From Bad To Worse
It has been an August to forget for DraftKings. It's latest woe is a civil lawsuit filed by the NFLPA in New York.
The Bulletin Board
NEWS: NFLPA files civil lawsuit against DraftKings.
BEYOND the HEADLINE: DraftKings launches peer-to-peer online poker game.
LOOSE ENDS: Record-setting online slot jackpot at BetMGM; Defunct DFS site has 4,200 creditors.
NEWS: The Virginia Lottery had a record-setting year, thanks to online sales.
BEYOND the HEADLINE: Online and land-based casino revenues are trending in opposite directions.
AROUND the WATERCOOLER: Connect the dots.
STRAY THOUGHTS: A big difference between regulated and unregulated sites.
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NFLPA Files Civil Suit Against DraftKings
It’s no stretch to assume that DraftKings would like to erase August 2024 from its memory.
First, there was the announced surcharge on August 1. The announcement did not go over well, and after its peers said they would not be following DraftKings’ lead, the company reversed course less than two weeks after the initial announcement. But the damage was already done.
Adding insult to injury, DraftKings inadvertently sent an email about golf bets to its entire database, causing a mass panic that accounts had been hacked and overwhelming the site’s servers:
Now, DraftKings is facing a civil lawsuit from the National Football League Players Association (NFLPA).
David Purdum was the first to post about the lawsuit on X:
“The NFL Players Association on Tuesday filed a civil suit vs. DraftKings for "anticipatory breach of contract," according to a court filing in the Southern District of New York. DraftKings is an official betting partner of the NFL.”
The suit is currently sealed, but speculation is it may have to do with DraftKings’ now-defunct Reignmakers offering.
As Sportico reported in April, companies have been renegotiating deals with partner leagues:
“DraftKings has also brought the NFLPA back to the negotiating table for its Reignmakers product. Sorare is seeking new terms on its MLB and MLBPA deals, and it has been in conversation with partners at MLS and the MLSPA as well.”
Fair Play Initiative also posted an interesting X thread that is worth reading.
Beyond the Headline: DraftKings Launches Jackpot Sit & Go Poker Tournaments
In positive news, DraftKings has launched a new online poker product in Michigan called Electric Poker.
The new game mimics the ultra-popular Jackpot Tournaments offered at PokerStars and elsewhere. It’s a three-player, peer-to-peer winner-take-all tournament with a random jackpot multiplier applied at the start of the contest. Pokerfuse.com has all the details.
This is DraftKings’ first foray into P2P real-money online poker. As Pokerfuse put it:
“It’s just one game, in one state, tucked away in their online casino lobby. But this looks like the first step in what could be a major push by the operator into US online poker. It seems likely the operator will bring this game to other states and that it will also expand its poker offerings.”
Loose Ends: Record-Setting Slot Jackpot; Defunct DFS Site Has 4,200 Creditors
Historic progressive jackpot hit at BetMGM: I usually don’t cover these types of stories, but this one is interesting for two reasons. First, a slot player won a massive $6.4 million progressive jackpot playing online slots at the BetMGM casino. The win is the largest in the history of the legal online casino industry. However, that brings me to Point #2: it wasn’t a cheap win. Per the press release, the player hit the jackpot on a $200 spin.
Defunct DFS site update: In May, Legal Sports Report reported that fantasy sports operator SportsQuack announced it was closing, and “shortly thereafter, customers took to social media in frustration over alleged uncertainty regarding their funds.” Fair Play Initiative offered an update: “Onecricket Fantasy LLC eventually filed for Chapter 7 bankruptcy on 6/19. Some people who filed chargebacks before then did get some of their money back. Over 4,200 creditors are listed, and a meeting was held last month.” I think David Purdum speaks for most of us on this topic, as the ESPN reporter tweeted back in May, “I know people don’t like the high barriers for entry into regulated betting, but this is an example, IMO, of why they’re necessary.”
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Online Sales Propel VA Lottery to a Record-Setting Year
The Virginia Lottery had a record-setting year, with $5.5 billion in sales and $934 million in profits, and another $142 million going back to lottery retailers.
Per a press release from Virginia Gov. Glenn Youngkin’s office, “Of the $5.5 billion in Lottery sales for the year, a record $4.2 billion went back to players as prizes. That means for every dollar spent playing Virginia Lottery games, approximately 77 cents went back to players.” [And people complain about SGP hold rates]
The interesting numbers are the state’s e-instant sales, which topped $2.9 billion in FY 2024, up from $2.1 billion in FY 2023 and $1.3 billion in FY 2022. To put those numbers into perspective, online sales outpaced retail sales in FY 2024 — $2.9 billion to $2.6 billion.
And therein lies the (potential) problem. Online sales are spiking, while retail sales are relatively flat:
Beyond the Headline: It’s Getting Harder to Dismiss Cannibalization Concerns
Yesterday, I mentioned New Jersey’s online and land-based revenues were trending in opposite directions, adding more fuel to the cannibalization conversation. Making matters worse, this is not isolated to New Jersey. A similar story played out across the Big Three online casino states in July:
This is not the chart I want to post. Still, it’s important that advocates of legal, regulated online gambling come to grips with it and formulate strong counterarguments to it, because online casino opponents will use it.
As Delaware North’s Alec Driscoll put it, it’s time to accept that consumer behaviors have changed.
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Around the Watercooler
Social media conversations, rumors, and gossip.
Here is a look ahead at the next 12 months summed up in a two-sentence tweet:
“I’ve had numerous conversations over the past few weeks about a convergence of disparate threats to the industry: advertising, social harm, integrity concerns (real and imagined), intra-operator feuds like the DraftKings-Fanatics VIP dustup, overzealous lawmakers and regulators further restricting or burdening the industry, and the recent interest in limiting bettors.
“There will be an inflection point at some point. If history is any guide, the reaction will be an extreme overreaction.”
Stray Thoughts
When people ask me the difference between regulated and unregulated sites, I often mention what you can bet on.
Case in point, “Little League International is condemning an unregulated site that is offering odds for betters on World Series games.”
The site is BetOnline.ag, which is offering the LLWS as a market for the third year, according to Richard McGarvey, a spokesperson for the Pennsylvania Gaming Board. “Licensed sports booking operators are prohibited from offering wagers on the Little League games, so what BetOnline is doing is illegal,” he said.
The legal industry has flaws, but this isn’t one of them.