It's Your Future... I See A Cab Ride
The legalization of online gambling in the US has experienced more hiccups and misadventures than Jules and Vincent in Pulp Fiction. But that isn't stopping efforts around the country.
The Bulletin Board
NEWS: Sports betting operators are looking down the road at online casinos, and for good reason.
NEWS: NCLGS will announce a major iGaming initiative at the Winter Meeting, plus sessions on DFS 2.0 and iGaming’s legalization struggles.
NEWS: BetMGM’s Adam Greenblatt highlights the best candidates for online gambling legalization in 2024.
BEYOND the HEADLINE: Who does AI think the best online casino candidates are?
AROUND the WATERCOOLER: More early revenue numbers for ESPN Bet.
STRAY THOUGHTS: Post-PASPA sports betting is not the most significant expansion of gambling in US history.
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Operators Set Eyes on the Next Prize: Online Casinos
BetMGM CEO Adam Greenblatt spoke about online gambling at the 2023 Morgan Stanley Global Consumer and Retail Conference, where he called the pace of sports betting adoption in new states a surprise. On the other side of the ledger, Greenblatt was even more effusive about online casinos, calling the iGaming market “eye-watering” and later adding that “the financial dynamics on the iGaming side are much more favorable.”
“Everybody expected it to be big, but actually, the size of it is just eye-watering, particularly on the iGaming side,” Greenblatt said. “The iGaming side now five states is just eye-watering.”
Speaking at the Craig-Hallum Online Gaming Conference, DraftKings CEO Jason Robins had this to say about online casinos:
“It’s a very significant chunk of our revenues, and that’s only in five states. It’s going to grow. For me, igaming is kind of the unlocked, or the hidden, not yet unlocked, gem of DraftKings.
“I think a lot of people are sort of sleeping on it a little bit, and maybe you’re just focused on how big the sports side can be and not realizing the igaming can make the business even larger.”
How large? According to Robins, as more states go live with online casino gambling, he “wouldn’t be surprised if it’s bigger than sports at some point for our business.”
Every point matters: “Given that a single point of market share could approach $100 million of annual run rate EBITDA in the long-term mature market, the case for investment is strong,” BetMGM CFO Gary Deutsch said during the company’s investor day call.
Looking Ahead to the NCLGS Winter Meeting
The National Council of Legislators from Gaming States (NCLGS) meets twice yearly. Once in the summer and once in the winter. From January 3-6, NCLGS will head to Florida (ground zero for many gambling-related topics) for its first Winter Meeting under West Virginia Delegate Shawn Fluharty’s leadership.
In a recent email, the National Council of Legislators from Gaming States teased a “major iGaming initiative led by new NCLGS President Shawn Fluharty” that will be announced at the upcoming winter meeting in Fort Lauderdale, Florida.
Fluharty strongly advocates for legal, regulated online gambling, and his ascension to a leadership role within NCLGS will be interesting to watch.
There are two sessions on the upcoming agenda that are also of interest. A third session on tribal gambling is also a topic du jour in Florida, but it’s unlikely any new ground will be trodden.
The first session of note is on DFS and the rise of DFS 2.0 products.
… a growing number of companies focused on daily fantasy sports (DFS) have entered the fray, offering games that some call innovative but others say bear too close a resemblance to sports betting. This panel will provide a survey of newer DFS game types that have grown in popularity since the 2018 PASPA repeal. How are these companies disrupting the gaming industry? How is the gaming industry dealing with these companies as some states are licensing them, while other states limit their offerings.
Chair: Delegate Shawn Fluharty, West Virginia; NCLGS President
Presenters:
Matt Carey, Reporter, VIXIO GamblingCompliance
Andromeda Morrison, General Counsel & Director of Skill Games, Ohio Casino Control Commission
Derek Schmidt, former Kansas Attorney General and Partner, Husch Blackwell
Stacie Stern, Vice President Government Affairs and Partnerships, Underdog Fantasy
The second session of interest is dubbed Closing the iGaming Education Gap.
While sports betting expanded quickly in the United States, igaming has not had the same success. Why is that? As legislatures convene in January across the country, what is being done to close the education gap on igaming among everyone from legislators to regulators. Many of the igaming companies are currently operating in foreign countries, but how can they better approach the United States market?
Chair: Delegate Shawn Fluharty, West Virginia; NCLGS President
Presenters:
Daron Dorsey, Executive Director, Association of Gaming Equipment Manufacturers (AGEM)
Saam Hafezi, Regional Director, US, Play’n GO
Charmaine Hogan, Head of Regulatory Affairs, Policy Development, Strategy, Gambling and Gaming, Playtech
Martin Lycka, SVP for American Regulatory Affairs and Responsible Gambling, Entain
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MGM CEO Names Six 2024 Online Gambling Candidates
Circling back to online gambling, when the topic of new online gambling states was broached with BetMGM CEO Adam Greenblatt at the 2023 Morgan Stanley Global Consumer and Retail Conference, he said the company expects “some movement on the legislative front.”
After discussing recent disappointments like Indiana, Greenblatt named New York, Maryland, and Illinois as potential 2024 candidates. However, I would point out that a careful parsing of his words indicates legislative movement, not passage.
Greenblatt also highlighted Georgia, Minnesota, and Missouri as candidates for online sports betting legalization, explicitly saying, “Minnesota is a complex situation, but some progress there being made that we see.”
On the online casino front, New York appears to be the best candidate (yet far from a promising candidate), considering the recently released Maryland study and its cannibalization finding, which provides the anti-online gambling crowd with all the ammunition it needs to derail efforts.
Still, New York has its own complications. The expected debate over downstate casino licenses and a history of legislative morass makes it difficult to consider the Empire State anything but a good-on-paper candidate.
And then there is Illinois, a peculiar addition to a list of top candidates. Illinois has toyed with the idea of online casinos for many years, but the state has never been overly close to pushing a bill across the finish line. This could be a case of Greenblatt wanting to give investors a shiny prize to stare at and picking the largest of the possible states. Or, perhaps there has been some behind-the-scenes progress in the Land of Lincoln?
Beyond the Headline: What Does AI Think?
I asked a couple of AI programs to forecast online gambling’s prospects in 2024. Keep in mind these programs have cutoffs (Grok is 2023, and ChatGPT is 2022), but even with that limitation, let’s just say these programs will not be moving prediction markets.
Grok:
New York, Illinois, and Massachusetts are the most likely candidates due to their large populations and potential for significant tax revenue. Massachusetts has shown interest in legalizing online poker, and there's a strong belief that it could happen in the next few years.
Chat GPT (which included already legal Connecticut based on its date cutoff):
Massachusetts: Massachusetts has been exploring various gambling expansion options, and discussions about online casino gambling have been part of the conversation.
Connecticut: Connecticut has shown interest in expanding its gambling offerings, including online options. The state has already legalized and launched sports betting.
New York: New York has been considering various forms of online gambling, and discussions about online casino gambling have taken place.
Illinois: Illinois has been open to expanding its gambling options, and discussions about online casino gambling may continue.
California: California has a large population and has historically explored online poker legislation. The state might consider broader online casino gambling options.
Around the Watercooler
Social media conversations, rumors, and gossip.
After yesterday’s Maryland numbers, more ESPN results are trickling in, and it looks like Penn is getting a solid boost from its new sports betting partner.
Barstool Sportsbook put up $7.7 million in handle in October.
We also have November results from Iowa, where ESPN Bet generated $15.3 million in handle and $1.8 million in revenue. In October, Penn’s Barstool Sportsbook produced $4.7 million in handle.
In all three locales, Maryland, Indiana, and Iowa, ESPN Bet’s handle share was between 5.8% and 6.2%, which, if adjusted for an entire month (ESN Bet launched on November 14), creep toward 10%.
Stray Thoughts
No, the current spread of legal sports betting in the US (2018-Present) is not the fastest expansion of gambling in US history.
In the late 1990s and early 2000s, the US went from having zero access to online gambling to unfettered access. Everyone knew about it, and advertisements were everywhere - online poker sites bought TV time and produced their own shows for many years. KYC was lax, the industry was self-regulated, and there was no friction with moving money around.
If there was ever a sky is falling, won’t someone think of the children, moment, it was during that period.