Back To The Drawing Board
After its proposed surcharge was heavily criticized, DraftKings is back with a new idea to offset burdens in high-tax states: A subscription service aimed at parlay bettors.
The Bulletin Board
THE LEDE: DraftKings returns to the drawing board after its surcharge debacle and comes up with a premium subscription offering.
WEEKEND ROUNDUP: CFTC warns prediction market sites about off-limit markets; BetRivers Poker makes a splash in PA.
NEWS: Missouri’s updated sports betting launch timeline.
VIEWS: VOX Podcast takes numerous swipes at online betting. The industry can learn a lot about winning debates from these criticisms.
AROUND the WATERCOOLER: How PA will change online poker in the US.
STRAY THOUGHTS: Housekeeping and the latest Talking Shop Podcast.
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The Lede: DraftKings Introduces Subscription
First reported by Sportico, DraftKings has introduced Sportsbook+ in New York. Sportsbook+ is a premium subscription service ($20/month) that gradually boosts users' winnings on parlays with two or more legs, provided each leg is at least -500. The maximum wager is $25.
Per Sports Betting Dime, “The tokens provide the following boosts for winning parlays”:
2 legs: 10%
3 legs: 20%
4 legs: 30%
5 legs: 40 %
6 legs: 50%
7 legs: 60%
8 legs: 70%
9 legs: 80%
10 legs: 90%
11 or more legs: 100%
The reaction to the news has been mixed, with some seeing it as another sign of the sports betting apocalypse. Others, including STTP, see it as the company’s latest effort to reduce its burdens in high-tax states, as it did with its short-lived surcharge idea last year. For others, its another nudge toward parlays. And some see it as an innovative new product offering.
The reason I lean toward it being, at its core, an attempt at reducing the company’s burdens comes from DraftKings CEO Jason Robins’ comments at the Bank of America Gaming & Lodging Conference in September, where he was asked about non-surcharge offsets to high taxes. “There's multiple levers that we can pull,” Robins said. “But our objective is to get to that gross margin or better.”
Sportsbook+ appears to be one of those levers.
STTP reached out to Brady Sharp, the co-founder and CEO of BroThrow (a newsletter sponsor), for his take on DraftKings’ new subscription service — for those that don’t know, BroThrow is a subscription-based sports betting platform:
“I think it’s great to see a market leader launch a subscription business; at a macro level, it’s validation of the model we launched two years ago. While the fundamentals of the DK subscription are much different from BroThrow’s (subscribing to boost parlays vs. subscribing to eliminate the vig), it’s giving bettors an opportunity to leverage a fixed cost, which we believe is a tailwind to retention.”
Another interesting take came from Chris Grove, who noted it’s becoming quite challenging to place wagering products into the “correct” bucket, which has filed debates over DFS 2.0, sweepstakes, and other products:
STTP Thoughts: These products are regulated and taxed differently, with licensed sportsbooks facing the most burdens. So, is it really surprising to see DraftKings’ attempt to circumvent a high sports betting tax rate?
However, I’m not sure how the state will classify the subscription charge, as New York regulators said they were “alarmed” by the surcharge.
“I am, of course, pleased that the proposal has been withdrawn,” New York State Gaming Commission Chair Brian O’Dwyer told Covers.com in September. “I remind all our licensees, however, that this commission is committed to protecting the consuming public and that any proposal such as the one advanced by DraftKings will be subject to the strictest scrutiny, and if appropriate, be rejected.”
Still, at the end of the day, this is yet another regulatory mess to clean up on the side of the road. I fear that the constant envelope-pushing pushes regulators and lawmakers over the edge of sanity.
As Adam Small put it:
Fascinating? Yes.
DraftKings a “habitual line-stepper?” Also Yes.
But I’ll repeat it: pushing the envelope isn’t always good. It can have some horrific downstream consequences.
Weekend Roundup: CFTC Warns Prediction Market Sites; BetRivers Poker Makes a Splash in PA
Prediction markets push the envelope on event wagering. Event contracts are all the rage after Kalshi’s legal victory over the Commodity Futures Trade Commission (CFTC). However, as is often the case, operators have overstepped their bounds. As a result, the CFTC sent notices reminding Kalshi and others that “contracts that reference terrorism, assassination, war, gaming, or an activity that is unlawful under any state or federal law” are prohibited. The notice was sent after prediction markets involving Luigi Mangione appeared on these sites.
BetRivers Poker is off to a good start in Pennsylvania. According to Poker Industry Pro, the recently launched BetRivers online poker site has a “market share of 8%, above that of estimates of DraftKings’ new Electric Poker and Borgata Poker.” According to Pro, “WSOP and BetMGM are approximately double the size, and PokerStars controls 50% of the market.”
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News: Missouri Regulators Aim for June Launch
Missouri has a sports betting launch deadline ( December 1, 2025), but if the Missouri Gaming Commission has anything to say about it (and it does), the state will beat that deadline by many months.
Missouri Gaming Commissioner Jan Zimmerman told the local press in December that the MGC had already begun drafting rules and regulations to prepare for the licensing process before the election. Zimmerman said the MGC has also consulted with other locales to further expedite the process.
But expedited doesn’t mean rushed.
"Our staff wants to make sure that those rules protect the consumers as well, people who actually will be engaged in sports betting or who will actually be going to the casinos," Zimmerman told local news in early December.
However, as Eilers & Krejcik noted in its recent Sports Betting Policy Monitor (paywall), a June launch would be significantly faster than the current average of 10 months from legalization to launch.
I would note that the 10-month average is skewed by four states that took 24+ months to launch: retail betting in Virginia, Florida, Maine, and Nebraska.
Working in Missouri’s favor, 15 mobile betting states have gone from legalization to launch within a seven-month window. Only Maryland took more than 18 months to launch its mobile betting sites.
Views: VOX Goes In On Sports Betting
“Sports betting feels like it’s everywhere.”
That’s the opening line in a recent VOX article (born out of a podcast appearance by Charles Fain Lehman), and it might be the most complimentary line in the entire discussion.
“Online sports betting is bad for sports — and for gamblers,” the subhead reads.
And when you get into the meat of the discussion from the Today, Explained Podcast, it gets even worse, as Fain Lehman is becoming one of the industry's biggest critics following an Atlantic article he penned in September 2024.
During his Today, Explained appearance, Fain Lehman said:
“When you do the cost-benefit math, gambling looks like any other addictive substance, which is that most of the people who participate in it get some small sort of utilitarian hedonic benefit. They get some fun out of it. And then a smaller subset of those people will become seriously addicted and do serious harm to themselves, to others, and potentially ruin their lives.
“Gambling addiction is associated with all sorts of terrible outcomes, including loss of your home, loss of family, loss of life through personal action. And so we’ve created this enormous concentrated social harm, and in return, we’ve gotten some anemic tax revenue and a bunch of ads everywhere. It just doesn’t seem like a worthwhile trade-off to me.”
During the podcast, he goes on to offer both anecdotal stories and data from research and chalks up much of the current problems to the spread of mobile betting:
“One component of it is it’s just much more readily available, which is to say, if I have to go to a casino to gamble, I may not want to take the time out of my day. I may not get drawn in, and so over the long run, you generate fewer people who are addicted because they never get exposed in the first place. The virtue of keeping gambling in Las Vegas is you have to go to Vegas to do it.”
In addition to calling the tax revenue “anemic,” and despite his libertarian bona fides, he doesn’t buy the argument that adults weren’t able to bet legally amongst themselves before legalization:
“The thing that was illegal was for big businesses and states to get involved in the action. And I’m just not that upset about restricting the liberty of the state of Georgia to get involved in your and my bets.”
Finally, he expressed skepticism about the industry’s #1 talking point, which is offering an alternative to the black market. He called the black market a complement to, not a substitute for, legal sites, citing a survey from Massachusetts that “found that bettors were just as likely to use unauthorized betting sites after legalization.”
I disagree (to different extents) with his conclusions, but he and several others are doing an excellent job in the debate. The industry must grapple with these complaints because more and more people agree with Fain Lehman et al. that there should be hoops to jump through (geographical/registration/deposit friction points) to place wagers.
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Around the Watercooler
Social media conversations, rumors, and gossip.
This is a really great look at what the online poker situation in the US will look like when Pennsylvania online poker sites join their partner sites in other states from Pokerfuse.com:
The total player pools are starting to approach my somewhat arbitrary number for a sustainable online poker market of 40 million:
WSOP = 35.3 million
PokerStars = 32.2 million
BetMGM = 32.2 million
BetRivers = 13 million
Another important but often overlooked aspect of interstate online poker is time zones, and with the exception of Nevada, every online poker state is in the Eastern Time Zone. That makes Nevada a critical state, as companies that can pull from Nevada (Pacific Time) will extend their peak traffic hours.
Stray Thoughts
A little housekeeping:
The Talking Shop Podcast is officially back, with returning guest Kim Lund joining the pod to talk sweepstakes, and as I said in the show notes: “How good was this discussion? I re-listened to the whole thing, and other than to check quality or edit, I’ve never listened to any of my podcasts — because I hate my recorded voice.”
Going forward podcasts will be released to paid subscribers on Wednesdays and available to all subscribers on Saturdays.
Straight to the Point (AKA Steve) is also tinkering with The Weekender Edition, with the new and improved Weekender returning in the coming weeks.