Back In The New York Groove

Could online casino legalization come up during a special session in New York? DC inches closer to an open sports betting market. Michigan's Bovada problem.

Jun 19, 2024

NEWS: New York could call a special legislative session to find a solution to fund MTA improvements, opening the door for online casinos.
NEWS: DC inches closer to an open, competitive sports betting market.
NEWS: What can Michigan do if Bovada ignores its cease-and-desist letter?
VIEWS: Truist still believes in ESPN Bet.
QUICK HITTER: Two more quotes from last week’s WaPo story on gambling.
AROUND the WATERCOOLER: Regulated markets should be held to higher standards.
STRAY THOUGHTS: Good, better, and best decisions.

SPONSOR’S MESSAGE - Sporttrade was borne out of the belief that the golden age of sports betting has yet to come. Combining proprietary technology, thoughtful design, and capital markets expertise, our platform endeavors to modernize sports betting for a more equitable, responsible, and accessible future.

Sporttrade’s newest feature, The Tape, prints all trades made on the app in real-time.

A Second Crack at Online Casino Legislation in New York?

Money. It always comes down to money, and New York is apparently in desperate need of it, as it tries to fund what Gothamist calls “a laundry list of construction projects to improve New York City’s subway system.”

Gov. Kathy Hochul has thrown out the idea of calling a special session, and while she is pushing for a payroll tax increase to help cover the cost, others are pointing to the 800-lb. gorilla sitting in the room, patiently waiting with its hand raised: Online casinos.

After the state legislature adjourned earlier this month without taking up the governor’s payroll tax plan, Hochul has, per Gothamist, “publicly raised the idea that the Legislature could return to the Capitol at some point before January to provide a new funding source for the MTA.”

Howard Glaser, Light & Wonder’s global head of government affairs, who worked in the Gov. Andrew Cuomo administration, has a simple solution: “We [the online casino industry] have a billion dollars for you, and it can start virtually tomorrow.”

Whether online casinos get a second look or not, MTA funding provides a glimpse into how online casinos will eventually be legalized, and it starts and ends with money. When one fiscal problem is solved, another quickly rears its head, and there are only so many fingers you can use to plug a hole until you get to online gambling.

Cracking Open the DC Sports Betting Market

The effort to end the DC Lottery’s monopoly on district-wide mobile betting is gaining steam. Council members, led by Kenyan McDuffie, are pushing to include the Sports Wagering Amendment Act of 2024 in the budget.

As is the case in Delaware, Intralot and its newly installed subcontractor, FanDuel, will put up a fight.

And they have a point. Companies invest loads of money in a market based on the agreed-upon structure and existing dynamics. When lawmakers decide they are going to change the deal, and even more so in markets where contracts are signed, it should come as no surprise that the legal system will be exhausted.

FanDuel is already threatening to break its contract with the DC Lottery. “Any District-wide sportsbook operations by OLG would no longer have participation from FanDuel,” FanDuel President Christian Genetski wrote to Council Chairman Phil Mendelson in a letter dated June 5.

Further, as Alfonso Stratton noted on X, the situation in DC is remarkably different from what it was just a few months ago, which raises the question of whether this is still necessary:

“Let's not overlook this lackluster predicament was a direct result of selecting an incompetent vendor to carry out the task... given the switch in mid-April to FanDuel, we can clearly see the positive impact of having a competent vendor at the helm...
“Understandably, a monopoly is never ideal for consumers... more choices always better... but let's not kid ourselves... D.C. bettors would have been, and will be, better served by a competent operator that recognizes the value of having an attractive 'legal' market all to themselves (even if just for a few months because sounds like this could change in a near future).”

One key component of the DC debate is who will fill the shoes of outgoing DC Lottery chief Frank Suarez. Sports Handle’s Bennett Conlin pointed out that Suarez has been at odds with McDuffie and others over the Lottery’s monopoly. Suarez is leaving to join the Connecticut Lottery on August 1. An interim director will be named before Suarez leaves.

SPONSOR’S MESSAGE - Underdog: the most innovative company in sports gaming.

At Underdog we use our own tech stack to create the industry’s most popular games, designing products specifically for the American sports fan.

Join us as we build the future of sports gaming.

Visit: https://underdogfantasy.com/careers

What Options Does Michigan Have to Rid Itself of Bovada?

Michigan has sent a cease-and-desist letter to Bovada and has yet to receive a response from the offshore sportsbook. Bovada is still active in the state and appears to be thumbing its nose at the letter. The timeline is a little unclear, but the state gave Bovada 14 days to respond, and the news was first mentioned some 20 days ago.

So what can Michigan do?

Michael Lipton, a senior partner in the Toronto office of Dickinson Wright, outlined some of the state’s options to Play Michigan:

“They could run the full gamut of sealed indictments, seizure of websites, seizing funds, if they’re available in the jurisdiction, name and shame, the cease and desist and going after third party facilitators.”

However, the state is somewhat handcuffed by its legal reach. It is unlikely to take an action that is all bark, as it could embolden other operators to follow Bovada’s lead and ignore similar requests.

As I noted last week, Michigan’s best bet is to pursue suppliers, including affiliates, payment processors, and other associated businesses that may be within the reach of US law enforcement.

Truist Has Faith in ESPN Bet

Analysts at Truist are bullish on recent upgrades to the ESPN Bet app, including recent upgrades that produced a better parlay product and more integrations with ESPN apps.

The Truist team said it’s “encouraged by both companies’ commentary about deeply integrating the two” brands.

Truist also downplayed the need for a strategic review and downplayed M&A possibilities despite the recent activist comments, which I touched on in a recent newsletter:

“While I’m a big believer in the dangers of the sunk cost fallacy, pulling back on ESPN Bet before it’s been given a chance seems like absolute folly. Penn has admitted the product is not on par yet, nor has it made a full-scale marketing push – Penn’s goal is to have both remedied near the start of the NFL season.”

Truist’s optimism isn’t misplaced, but that optimism comes with a lot of ifs.

If ESPN Bet has an improved SGP offering in time for the NFL season, and if ESPN fully integrates ESPN Bet into its programming and associated apps, ESPN Bet could have a phenomenal Q3 and Q4.

Quick Hitter: Two Quotes from Last Week’s WaPo Story

I have two more nuggets to relay from the Washington Post story I first mentioned last week.

First, context is key:

“Overall, the $2.5 billion states earned by taxing sports gambling was just 0.17 percent of their tax revenue in 2023. Even with its recent run, sports betting only passed drivers’ licenses, or hunting and angling licenses, as a revenue center at the end of 2023. Even in New York, it averaged just 0.75 percent of 2023 tax revenue.”

As Richard Schuetz often refers to it, budget dust.

Second, as I’ve been discussing (h/t to Jamie Salsburg), the Gambler’s Mindset is real:

“Russell DeSimone, a mathematician turned lottery collector, brought up the same subject. Lotteries “prey upon those that can ill afford it,” he told us. “If you are down and out and you’re never going to see daylight, you say, ‘Well, I might as well buy a ticket. Maybe I’ll hit it big.’”

SPONSOR’S MESSAGE - Now live on the OpticOdds screen: player market alternate lines, vig, line history & more…

Built for operators with an emphasis on speed and coverage, OpticOdds offers:

SGP Pricer: query top operators and instantly see how correlations are priced in real-time.

Live Alerts & API Access: get odds updates from sharp sportsbooks on best odds, arbitrage, player markets, reference lines, settlements, injuries, and more.

Market Intelligence: analyze competitor markets to see what you’re missing. Drill into hold, alternate lines, uptime, and release time.

Join top operators at opticodds.com/contact.

Around the Watercooler

Social media conversations, rumors, and gossip.

I couldn’t agree with this more. The regulated market is the regulated market and should be held to a higher standard. Poll after poll indicates that using licensed and regulated sites is extremely important to bettors.

Stray Thoughts

“It’s better to avoid than to run; better to run than to de-escalate; better to de-escalate than to fight; better to fight than to die.” ~ Rory Miller

The above quote is interesting in many ways. As a self-protection hierarchy, it is 100% accurate. However, what makes it interesting is the number of people who skip steps in the process — with some going straight to fighting.

Pretty much every pursuit has these types of hierarchies, and as is the case with the above, far too many people skip steps, trying to get to their perceived strength.