You're Going To Get Some Pushback
Online casino legalization is facing widespread blowback. In states like Illinois, the opposition has many faces, citing fears of addiction and economic risks.
The Bulletin Board
THE LEDE: Online casino legalization faces massive opposition in Illinois.
BEYOND the HEADLINE: As online casino bills flounder, states are likely to look at increasing taxes on existing gambling.
ROUNDUP: Bet365 is live in 2 more states; MD sends VGW C&D Letter; FanDuel launches The Comeback with Craig Carton.
VIEWS: Kalshi and Robinhood 2.0, March Madness edition.
AROUND the WATERCOOLER: About that 15-year-old with a gambling problem…
STRAY THOUGHTS: John Oliver takes aim at sports betting.
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The Lede: Illinois Online Casino Efforts are a Fool’s Errand
With online casino prospects trending negatively, there is a kitchen-sink approach happening in states like Illinois — a state that has flirted with, but never seriously considered online casino legalization.
Two online casino bills are under consideration: SB 1963, sponsored by State Sen. Cristina Castro, and HB 3080, sponsored by State Rep. Edgar Gonzalez.
“It would set forth protections for consumers and retail casino workers and capture revenue to give our state’s economy an extra boost,” Castro told Politico Playbook. “Expanding gaming is not a fix-all solution for every issue our state faces, but I believe it can be part of the solution.”
The problem is, (almost) no one wants it, as the witness list for a hearing on HB 3080 demonstrates (h/t Steve Brubaker):
As Chris Altruda wrote for Casino Reports:
“While there was support for HB 3080, only one local witness provided oral testimony among a group that included representatives from FanDuel, Caesars, and the Sports Betting Alliance.
“The multiple opponents who spoke against the bill included representatives from the Illinois Licensed Beverage Association, the Illinois Municipal League, multiple fraternal organizations, and the Illinois Gaming Board.”
One (somewhat unlikely) opponent, Penn Entertainment, told the committee, per Hannah Meisel, the company has spent $600 million in recent years enhancing and expanding its casinos in Aurora, Joliet, and Alton, with “the understanding that Illinois’ gaming landscape would remain stable.” In addition to its casinos, Penn is a VGT supplier in the state. For more on Penn’s opposition, scroll down to the “Views” section.
“The economic impact of iGaming is uncertain, but the potential negative consequences are clear: The proliferation of online gaming could reduce in-person casino traffic, threatening jobs, lowering the economic benefits to local communities and ultimately discouraging future investments in the state,” Penn lobbyist Jay Keller said.
And this is not simply stakeholder opposition. According to Politico Playbook, a new poll (the polling memo is here) indicates negative public sentiment toward online gambling: “The Tulchin Research survey of 800 registered voters found that 71 percent believe gambling on phones is more addictive than gambling at brick-and-mortar locations like casinos, restaurants, bars or veterans halls.”
I’ll finish this entry with Chris Grove’s statement from the Next.io conference (conveyed by Ryan Butler): “Opposition to real money online casino legalization in state legislatures is arguably growing, not decreasing, per Chris Grove.”
Or, as Eilers & Krejcik Gaming (a newsletter sponsor) put it in its latest EKG Line newsletter following bullish comments from several industry executives on online casino expansion:
“Although we generally agree that fiscal need can result in the consideration of new legal markets (and tax revenue sources), online casino shows no signs of obeying this rule of thumb. In short, the typical view of online casino in state houses remains negative. In light of that dynamic, it is much easier politically to raise taxes on an existing sin industry (OSB) than legalize an entirely new one. As such, our house forecast remains one new casino state (Florida) in the next three years through 2027.”
Beyond the Headline: Tax Increases Gain Momentum
Speaking of tax increases on existing gambling products, an EKG Flash Note entry examined the possibility of New Jersey bumping up its sports betting and online casino rates, concluding that while Gov. Phil Murphy’s proposal is unlikely to pass as-is, “We still think some kind of tax increase is likely given the proposal is (1) fairly moderate (~27% blended GGR rate), (2) backed by Governor Murphy, (3) slated for inclusion in the budget, a must-pass bill, and (4) made amidst exigent fiscal need (the state is facing a $3.8bn budget deficit).”
The bigger story, in STTP’s view, is what happens across the country if New Jersey, a state the industry props up as a bastion of reasonability and the “gold standard” for how to legalize online gambling, raises its tax rate.
New Jersey isn’t Ohio or Illinois, and an increase in the Garden State will likely cause other states to look closely at their sports betting (and where offered, online casino) rates, particularly with online casinos seemingly years away in most locales.
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Roundup: Bet365 Live in 2 More States; Maryland Sends C&D to VGW; FanDuel TV Launches PG Show
Bet365 goes live in Illinois and Tennessee: Illinois now has ten licensed sports betting operators following the launch of bet365. Illinois is bet365’s twelfth state. The news was followed by its Tennessee launch (state #13). Bet365 has been steadily expanding its presence across the US since launching in New Jersey in 2019, and is one of the Challenger brands STTP is keeping a close eye on.
VGW gets “the letter” from Maryland: Per Daniel Wallach, writing in Forbes, Maryland regulators sent a cease-and-desist letter to VGW saying the company “is offering and conducting online gaming activities in Maryland without legal authority to do so.” The letter was sent a day after a VGW lobbyist testified (somewhat convincingly?) against a sweepstakes ban bill that has passed the Maryland Senate.
FanDuel TV announces show focused on problem gambling recovery: FanDuel TV has launched “The Comeback With Craig Carton.” Per a press release. Carton will sit down with “those who have experienced the highs and lows of gambling addiction to amplify their stories, break down the stigma surrounding gambling disorder, raise awareness of support resources for individuals and their families, and show that recovery is possible.” Interestingly, the show (which can be found on YouTube) has a presence on the Substack platform.
The first episode can be found here:
News: Kalshi + Robinhood = 50-State Sports Betting
And so it begins (again): Robinhood is once again teaming up with Kalshi to offer sports markets, this time for March Madness after the duo’s previous false start when it attempted to launch Super Bowl markets:
Per a press release [bold mine], the offerings seem to have been given a green light by the CFTC — the CFTC requested :
“Today, Robinhood Derivatives, LLC (RHD) announced a prediction markets hub directly within the Robinhood App, giving customers the opportunity to trade on the outcomes of some of the world’s biggest events. At launch, the hub will allow customers to trade contracts for what the upper bound of the target fed funds rate will be in May, as well as the upcoming men’s and women’s College Basketball Tournaments.”
“The prediction markets hub–and corresponding contracts–will initially be available across the US through KalshiEX LLC, a CFTC regulated exchange. We have been in close contact with the CFTC over the past several weeks and look forward to continuing to work with them to promote innovation in the futures, derivatives and crypto markets.”
I agree with Dustin Gouker, who wrote in his Closing Line newsletter, “Kalshi and Robinhood are going YOLO into full-on sports betting for March Madness and daring anyone to try to stop them.” As I’ve been saying, the envelope-pushing in this space is enough to make DFS and sweepstakes operators blush.
You can check out my recent feature column for more thoughts on the current prediction market landscape.
I don’t want to write another feature column on this topic. Still, I fear I will have to in the coming weeks as opposition snowballs (covered in my previous feature column linked above) and prediction markets like Kalshi expand into new areas like sports, with little regard for the existing sports betting structure.
As two-time podcast guest (episode #8 and #34) Kim Lund put it on LinkedIn following Kalshi’s announced March Madness offerings, “Industry folks liking this post says it all. Still hasn't uttered the word "harm" once this guy. But who cares. Maybe this is the next golden goose amiright?”
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Around the Watercooler
Social media conversations, rumors, and gossip.
There is a video making the rounds on social media of a gambling addiction counselor telling the story of a 15-year-old who used stolen social security numbers and credit cards to open sports betting accounts.
A few parts of the story don’t add up (not being able to contact FanDuel being the most head-scratching), but as we enter March Madness, this type of coverage (see below) will likely get ramped up to 1,000.
Stray Thoughts
And more negative attention:
Oliver said, “As you no doubt have been reminded by approximately ten million ads.” Oliver called gambling for entertainment “time or location dependent” before diving into the ridiculous amount of money US residents are betting on European ping pong matches.
Interestingly, Oliver also talked about an aspect of modern gambling that I recently touched on: the use of euphemisms.
“As long as you replace gambling with skill, bets with entry fees, and lines with markets, you have something that looks, sounds, and feels like gambling but technically isn’t. It’s linguistic sleight of hand, and it’s everywhere.”