Sweep It Under The Rug
Sweepstakes casinos have been around for years, but until recently, they were hiding in plain sight. Now they are finding themselves in the spotlight.
The Bulletin Board
NEWS: An unwanted spotlight is shining on sweepstakes casinos.
NEWS: Licensed sportsbooks express concerns about a proposed CFTC rule to rein in prediction markets.
VIEWS: Is guaranteeing jobs the answer to bringing online casinos to NY? Some say yes, and some say no.
BEYOND the HEADLINE: Even if organized labor is brought on board, another significant hurdle remains in online casino’s path.
AROUND the WATERCOOLER: Sports betting takes in the wild.
STRAY THOUGHTS: There’s no use crying about spilled milk.
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Sweepstakes Casinos Suddenly Getting a Lot of Attention
With the DraftKings surcharge in the rearview mirror, the chatter across the industry has turned to sweepstakes casinos.
One big piece of news, first reported by SBC Americas, is Delaware sending a cease and desist order to VGW, which operates sweepstakes gambling sites like Chumba Casino, LuckyLand Casino, and Global Poker. The company is expected to comply with the order, making Delaware the second state to crack down on sweepstakes sites—Michigan was the first.
On a different front, lobbyist Steve Brubaker has been asking all sorts of questions about sweepstakes on X (you can dig through his tweets here). Most of Brubaker’s questions have to do with licensing, not gaming, but rather business.
The American Gaming Association is also shining a spotlight on sweepstakes. In a recently released memo, the AGA urged states to crack down on these sites:
“Gaming regulators and state attorneys general should investigate companies or platforms that offer casino games or a form of sports betting under the “sweepstakes” model to determine whether or not these operators are in compliance with their respective laws and regulations and take appropriate action if not. Where state laws and regulations are not clear, legislatures should consider enacting legislation to prevent unlicensed operators from exploiting loopholes in sweepstakes regulations to offer online real-money gambling.”
And then there is Arkansas, where Saracen Casino hopes to get the state to authorize online 50/50 raffles. As I reported on Monday, one way Saracen is trying to gain support is by pointing to the sweepstakes casinos operating in the state.
Why are Sportsbooks Against an Election Betting Ban?
Lawmakers are urging the Commodity Futures Trading Commission (CFTC) to install tighter restrictions on prediction markets.
“We strongly support the proposed rulemaking to prevent further corruption of our electoral system by moneyed interests,” the letter from a group of eight Democrat lawmakers to the CFTC reads. “Specifically, we support the Commission in finding that the outcome of a political contest, including an election, constitutes “gaming” and is, as such, contrary to the public interest and may not be listed on CFTC-regulated markets. Political event contracts do not serve the economic purpose of futures markets, and the Commission does not have the congressional mandate to regulate election and campaign activity.”
However, not everyone is on board, including the legal sports betting industry, which has concerns that it could be swept up in tighter rules around prediction markets.
“The proposed change drew the attention of both the American Gaming Association and the Sports Betting Alliance,” Steve Bittenbender wrote for Bet Massachusetts. “The two industry trade groups did not express a desire to offer political betting. Instead, they want the commission to revise the proposal to guarantee it does not preclude states from permitting gaming.”
In a comment to the CFTC, Attorney Jeff Ifrrah, who heads iDEA Growth, an online gambling advocacy group, wrote:
“We respectfully urge the Commission to reconsider its approach to event contracts involving sporting event outcomes and gaming more broadly… we advocate for a nuanced evaluation of each contract on its merits, taking into account the changed legal landscape, the demonstrated and declared hedging utility for industry participants, and the robust integrity monitoring systems already in place. By allowing CFTC-regulated event contracts, the Commission would empower the legal sports betting industry to better manage risks, compete more effectively with illegal and unregulated offshore operators, and ultimately better serve and protect American consumers and the public interest at large.”
You can read my feature column (written in September 2023) on US election betting here.
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Opinions Divided on Guaranteeing Jobs to Pass Online Casino Legislation
Attorney Daniel Wallach proposed an outside-the-box idea to overcome organized labors’ opposition to online casinos in a Forbes column published last week.
“Instead of trying to win the ‘battle of the experts’ or funding more economic studies, the focus should be on crafting a solution that will meaningfully address the concerns of the HTC and its membership,” Wallach wrote. “In other words, condition the granting of a casino’s iGaming license on its maintaining current employment levels.”
Responses have been mixed, with industry everything Chris Grove doubting a viable path could be found:
Meanwhile, New York State Sen. Joseph Addabbo Jr. thinks the idea (but perhaps not the specific proposal) is the only way legal online casinos come to New York.
Addabbo told Bonus.com in part:
“I believe Daniel Wallach was accurate in his approach with his Op-Ed to suggest a creative, innovative, legislative idea to advance iGaming in New York… I know that New York can be the model for other states as we work towards groundbreaking, legal language to not only protect union casino jobs from any cannibalization but also witness employment growth at those brick-and-mortar sites.”
Until organized labor’s cannibalization concerns are overcome, online casino legislation faces an impossible climb in blue states like New York and Maryland. Still, Wallach’s idea is a difficult needle to thread, as finding a reasonable compromise that satisfies unions AND stakeholders will be hard. These negotiations tend to gain support from one corner and lose it in another.
It reminds me of the “kitchen sink” approach to gambling expansion we recently saw in North Carolina and Minnesota’s constant tinkering with its mobile sports betting bill; they rarely work.
“The kitchen sink approach is a common occurrence in states struggling to gain enough support for a gambling expansion. The theory is you can add another expansion that opponents of your effort agree with to bring them on board… So you gain a few votes and lose a few votes. And then, in a desperation hail-mary attempt, you try adding another expansion (and maybe another), and the same scenario plays out. You keep adding and adding until no one supports it.”
Beyond the Headline: Cannibalization Lurks in Background
Online casino legalization doesn’t hinge on organized labor’s support (or dropping its opposition). There are other obstacles standing in its way, not least of which are land-based casino cannibalization concerns.
Land-based casinos are split on online gambling, and the concern that online casinos will cannibalize land-based revenues predates labor opposition by many years. This concern is becoming harder to dismiss out of hand.
As analyst Gene Johnson remarked on X:
Johnson also noted that it might be time for all of us (including himself, and I’ll throw myself in that group, too) to update our priors. In the post-COVID world, people are increasingly turning to online options, and that may be true for gambling.
“While many were hopeful that the summer of 2024 for Atlantic City casinos would see a rebound in drive-in visitors after last year’s trend of people taking their ‘dream vacation’ and flying to destinations, the July in-person gaming numbers suggest that is not the case,” said Jane Bokunewicz, director of Stockton University’s Lloyd D. Levenson Institute of Gaming, Hospitality and Tourism.
The bigger-picture question is: Should casinos that believe online will eat into (and possibly replace) land-based gambling fight it tooth and nail or recognize the inevitable and get on board? Companies that choose the latter will be able to capitalize on online opportunities and, perhaps more importantly, evolve their land-based offerings to fit into a changing world.
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Around the Watercooler
Social media conversations, rumors, and gossip.
Another installment of sports betting takes in the wild:
I find these tweets extremely enlightening, not because they are subject matter experts; instead, they are helpful as a barometer of how non-bettors view the industry.
As always, read the replies (example below).
Stray Thoughts
Has anyone figured out how to pour milk from a newly opened gallon container without spilling it everywhere? I’m closing in on five decades on this planet, and sometimes it pours fine, and sometimes I spill it all over the place.
It was interesting to hear Eric Hession, President @ Caesars Digital on a recent podcast reference sweeps as an area they're looking at (while also stressing there were no immediate plans in motion).
You kind of feel that unless regulators clamp down (or better still, legislate for online casino), it's going to be too tantalising an opportunity for growth-hungry operators to ignore....