Hear Me Out
Yesterday's Senate Judiciary hearing on sports betting is Congress's way of saying hello (Picture Forrest Gump waving) to the online gambling industry.
The Bulletin Board
THE LEDE: Takeaways from yesterday’s Senate Judiciary hearing on sports betting.
MIDWEEK ROUNDUP: Analyst bullish on Penn; Retail sports betting’s Maine success story
NEWS: California Cardrooms get some revenge on the ballot.
VIEWS: Tribes are pleased with DOI nominee Doug Burgum.
AROUND the WATERCOOLER:
STRAY THOUGHTS: Practice doesn’t make perfect.
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The Lede: Sports Betting Goes to Congress
The Senate Judiciary Committee held a hearing on sports betting yesterday. While. While nothing will come of it this year, the overall vibe should have the sports betting industry on notice—which it should already be if it reads this newsletter (here, here, and here).
The expert witnesses were:
NCAA President Charlie Baker
Former NJ Division of Gaming Enforcement Executive Director David Rebuck
NCPG Executive Director Keith Whyte
Former NFL Player Johnson Bademosi representing the NFLPA
Harry Levant, Director of Gambling Policy and Certified Gambling Counselor, Public Health Advocacy Institute at Northeastern University School of Law
There were ten members of the Committee in attendance: Senators Dick Durbin, Thom Tillis, Alex Padilla, Marsha Blackburn, Adam Schiff, Richard Blumenthal, John Kennedy, Mazie Hirono, Josh Hawley, and Peter Welch.
If I had to categorize their views on gambling, it would fall between lukewarm and utterly supportive of federal oversight.
Three things stood out to me:
Prop Bets are the Entry Point
The overall support for a college player prop betting ban, and more importantly, the matter-of-fact way some Committee members spoke about the need for a federal prohibition on college player props.
Prop bets were a topic where there was consensus agreement. While the federal government has a lot of tentacles reaching into the gambling industry, as I posted on X, if federal oversight happens, “Prop bets feel like the camel's nose under the tent that will lead to federal action.” STTP Thoughts: Baker said the NCAA was making progress at the state level multiple times but eventually admitted that a federal ban like the one in the SAFE Bet Act would save him a lot of running around.
The Industry Needs a Better Argument
The industry’s best argument against federal oversight appears to be, “We’ve got this.” That may be true. States may already be doing 100% of what the federal government asks, so I think some of the committee members were asking, “If you’re already doing this, what is the issue with the federal government codifying it into law? I don’t think there was a great answer to that question outside of, “Just trust us.”
As I said on LinkedIn, “The industry needs better arguments against federal oversight than what it offers, which seems to be that you (Congress) will do a worse job than us. I'm not sure if people know this, but running for Congress takes a big ego, and that kind of argument isn't going to sit well.”
The Discussion Isn’t Magically Going Away
The industry’s attitude toward the hearing (an other federal actions) fell somehwere between it being an unserious effort and dismissive. This is Democrat led effort and they are on their way out the door; Congress is dysfunctional; It’s a lame duck hearing.
That wasn’t the feeling I got.
Sen. Thom Tillis, said he would continue this discussion in 2025 (when the Senate’s reins of power pass from Democrat to Republican). Tillis compared the existing legal landscape for sports betting to marijuana, noting that it is a patchwork of laws, and rhetorically asked, “How do we make it safe?” and “How do we address the negative consequences?” Tillis suggested a task force that could take a year or so to develop appropriate guardrails.
He also adamantly disagreed with David Rebuck, the only witness expressly against federal oversight. Tillis said the federal government must play a role in authenticating legitimate mobile betting and called it an interstate commerce issue.
Beyond the Headline: Preview and Review of the Hearing
I made some guesses before the hearing, let’s see how I did.
Here’s what I said before:
Rebuck will make the most salient points (just not sure it will resonate with a largely anti-gambling committee). He will also be on a relative island.
100% accurate. +1 Unit
Levant will get the most questions and will be the Committee's favorite witness.
Misfire! Baker, due to other goings on in the NCAA, was the “favorite.” -1 Unit
Bademosi, Baker, and Whyte will come to the hearing with specific asks and generally lean toward Levant's thinking, but they will also diverge in some spots, particularly Whyte.
100% accurate, with Bademosi focusing on protecting athletes, Baker zooming in on the NCAA’s efforts to enact a nationwide college player prop betting ban, and Whyte advocating for the GRIT Act. All three said they support parts of the SAFE Bet Act. +1 Unit
The hearing will conclude with the committee expressing grave concerns and declaring sports betting an industry that warrants further discussion.
This, too, came to pass. +1 Unit
Total profit: +2 Units
Midweek Roundup: Analyst Bullish on Penn; Retail Sports Betting Success Story
At least one analyst is bullish on Penn stock: JP Morgan Chase’s Joseph Greff is taking the “contrarian” view on Penn, raising his target price from $19 to $27 (the stock was trading at $20 last Friday). While he mentioned online playing a role, most of the optimism stems from the company’s land-based portfolio: “Even allowing for an unsuccessful ESPN Bet, Greff saw Penn as worth $26 per share. (The stock was trading at $20 per share at the time of his report.) He opined that the value could be further elevated with merger-and-acquisition activity and asset sales.”
Maine’s (retail) sports betting success story: The numbers are far from jaw-dropping, but $6 million is still $6 million, and that’s the amount of tax revenue sports betting has delivered to the state since mobile launched in November 2023. More importantly, the state’s first retail sportsbook considers sports betting a success. Oddfellahs Sportsbook and Bar operator David Timulevich tells News Center Maine that crowds have kept coming since opening as the state's only in-person betting location. “The crowds have been amazing,” said Timulevich. “There’s nothing like sports. Sports bring everyone together.”
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News: California Cardrooms Successfully Target Lawmakers
The passage of SB 549, a bill that grants tribes standing to sue California Cardrooms, has been flying a bit under the radar, considering it could completely upend the California cardroom industry.
Cardrooms lost the legislative fight, but they did get even during the November elections, defeating three of the four lawmakers they targeted as responsible for the bill’s passage.
Per Cal Matters, card rooms spent more than $3 million on attack ads, text messages, mailers, and other outreach to voters targeting the four candidates:
“In an extraordinary display of political retribution, California’s card room industry spent more than $3 million in the lead up to the November election to oppose four lawmakers who played key roles in the bill’s passage. Three of the candidates targeted by the card rooms ended up losing, including the rare defeat of an incumbent Democratic senator.”
The efforts to defeat these lawmakers were purely punitive, something insiders see as a stern warning from cardrooms, “Any time you have a group essentially announcing to the world that they are going to do vengeance spending, it does cause lawmakers to pay attention,” former Democratic Assemblymember Mike Gatto told Cal Matters.
Views: Gaming Tribes Happy with Trump’s DOI Nominee
Play USA’s Matthew Kredell confirmed what this newsletter has been saying (has known) for several weeks: Donald Trump’s nominee for Secretary of Interior, Doug Burgum, will not be a thorn in the side of tribes.
In fact, of all the potential nominees Trump could have selected, Burgum is probably the best-case scenario for tribes.
“… Burgum doesn’t have an adversarial history with tribes. He signed multiple pro-tribal pieces of legislation while serving as the governor of North Dakota and is unlikely to roll back any progress made during Secretary Deb Haaland’s tenure.”
And consider the components of the compacts he signed with North Dakota tribes in 2022:
Allow tribes to offer online Class III games, including sports betting, on their reservations.
Lower the legal age for gambling on reservations from 21 to 19 years old.
Allow tribes to accept credit and debit cards for any purpose, including account wagering and cashless gaming.
Limit the cost of state regulatory activity reimbursed by the tribes to no more than $10,000 per year for each tribe, subject to an annual inflation rate.
Included language allowing tribes to offer statewide mobile iGaming if authorized by state and federal law.
Kredell spoke with several tribal leaders, and there was broad agreement that Burgum’s nomination was good news for gaming tribes.
“Gov. Doug Burgum is such a good guy, and I’m so grateful for the choice President Trump has made,” Standing Rock Sioux Tribe Chairwoman Janet Alkire told Kredell. “He really understands the relationship with tribes, meets with us regularly, and we can call on him anytime. He just really has a good friendship and partnership with all the tribes in North Dakota.”
Indian Gaming Association Chairman Ernie Stevens Jr. called Burgum a “bright spot” and highlighted his record of working with tribes. “He’s fair, cordial, and effectively communicates with tribal governments, and that’s all we can ask for in the work we do.”
As I titled one entry on Burgum’s nomination: Doug Burgum’s Tribal Record Is Pretty Damn Good.
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Around the Watercooler
Social media conversations, rumors, and gossip.
Here are what some others were saying after the Senate Judiciary hearing:
Columns from:
Statement from AGA:
“Today’s hearing notably lacked an industry witness. This unfortunate exclusion leaves the Committee and the overall proceeding bereft of testimony on how legal gaming protects consumers from the predatory illegal market and its leadership in promoting responsible gaming and safeguarding integrity,” AGA Senior Vice President of Strategic Communications Joe Maloney. “We remain committed to robust state regulatory frameworks that protect consumers, promote responsibility, and preserve integrity of athletic competition."
Statement from iDEA Growth:
“Imposing federal mandates on sports betting would risk undermining this progress and introduce confusion and inefficiencies in a regulatory environment that is functioning well. Federal intervention threatens to stifle innovation, disrupt state economies and jeopardize the benefits that regulated sports betting has delivered to communities across the country.”
Statement from Campaign for Fairer Gambling:
Derek Webb, founder and funder of CFG, stated, “The testimony made it abundantly clear that the state-by-state regulatory approach is failing. Without federal oversight, gambling expansion will continue to harm the public while empowering illegal operators.”
Stray Thoughts
One of the most pervasive lies is that practice makes perfect. The truth is that perfect practice makes perfect. Mindless practice is a waste of time and can even be counterproductive. As self-defense guru Tony Blauer says, “Be careful what you practice—you may get really good at the wrong thing.”