Sports Betting Fantasy
With a launch imminent, ESPN Bet believes it can leverage ESPN's season-long fantasy sports database, but as some note, season-long isn't daily fantasy sports.
The Bulletin Board
NEWS: ESPN Bet takes center stage during Penn Entertainment’s Q3 earnings call.
BEYOND the HEADLINE: ESPN Bet banking on season-long fantasy players.
NEWS: Oklahoma follows California’s lead and foolishly tries to legalize sports betting by bypassing tribes.
NEWS: Earnings in brief: More from Penn, Rush Street Interactive, DraftKings, and Bally’s. Plus, a look ahead to this week’s calls.
NEWS: Intrastate compacts are boosting the online poker markets in New Jersey and Michigan.
AROUND the WATERCOOLER: DraftKings was one of the most active stocks on Friday.
STRAY THOUGHTS: Goals = Moving targets.
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ESPN Bet Launch Is Just Over a Week Away
As noted on Thursday, ESPN Bet will launch in 17 states on November 14. More details for the launch emerged on Friday, with the news that the transition for current Barstool Sportsbook users to ESPN will be relatively seamless. Barstool App users will be prompted to download and roll over their current accounts (funds, pending bets, account details, and rewards) to ESPN Bet.
During Penn Entertainment’s Q3 earnings call, CEO Jay Snowden said the company expects heavy losses ($300 million) in Years 1 and 2 of ESPN Bet, with EBITDA nearing break-even in Year 3. Those losses will stem from the $150 million internally and another $150 million externally that will be spent on advertising.
Part of that advertising blitz will be some attempted cross-selling. “In connection with the launch, ESPN will be implementing an initial wave of exclusive integrations across the ESPN ecosystem,” Snowden said. That ecosystem includes 200 million users in the US and more than 12 million ESPN fantasy sports app users, per Snowden.
ESPN Bet will launch in a very unique position. It can draw on three databases: Penn’s brick-and-mortar casino customers, Barstool’s current database of mobile bettors, and the 200 million ESPN users.
Beyond the Headline: ESPN Bet’s Fantasy Focus
ESPN Bet has continually highlighted ESPN’s strong season-long fantasy sports database. But how and if that can be leveraged is unclear. We know how DraftKings and FanDuel’s DFS databases converted, but season-long fantasy is a different animal.
Chris Krafcik, the managing director of sports betting and emerging verticals at Eilers & Krejcik Gaming, told Sports Handle the simple answer is no one knows.
“We note ESPN Fantasy’s season-long fantasy focus and believe season-long players, in a vacuum, likely cross-sell to OSB (online sports betting) at appreciably lower rates than DFS players,” Krafcik said. “DFS is a proven OSB proxy form factor; season-long, by contrast, is less betting-infused/betting-forward, with player motivation factors typically more geared toward social elements (e.g., drafting, bragging rights).”
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OK Gov. Takes Another Swing (and Miss) at Sports Betting
Oklahoma Gov. Kevin Stitt has spent several years trying to bring legal sports betting to the state. Last week, Stitt unveiled his latest plan that, much like the current efforts in California, appears to be DOA.
Per the press release:
“The Governor’s plan, which would allow Oklahomans to place in-person bets at gaming sites operated by federally recognized tribes, would protect tribal investments in brick-and-mortar facilities. The plan would also allow Oklahomans to place bets on their mobile devices on a sportsbook licensed by the state.”
The first part is fine. The second part is where the problems arise.
The Oklahoman said it best:
“The proposal was met with surprise and questions from lawmakers and lawyers. State law currently prohibits sports betting. Tribal governments also have exclusive rights to conduct gaming in the state without outside competition.”
With tribes limited to retail betting and outside operators having access to mobile betting, the proposal, as-is, is going nowhere. However, it could be an attempt to bring tribes to the bargaining table.
Stitt, a Cherokee citizen, has a tenuous relationship with many Oklahoma tribes following his assertion in 2019 that tribal compacts did not automatically renew, kicking off a legal fight that the governor lost. From there, Stitt and the tribes have been on opposite sides of several issues.
In May, Stitt called his relationship with tribes “very good.” An opinion few share.
“Unfortunately, Gov. Stitt has chosen to continue his political attacks on tribes, even when it harms the health, safety, and education of Oklahomans,” said Chuck Hoskin, Cherokee Nation principal chief.
Toying with the idea of shutting tribes out of online sports betting is unlikely to thaw those strained relationships.
Matthew L Morgan, the Chair of the Oklahoma Indian Gaming Association, said in response to Stitt’s latest effort [bold mine]:
“The Oklahoma Indian Gaming Association was not consulted prior to Gov. Stitt releasing his sport betting plan. The members of the OIGA have been preparing to receive an offer from the State on sports betting for the past couple of years, and while we appreciate Gov. Stitt finally joining the sports betting conversation, to date he has not engaged in meaningful and respectful government-to-government discussion with tribes. We remain hopeful that he is committed to moving forward in a productive manner in accord with established law and process, which would include working with the Oklahoma Legislature to offer a compact supplement to tribes within the State-Tribal Gaming Act construct that protects the tribes’ “substantial gaming exclusivity.” To approach it otherwise is simply to invite failure.”
Q3 Earnings News and Nuggets
Penn: During its Q3 earnings call, Penn Entertainment noted that its divestiture of Barstool Sports cost the company nearly $1 billion ($923.2 million), resulting in a $724.8m loss in Q3.
RSI: Rush Street Interactive’s scalpel approach to the US online gambling market is paying dividends as RSI reported its second consecutive quarter of EBITDA profitability.
DraftKings: Sales and marketing expenses fell 2.6% to $313 million in Q3, while revenue rose 57% YoY to $790m.
More on DK stock from Earnings+More (a must-follow during earnings season)
Highlights from the DK earnings call from, you guessed it, E+M
DraftKings: “CEO Jason Robins notes that DraftKings will announce a new sportsbook feature at their Nov. 14 investor day,” which coincides with the launch of ESPN Bet. No other details were provided, per Robert Linehan.
Bally’s: In the words of Val Kilmer’s Doc Holliday, Bally’s was “no daisy” in Q3, with Bally’s stock sliding 15%, but according to Truist, that was an overreaction.
This Week: Looking ahead to this week, we’ll hear from the likes of MGM (November 8) and Flutter (November 9).
The Power of Interstate Online Poker
A specific data line in the most recent Eilers & Krejcik Gaming Online Casino Monitor caught my eye. The data set is the trailing 12-month online poker share by state.
If we look at the top three online casino states comparing market share and adult population, things don’t align.
Michigan is outperforming the more heavily populated Pennsylvania:
Michigan (adult population of 7.48 million): 29%
Pennsylvania (adult population of 9.78 million): 28.89%
New Jersey (adult population of 6.91 million): 26.59%
In June, those numbers were:
Pennsylvania 30%
Michigan 28.7%
New Jersey 25.8%
In March 2023, Pennsylvania’s share was 33%.
Of note, Michigan and New Jersey began pooling players (across the PokerStars network) on January 1, 2023, which would help explain their market share growth over the course of 2023.
On a per-adult basis, New Jersey outpips Michigan, which is now well ahead of Pennsylvania, the previous leader in the clubhouse. New Jersey pools players with Nevada and Delaware and separately with Michigan.
This seems like a strong case for interstate agreements.
Around the Watercooler
Social media conversations, rumors, and gossip.
DraftKings was a Wall Street darling on Friday following its earnings call.
More on DraftKings’ stock surge from Legal Sports Report.
Stray Thoughts
Tomorrow is the three-month anniversary of Straight to the Point.
When I embarked on this journey, I set several goals, including 1,000 subscribers in six months. I’m happy to report that the newsletter is on the cusp of 1,000 subscribers at the three-month mark.
I’m a goal-setter by nature, but most of my goals are moving targets. My poker playing days have inured me to the whims of variance, and not reaching a goal isn’t always a sign of failure. Sometimes shit happens. Similarly, reaching or exceeding a goal doesn’t mean you succeeded. Maybe you got lucky, or maybe the goal was too low to begin with.
Further, the celebration is short once I hit a goal. It’s “back to the lab,” as the saying goes.
With that in mind, my six-month goal has been revised.