That's A Bold Prediction Cotton
Industry analysts from Eilers & Krejcik and SeventySix Capital have offered up some bold predictions, including on the soon-to-launch ESPN Bet mobile sports betting app.
The Bulletin Board
VIEWS: EKG’s bold predictions for the US sports betting space in 2024.
NEWS: Nevada rolls out the welcome mat for esports betting.
ASK an EXPERT: Sharpr’s Cody Luongo talks about the big-picture ramifications of the Nevada rule change.
NEWS: New York becomes a no-go zone for Pick’ Em DFS contests.
QUICK HITTER: Can ESPN Bet climb to the #1 spot? One venture capitalist thinks so.
AROUND the WATERCOOLER: An X thread with four polls on the Kentucky sports betting market and how not to make responsible gambling messaging resonate.
STRAY THOUGHTS: Online poker is 25 years old and still can’t shake the many myths preventing widespread legalization.
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2 3 Predictions from Eilers & Krejcik Gaming
The most recent Eilers & Krejcik Gaming EKG Line newsletter (subscribe here) included two predictions the company presented to clients at G2E.
Prediction 1 focused on some of the new entrants in the US sports betting space, with EKG choosing three operators it believes can get to 5-10% market share in 2024 via radically different routes:
ESPN Bet - With plans to spend $300 million annually on marketing, EKG believes the joint venture between PENN and ESPN could buy its way to a 5-10% share.
Bet365 - The UK giant has carved out an 8% market share in Ohio and appears ready to (finally) commit to the US.
Hard Rock Bet - EKG posits the company could leverage its Florida monopoly and re-invest those profits in products to boost its presence in other states.
Prediction 2 is a pivot by one or more DFS operators into sports betting, with Underdog (a newsletter sponsor) the most vocal about its plans. In a recent interview with SBC Americas, Underdog’s Jeremy Levine said the plan is to become “the biggest company in the [sports betting] space.”
Prediction 2a was nestled inside Prediction 2, as EKG put forth the prospect of M&A in what it calls the “Emerging Verticals segment (i.e., DFS+, sweepstakes and skill gaming, and online lottery courier).”
“We see clear potential for an Emerging Verticals SuperCo to arise and consolidate share of high-margin verticals to which OSB operators like FanDuel and DraftKings have little to no exposure.”
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Nevada Eases Restrictions on Esports Betting
The Nevada Gaming Commission approved a significant regulatory change last week that streamlines the process for esports betting. The Nevada Esports Technical Advisory Committee first proposed the new rule last year.
Previously, sportsbooks needed regulatory approval for each esports event they planned on offering. The new rule eliminates that requirement, allowing Nevada sportsbooks to treat esports events like any other market.
“These amendments have been a long time in coming, and it’s my belief they will help promote and increase the volume of wagers,” Gaming Control Board member Brittnie Watkins told the Commission. “They’re in line of our policy goals of promoting the success of gaming.”
Ask an Expert: Sharpr’s Cody Luongo Explains the Situation
Since I’m not an esports expert by any stretch of the imagination, I asked Cody Luongo of the Sharpr Substack (subscribe here) to explain what the changes mean.
Luongo called the change a “significant win for Nevada and the esports vertical broadly in the US,” noting how the loosened restrictions will eliminate friction.
Esports were previously approved by the board on a per-event basis, but the reality was that the process of doing so was cumbersome, time-intensive, and often costly for operators.
There was ultimately too much friction for sportsbooks to get esports on the board relative to the betting handle they could generate at this stage. Operators are rightfully prioritizing more lucrative categories and there was little incentive for them to explore esports betting under the previous regulations in Nevada.
With that being said, the regulation is just the first step here.
There’s significantly more ground to be covered in terms of sportsbooks adding esports into their offering, marketing the product, and also educating customers that it’s something they can bet on.
These things won’t be accomplished overnight, and I expect it will be some time before we see the segment begin to gain meaningful traction in US states.
Esports betting will be a slow burn in Nevada, but making it accessible was the first step toward sizing up the actual market opportunity in the country and beginning to build a betting culture around it. I believe sportsbooks that commit themselves to esports early and are able to market it appropriately will be rewarded later on as they build rapport with the next generation of bettors, which at this stage, is the bigger opportunity in front of us.
Luongo, along with Nevada Esports Technical Advisory Committee member Dr. Brett Abarbanel, wrote an article last year on this topic.
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Sleeper Leaves NY as Pick’ Em Games
As reported by Legal Sports Report’s Sam McQuillan, Sleeper Fantasy has pulled the plug on Pick’ Em games in New York after the New York State Gaming Commission officially approved new rules prohibiting fantasy products that mimic sports betting prop bets.
“Sleeper no longer offers Pick'Em games in New York. The Empire State was added to its excluded states list Wednesday as rules banning DFS games mimicking prop betting took effect.”
There are some questions about the new regulations. Per Jessica Welman on X, “For those saying the NY DFS situation is cut and dry, what they said in meetings and what they actually wrote are two diff things. FWIW I can’t really tell what this disallows. It legit reads like unders are OK but overs aren’t.”
New York is among several states that have taken aim at Pick’ Em games.
Florida, Michigan (Sleeper and Underdog didn’t operate in Michigan), and some smaller states like Wyoming, Maine, and Alabama have moved to prohibit the games.
As the EKG Line newsletter recently said, DFS 2.0 (EKG calls it DFS+) is trending down as more markets restrict Pick ‘Em style games.
“The New York State Gaming Commission on Tuesday adopted regulations to prohibit fantasy games that “mimic proposition betting.” DFS+ operators will contest the new rules, but along with the recent crackdown in Florida, around 20% of their GGR TAM is now under threat, by our estimates.”
However, EKG has also said that the crackdown could accelerate an entry into sports betting from a DFS 2.0 operator or, as mentioned in the top header of this newsletter, lead to a merger between companies in the Emerging Verticals sector.
Quick Hitter: Can ESPN Bet Go All the Way to #1?
Sports Handlle published an interesting column on ESPN Bet and how Wayne Kimmel, a managing partner of SeventySix Capital, expects the soon-to-launch ESPN Bet to be a Top 3 sportsbook in short order and eventually ascent to the #1 spot.
“ESPN has an amazing opportunity to do something incredibly special,” Kimmel said. “They can do a great job of integrating, which I believe they will with sports betting into their overall programming.”
The question is, will they integrate in the ways Kimmel envisions? And will Kimmel’s belief in a global NBA and NFL market, with non-North America expansion teams, come to fruition?
Around the Watercooler
Social media conversations, rumors, and gossip.
Following the latest data from Kentucky, Jamie Salsburg posted four polls in an X thread that I am keen to see the results of.
And in today’s installment of how to make responsible gambling messaging as annoying as possible, we have this entry from @MeltVegas…
Stray Thoughts
I recently watched Rounders with my oldest son, and it dawned on me that the movie is 25 years old. That means online poker is (roughly) 25 years old, and sports betting is around 30. Yet, we still tend to talk about these products as if they are new and untested.
I can’t think of anything that has been around for 25 years that is still talked about the way online gambling is, particularly by lawmakers and regulators. How can there be so many questions and so many myths surrounding online gambling?