Lotto Fever

The Massachusetts Lottery was already the best-performing lottery in the country, reaching new heights in FY2023. The record is likely fall in FY2024 now that online ticket options are available.

Aug 10, 2023

NEWS: The Massachusetts Lottery is the best in the nation (based on per capita spend), and it’s just now getting into iLottery.
NEWS: After taking a mulligan, Bally Bet preps for its return to the US sports betting market.
VIEWS: Is Maryland a pretender or contender to legalize online casino and poker in 2024?
NEWS: Underdog fires back at critics.
BEYOND the HEADLINE: Are DraftKings and FanDuel making the same error their opponents did several years ago?
AROUND the WATERCOOLER: What does $1 get you? And Fanatics Sportsbook’s new tagline.
STRAY THOUGHTS: Real experts are rare.

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Massachusetts Loves It Lottery

The lottery is a big business. MegaMillions just set a new jackpot record of $1.5 billion. And nowhere is that business bigger than in Massachusetts.

The Massachusetts Lottery set a new revenue record in fiscal year 2023, with a whopping tally of $6.13 billion in sales resulting in $1.18 billion in profits. The growth was driven by record scratch-off ($4.04 billion) and keno ($1.23 billion) sales.

The Massachusetts Lottery is considered the best in the nation by a mile. Per a 2022 Lending Tree report, Massachusetts has the nation's highest lottery spend per capita.

#1 Massachusetts - $805.30
#2 New York - $455.93

Online sales are now available: Massachusetts managed that without an online ticket sale presence, but that is changing. Jackpocket (one of Straight to the Point’s sponsors) launched in Massachusetts in July.

The state does offer online ticket redemption for prizes between $601-$5,000. And Bay Staters utilized it more than 66,000 times (claiming $87 million in prizes) since its launch in September 2021.

Massachusetts Treasurer Deborah Goldberg has long advocated for the legislature to authorize complete online sales. With the redemption program and Jackpocket, the state is getting extremely close to that point, even without legislative approval.

Bally Bet’s Mulligan: Ready For Primetime?

When Twin River jumped into the US sports betting space, it didn’t hold back. The company acquired a new name (Bally’s), the DFS site Monkey Knife Fight, a sports betting platform (Bet.Works), and online gaming supplier Gamesys. It signed an agreement with regional sports networks that saw them rebranded as Bally’s Sports and acquired the AVP volleyball tour and Major League Fishing.

The pieces were on the chess board, but everything unraveled this year.

Monkey Knife Fight was shuttered in February.
Bally’s wrote down MKF and Bet.Works (a nearly $400 million impairment).
Bally’s was the last New York sportsbook to launch.
the value of its deal with Sinclair took a major hit when Sinclair’s Diamond Sports ran into financial difficulties.

During the Q4 2022 earnings call, newly appointed CEO Robeson Reeves didn’t beat around the bush:

“On sports, we recognize that the Bet.Works acquisition did not give us the platform required to develop a competitive product. We didn’t react fast enough there, and this will not happen again. We are confident there are more economical and nimble solutions out there and have spent the past five months analyzing them deeply. Sports for us is an acquisition tool. It can drive further engagements for the Bally’s brand. So when we approach the choice of technology, we’ll make sure we have that mindset.”

Bally’s later signed a deal with Kambi, one of the top-ranked sports betting apps per Eilers & Krejcik Gaming’s proprietary testing (of note, Kambi allows its clients to customize its app, so each client’s app is different).

Bally’s dreams of in-house sports betting tech turned into an outhouse. The shift to Kambi will be a complete restart. The Bally Bet app has been shut down, and customers will have to open a new account, which will undoubtedly be a major friction point.

As reported by Earnings+More, CEO Robeson Reeves said the Kambi-powered app “would be live in three states before the end of the summer with at least seven states operational by year-end,” during its Q2 earnings call last week.

During the call, CFO Marcus Glover lowered expectations for Bally Bet 2.0, calling it a funnel and not a profit driver.

On a more positive note, Bally’s is making strides on the online casino front. Its online casino product is now live in Pennsylvania and Reeves said the company is on track to reach its 6-8% market share in the highly competitive New Jersey market. Reeves was also excited about the company’s prospects in Rhode Island, where it will have a complete monopoly.

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Maryland Ascends To The #1 Contender Slot

Maryland was a surprise entry into the online casino legalization conversation this year.

The Terrapin State took an interesting approach to legalizing online casinos and poker, which has proven a bridge too far in most states.

Maryland’s idea was to legalize online gambling like it approved sports betting via a ballot referendum. As I previously wrote, a referendum allows lawmakers to have their cake and eat it too.

“Because online casinos and online poker are more controversial, a referendum asking voters a basic question, “Do you support online gambling,” alleviates the possibility of political fallout from a vote to expand gambling.
“If lawmakers are nervous about legalizing online casino gambling, they can vote to let residents decide if they want to legalize online poker and casinos. All the legislature is doing is placing the issue in front of voters.”

So why is Maryland climbing to the top of the contender charts? During its Q2 earnings call last week, Rush Street Interactive CEO Richard Schwartz singled out Maryland as a 2024 candidate, and it’s these comments, not the ones from lawmakers, you should pay attention to:

“… there have been advancements in Maryland, as part of the fiscal 2024 budget, the State Lottery and Gaming Commission has been mandated to submit an iCasino study to the general assembly before year-end. Notably, a prominent legislative member in the state has expressed optimism about the potential for passage of iGaming bill when the legislator reconvenes in January.”

The study Schwartz alluded to will be conducted by The Innovation Group.

It’s Not the Size of the Dog in the Fight

Underdog Fantasy did its best Val Kilmer expression, telling FanDuel and DraftKings, “I’m your huckleberry.” (Full disclosure, Underdog is a newsletter sponsor).

In an open letter, Underdog CEO Jeremy Levine called out DK and FD:

As you may have seen, the right to play our fantasy sports contests has recently come under attack. The attention is not organic - it's being directly fueled by the companies with a virtual monopoly in sports gaming: FanDuel and DraftKings.
They are waging a campaign in back rooms across the country, using their deep pockets and political muscle to try to influence government officials, and exerting their market power to influence our business partners. Today we're pulling this issue out of the shadows. We want the Underdog community to understand why and how FanDuel and DraftKings are working so hard to eliminate fantasy sports innovation, kill competition, and boost their bottom lines at the expense of sports fans.

In the letter and on Twitter, Levine lays out Underdog’s side of the story, including the company’s legal arguments.

I touched on this topic on Tuesday, and Massachusetts and New York have since added their names to the list of states looking at these products.

How this ends is anyone’s guess, but it’s now very clear that Underdog isn’t going to back down.

Beyond the Headline: Seen This Movie Before

Chris Grove had a very interesting take on the current DFS situation, noting the similarity to the original DFS battles.

Per a tweet from Grove, “The deep irony here is that FanDuel and DraftKings risk making the same exact mistake the casinos made with their antagonistic reaction to DFS - a mistake that cost casinos the US online gambling market. The right approach is to co-opt these products and grow the overall opportunity, not mindlessly defend a narrow slice of it.”

Left unsaid in Grove’s tweet is the simple fact that states can decide what is legal and what is illegal gambling - perception is not reality. Legal challenges aside, if the state says these products fall into the fantasy sports bucket, they do. Anyone who has followed the California player-banked game saga understands this all too well.

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Around the Watercooler

Social media conversations, rumors, and gossip.

Immediately after Tuesday’s blockbuster announcement, the sale price of Barstool Sports to Dave Portnoy was a hot topic. While it wasn’t zero, the paperboy in Better Off Dead tried to collect twice as much from John Cusack as Penn was for Barstool.

And in other soon-to-be live sportsbook news, it looks like Fanatics Sportsbook has a tagline.

Stray Thoughts

One of the things I’ve learned over the years is that no matter how much time I invest in following the industry, there are a million and one things I don’t know much about.

And to be clear, there are a lot of areas I know quite a bit about. I’m just not an expert. True experts are rare, and because of this industry’s complexity, most of the experts I’ve met know one thing inside and out, and that thing is usually a very focused subset of a subset. A select few might be experts in two or three areas, but they are exceedingly rare.

Now, for every legitimate expert I’ve run into, I’ve met five people who are somehow experts in everything. And by experts in everything, I mean people who know a little about a lot of things but speak with a certainty that doesn’t line up with their actual knowledge. Remember that when you see someone confidently wading into every social media debate, big and small. Or when someone is ranting about a problem you didn’t know existed that they happen to be selling a solution for.

Author note: Straight to the Point is a one-person show at the moment. Apologies in advance for any spelling or grammatical errors.