Between the Lines – American Gaming Report – February 2024

Catena Media is offering North America gambling industry insights via Adam Candee, Editor-In-Chief of Legal Sports Report.  Catena will offer Candee's in-depth look at the US industry every month with trends and news in regulation, legalization and the companies involved in the space.

M&A returns to the US industry after pullback

As we continue through the sixth year of the broader legal US sports betting industry, referring to any particular time period feels incomplete because the snapshots are so narrow.

With that said, recent news suggests we could be entering a second major period of M&A activity after a soul-searching 2022 and 2023 for many operators.

In just the past couple of weeks, consider what took place:

• DraftKings purchases online lottery heavyweight Jackpocket for $750 million
• FanDuel grabs BeyondPlay with an eye toward bolstering iGaming
• Caesars buys WynnBet online gaming operations in Michigan

Add to those the relatively recent moves of Fanatics scooping up PointsBet’s US operation and BetMGM adding Angstrom for in-play sports betting help, and you see the stateside market-share leaders leveraging their collective crawl toward profitability with additions pointed toward the next round of the battle for American supremacy.

Their paths forward, of course, shape up quite differently. FanDuel and DraftKings maintain their positions as the clear top two operators in the US sports betting market, but their recent moves suggest a longer look into the murky future of iGaming. Passing online casino legislation at the state level will likely prove more daunting than the rapid adoption of sports betting, but iGaming profit margins in the handful of live states demand such long-term forethought.

While a handful of states, including New York and Illinois, are dipping toes into the water on iGaming legislation in 2024, no state-level bill appears to have significant momentum toward passage right now.

Can bridges be repaired to California sports betting?

The 2022 election provided yet another reminder of how complicated the California gaming market can look to outsiders. A ballot initiative to legalize commercial online sports betting met enormous resistance from powerful state gaming tribes, both in opposition to the measure and with a competing proposal from the tribes themselves.

Voters soundly rejected both proposals, with neither gathering more than 18% approval. That defeat sent as strong of a message as proponents could receive: work in concert with tribes or face more rejection in the Golden State.

That is why a panel at a California tribal gaming conference this week raised eyebrows when a prominent FanDuel executive took the dais alongside tribal leaders. FanDuel President Christian Genetski spoke while seated with California Nations Indian Gaming Association Chairman James Siva:

“When I reflect on 2022, I think if I’m being a little charitable it was what I would describe as a well-intentioned but uninformed and misguided attempt. It was definitely a spectacular failure from our perspective, but that’s OK. It wasn’t the time and it wasn’t the right way, and we understand that. … I’m happy to sit here today and be the butt of some hopefully friendly jokes and have the opportunity to speak transparently about at least where FanDuel is on these issues.”

Genetski acknowledged it will take time to rebuild trust with tribal leaders. Commercial sportsbooks took a tangible step toward doing so earlier this year by speaking out against a rogue 2024 sports betting ballot proposal that proponents ultimately abandoned.

Tribal leaders consistently say that if legal sports betting ever comes to California, it likely will begin with in-person wagering at their properties. Such a phased rollout toward any online option likely puts the horizon in California at least two years out, if not more. It also likely places sportsbooks like FanDuel and DraftKings into more secondary roles in the business rather than as primary platform operators.

Siva acknowledged the long history and road ahead with a positive finish:

“We always hear lots of nice words. Christian being here today and FanDuel sponsoring the conference, I think really puts some actions behind those words, so that means a little bit more to us.”

North Carolina online sports betting launch right on track

Online sports betting is slated to launch in North Carolina on March 11, with the eight operators at the starting line able to begin taking pre-registrations and deposits on March 1.

State regulators are moving dutifully through their duties toward launch day after a surprise fall legislative change forced them to regroup and miss a potential Super Bowl start time. This week, North Carolina regulators issued a series of approvals that keep the online launch on track for a start right before both the ACC Basketball Tournament and March Madness in college hoops.

Unless a state currently looking into legalizing sports betting pulls an Arizona-like pass and launches within months, North Carolina appears to be the only new online launch in 2024. That places extra emphasis on a successful launch for all corners of the industry, but especially for sports betting newcomers ESPN Bet, Fanatics Sportsbook, and Underdog.

Penn Entertainment, the parent company of the ESPN Bet platform, teased improvements to the revamped app launched after separating from Barstool Sportsbook. Early returns on the late-2023 ESPN Bet start appear middling, with the operator approaching an 8-9% share in active markets.

Penn CEO Jay Snowden previously said the company is targeting closer to 20% market share within a couple of years. A strong start in a competitive North Carolina landscape of operators would go a long way toward inspiring market and industry confidence in that possibility.

 

About the author

Adam Candee is the Editor-In-Chief of Legal Sports Report. He joined LSR in April 2018, just a month before the dawn of today’s US sports betting industry. Adam earned national and regional awards as a newspaper reporter at the Las Vegas Sun and Arizona Daily Sun for breaking news, feature, and opinion writing. His team at KLAS-TV earned the Edward R. Murrow Award as the best television news website in the country in 2013. Adam also is a two-time Arizona sports columnist of the year and a Golf Writers Association of America honoree. A proud graduate of Northern Arizona University, Adam also volunteers as an editor for Kiva, a non-profit that specializes in microfinance in underprivileged parts of the world.