What Goes Up
DraftKings stock dropped after NJ's proposed tax hike and Jackpocket's ban in TX. With other states eyeing similar moves, the sector faces a shaky future.
The Bulletin Board
THE LEDE: DraftKings stock dropped back to earth after a post-earnings surge.
ROUNDUP: GA and HI sports betting updates; TX takes aim at poker clubs; Fresno State investigation; Reads of the Week.
NEWS: NH lawmaker: iCasino will pass Senate, but fate uncertain in House.
VIEWS: You should try to attend this upcoming conference (it’s probably not the one you are thinking of).
AROUND the WATERCOOLER: Read my lips; no new taxes.
STRAY THOUGHTS: Bring a little transparency to the conversation.
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The Lede: Bad News in TX & NJ; DraftKings Stock Takes Hit
DraftKings and the rest of the online gambling sector are learning how fast the ground can quickly shift under your feet.
For most of February, DraftKings stock was priced around $42. Following the company’s quarterly earnings, it surged to $53.49 on February 14. The stock has since fallen back to earth, trading between $42-$44.
The downward trend can be traced to two adverse events:
New Jersey Gov. Phil Murphy included a significant tax hike on online gambling operators in his budget.
Jackpocket (which DraftKings acquired for $750 million last year) was booted out of Texas and is under investigation.
New Jersey nearly doubling its tax burdens would be a significant story in isolation (Newsletter sponsor Eilers & Krejcik Gaming estimates it will “cost DraftKings around $62 million… equivalent to ~6% of its 2025E adjusted EBITDA”). That’s not good, and when you consider several other states are also considering tax increases, the situation becomes a bit more dire.
There is also a contagion effect following Texas’s actions against lottery couriers. New York regulators have signalled an interest in looking into couriers, and as STTP has noted, two states also have active legislation that would prohibit online lottery couriers (Connecticut and South Carolina).
According to EKG, “Jackpocket had 60-70% revenue share of the Texas market [25% of the total courier market], which puts the revenue impact at or around $34-$39 million.” More worrisome, EKG notes that New York is the largest courier market, and five states (including Texas and New York) represent 92% of the total courier market. Action is less likely in New York, given itt’s one of two states, along with New Jersey, that licenses couriers.
Roundup: GA and HI Sports Betting; TX Poker Clubs; Fresno State Investigation; Reads of the Week
Georgia sports betting bill runs into a brick wall: Georgia’s latest sports betting effort, SR 131, was voted down in committee last week in a show of hands vote. The bill requires a change to the state constitution via a voter referendum in 2026 and must pass the House and Senate by a 2/3 majority vote. An alternative bill, SB 208, bypasses the constitutional amendment requirement — there is little legislative support for the non-constitutional amendment pathway. New polling shows strong support, but with no urgency until 2026, 2025 efforts are unlikely to gain momentum. Another set of bills to legalize sports betting via a constitutional amendment has also been filed in the House by State Rep. Marcus Wiedower, HR 450 and HB 686.
Hawaii sports betting dreams turn into a nightmare: A sports betting legalization bill has made its way to the House floor, but despite momentum in the House, the effort is likely dead in the Senate. The Senate version was deferred in committee, after more than 150 pages of negative testimony were submitted. Of note: The bill was supported by DraftKings, BetMGM, the SBA, and local trade groups and is opposed by Boyd Gaming (Boyd runs a Hawaii to Las Vegas business), the Hawaii Department of the Attorney General, and the City of Honolulu.
Texas bill would prohibit membership Poker Clubs: New legislation in Texas, HB 2154, would prohibit Texas Poker clubs, by amending the definition of a “private place” to include “For purposes of this subdivision, "commercial gaming enterprise" includes a for-profit poker club, card club, or game room.” the prevalence of these card clubs has become a point of contention in Texas, with several being raided, and some locales refusing to grant the businesses licenses.
Fresno State betting scandal update: According to ESPN, two now-dismissed Fresno State basketball players reportedly participated in daily fantasy contests based on their own performances. “The sources told ESPN that junior forward Mykell Robinson and associates bet and entered daily fantasy sports contests involving Fresno State games in which he played. The wagers and fantasy entries included the under on Robinson's points and rebounds. The other player, Jalen Weaver, told ESPN, "I just made a bad decision, and I shouldn't even have gotten involved with that. Now, I'm obviously paying for it. I bet on a game I played in, but I never tried to sabotage the season. I never bet on us to lose, never bet my under."
Reads of the Week: Catch Up on Your Reading List with These Gems.
An insatiable acquisitions appetite': Sports betting industry facing major challenges despite growth
New Google Gambling Policies Could Force Major Changes For Sweeps Casino Advertising
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News: NH Lawmaker Fears History Will Repeat Itself
New Hampshire State Sen. Tim Lang is confident his online casino legalization bill can pass the Senate. However, as he told Play USA, he fears a repeat of 2023, when a similar bill passed the Senate only to run into a roadblock in the House.
The bill is scheduled for a floor vote in the Senate on March 6.
While several obstacles have been removed in the House, including Laurie Sanborn (backstory here), there is still stiff opposition as stakeholders are not convinced online gambling will be additive, even though the bill tethers online licenses to brick-and-mortar facilities, with a minimum of three and maximum of six licenses available.
Despite the tethering and the legislation not authorizing online slots, land-based operators continue to fear cannibalization and a loss of foot traffic. As previously noted, Alicia Preston, president of the New Hampshire Charitable Gaming Association, testified when the bill was heard in the Ways and Means Committee, voicing concerns about decreased foot traffic at the state’s charity casinos.
Views: An Upcoming Conference You Should Attend
There is no shortage of gaming conferences on the calendar (which is a topic I may write about in the future).
The Next.io Summit New York is just a couple of weeks away.
SBC Summit Americas will be held in Fort Lauderdale in May.
Wedged in between is the longest-running gaming conference in the US, the East Coast Gaming Congress (ECGC), which will host its 28th annual meetup at the Hard Rock Hotel & Casino on April 15-16.
ECGC is what I would call an intimate conference. Still, because of its history and location (in Atlantic City), it attracts some of the biggest names in gaming, making it the most slept-on conference, in my opinion — you can register for ECGC here.
The speaker list this year includes the following gaming CEOs:
Jim Allen, Chairman, Hard Rock International and CEO of Seminole Gaming
David S. Cordish, Chairman of The Cordish Companies
Ray Pineault, President and CEO of Mohegan Gaming & Entertainment
Thomas R. Reeg, Chief Executive Officer of Caesars Entertainment
Jeffrey Gural, Owner of Meadowlands, Tioga Downs, and Vernon Downs
Bill Hornbuckle, Chief Executive Officer and President of MGM Resorts
Soo Kim, Chairman of Bally’s Corporation
The lineup also includes:
Bill Miller, President and CEO of the American Gaming Association
Philip D. Murphy, Governor, New Jersey
Chris Grove, Co-Founding Partner, Acies Investments and EKG Ventures
James Carey, Executive Director, New Jersey Lottery.
Mary Jo Flaherty, Interim Director, New Jersey Division of Gaming Enforcement
The full lineup can be found here.
A few months later, the National Council of Legislators from Gaming States (NCLGS) Summer Meeting will be held in Louisville, Kentucky, from July 9 to 12 at the Hyatt Regency Louisville. Like ECGC, I find NCLGS to be one of the better conferences for information. More on this year’s Summer Meeting can be found here.
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Around the Watercooler
Social media conversations, rumors, and gossip.
Author’s Note: It has been brought to my attention that the LinkedIn post in Thursday’s Watercooler section was not specifically directed at Heather Fletcher’s most recent workplace.
Sportsbooks are fighting back against a proposed tax increase in New Jersey:
And it’s not just DraftKings, as John Brennan noted in a recent article at Casino Reports, FanDuel and BetMGM are also mobilizing their customers.
Operators took a similar approach last year in Illinois, and we all know how that worked out.
Stray Thoughts
I wish everyone who advocates for or opposes sweepstakes, prediction markets, and other verticals would disclose their interests, particularly when they post commentaries or random social media posts.