Short Attention Span
Sweepstakes is trending down and election betting is trending up in the industry's never-ending quest to find the next big area of growth.
The Bulletin Board
NEWS: DraftKings is exploring election betting opportunities.
BEYOND the HEADLINE: Election betting’s future is still undecided.
NEWS: There isn’t much support for gambling expansions in the Texas Senate.
BEYOND the HEADLINE: Texas tribe wants the state to rein in online lottery couriers.
NEWS: Industry (unsurprisingly) opposes Louisiana’s sports betting tax increase.
AROUND the WATERCOOLER: Insult to injury.
STRAY THOUGHTS: The road to 3,000.
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Is Election Betting the Next Big Thing?
With online casino legalization stalled and few strong sports betting candidates remaining, there was some light background industry chatter about finding growth by embracing sweepstakes. The reasoning was that it would allow the major, licensed operators to build a database and bridge the gap between full-fledged iCasino legalization and sweepstakes.
The current sweepstakes debate likely ended any serious discussion within these companies of dipping into the sweepstakes realm.
Luckily, like a standout NFL cornerback, the industry has a short memory.
Based on recent comments by DraftKings CEO Jason Robins, it appears it’s so long Sweeps and hello election betting.
During the company’s recent earnings call, Robins said it was “a very interesting thing” when asked about prediction markets like election betting:
“The market within that that's dominant is election markets, of course, particularly during presidential elections. So I know there's been a lot of attention on it over the last few weeks.
“And I do think there could be a place for it outside of elections, but that's really where the interest seems to be now from a customer demand side.
“So, it's definitely something we're looking at in advance of the next presidential election, and potentially, there will be an opportunity to look at something sooner.”
As Robins noted, election markets use a different legal/regulatory framework and share some similarities to sweepstakes: “It's not licensed as a betting product; it's licensed as a financial market… So we'll have to see where it fits in the priority list.”
Beyond the Headline: Is Election Betting Here to Stay?
As I’ve previously noted, election betting markets are not guaranteed to be a permanent addition to the US landscape.
As US Commodity Futures Trading Commission (CFTC) Chairman Rostin Behnam told Bloomberg, the agency is appealing the decision:
“We don’t believe listing event contracts on political elections is legal, but while we have this ongoing legal challenge, we’ll allow them and do what we can to protect the integrity of the markets. Whether or not there has been manipulation or fraud remains to be seen.”
In that column, I mentioned that Congress has already shown an interest in reining in election markets, with a group of lawmakers writing to the CFTC to rein in election prediction markets.
However, a group of Republican lawmakers wrote to the CFTC in July with concerns about the scope of the CFTC’s proposed rules. While not exactly endorsing election betting, they are concerned that the rules will sweep up other legal markets with election betting:
“The proposal comes during a significant increase in new event contract product offerings, many of which could be impacted by the proposed rule. On matters of complexity and consequence such as this proposed rule, the Commission should have the benefit of a robust public discussion, and a diverse and full record.”
As Geoff Zochodne wrote in a recent Covers.com article, the incoming Congress is likely to continue the fight, and like most issues, it appears to be a partisan issue:
“More than a dozen Republican members of the House who wrote to the Commodity Futures Trading Commission this summer about proposed rules for event contracts were reelected on Nov. 5.
“Also reelected were Democratic Senators Elizabeth Warren of Massachusetts and Amy Klobuchar of Minnesota, who likewise wrote to the CFTC’s chairman this summer regarding event contracts. However, in their case, the letters were to raise concerns about election betting.”
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Little Support for Gambling Expansions in the Texas Senate
Texas Lt. Gov. Dan Patrick has repeatedly said he won’t bring a gambling expansion bill to the Senate floor without a majority of Republican senators’ support.
That seems quite unlikely, considering Patrick told WFAA podcast Y’all-tics last week that casinos have the support of three or four of the state’s 20 Republican Senators.
Making matters worse, the November 5 election bumped the number of Republican State Senators up to 21, which means 11 Senators would have to support the measure for Patrick to bring it to the Senate floor for a vote.
During his podcast appearance, Patrick also criticized House leadership, specifically Speaker Dade Phelan, for bringing a gambling expansion bill to the floor for a vote when it had little Republican support.
Per Matthew Kredell’s reporting at Play USA:
“They say, ‘Oh, we almost passed it last session.’ You know, they almost passed it with every Democrat voting for it and about one of four Republicans voting for it. We don’t do that in the Senate.”
“The difference between the Senate and the House is we don’t let the Democrats run the Senate,” Patrick said, “We know how to work across the aisle without ceding power to the other side to let them run the Senate like Dade lets Democrats run the House. We’re a Republican state.”
Phelan is facing a challenge for House Speaker in 2025.
Basically, don’t expect to check Texas off the list of states without sports betting anytime soon.
As I wrote in my inaugural The Forecast Quarterly Report (available to premium subscribers):
“Lt. Gov. Dan Patrick is seen as the immovable object derailing mobile betting. STTP believes the resistance to gambling expansion runs much deeper, with Patrick, like Sen. Denny Hoskins in Missouri, simply serving as the face of the anti-gambling crowd.
The Republican platform calls on state lawmakers to oppose gambling. “We oppose any expansion of gambling, including legalized casino gambling,” and calls on GOP politicians to refuse donations from gambling organizations,” the platform reads.
At G2E, Rick Limardo, SVP of Government Affairs MGM Resorts, said, “We have to show this is viable in the Senate and get the votes there. We’ve been told directly we don’t have the votes.”
Beyond the Headline: An Alternative Path to iGaming in TX
Per the Dallas Express, “The Kickapoo Traditional Tribe of Texas informed the Texas Senate that if it didn’t rein in the online sales of Texas Lottery tickets, the tribe would pursue full-blown casino gambling in the state.”
The tribe is speaking of the online lottery courier services operating in the state.
Per the letter sent by the tribe:
“Lottery courier services facilitate and encourage the online play of lottery games, which is an expansion of gambling in the state… they provide comprehensive online gambling experiences to their users that have the ability to mimic otherwise unlawful internet gaming.”
The tribe claims that every purchase of an online lottery ticket is “in essence” the placement of a bet. It further states that online lottery tickets act as a random number generator and simulates real-time online games of chance, which, if courts agreed (I don’t think they would), could (emphasis on could) lead to the tribe offering Class III games like slot machines.
It’s doubtful this leads to online gambling, but it does open the door for tighter restrictions on lottery courier services.
Louisiana Tax Hike Roundly Criticized
In yesterday's newsletter, I mentioned a new bill, HB22, that seeks to bump Louisiana’s sports betting tax rate from 15% to 51% and eliminate promotional deductions (operators can currently deduct up to $5 million per year).
The bill will get a hearing in the House Ways and Means Committee today at 9 AM, as the legislature kicks off the special session called by Gov. Jeff Landry.
As noted yesterday, the bill would need a two-thirds majority in both chambers, and the special session will last less than three weeks.
Still, the amount of pushback the proposal is receiving is a good indication of just how seriously the industry is taking it.
"The introduction of HB22, proposing a staggering tax increase on Louisiana's sports betting industry, marks a drastic and counterproductive shift in policy,” iDEA Growth’s Jeff Ifrah said in a statement. “This measure, if passed, will make Louisiana one of the highest-taxed sports betting markets in the country, significantly undermining the competitiveness of legal operators in the state.
“Such a sharp increase would not only raise costs for operators but ultimately impact consumers, who will bear the brunt through less favorable odds and reduced promotional opportunities.”
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Around the Watercooler
Social media conversations, rumors, and gossip.
Catena Media has had a rough go of it lately, and today’s news (h/t to John Mehaffey) that the company’s $2 million investment in AI was all for naught is just rubbing salt in the wound.
As I said on X, $2 million could pay 29 employees $70,000/year, which is precisely how many people were laid off last month.
Pokerfuse’s Nick Jones also raised an interesting question on X, asking, “Anyone see where this Catena AI investment strategy is put to investors? Not seeing anything in their Q3 pres/report. There's this one line in their Q2. Haven't read any transcripts just yet. Be fascinating to see how/why they want to and justify $2 million.”
Stray Thoughts
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