Offshore Is Here To Stay
Offshore Is Here To Stay
One of the goals of legal sports betting was to give bettors a safe, regulated option. So why are so many sticking with offshore sites?
The Bulletin Board
VIEWS: What can we learn from the Truist online sports betting survey?
BEYOND the HEADLINE: Bettors want to use ESPN Bet but need a reason.
NEWS: NCLGS President seeks to avoid federal involvement in online gambling.
QUICK HITTER: Online gambling’s piece of the US market share pie is growing.
NEWS: Louisiana joins the list of states prohibiting college prop bets and might (emphasis on might) also ban TV advertisements.
BEYOND the HEADLINE: Et Tu Wyoming?
AROUND the WATERCOOLER: It’s the games, stupid.
STRAY THOUGHTS: I told you that five years ago.
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Truist Survey Sheds Some Light on the Offshore Market
In a survey of over 400 bettors, 31% (133) indicated they bet offshore. More than 50% of respondents wager at BetOnline, and 10% of respondents name-dropped Bovada, MyBookie, and BetUS.
The reasons given were wide-ranging but speak to the limitations of a legal, regulated industry, as the following are out of the hands of licensed operators:
Tax reasons = 27%
Credit betting = 37%
More betting markets = 42%
However, two reasons, including the most mentioned, can be addressed by legal operators:
Better promotions = 50%
Not being limited = 39%
Another interesting finding (with a couple of caveats) was VIP bettor’s usage of offshore sites.
Per Truist, 71% of VIPs bet offshore, which is “directionally in-line with prior data from Juice Reel… that showed offshore books saw only 18% of the total tracked bet count, though accounted for 46% of the handle and 50% of sportsbook revenues.”
Dillon Borgida, a former VIP host at FanDuel and DraftKings, tweeted:
“in my experience, most VIPs aren’t using bet trackers or playing legally, so they won’t be included in any tracked data.”
“Makes me think the true % of VIPs betting offshore is even higher than 71%. My guess ~ 90% of 6-7 figure/yr losing bettors don’t play legally.”
Now, for those caveats:
This doesn’t mean 71% exclusively bet offshore.
The sample size is incredibly small, at 21 “VIPs.”
The definition of VIP, $5,000 in monthly wagers, is debatable.
Beyond the Headline: ESPN Bet’s Opportunity
The Truist survey also hints at the potential of ESPN Bet.
ESPN was the first choice for checking scores, with 44% of respondents naming the ESPN App as their go-to choice. 64% of respondents would like more integration between the ESPN App and ESPN Bet.
And in a line that should make Penn’s mouth water, 52% said that with better integration, ESPN Bet would become their first choice for a sports betting app.
Of course, what people say and what they mean doesn’t always align.
“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.”
Or, consider the following story about a Sony Walkman focus group:
“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.”
NCLGS President Has a Warning for the Industry
In an interview with Casino Reports, Shawn Fluharty, the West Virginia House Minority Whip and President of the National Council of Legislators from Gaming States, talked about the state of online gambling in the US.
According to Fluharty, the issue he hears the most is advertisements.
“I worry that if we don’t see a state-by-state framework analysis in collaboration, then you’ll see the federal government jump in,” Fluharty said. “And that’s the last thing we want because they don’t come in to fix problems; they usually come in and make more problems.”
Those concerns are not unfounded.
Rep. Paul Tonko (New York) is looking to rein in advertising and institute multiple responsible gambling policies through his SAFE Bet Act.
Sen. Richard Blumenthal (Connecticut) has sponsored the GRIT Act, which would earmark 50% of the federal sports betting excise tax to problem gambling programs, and recently sent a letter to eight sports betting operators demanding they “stop leveraging data to target problem gamblers with promotions and ads.”
Blumenthal didn’t pull any punches when he addressed the Wheeler Clinic Family Health & Wellness Center in Hartford, Connecticut:
“Sports betting companies are exploiting, targeting, and taking advantage of vulnerable problem gamblers… They are enticing problem gamblers by targeting them based on the data they collect in real time about who is betting how much and where, and they are collecting that data and then targeting the most vulnerable problem gamblers to do more, leading them down dark paths to addiction. And the reason very simply is that they want to make more money.”
Meanwhile, Massachusetts regulators are beginning to ask questions about limiting bettors, with interim Massachusetts Gaming Commission Chairman Jordan Maynard asking if sportsbooks limit losing players with the same zeal as winning players.
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Quick Hitter: Online Gambling Grows its Piece of the Pie
Online gambling accounted for 12% of all gambling revenue in 2023 (including lottery, racing, VGTs, and charity gaming), according to a recent presentation from Eilers & Krejcik Gaming (a newsletter sponsor).
Sports betting accounts for half of EKG’s estimates, with online gambling (casino and poker) accounting for 4% and lottery and ADW making up the difference. That’s not surprising considering the availability of these products in the US:
Online sports betting states = 30
Online casino-poker states = 8
Online lottery states = 14
ADW states = 40
It’s clear that online casinos punch way above their weight, while ADW is a bit of a tomato can.
Louisiana Joins the Prop Bet Ban Parade + a Possible Ad Ban
Louisiana is joining the growing list of states prohibiting sports betting wagers on college athletes.
As first reported by Robert Linnehan:
“Louisiana will be addressing the collegiate prop betting issue through a new order this week, according to Gaming Board Chairman Ronnie Johns. When asked if it would prohibit collegiate player props, Johns said, "It will address that issue."
Per Gambling.com’s Larry Henry, college player prop bets will be prohibited in Louisiana beginning on August 1, 2024. “We did issue an order today (April 2),” Johns told Gambling.com on Tuesday. “We have been working on it for a few weeks, well before the NCAA came out with their request.”
Meanwhile, Louisiana State Rep. Shaun Mena has introduced a bill (HB 727) that would make it illegal for a sports betting or fantasy sports licensee to advertise on TV: “No holder of a license to operate sports wagering as provided for in this Chapter shall advertise sports wagering in the state of Louisiana.”
Violation would result in the revocation of their license.
Ad bans are extremely difficult given the First Amendment implications and the interstate nature of advertising, particularly during nationally telecast games and events.
As former Louisiana Gaming Control Board Ronnie Jones said on LinkedIn, a few states have considered such a ban (Maine came the closest), and each one eventually backed off:
“I’m not an attorney, Mena is, and I’m guessing he and his staff have done some rudimentary research on advertising and its genetic link to the First Amendment. If so, they should have discovered this is an incredibly complex issue deserving of a more nuanced solution than the outright ban as provided in the bill. Regulatory bodies in nearly 40 states are grappling with the same issue, and the fact that there is no clear solution to the problem is evidence of its complexity.”
Beyond the Headline: Wyoming Takes Aim at College Player Pros
Once again, I’ll tip the hat to Robert Linnehan, who noted on X that Wyoming is also planning to take action on college player prop bets at the request of the NCAA:
“Charles E. Moore, executive director of the Wyoming Gaming Commission, revealed moments ago the commission will be considering the NCAA's request to ban college player prop bets during its May 9, 2024, meeting.”
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Around the Watercooler
Social media conversations, rumors, and gossip.
Chalkline’s Daniel Kustelski posted a fascinating chart that shows New York Times Games apps account for 50% of time spent across the entire suite of NYT products.
Stray Thoughts
I interviewed Mark Potter of Epic Risk Management way back in 2020 (paywall), and one thing that has stuck with me is “five years.” That was Potter’s warning to the US.
Per Potter:
“My biggest concern is how the UK market went. There was a massive boom in online betting and sports wagering. There was a flood of money that poured into the economy through it. And it was all positive to begin with.
“But then three, five years down the line, we started to see the signs of harm. Things would appear in the press around suicide, bankruptcy, aspects of fraud and money laundering. The negative side of the industry that takes time to make its presence felt. It takes time for the harm to develop.”
If you start the five-year countdown clock in 2019, when several states’ sports betting industries were up and running, Potter’s warnings are downright prophetic.
Potter also noted that regulation was lacking in the early days of online gambling in the UK, which he called a “free-for-all, where people could go and spend what they wanted and bet in any way they wanted.” And only after the harm started appearing did regulators decide to step in.
It looks like the US has entered that phase.