Changing Of The Guard
Changing Of The Guard
The regulated online gambling industry in the US is undergoing a change, with David Rebuck, Thomas Winter, and now Ed Andrewes hanging up their spurs.
The Bulletin Board
NEWS: Several high-profile exits signal a new era of online gambling in the US.
BEYOND the HEADLINE: When great ideas are ahead of their time.
WEEKEND CATCHUP: RSI CEO says tax hikes unlikely; Virgin Casino rebranded to MONOPOLY Casino.
VIEWS: DraftKings overtakes FanDuel as the top sports betting app in EKG’s proprietary testing.
BEYOND the HEADLINE: How winning and losing affects customer behavior.
AROUND the WATERCOOLER: Is NV ready to send a lottery proposal to the voters?
STRAY THOUGHTS: Poisoned by the Grateful Dead.
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The US Online Gambling Industry Is Changing
In the last year, the US online gambling space, and New Jersey in particular, has lost several key individuals who were responsible for shaping a fledgling industry: Thomas Winter of Golden Nugget Online Gambling, NJ DGE Executive Director David Rebuck, and most recently, Ed Andrewes of Resorts Digital.
As I wrote in a February 2023 column on the impact of online gambling in New Jersey:
“The two biggest beneficiaries were the smaller casinos in the Atlantic City market, Golden Nugget and Resorts… Not surprisingly, both companies brought in veterans from the European market to run their online operations — Thomas Winter at Golden Nugget and Ed Andrewes at Resorts. I could make a case for either as the most crucial figure in New Jersey’s online gambling history.”
I eventually chose David Rebuck as the most important person in New Jersey's online gambling history.
I’ve written many words about Rebuck and Winter, but Andrewes also deserves a lot of credit for his accomplishments at Resorts, a casino that would almost certainly have shut its doors had it fumbled the online gambling opportunity in 2013.
In 2012, Resorts' gross revenue was $183.4, with an operating loss of $7.9 million. 2013’s numbers were even gloomier, with revenue falling to $176.5 million and losses increasing to $12.2 million.
The company added online gambling in 2015 (a very late starter due to its partnership with PokerStars). By 2016, its first full year in the market, its land-based revenue of $173.1 million was buoyed by an additional $31.8 million in online revenue. Operating profit for the casino was $18.7 million, while the fledgling online division had losses of $1.4 million.
The landscape shifted post-PASPA. In 2023, Resorts' land-based revenue had dipped back to $163.5 million, but Resorts Digital generated $822.2 million, with losses of -$937,000 for Resorts and a profit of $1.5 million for Resorts Digital.
Like Thomas Winter at Golden Nugget, Andrewes tried to transform the stagnant land-based industry into a modern one. Many of Andrewes' efforts were simply ahead of their time, and I’d argue that Atlantic City and Resorts specifically weren’t ideal launchpads. There was the PokerStars Festival event, the iGaming Lounge, taking a chance on virtual sports, and many other efforts that don’t appear on the balance sheet.
Beyond the Headline: Ideas Ahead of Their Time
Winter leaned into live-dealer games, and that risk paid off.
Andrewes took a shot on the iGaming Lounge and virtual sports, two interconnected ideas that proved ahead of their time. I suspect that someone will successfully repackage the iGaming Lounge idea within the next five years and get credit for being an innovator.
The iGaming Lounge wasn’t a game-changer, but it was successful. It was a first-of-its-kind on-site area where customers could register an online account or just sit and relax and play online with their own device or on state-of-the-art gaming tables provided by Resorts. In May 2018, Andrewes told me there were over 25,000 registrations through the iGaming Lounge.
Virtual sports were going to be a big part of the experience, but the legalization of sports betting pushed that to the back burner, and the iGaming Lounge was eventually repurposed as a traditional gaming space.
That happens a lot in the gambling sphere. Whether it is multi-player tabletop games (Gamblit Gaming) or arcade-style slot machines (Gameco), there have been a number of ideas and projects that I’ve been very keen on but simply weren’t accepted.
There are numerous reasons for a lack of acceptance/adoption:
A good idea on paper but difficult to execute
Regulatory (is it legal) or structural hurdles (minimal coin in rate per hour)
The idea has less appeal than expected
A lack of buy-in (sticking an arcade slot in a far-flung corner)
It’s ahead of its time/the tech isn’t there yet
None of this makes them bad ideas, and I’m always surprised how quickly these ideas are scrapped.
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Weekend Catchup: RSI CEO Says Tax Hikes Unlikely; Virgin Casino Rebranded to MONOPOLY Casino
Just say no to tax increases: As noted by Eilers & Krejcik Gaming’s (a newsletter sponsor) EKG Line newsletter, the industry’s fear that states will follow the lead of Ohio and Illinois on sports betting tax policy is subsiding. RSI CEO Richard Schwartz said he doesn’t expect other states to raise OSB tax rates during RSI’s recent earnings call: “Protecting consumers is a goal. Governments raising taxes on regulated operators like us really just simply drives more volumes at unregulated sites like the Sweepstakes casinos where no one benefits.”
Virgin Casino is no more in New Jersey: Bally’s is transitioning its secondary online casino brand from Virgin Casino (which launched a decade ago) to MONOPOLY Casino. The new app will feature numerous Monopoly games and features and looks to be trying to take advantage of the original board game’s roots, as Monopoly is based on Atlantic City streets and landmarks. “Just a heads up, we will be temporarily offline on the evening of Tuesday, November 5th, until the afternoon of Wednesday, November 6th, as we prepare for the switchover from Virgin Casino to Monopoly Casino,” an email to customers reads.
DraftKings Ascends to the #1 Spot in EKG App Testing
When it comes to sports betting apps, DraftKings is the new sheriff in town, according to Eilers & Krejcik Gaming’s 2H24 OSB app rankings.
“DraftKings’ Same Game Parlay functionality scored higher, and testers loved the player props and flash bets available on the platform,” the EKG Line newsletter reports. “Coupled that with faster loading and bet processing times.”
Another shakeup in the rankings was Fanatics's rise to the #3 spot. That increase aligns with Fanatics' recent results in several states, where it is growing its market share. Per EKG, the improved scores from testers were due to "expanded cash out and SGP availability and an improved interface.”
Here’s how the Top three in EKG’s app rankings have changed over the course of 2024:
One other note: BetMGM has the highest ceiling, as its app currently ranks ninth despite being the third-best performer in the US market in terms of market share.
Per EKG:
“BetMGM languished in ninth, thanks to ongoing speed issues. BetMGM’s speed and loading times are a foregone conclusion at this point, and considering it has been a consistent issue for more than three years, it feels repetitive to keep bringing it up. But, yet again, it is the single greatest issue our testers see with the app.
“If it were ever properly fixed, we would be talking about BetMGM in the same breath as DraftKings and FanDuel, because our testers do like the features, market depth, and account page on the app.”
Beyond the Headline: What Happens When Bettors Win?
A lot of attention was paid to the company’s bottom-line results, but the Q3 earnings call also had a fascinating response from DraftKings CEO Jason Robins about shifts in customer behavior when they are winning and losing:
“We have seen a little bit of evidence that Handle can go up or down based on whether customers are winning or not, but it's actually not really that big a number if it is an impact at all.
“More what we see is that people don't need to deposit as much, but they tend to keep their betting levels at a pretty similar level.”
According to Robins, when customers win, there isn’t a significant increase in betting. Instead, the need to deposit lessens: “On the margins, you see some incremental betting, but for the most part, people just continue to kind of bet as they've been betting at this point.”
Around the Watercooler
Social media conversations, rumors, and gossip.
Is Nevada finally ready to add a lottery?
As John Mehaffey notes, the legislature began the process to amend the state constitution to allow a lottery in 2023. However, the measure must be passed in 2025 (Nevada meets every other year) before heading to the 2026 ballot, where voters would decide its fate.
Stray Thoughts
I talk a lot about unintended consequences, and this Taoist parable sums it up quite nicely.
A long time ago, a poor Chinese farmer lost a horse, and all the neighbors came around and said, “well that’s too bad.” The farmer said, “maybe.” Shortly after, the horse returned bringing another horse with him, and all the neighbors came around and said, “well that’s good fortune,” to which the farmer replied, “maybe.” The next day, the farmer’s son was trying to tame the new horse and fell, breaking his leg, and all the neighbors came around and said, “well that’s too bad,” and the farmer replied, “maybe.” Shortly after, the emperor declared war on a neighboring nation and ordered all able-bodied men to come fight—many died or were badly maimed, but the farmer’s son was unable to fight and spared due to his injury. And all the neighbors came around and said, “well that’s good fortune,” to which the farmer replied, “maybe.”
At the end of the day, every cloud has a silver lining, and conversely, every silver lining has a touch of grey — or every rose has its thorn if you’re more of an 80s hair metal kind of person.