Legal Sports Betting Will Give NBA, MLB A $1.7 Billion Revenue Bonanza: AGA Survey

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The American Gaming Association (AGA) is reporting that the NBA and MLB will get a $1.7 billion revenue increase from legal sports betting.

In total, the AGA anticipates legal sports betting will boost profits for the four major pro leagues by $4.2 billion.

The AGA bases the forecast on work done by Nielsen Sports. This adds to the figures previously published for the NFL and NHL.

Sara Slane, AGA senior vice president of public affairs:

“The four major sports leagues will earn a collective $4.2 billion from widely available legal sports betting, further proving that working together with the gaming industry will pay dividends for all sports stakeholders. Legal sports betting will also create substantial opportunities for state and local economies, generating tax revenue, jobs and supporting small businesses across the country.”

Each report was based on a survey of more than 1,000 people over the age of 18. The results provide a convincing rationale that the benefits of legal sports betting will be huge.

Where will the money come from?

The leagues themselves won’t make money directly from legal sports betting. That would introduce a conflict of interest that no regulator would permit. Rather, the cash will flow from the secondary effects of state-regulated sports betting.

The Nielsen Sports study breaks the additional revenue down into two categories:

  • Increase in Revenue from Fan Engagement: Revenue not incurred directly from betting operators, but rather as a result of increased consumption and engagement with the league and its content/products
  • Gaming-Related Revenue: Revenue paid directly from betting operators, in the form of sponsorship, advertising, and product fees.

How much money can each league expect?

The first study estimated that the NFL will make the biggest bucks. No surprise there.

Broken down by league:

  • The NFL should see total revenues rise by $2.326 billion. Increased fan engagement should generate $1.753 billion of that, with an extra $573 million coming from gaming related revenue.
  • The NHL figures are $216 million in total$151 million from more fan engagement and $65 million from gaming-related revenue.
  • Additional fan engagement will provide an extra $425 million to the NBA. Gaming-related revenue of $160 million takes the NBA total up to $585 million.
  • MLB can expect another $1.106 billion in total revenues: $957 million from extra fan engagement plus $154 million from gaming-related revenue.

Fan engagement and gaming-related revenue details

Nielsen Sports breaks down the additional revenue by source. As one example, for MLB, the extra $957 million in fan engagement revenue comes from:

  • Media rights increase by 11.1 percent to $4.2 billion
  • Sponsorship increases by 6.8 percent to $952 million
  • Merchandise sales increase by 3.4 percent to $683 million
  • Ticket sales increase by 12.2 percent to $4.109 billion

Additional gaming-related revenue will come from three primary sources:

  • TV Advertising: $64 million
  • Sponsorship: $62 million
  • Data and Product for Third-Party Gambling Services: $28 million

The effect of potential integrity fees mandated by states are not included in the survey.

AGA selling sports betting to the sports leagues

Sports leagues have historically been opposed to sports betting. Now that the Supreme Court has overturned the Professional and Amateur Sports Protection Act of 1992 (PASPA), leagues must come to terms with a new reality.

State-regulated sports betting is expanding rapidly. Early entrants, including Delaware, New Jersey, Mississippi, West Virginia and soon Pennsylvania are leading the way.

The AGA surveys showing large financial gains for the leagues are one way of shifting the oppositional mindset. The group wants leagues to see the opportunities and embrace them.

Meanwhile, as the recent Illinois hearings show, the possibility of states giving leagues some form of integrity fee is still alive despite full rejection of it in 2018.

Rep. Lou Lang, who is a strong proponent of legal sports betting, testified that he’s not opposed to the idea:

“I don’t have a problem giving major league sports a fee, but I want to give them a fee for something. Not a fee for nothing.

“I have proposed to them … that any fee they get ought to be in exchange for information we need — data, pictures, videos, demographic and marketing information …

“That would help us market sports betting in Illinois, and that would give us something for anything we might pay them. I don’t want to pay them for nothing.”

The AGA’s members are the operators who will end up paying for such a fee, so naturally they are against it. In using survey evidence to show how much the leagues will benefit financially, the AGA is making the case that leagues don’t need integrity fees.

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What We Learned About Sports Betting In Congress: Questions And Answers

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We’ll take a look back at the recent Congressional sports betting hearing in this short series.

In part three, we take a look at the questions and responses from members of the House Judiciary Committee and examine some of the supplemental statements filed with the committee.

  • Part one: The NFL
  • Part two: The witnesses

The illegal sports betting market

Congressman Jim Sensenbrenner expressed skepticism that the illegal market will feel any pressure from the legal market.

Sara Slane of the American Gaming Association (AGA) responded to Sensenbrenner that there was clearly a need for the legal market to be competitive with the illegal market in order to convert bettors.

This is without question true. Sensenbrenner’s question/comment was based on the premise that most gamblers are ambivalent to whether a market is legal or illegal, something that is almost certainly untrue for most Americans.

Unfortunately, Slane doubled down on the statistic that 70 percent of people would move some money to the legal market (I detail the problem with this statement in part two).

There are advantages to the offshore market in that some of the features of betting in grey or black markets cannot be mirrored by the legal market because the social costs associated with the risks are too high. To assume that it is simply better to not create a legal market is an incredibly regressive view, not in touch with large segments of the population.

Underage gambling?

A follow-up comment from the committee asked about the children and how we can keep children from gambling.

Forgive my editorializing, but it appears that small-government Republicanism is dead. Keeping children off of gambling sites begins with responsible parenting. Obviously, there are age verifications that need to be implemented, but no system can stop a child who gains access to their parents log in information, or is allowed to wager on a parents account.

Indeed, a study of Adolescent Online Gambling in the UK showed that 10 percent of study participants had gained access with their parents’ permission (the study is available here).

The issue here is two-part; does prohibition stop children from accessing gambling sites? My response is: No. Second, is whether some regulation or checks is better than no regulation? My response is: Yes. I know it may be hard to find a good, reliable babysitter, but I would suggest that Congress is not the place to find one.

And age verification…

Rep. Bob Goodlatte enquired regarding age verification.

Les Bernal of Stop Predatory Gambling advocated for allowing small unlicensed gambling games, and claims that the issue with gambling is when the state puts the mark of legitimacy on the games by regulating and licensing them.

Jon Bruning of the Bruning Law Group relied on some headlines about underage gambling in the UK to argue that age verification protocols do not do adequately protect against underage access.

This is not a totally fair characterization. Age verification is not perfect. The UK currently does age verification as well as anybody, but stopping underage access begins at home with parents knowing what their children are doing online. The UK is also in a process of updating age verification procedures, an important aspect that often does not get discussed after regulations are passed.

There is a need for continued moderating and updating. Becky Harris of the Nevada Gaming Control Board detailed the procedure for registering to obtain access to online betting in the state, seeming to dispel with apocalyptic visions of several members on the panel who suggested that online legal wagering would result in widespread underage access to gambling.

What about the gambling laws already on the books?

Goodlatte inquired how do we get the Department of Justice to enforce the existing statutes against gambling companies.

Bruning and Bernal responded and expressed that this was their question as well. The Department of Justice has the ability to enforce federal law and they are also able to file both civil and criminal lawsuits against foreign actors. It is odd that a congressman chose to ask a witness about such enforcement procedures, when these are questions for the Attorney General.

Congressman Cedric Richmond of Louisiana stated: “when I go into a casino…far too often it appears that many of the people in there look like they should not be there.”

Richmond’s observations are obviously nothing more than anecdotal, potentially offensive, and are not based on statistical analysis. Bernal responded with an anecdote from Ireland that says 70 percent of Irish online gamblers went into debt to wager online, I have been unable to find a copy of this study.

Harris that it is quite difficult to wager with credit cards and because of that, in regulated markets like Nevada, there are barriers to accruing large amounts of debt.

Data security

Richmond then asked about personal data security.

Harris stated that she is unaware of any operators misusing data in Nevada; Bernal, however, elected to inform the committee that the gambling industry knows more about individuals than Google does. In one anecdotal story from Patrick Cain of Canada’s Global News, Cain requested everything Google knows about him. They sent him more than 20 gigabytes worth of data that is the equivalent of about 12 million pages of text.

Does the gambling industry know more than that about you? I do not know, but I have my doubts. The comment, however, sure made a good sound bite and one not likely to be questioned by Congress.

College sports

Rep. Martha Roby of Alabama inquired as to how college athletes can be protected from legal gambling.

One solution would be to pay them, but alternatively, Bernal suggested that legal gambling should be banned.

Unfortunately, there will always be a threat of match-fixing since the monster can never be totally eliminated, but threats can be reduced. Increasing costs for match-fixers is one potential avenue for deterrence, as long as college athletes remain unpaid workers in a multi-billion dollar industry, they will be potential targets for match-fixers.

It is likely that match-fixers would prefer to operate in illegal markets than legal markets, as illegal bookmakers are less likely to report suspicions to authorities because of their own exposure. For this reason, one of the best means to protect college athletes is to establish a robust legal market.

After the hearing…

The conclusion of the hearing left little indication of the direction that the House was interested in pursuing. More than anything, the hearing came across as a fact-finding mission, though the buckshot pattern of topics and interests left much ground to be covered before federal legislation becomes a realistic vision.

In addition to the verbal testimony, there were a series of filings. We have managed to track down several:

Americans for Tax Reform

Grover Norquist of the Americans for Tax Reform group urged: “There is no need for federal regulation in the area of sports betting.”

It is unclear if this is advocating for repeal of UIGEA and the Wire Act, or if the organization is simply referring to new legislation. In the second paragraph, Norquist incorrectly asserts that the Supreme Court’s decision in Murphy stood for the proposition that all 50 states must be treated the same.

While I have argued that this was a deficiency of PASPA, this (equal sovereignty) was not an issue that Justice Samuel Alito addressed in his decision.

Interestingly, the group also comes out against an integrity fee, however, it attributes the requests/demands for a fee as originating from the NFL, NHL and NCAA, instead of the two-most vocal advocates for the fee, the NBA and Major League Baseball.

National Conference of State Legislatures

The NCSL notes that PASPA “exemplified the failing of a one-size-fits-all federal solution to complex questions of policy.”

Much like the Norquist letter, there appears to be a misunderstanding as to what PASPA was. It was hardly a one-size-fits-all solution since a number of states were treated differently under the statute.

In the next sentence the NCSL refers to the “shackles of federal preemption being removed,” but again Congress was not preempting (something the Supreme Court said Congress could do); instead Congress was commandeering. Words matter, it is important that organizations use language accurately.

The NCSL letter argues that states should remain free to regulate sports betting as they choose.

Major County Sheriffs of America

The MCSA sent a letter to Sensenbrenner arguing that illegal sports gambling supports a number of other illegal activities including money laundering, extortion and drug trafficking.

The MCSA has also come out against integrity fees, noting that if integrity fees go to sports leagues, the money collected is not going back to help communities. This is an important point that the sports leagues have not been held to account for. If they receive a royalty, then that is money that is not going to community interventions, and the costs associated with the lost funds need to be covered by taxpayers.

The American Conservative Union

The ACU advocates for Congress to allow the states to make their own decisions regarding sports betting.

The ACU notes that state legislatures are in the best position to make decisions about allowing sports betting for their citizens. The ACU notes that a survey of Conservative Political Action Conference (CPAC) attendees found that more than 90 percent thought that the states, not the federal government, should be responsible for regulating sports betting.

It should be noted that a survey of CPAC attendees is not likely to be representative of a state’s population, as a key principal of conservative values is limited government with an emphasis on states’ rights.

National Fraternal Order of Police

The FOP weighed in, noting that it is a member of the American Sports Betting Coalition and that the black market operates outside the reach of law enforcement and that illegal betting fuels other illegal activities. FOP thus advocates that legalization is in the best interest of public safety.

The FOP argues that sports betting regulation should be left to the states, and “federal law enforcement should focus on the pursuit of criminals and their organizations beyond the jurisdiction of State and local law enforcement.”

Indeed, this has been the impetus for many of the federal sports betting regulations.

Consumer Action for a Strong Economy

CASE argues that consumers and taxpayers are the real winners because of the “many millions of dollars more in tax revenues, which relieves the pressure of politicians to raise taxes.”

While there will be some money for states, but sports betting is not going to see the government sending us sports betting dividends because they cannot spend all the money coming in. This narrative is unhelpful.

CASE also praised the Supreme Court for “their judicious ruling.” The Supreme Court’s job is to interpret laws. They are theoretically impartial. CASE does make an important point that unreasonable taxation threatens to suffocate the legal industry.

The organization also advocates for private partnerships like those between the NBA and MGM, while calling integrity fees a “laughable prospect.”

Citizens Against Government Waste

CAGW noted that PASPA was an anomaly and that gaming regulation has historically been left to states and localities. CAGW observed that Congressional intervention at this point would throw the nascent state-level industries into disarray.

CAGW appears to have a lot of faith in the efficiency of the market to ensure that best practices emerge.

Once again CAGW comes out in opposition to integrity fees. The CAGW statement is quite similar in scope to that of CASE.

Michelle Minton – Competitive Enterprise Institute

Minton’s testimony advocates for state regulation of sports betting, noting that states are best positioned to pass laws reflecting the morality of their citizens.

Minton notes that outside of Hawaii and Utah nearly all states have experimented with some forms of gambling policy liberalization.

Minton argues that the European market, which is regulated, has limited their vulnerability to corruption and this has “allowed them to successfully address match-fixing.” I think this is true for some countries in Europe, but I would argue there are regulated markets in Europe that are doing an inadequate job of preventing corruption of betting markets.

Minton argues that competition is necessary to shrink the illegal market. This is invariably true, though I would argue that as a country, the cited potential for $16 to $40 billion in economic output are not short-term outcomes.

In summary, Minton’s testimony largely advocates for minimal intervention in the betting market, and recommends that the regulation emerge from states as opposed to federal lawmakers.

Poker Alliance

The Poker Alliance (formerly the Poker Players Alliance) filed a statement for the House record. Again, another organization has taken an expansive view of Alito’s ruling, stating: “the Court held that PASPA violated the 10th Amendment’s “anti-commandeering” principle, which provides that if the Constitution does not give power to the federal government or take power away from the states, that power is reserved for the states or the people themselves.”

This seemingly downplays the fact that Alito stated (accurately) that Congress could preempt state regulations and ban sports betting, but they did not in the case of New Jersey. The Alliance claims that nearly 80 [percent] of wagering is done over the internet, which is certainly an interesting statistic that I have not previously seen, but would seem to suggest the importance of offering mobile betting, if the desire is to convert bettors from the black market to the legal market.

That’s a lot of opposition

The big takeaway from the hearing and the statements of witnesses and non-witnesses is that Congress faces significant opposition if it intends to usurp state-level regulation of sports betting.

With that said, I think we are a long way away from Congress taking a serious stab at usurping the state-level regulation of sports betting. This would not only be unpopular with public opinion according to some circulating polls, but would seem to fly in the face of what many conservative groups are advocating for.

Given that Republicans still control both houses of Congress and the Oval Office, I would expect these powerful conservative voices to be heard.

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Football Revenue Soars To Power Mississippi Sports Betting To Strong Second Month

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Football wagers took off in September as expected, helping Mississippi sports betting to a robust second month of revenue.

The first full month of football betting led to nearly $4 million in revenue for Mississippi casinos, according to information from the Mississippi Gaming Commission. With little football on the calendar in August, this month became the one to watch as gridiron action took off in Mississippi.

Mississippi casinos totaled more than $5.5 million in overall revenue in September on more than $31.7 million in handle. That represents a major move forward from the initial month in August, when casinos took in $644,000 in revenue on $6.3 million in wagers.

The state posted a remarkable win percentage of 17.3 in September, leaping from better than 10 percent in August. When compared to Nevada‘s historical hold of just more than 5 percent, Mississippi’s month looks even more impressive.

How Mississippi sports betting revenue breaks down

The MGC breaks down Mississippi sports betting revenue by region. The state’s 28 casinos are separated into three groups: central, coastal, and northern.

  Central Coastal Northern Total
Overall September revenue $470,564 $3,909,046 $1,124,181 $5,503,792
Football $421,225 $2,923,511 $637,030 $3,981,766
Basketball ($5,797) $1,734 $2,062 ($2,001)
Baseball $9,365 ($116,098) ($7,389) ($114,122)
Parlay $38,449 $981,065 $457,173 $1,476,687
Other $24,219 $118,834 $35,305 $178,358

What we can read from the numbers

The September breakdown yields a few interesting notes:

  • Football is king in Mississippi. Pigskin wagering accounted for nearly three-quarters of all Mississippi sports betting revenue in September. This is not surprising to note, but certainly underscores just how important football betting is in the South.
  • Mississippi sportsbooks matched their overall state win percentage on football alone. Books held 17.4 percent of gridiron wagers. That will be an awfully tough numbers to sustain moving forward on football or any other sport.
  • Baseball did not prove as lucrative for Mississippi sportsbooks in September. They posted an overall loss on the diamond, just as New Jersey sportsbooks did for the month.
  • It’s also important to remember that more sportsbooks were active in September in Mississippi. A total of 10 casinos offered sports betting in the second month of legal activity. More sportsbooks, more handle, more revenue — or so the Magnolia State hopes, of course.

Mobile still not moving in Mississippi

The most important factor to keep in mind in Mississippi: there is no true mobile sports betting available. State regulations only permit mobile wagering on the grounds of a casino. To date, no Mississippi casinos have chosen to go that route.

This means all Mississippi sports betting is being done at physical sportsbooks. When comparing to other states that launched mobile sports betting, it appears Mississippi might be leaving revenue on the table.

New Jersey mobile sports betting already surpassed revenue for land-based betting. Nearly three-quarters of Nevada sports betting now takes places on mobile, according to industry sources.

Mississippi definitely made the September move forward most expected thanks to football. Going mobile and online could grow that move exponentially.

 

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Three’s a Trend: Caesars Property Partners With NFL’s Baltimore Ravens

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This new trend of US sports franchises joining forces with gambling companies is starting to catch on.

On Friday, Horseshoe Baltimore announced that it has entered into an official partnership with the Baltimore Ravens. It is third such alliance between a gambling company and a US sports team and the second involving the NFL. The news came press releases from the Ravens and Caesars.

For now, the partnership has nothing to do with sports betting.

Maryland is one of many states that considered a sports betting bill this year, but legalization requires a voter referendum at the ballot box. With the 2018 midterms upon us, 2020 represents the first chance for forward movement on that front.

Horseshoe + Ravens

Many details come from The Baltimore Sun. According to the report, the multi-year marketing deal places Horseshoe Baltimore as an “official casino partner” to the Ravens. The agreement is non-exclusive, as the team is apparently shopping around for additional official partners.

It is pretty much a no-brainer for Horseshoe.

The property lives in the heart of downtown Baltimore, practically in the shadows of M&T Bank Stadium. It is struggling, too. New competition from MGM National Harbor has dented the bottom line of casinos in the region, the Horseshoe very much included.

This partnership is so natural, in fact, that it has been in place since Sept. 7. Friday’s announcement seems to represent an expansion of that deal, however, including the use of team logos within Horseshoe’s promotions. The property’s three-level bar will be rebranded as a Ravens bar, too.

For what it’s worth, the ‘Shoe is also in the same proverbial ballpark as Camden Yards, home to the Baltimore Orioles of Major League Baseball.

The intersection of sports and gambling

For all of the timidness the leagues have shown toward toward sports betting, team owners are jumping right in.

Jerry Jones made the first move last month. The owner of the Dallas Cowboys partnered his team with Winstar World just a few days after NFL owners approved relaxed rules for casino sponsorship.

Shortly thereafter, the Vegas Golden Knights did something similar with William Hill. Theirs was the first such union involving the NHL and the first to include a dedicated sports betting company. Will Hill has sportsbooks in just about every state with legal wagering.

Although Maryland is far from legal wagering, the prospect certainly factored into the negotiations. Here’s Erin Chamberlain, the property’s general manager, on the Ravens deal:

“We’re hoping that this agreement would put us in a great position should we achieve that goal in Maryland. It’s obviously something that we think would be very beneficial to the casinos and drive revenue that would benefit the education fund and the state overall.”

Some leagues are more progressive than others, too. The NBA makes up half of the inaugural league-level alliance, allowing MGM to use its data and logos as its official gaming partner. That title is exclusive, though the data usage is not.

So far, no other US sports league has signed a deal with a gambling company.

That likely won’t be the case for very much longer, though. As was the case in the heyday of daily fantasy sports, the smartest leagues and teams will embrace these types of alliances.

If sponsorship arrangements in other markets materialize fully in the US, you should expect to see much more of this going forward — including at the league level.

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Three New NJ Sports Betting Apps Go Live For iPhone And iPad Users In Time For NFL Sunday

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A trio of new NJ sports betting apps entered the Garden State market this weekend.

BetStars, 888, and playMGM received clearance from the Apple App Store, and can be downloaded in time for this football weekend. The apps are not new to the New Jersey sports betting market, as each casino went live with mobile earlier this year.

All three NJ sports betting app launches on iOS were long in the making. The playMGM app went live on Android in August. BetStars and 888 both launched their Android apps in September, right around the start of NFL season.

NJ sports betting apps powering revenue

The past two months of New Jersey sports betting revenue reports show why mobile is crucial to long-term success. That goes not just for New Jersey, but for any state seeking to maximize tax revenue from legal sports betting.

It took just those two months for revenue from digital to surpass physical sportsbooks in the second state to launch post-PASPA. Mobile and online betting brought in $12.5 million, compared to $11.4 million for in-person sports wagering.

New Jersey sports betting generated more than $184 million in handle and $2.6 million in tax revenue in September. That roughly doubles the haul from August, when bettors wagered $95 million with fewer sportsbooks and less mobile options.

The state’s top gaming regulator, David Rebuck, said at last week’s Global Gaming Expo convention in Las Vegas that the September numbers would be “stunning.” That quote generated fanciful thoughts of $300 million or more in monthly revenue, but $184 million still represents an impressive total.

New apps needed to keep pace with the leaders

All three new NJ sports betting apps should help to increase revenue for BetStars, 888, and MGM. All could use the boost as they chase market leaders DraftKings Sportsbook and FanDuel Sportsbook.

Here’s a look at September revenue from New Jersey sports betting:

Property (Online) September digital September retail August YTD total
Totals: $12,567,785 $11,393,253 $9,182,943 $40,449,676
Bally’s Wild Wild West (Caesars online, 888) $106,463 $394,046 $267,796 $786,094
Borgata (playMGM) $120,938 $2,394,106 $855,152 $4,919,857
Golden Nugget (SugarHouse) $619,030 $499,414 $215,109 $1,333,553
Harrah’s N/A $310,766 $298,521 $609,287
Meadowlands (FanDuel) $2,852,548 $4,377,474 $3,060,367 $11,663,752
Monmouth Park (William Hill) $70,785 $2,138,097 $898,017 $6,242,345
Ocean Resort (William Hill) $292,081 $999,858 $519,563 $3,040,938
Resorts (DraftKings, BetStars) $8,505,940 $279,492 $3,068,418 $11,853,850

Just how dominant were the two sports betting newbies? DraftKings Sportsbook earned nearly two-thirds of market share, albeit in a growing and shifting market. That is dominant. FanDuel Sportsbook generated close to a quarter of mobile New Jersey sports betting revenue.

BetStars, 888, and MGM are adding the last piece of their mobile puzzle late in October. November’s revenue report likely will tell the whole story on what effect the newest NJ sports betting apps have for their casinos.

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Hoosiers Run Full-Court Press On NBA Over Integrity Fee At Indiana Sports Betting Hearing

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A busy week of state-level hearings closed out with Indiana sports betting on the table Friday.

A study group from the Committee on Public Policy met to discuss two bills that have been sitting on their desk for months. Stakeholders from across the industry presented testimony, including a representative for the professional sports leagues.

The hearing was mostly educational and surface-level, but a back-and-forth with NBA counsel Dan Spillane spawned a few disagreeable moments.

The land of integrity fees

The Hoosier State holds a special place in the dialogue surrounding expanded sports betting. It was in the Indiana statehouse that league representatives first asked for their contentious integrity fee.

Here’s the language that appeared in H 1325 back in January:

A sports wagering operator shall remit to a sports governing body that has provided notice to the commission under section 2 of this chapter an integrity fee of one percent (1%) of the amount wagered on the sports governing body’s sporting events.

Indiana was first, but this request traveled from state to state in lobbyists’ briefcases. Just about every legislative body that’s considered a sports betting bill is familiar with this language.

It’s language the leagues came to regret. As lawmakers wondered aloud on multiple occasions, shouldn’t leagues already be monitoring the integrity of their games? Sports betting, after all, has been legal in Nevada and other jurisdictions for decades.

In the time since that bill appeared, the NBA has tried to pivot from the ill-chosen moniker to a straight-up royalty. It also since reduced its ask from a full 1 percent down to one quarter of a percent of all wagers.

Meanwhile, Commissioner Adam Silver continues to refer to the integrity fee by its original name in public conversation.

Spillane faces the firing squad

Spillane often draws the unenviable task of fighting for these fees, and he returned to Indianapolis to face legislative questioning. After Spillane presented his pitch, the committee became hung up on the included fees.

Spillane tried to explain:

“We certainly are not saying that unless we get compensation from legislation that we’re not going to do everything within our power to protect the integrity of our sport. That’s absolutely not the case. We are doing it now, we’re going to do more as betting becomes legal, and we’re going to do that regardless of what you decide here.”

However, Spillane continued, the NBA will need to invest additional resources to monitor integrity. And borrowing a page from MLB representatives, he offered that sports betting is being forced on the leagues against their will.

“It’s really unusual. It’s hard to think of any other industry that is built on top of another business — ours — that imposes risks on that business — ours — and that requires that other business to spend more to protect itself from another business that’s built on top of it.”

Rep. Jim Lucas wasn’t quite buying it, though. Citing his own small company, Lucas argued that maintaining integrity is simply “the cost of doing business.”

“You should be working — and it sounds like you are — working hard to maintain that integrity. I don’t understand that more pressure is going to be put on you if somebody else is betting on it. You should be maintaining that integrity no matter what — whether some somebody is betting a dollar on you or a million dollars on you. I don’t care.”

Now you see why Spillane and the NBA pivoted away from the term “integrity fee” when it comes to this request. It does not play well in statehouses.

NBA lobbying just tipping off

Rep. Ben Smaltz chairs the committee, and he interjected at one point to ask about the states that have passed sports betting bills to date. He wondered if any others have included integrity fees or royalty fees in their legislation.

“Not yet,” Spillane answered. He went on:

“We’re expecting that as legislatures return to session in the new year, this is going to be an area of intense interest. We’re going to see states start to pass bills, and I think it’s going to be a more serious process post-Supreme Court decision than it was before. So we’re certainly going to be making this case here and in every other state that is considering legislation.”

“So currently zero,” Smaltz responded flatly. “Nobody has done it.” Once again asking the right question, the chair inquired if private commercial deals between operators and leagues might be a better tack.

Spillane didn’t disagree, but he called it a “partial solution.” Referencing the deal between the NBA and MGM, he testified that fees aren’t “an axis of negotiation” under current law.

“We’re looking for the law to say: Actually, if a company wants to be offering betting on a sport’s games, it needs to share a small portion of what it makes on that betting with the sports league. And that would be something in addition to commercial deals or logos and things like that.”

Legal precedent is not on the leagues’ side, however. Courts have previously held that leagues have no ownership over things like box scores and statistics. The NBA is asking for an updated statute, but the appetite for compensation seems limited in Indiana.

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Pennsylvania DFS Revenue Surges In September, But Sports Betting Likely Will Dwarf It

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To no one’s surprise, NFL season boosted Pennsylvania daily fantasy sports revenue to its strongest month yet in September.

DFS companies totaled more than $2.1 million in revenue through the first full month of NFL football, according to the Pennsylvania Gaming Control Board. That’s more than double what Pennsylvania DFS brought in during August, when operators brought in more than $943,000.

September’s Pennsylvania DFS haul worked out to more than $320,000 in tax revenue for the state. That is boosted from more than $141,000 last month.

Breaking down Pennsylvania DFS revenue

DraftKings maintained what has become a consistent place as the Pennsylvania DFS market leader with nearly $1.2 million in revenue. That extends its lead by percentage over FanDuel, which netted close to $950,000 in September. Both operators better than doubled their revenue from August.

Here’s how the monthly report shakes out for all Pennsylvania DFS operators, who pay a 15 percent tax on adjusted revenue:

  • DraftKings:
    $1,174,327.61 revenue, $176,149.14 tax
  • FanDuel:
    $948,838.89 revenue, $142,325.83 tax
  • DRAFT:
    $19,659.38 revenue, $2,948.91 tax
  • Boom Fantasy:
    $1,336.87 revenue, $200.53 tax
  • FantasyDraft:
    $1,088.58 revenue, $163.29 tax
  • Sportshub Technologies:
    $270.49 revenue, $40.57 tax
  • Full Time Fantasy Sports:
    $241.50 revenue, $36.23 tax
  • Fantasy Football Players Championship: No revenue
  • Yahoo! Fantasy Sports:
    -$12,049.35 revenue, -$1,807.40 tax

    • Total:
      $2,133,713.97 revenue, $320,057.10 tax – September
      $943,620.22 revenue,$141,543.03 tax – August

No, you’re not reading a massive typo in the Yahoo! report. The company reported a loss after moving into the black in Pennsyvlania DFS last month.

Yahoo! should not be expecting a tax refund check in the mail though. Pennsylvania regulators said the refund will be applied to future tax bills.

Compared to sports betting revenue though …

Pennsylvania DFS began regulation and taxation in May this year under a 2017 law authorizing it. September’s strong showing highlights the continued viability of DFS even in the new era of legal sports betting.

Its place, however, clearly will be behind sports betting. You need only to look next door at New Jersey sports betting revenue from September to see that.

The Garden State generated roughly $24 million in adjusted revenue on about $184 million in total handle in September. That’s the most robust month yet for New Jersey sports betting, and the first in which most sportsbooks had mobile apps.

While New Yorkers and Pennsylvanians certainly add to New Jersey sports betting coffers, its smaller neighbor has almost 4 million less people than Pennsylvania. That population gap only underscores the popularity of sports betting.

Pennsylvania will be in the sports betting game soon enough. PCGB regulators expect to launch by the end of the year after landing multiple operators despite a $10 million license fee and 36 percent tax rate.

The post Pennsylvania DFS Revenue Surges In September, But Sports Betting Likely Will Dwarf It appeared first on Legal Sports Report.

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West Virginia Sports Betting Handle $10 Million Strong And Growing

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Approaching its two-month anniversary, West Virginia sports betting appears to be serving a hungry market.

WV sportsbooks have booked around $10 million in wagers since launch, and weekly totals are climbing steadily as the sports calendar fills in.

The state has collected more than $200,000 in taxes, too, tracking toward its year-long projection of $5.5 million. That seems within reach, as early numbers essentially include just one operator in the dawn of peak sports season.

Hollywood is king of WV sports betting

Hollywood Casino was the first WV property to open its sportsbook, hiring ticket writers at the end of August. Located within driving distance of Washington D.C. in the eastern tip, Hollywood enjoys the prime location in the state.

The benefits are evident in the numbers. Hollywood has booked more than $9 million in wagers since launch, responsible for pretty much all of the WV sports betting handle. Those tickets have turned into $2.3 million in revenue, though that number does include outstanding futures bets.

Hollywood’s handle has increased each week since opening, climbing over $2 million for the most recent reporting period (Oct. 6-12). Here’s the growth since launch:

  • Week 1: $457,788
  • Week 2: $1,104,008
  • Week 3: $1,713,845
  • Week 4: $1,829,347
  • Week 5: $1,875,615
  • Week 6: $2,110,500

Total handle: $9,091,103
Total revenue: $2,298,733
Taxes due: $229,873

FanDuel Sportsbook hiding at Greenbrier

The Greenbrier doesn’t have location working for it, nor does it draw heavy sports betting traffic.

The sprawling resort is tucked up against the Appalachian Mountains in a fairly remote part of the state. It’s also entirely private, with low-level memberships still running a couple thousand bucks. The sportsbook on property opened two weeks after Hollywood’s.

As anticipated, The Greenbrier’s numbers show modest in-person betting:

  • Week 3: $87,763
  • Week 4: $75,222
  • Week 5: $178,666
  • Week 6: $105,442

Total handle: $447,094
Total revenue: $75,697
Taxes due: $7,570

What the property does have going for it is a branding partnership with one of the industry’s emerging heavyweights.

FanDuel Sportsbook operates the resort’s brick-and-mortar facility, but its primary focus will be in the digital realm. Its online/mobile platform is already available in New Jersey and preparing for launch in WV.

What’s next for WV sports betting?

Speaking of online/mobile betting, that’s what’s next for West Virginia. The law passed in March authorized it, and regulations permit each licensee to partner with up to three online brands.

The Greenbrier will deploy a digital FanDuel Sportsbook in due time, and Hollywood is partnered with William Hill for its online/mobile betting product.

Delaware North owns Mardi Gras and Wheeling Island, and it has a new partnership with Miomni. Both properties will have retail sportsbooks up and running at some point, but the target date has been slipping backward.

Mountaineer Casino is the other WV property permitted to offer sports betting, but it had not yet submitted an application at the most recent update. It will, though, according to industry sources.

For now, Hollywood doesn’t face any competition in the open market, and should retain its retail crown for the foreseeable future. You can expect FanDuel Sportsbook to own the online/mobile space, though, if New Jersey’s experience is any guide.

DraftKings Sportsbook might be the runaway NJ sports betting leader, but it is currently without access to any other state with a legal industry — including West Virginia.

The post West Virginia Sports Betting Handle $10 Million Strong And Growing appeared first on Legal Sports Report.

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Illinois Sports Betting Takes Center Stage In Gambling Expansion Hearing

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State lawmakers from two House subcommittees gathered in Springfield on Wednesday for a second hearing on gambling expansion including Illinois sports betting.

The first, held in August, created the foundation for this deeper dive, with stakeholders from across the landscape offering perspectives.

New casinos, online gambling, daily fantasy sports and sports betting were all on the table, but the latter dominated the conversation.

Quick backstory in Illinois

A 2017 bill numbered S 7 served as the spark for this hearing, but efforts have expanded in the time since introduction. The current version contains placeholders for each of the other gambling categories mentioned.

When Sen. Terry Link first presented his proposal, its focus was on authorizing a new casino in Chicago. Illinois has 10 riverboat casinos, but much of the gambling traffic slips away into neighboring states. Indiana casinos, for example, live just across the border and well within reach of the Windy City.

S 7 has been active in the statehouse since last January, but passage so far has been elusive. And the hill has only gotten steeper in recent months. Link’s bill has morphed into a 500-page behemoth seeking broad expansion of the state’s gambling industry.

The state Senate already passed the previous version of this bill — twice, in fact — but it hasn’t advanced through House committees in almost 18 months.

Illinois sports betting in the spotlight

Rep. Rob Rita runs point for S 7 in the lower chamber. As chair for both subcommittees, he opened the hearing with the declaration that sports betting would be the focus.

A key proponent, Rep. Lou Lang, was the first to testify. The representative from a Chicago-area district stressed the importance of “doing it right” when it comes to expansion, citing the PA sports betting model as one to avoid.

Lang is one of five lawmakers that sponsored an Illinois sports betting bill this year. He was in attendance to offer his thoughts on regulation and implementation — and to make sure his colleagues were asking the right questions.

During his testimony, Lang worked to manage revenue expectations. “We have to consider this a piece to some larger puzzles that we have,” he said. “This is not a cash cow, although it is an important tool for economic development.”

He also cautioned against over-taxation, which would stunt acquisition and hinder the conversion of existing bettors to regulated channels.

Lang offers conditional support for league fees

Any discussion of fees and taxes is incomplete without covering the integrity fee.

A group of professional sports leagues, led by the NBA and MLB, has actively lobbied for a share of the industry’s revenue in states around the country, Illinois included. So far, none has passed a law or installed a statute requiring operators to pay sports leagues a cut of their action.

Lang supports the concept, though, provided the state receives some value in return.

“I don’t have a problem giving major league sports a fee, but I want to give them a fee for something. Not a fee for nothing.

“I have proposed to them … that any fee they get ought to be in exchange for information we need — data, pictures, videos, demographic and marketing information …

“That would help us market sports betting in Illinois, and that would give us something for anything we might pay them. I don’t want to pay them for nothing.”

Referencing an illegal site by name, Lang says state-regulated sportsbooks could better compete if their platforms were populated with league content.

Former NFL player and current Sen. Napoleon Harris also sponsored a 2018 bill, and his is the only one that expressly includes an integrity fee.

Sports leagues make their case

Hours after Lang first addressed teams and leagues, Rita called them to the table for testimony.

John Corvino was first up, representing the Chicago White Sox. Corvino waxed poetic about the fabric of American youth, the pitfalls and possibilities for fans and aspiring athletes, and the generational connection the game provides.

“Now I’m sure that we all recognize the risk that sports betting poses to the integrity of our game,” he said as his story arrived at the key request. (There is something amusing about this comment originating with a franchise that is responsible for the largest betting scandal in sports history, but that’s beside the point.)

Corvino asked lawmakers to include provisions that protect integrity without directly asking for a fee.

That job fell to Josh Alkin, speaking on behalf of MLB. Alkin clearly referred to the integrity fee as a “royalty,” extending a new trend from league lawyers. With their messaging growing cloudy over time, embracing fees as a straight-up royalty may be their best shot.

MLB also asked for the remaining pillars of its proposed framework, including the ability to restrict certain wagers and the mandated use of official data.

Players fighting for a voice too

Representatives from league players’ associations provided some of the more intriguing testimony of the day.

NFLPA representative Joe Briggs was the most talkative of the group, laying out a list of requests related to data. Briggs raised concerns about the personal safety of athletes amid sports betting expansion, citing the recent beer-throwing incident in Massachusetts.

Clarence Nesbitt had a follow-up request on behalf of the NBPA.

Focusing on betting information, Nesbitt asked lawmakers to craft laws that “clarify that players own their own performance and biometric data.” This sort of data could have use in the sports betting industry, but ownership is likely a matter for collective bargaining.

Referencing an undisclosed LeBron James injury during last year’s NBA Finals, Nesbitt said players should have discretion over the release of such information.

“LeBron’s integrity is clearly beyond reproach and needs no defense from me,” he said. “We need you to leave the choice of data disclosure in LeBron’s capable hands — pardon the pun.”

Briggs testified that no state has so far passed a sports betting law with sufficient provisions, but indicated conversations with New York lawmakers were ongoing.

Industry stakeholders weigh in

The subcommittees heard testimony from several stakeholders involved in the mechanics of online gambling.

Lindsay Slader testified that modern technology allows regulators and operators to monitor compliance with location restrictions. Her company, GeoComply, is the primary supplier of the geofencing tools used in other markets. Network transactions run through more than 350 verifications before approval.

Michael Pollock from Spectrum Gaming Group offered support for Lang’s testimony as he reiterated the primary message.

“In the choice between doing it quickly and doing it right, please err on the side of doing it right.”

Pollock testified about the ancillary benefits that come from legal sports betting but cautioned against viewing it as a “fiscal cure-all” for the state budget.

Gaming Laboratories International (GLI) followed up with testimony from Kevin Mullally regarding standards and controls that guide the industry in other markets. He testified that GLI has deployed “ethical hackers” to test GeoComply’s virtual fences with no success.

The American Gaming Association also sent a representative to Springfield to lay out the benefits of well-crafted regulation.

Jim Ryan steals the show

Lawmakers warned longtime gaming executive Jim Ryan to be brief, but nobody wanted to interrupt him once he got started.

A man of many hats, Ryan delivered his testimony on behalf of the iDevelopment and Economic Association (iDEA). He’s also the CEO of Pala Interactive, which operates an NJ online casino and poker platform.

Ryan focused on illegal, offshore operators as he relayed his own recent experience.

He told lawmakers he found it “shockingly easy” to register for an illegal account from his hotel room the night prior. There were no ID verifications and no issues processing the payment. “It was a perfectly seamless experience,” he said.

Illegal operations represent the primary threat to the emerging, regulated industry. The site Ryan was patronizing is based in Curacao and operating in open violation of US law.

“I have no idea if the game I played last night is fair. I have no idea if the $75 I deposited continues to exist. And I don’t know, if in fact the Bears beat the Patriots, if I’ll be paid.”

Fantasy sports makes a quick appearance

Rep. Michael Zalewski was just about the only person who spoke to the fantasy sports placeholder in S 7. As the chair of the House Revenue Committee, he has previously tried to spearhead an effort to legalize Illinois DFS.

Zalewski’s testimony was brief. He cited the ongoing presence of FanDuel and DraftKings in the state as he pitched for a legislative update:

“They’ve been good corporate citizens. We want them to continue to flourish in Illinois. We want them to have comprehensive regulations.”

The chairman pleaded with his fellow lawmakers to include provisions for DFS in any gambling expansion package.

The post Illinois Sports Betting Takes Center Stage In Gambling Expansion Hearing appeared first on Legal Sports Report.

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DC Sports Betting Regulators Tell Council They Could Have Product Live In Early 2019

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If Washington, D.C. residents are hungry for sports betting, district regulators say it can be running four months after a bill is passed.

The Committee of Finance and Revenue heard testimony Wednesday from several gambling stakeholders including representative from MGM Resorts InternationalNBA, FanDuel and DraftKings.

Beth Bresnahan, executive director of the lottery, said it would take four to six months to start sports betting once a law is in place.

DC sports betting game plan

The hearing was scheduled to review the “Sports Wagering Lottery Amendment Act of 2018,” authored by Councilmember Jack Evans. It would permit sports wagering at licensed establishments around the district as early as next year.

A spokesman for Evans said if everything goes as planned, the bill could be on the mayor’s desk by Thanksgiving. Any DC bill signed by the mayor must go to Congress for a 30-day review.

If a disapproval resolution is passed by the House and Senate, then the DC bill is overturned, unless the resolution is vetoed by the president. However, if a bill goes to the House and is not acted upon in 30 days, then the bill is enacted.

What the industry is saying

Councilmembers heard from 15 witnesses on potential sports betting models, licensing structures and integrity monitoring over the course of two hours.

FanDuel and DraftKings voiced their support for Bill 22-944, and were on board with a model that permitted multiple operators.

“The district is in a position to break new ground,” said Christian Genetski, chief legal officer for FanDuel.

Genetski was referring to the fact that traditional sportsbooks operate out of a physical brick-and-mortar casino. DC has no casinos, so Evans has proposed that sportsbooks be located at the five major sports arenas, as well as bars, restaurants and hotels.

Shane August, president and CEO of August Holding Corporation, expressed support for allowing small operators to enter the sports betting market.

“The FanDuels and DraftKings of the world sign exclusive contracts with big casinos,” August said. “Other places don’t allow for smaller groups to compete.”

“If this bill passes, our application will be first on the desk,” he said.

Jeff Ifrah, founding member of iDEA said lawmakers should not limit their options to just sports betting but also look to expand into other areas like online slots and poker.

“The most effective state legislation will provide for the triumvirate; sports, poker and casino games,” Ifrah wrote in his testimony.

Ifrah said mobile gaming increases a casino’s audience base resulting in new streams of revenue from younger, “tech savvy gamers who expect to bet from their phones.”

Other major hurdles and next steps

Several other topics during the hearing were responsible gaming practices, revenue disbursement and the NBA’s continued pursuit for an integrity fee.

Scott Butera, president of MGM’s Interactive Division also said they prefer high stability standards for licensees.

“Market operations have to work for regulators and operators,” Butera said.

The DC council plans on keeping the public testimony period open until November 1. The bill would need to clear two committee votes before being sent to the mayor’s desk.

The post DC Sports Betting Regulators Tell Council They Could Have Product Live In Early 2019 appeared first on Legal Sports Report.

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