And Here We Go
There is a growing body of evidence that the promotional spending wars are about to heat up in the US sports betting space.
The Bulletin Board
VIEWS: BetMGM has increased its promotional spending in Maryland. What are the big-picture implications?
NEWS: Virginia Supreme Court Reinstates Skill Game Ban.
BEYOND the HEADLINE: The VA ruling is a big win for Churchill Downs and its HHR machines, which raises another question.
NEWS: Alabama Dems consider gambling expansions, including sports betting.
NEWS: North Carolina releases its first round of sports betting rules.
AROUND the WATERCOOLER: Poker players are upset with Global Poker.
STRAY THOUGHTS: Actions speak louder than words.
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BetMGM Promo Spend Ticks Up In Maryland
As reported by Earnings+More on Monday, BetMGM has upped its promotional spending in at least one market at the beginning of the NFL season.
Per E+M, after a decline in market share in Q2, BetMGM’s “level of promo spend as a percentage of GGR leapt to 74% or $3m for the month” in Maryland.
The actual spend was around 1/3 of the $8 million-plus spent by DraftKings and Fanduel individually, but the percentage as a percentage of GGR was much higher at BetMGM (74%), with DraftKings at 59% and FanDuel at 42%.
The increased spending comes on the heels of declining market share in five states: Maryland, New York, Iowa, Oregon, and West Virginia.
Per E+M, “the GGR split is FanDuel on 44% followed by DraftKings (39%), Caesars (7%) and BetMGM (6%).”
And this is the calm before the storm, as Fanatics launches in more states and we await the arrival of ESPN Bet.
As Eilers & Krejcik Gaming’s Chris Krafcik recently noted on LinkedIn, there are “many variables in play that could shift the comp[etitive] landscape—from Fanatics to ESPN Bet to a potential Hard Rock Digital OSB monopoly in FL.”
With the launch of Fanatics and the soon-to-launch ESPN Bet coinciding with the busiest time on the sports calendar, a resurgence in promotional spending was inevitable. The established operators didn’t spend years building their business to let new entrants poach their customers.
And those new players are likely to receive a lot of free publicity, which could require the current market leaders to loosen their pursestrings further. A recent media survey indicates a lot of interest in Fanatics and ESPN Bet among journalists, which often leads to a lot of coverage.
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Virginia Supreme Court Reinstates Skill Game Ban
The Virginia legislature banned so-called “skill games” back in 2020. The machines have remained in service after the Greensville County Circuit Court ruled in 2021 that the ban was a free speech infringement, as plaintiffs argued the games use storylines.
The Virginia Supreme Court has now weighed in, reinstating the ban and concluding the case is unlikely to succeed on the merits - the case is slated to be heard in December.
Per the Richmond Times-Dispatch, the three-judge panel wrote:
“Nothing in the statutory scheme prohibits video games from containing exactly the same themes and messages ... rather the statutory scheme only prohibits the ability of (the truck stops and convenience stores) to offer customers a chance to wager on the outcome of the games — that is, it prohibits the conduct of gambling.”
The ruling is also the proverbial light at the end of the tunnel, as skill game manufacturers, suppliers, and venues are left with limited legal options moving forward.
I took a deep dive into skill games in a previous feature article you can read here.
Beyond the Headline: A Win for Churchill Downs
Truist analyst Barry Jonas called the Virginia Supreme Court ruling a “meaningful positive” for Churchill Downs, as the company looks to nearly double the number of historical horse racing (HHR) machines in Virginia.
From CDC Gaming Reports:
“Churchill Downs is aiming to ramp up its own slot-like ‘historical horse racing’ machines from an installed Virginia base of 2,750 to 5,000. The presence of 9,000 gray-market devices “could be negatively impacting revenues,” Jonas opined.”
“We see the state Supreme Court decision as a big win for the company just months following the Exacta transaction closing,” wrote Jonas. “This ruling comes 4 months after Kentucky issued a similar ban, and speaks to CHDN mgmt’s political savvy.”
Something the industry will have to grapple with (whether it’s skill games vis-a-vis HHR or the “Is DFS 2.0 DFS or sports betting?” debate, is the semantic arguments used to separate legal from illegal.
Many products are essentially indistinguishable from one another (and even HHR machines are taking on slot-like qualities). Yet, some are legal, some are illegal, and some reside in a gray zone in between. Basically, why is this thing okay and this one isn’t?
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Alabama Democrats Keen on Gambling Expansions
Alabama State Rep. Anthony Daniels, the House Minority Leader, plans to push for legal gambling in the state, saying they are bringing in sports betting experts and plan to discuss casinos and lottery.
Per WSFA-TV, “Alabama’s Democratic lawmakers want to explore more options to make gambling legal.” The outlet quoted Daniels as saying, “We’re going to talk about proceed revenue sharing, folks from Tennessee, folks from Georgia, vendors that deal with the lottery, so that our members will be able to get a full picture.”
Before you get too excited, understand that this is a Democrat-led effort in perhaps the most conservative state in the country.
Republicans have controlled the Alabama House and Senate (and the governorship) since 2011. Republicans have a super-majority in the House 77-2 and a 27-8 edge in the Senate.
It’s extraordinary for the opposition party (particularly in an election year) to give the minority party a victory to campaign on.
As an AL.com headline in May reads, Alabama’s future with gambling: Don’t bet on it.
North Carolina’s First Batch of Sports Betting Rules
The North Carolina Sports Betting Committee met publicly for the first time on Tuesday and unveiled a 64-page document comprising 48 sports betting and pari-mutuel rules. These rules are now in the public comment phase, lasting until November 1, with another hearing scheduled for October 27.
Per North Carolina’s deputy executive director of gaming compliance and sports betting, Sterl Carpenter, the goal is to keep North Carolina on track to meet or beat its June 15, 2024 launch mandate.
One of the more discussed parts involves fantasy sports, as the North Carolina rules appear to take aim at the suddenly controversial Pick’ Em style contests, as seen in a and b below.
The Coalition for Fantasy Sports responded to the NC rules in a statement that reads:
Lobbyist Steve Brubaker added more color to the situation, tweeting, “On the NC rule it would be unusual to prohibit something in rule that was not prohibited in the underlying law. It looks like the legislative body that has oversight of rulemaking has the authority to object to the rule. But that’s a lobbying battle that I am not sure can be won.”
Around the Watercooler
Social media conversations, rumors, and gossip.
There is revolt at Global Poker as cheating accusations fly (and from Matt Berkey), and the poker community takes offense to the response.
Important context: Global Poker is a sweepstakes online poker site that operates in a gray area in the US.
More context: Yesterday’s report on how online poker sites (PokerStars and GG Poker) deal with Real-Time Assistance tools (RTAs).
Stray Thoughts
A recent tweet about the focus group for the Sony Walkman helps explain my dismissive attitude towards most surveys.
The tweet reads:
People are lousy at predicting what they'll do in the future. Want proof? Just ask Sony...
In the 90s, Sony held a focus group and asked teenagers how they felt about Sony's new yellow Walkman. The teens loved it. At the end of the day, the teens were given a free Walkman as a gift for participating in the focus group.
They didn't know it... but *this* was the real test (not the focus group itself). The teenagers had a choice: a black Walkman or a yellow one. The major[ity] chose the black one—not the yellow one they said they LOVED.
The lesson? Don't just ask people what they *think* they might do. Talk to buyers and explore what they *actually* do. Ask them *why* they did it. Dig in to understand the hidden reasons why people buy. You'll learn much more this way.
I haven’t looked into the story, so I cannot verify its accuracy. Still, from my experience, this rings very true and is something I bring up a lot when opining about different things: There is a big difference between what people say and what they do.
“This comes down to something I call “wish vs. goal… It’s the difference between what people say (a view) and what they mean (a conviction). At the end of the day, don't put much stock in what people say they will do until they do it. In business, that is when they open their wallets and pay.”