DraftKings' Secret Weapon
DraftKings launches Golden Nugget online casino in fourth state. Portnoy's successful gambit. And what the Barstool non-compete may or may not limit.
The Bulletin Board
NEWS: The biggest success story in the short history of US online gambling is the Golden Nugget online casino, which DraftKings gobbled up for $1.5 billion.
NEWS: Portnoy is one of legal sports betting’s biggest winners.
BEYOND the HEADLINE: Conflicting accounts on Barstool’s non-compete.
NEWS: Kentucky presses forward with its sports betting launch. Pre-registration begins next week.
VIEWS: The start of the NFL season is also the start of the Negative Press season.
AROUND the WATERCOOLER: Is Prime Sports ready for Primetime?
STRAY THOUGHTS: The danger of standing still.
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Golden Nugget: US iGaming’s Best-Kept Secret
Golden Nugget Online Gaming (owned by DraftKings) has launched its online and mobile casino in Pennsylvania. The PA launch marks the fourth state launch for the Golden Nugget online casino, along with Michigan, New Jersey, and West Virginia.
Online casino predates sports betting by five years in the US. And long before legal sports betting washed up on US shores, Golden Nugget was a dynamo in New Jersey - the best-performing online casino in the best-performing online gambling market.
As I wrote way back in 2017, “Some casinos have been able to leverage online gaming more than others, but no casino has been strengthened by the addition of online gambling more than Golden Nugget Atlantic City.”
Golden Nugget’s success caught the eye of DraftKings, which purchased the company in 2021 in an all-stock transaction valued at $1.5 billion (the deal was completed in 2022). It was a hefty price, but with more online casino legalization expected, it could be a huge bargain if GN-DK continues its current success.
It’s worth pointing out that with Golden Nugget, DraftKings sits atop the US online casino market, with a 26% national market share. According to Eilers & Krejcik, DraftKings is the top online casino brand in four of the six US Casino states: Connecticut, New Jersey, Pennsylvania, and West Virginia. It has no chance in Delaware, which is a monopoly state and sits in a competitive third behind BetMGM and FanDuel in Michigan.
Portnoy Pops Bottles
The Barstool Sportsbook was a bust, but it made Barstool Founder Dave Portnoy a very rich man. Penn’s $550 million acquisition of Barstool provided Portnoy with multiple windfalls, and when it decided to scrap the brand and move on to ESPN, Portnoy benefitted again, buying the company back for $1 plus some concessions.
“Portnoy is probably one of the 10 biggest individual winners post-PASPA,” Chris Grove, the industry’s swiss-army-knife, told SportsHandle.
The sportsbook failed, but Portnoy now gets to tell the Barstool audience (which was growing disillusioned with the watering down of the content) that he saved Barstool from corporate America. that will likely strengthen Barstool as a media company.
As I wrote at the time of the announcement:
“My guess is Barstool will do what it does best; use the last five years as a storyline arc to generate content… Barstool will quickly reestablish its street cred with its core audience… pulling the “Pirate Ship” out of mothball… Its content will improve (from Barstool’s perspective), as it has shed many of the regulatory constraints it had to adhere to in order to maintain its licenses.”
Beyond the Headline: About That Non-Compete
Still, the big unanswered question is the details-still-unknown non-compete Portnoy signed. What is and what isn’t off-limits?
GDC Group CEO Charles Gillespie doesn’t see Barstool as a competitor, saying during the company’s earnings call that Barstool has “essentially come off the map.”
“They’re not supposed to take any revenue from gambling companies,” Gillespie said. “So they’re not really going to be competition.”
But we don’t really know what revenue from gambling companies includes. It most likely covers affiliate deals, but straight ad buys may not be off the table. And as reported by Vanity Fair, the duration could be extremely short, which wouldn’t be surprising as the PENN-ESPN-Barstool deal was reportedly brokered in two weeks.
What we do know is Portnoy likely popped a bottle of champagne.
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Kentucky Sports Betting on Schedule for Sept.
Kentucky is on track to meet its ambitious launch timetable. If all goes to plan:
Retail sports betting begins on September 7.
Mobile betting goes live three weeks later, on September 28.
Last week we also learned when Kentuckians can preregister their mobile sports betting accounts with approved operators beginning on Monday, August 28. On September 7, customers can begin funding their preregistered accounts.
“The countdown is on. We are just three weeks away from sports wagering in Kentucky,” said Gov. Beshear. “We are ready to deliver the quality entertainment experience Kentuckians asked for, while bringing money to the state to support pensions and free up funds that can be used to build a better Kentucky.”
The timeline makes Kentucky among the fastest states to go from legalization to launch (Kentucky legalized sports betting on March 31).
Iowa - Legalized May 13, 2019. Launched August 15, 2019.
Kansas - Legalized May 12, 2022. Launched September 1, 2022.
Indiana - Legalized May 8, 2019. Launched October 3, 2019.
Arizona – Legalized April 15, 2021. Launched September 8, 2021.
Currently, seven operators have applied for mobile betting licenses: Bet365, BetMGM, Caesars, Circa, DraftKings, ESPN Bet (Penn), and FanDuel.
Negative Press
As we approach the NFL season, the mainstream press has once again taken an interest in gambling (a torrent of negative articles was unleashed in Nov. 2022). Chris Grove posted a lovely thread on this back in March that everyone should read.
Recent headlines include:
The latter warranted a response from AGA CEO Bill Miller, who wrote in part:
“Yet again this week, a respected news outlet chose to publish a legal sports betting feature more concerned with confirming predetermined narratives than reporting the facts—despite the AGA and our members going on the record with the reporter to provide those facts.”
That said, the industry needs to be very careful how it counters such articles, or I fear it might lose the plot.
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Around the Watercooler
Social media conversations, rumors, and gossip.
There is another mini-controversy brewing with the launch of FanDuel Faceoff, a free-to-play social app sans the usual RG messaging. As Jamie Salsburg asked on X:
You may remember Jamie from his previous appearance calling out a Fanatics promotion that the company later stopped offering.
There is a new entry into the US sports betting market. No, I’m not talking about Fanatics or ESPN. Rather, it’s a sportsbook for the bettor by the bettor: Prime Sportsbook, an ambitious effort by Joe Brennan Jr and Adam Bjorn.
The idea is a sportsbook where bettors aren’t limited or bombarded with SGPs. It’s a longshot idea, but interesting enough for Eilers & Krejcik to notice it (From LinkedIn).
Stray Thoughts
It’s often said that in business, you’re either growing or you’re dying. This is an offshoot of a Lou Holtz quote, “In this world, you're either growing, or you're dying, so get in motion and grow.”
A favorite martial arts saying of mine comes from Iain Abernethy: “There are only two things still in a fight. People who are unconscious and people who are about to be unconscious.”
I find the former quote to be a general self-help maxim and not always true. The latter is something to consider as Fanatics and ESPN enter the fray; who is standing still and who isn’t?