Between the Lines – American Gaming Report – November 2023

Catena Media is offering North America gambling industry insights via Dustin Gouker, a former vice president of the company who has been at the forefront of coverage and discussions in the United States for much of the past decade. Catena will offer Dustin’s in-depth look at the US industry every month with trends and news in regulation, legalization and the companies involved in the space.

Florida sports betting is back, sort of

Florida became the biggest state by population to have any form of sports betting (for the second time) in early November. The Hard Rock Bet app started taking wagers again, albeit on a limited basis. The user base is currently limited to people who signed up and bet back in 2021 when the app was briefly live between the approval of the Seminole compact with the state and a court case that ultimately forced it to stop.

We’ll also see the opening of three sportsbooks at casinos in South Florida in December, according to the Seminole tribe.

But it’s not quite all systems go for Florida sports betting, and it’s not clear Hard Rock will green light a further opening of the online market. After all, there are now two active court cases trying to stop sports betting in the state; while neither of those precludes offering sports betting now, Hard Rock likely wants to avoid any potential kind of start and stop like it experienced in 2021:

• The ongoing federal court case is being appealed to the U.S. Supreme Court, but there is no guarantee the nation’s highest court will hear the case. After initially granting a temporary stay, the court already denied a stay of the lower court’s ruling.
• The plaintiffs in the federal case have also now opened up a challenge in state court and have asked to suspend sports betting via this channel.

The uncertainty that comes with the above could continue to slow or stop a full rollout of online sports betting. However, Hard Rock and the Seminoles may not want to continue to wait while both of these cases play out, which could take years in the case of the state-level challenge.

In parallel, it will be interesting to see if the opening of sports betting creates more action or urgency around ​​the Florida Gaming Control Commission’s cease and desist letters to three fantasy sports operators. The impetus of those letters would appear to be trying to stop operators offering a competitive product to legal sports betting that is not clearly authorized by state law. So far, it doesn’t appear that any fantasy sports operators have exited Florida in the wake of the letters.

Athletes and gambling getting more attention

There continues to be a steady stream of news around the intersection of gambling and athletes in recent months. The latest:

• NHL player Shane Pinto was suspended for 41 games, but we don’t know much about the details of why.
• NCAA President Charlie Baker is asking for a fresh look at proposition bets on college athletes.
• Fallout from gambling activity with Iowa and Iowa State athletes continues, as some players were suspended for the season. Iowa’s football coach is not happy with what is going down.
• Two lower-level pro golfers were suspended for gambling violations.

The undercurrent of the discussion around the intersection of athletes and sports betting comes in several channels:

• Transparency: The NHL and golf suspensions came with very little information about the nature of what happened, at least officially. It’s not clear why leagues or players associations would want to allow people to speculate about the nature of the infractions, which is what is now happening. To its credit, the NFL has been very transparent about its suspensions.
• What don’t we know?: The Iowa college gambling incidents underline something few are talking about: It’s hard to believe this is isolated to Iowa. If more than a dozen athletes in Iowa have been charged in relation to illegal gambling, this is almost certainly going on at colleges around the country, as well. It’s also becoming difficult to believe that there are relatively few violations in pro baseball, basketball and hockey vs. pro football, even though the latter has far more players on rosters than the first three.
• More re-regulation cometh?: The past year has seen some attempts to put tighter reins on the sports betting industry on a variety of fronts. After the wave of news this year around colleges and betting, lawmakers or regulators could take a fresh look at policies on betting on college teams and athletes in 2024 and beyond.

California sports betting: Don't hold your breath

The recently surfaced California sports betting ballot initiative seems dead on arrival, based on the early returns from tribes in the state. But we got more insight into the plan, which, to put it as nicely as possible, looks half-baked.

The entrepreneurs behind the effort want to create a path for offshore sportsbooks to become regulated entities owned by the tribes in the state. That scenario seems highly unlikely and also extremely difficult to execute even if there was interest from the offshore entities.

In any event, if you’re handicapping the likelihood of California sports betting, it’s an extremely heavy underdog to be legalized in any form in 2024. The most likely timeline would feature the legalization of retail sportsbooks at tribal casinos in the coming years, with a longer horizon for sports betting apps that would be operated by the tribes. A fully open sports betting industry untethered to the tribes seems unlikely based on the current climate.

Q3 earnings season

It’s earnings season for companies in the gambling space; here’s some of what we learned:

• DraftKings has seen its stock rise after solid third-quarter results and improved guidance. CEO Jason Robins also hinted at a new product launching in November, later revealed to be “progressive parlays,” in which users don’t have to hit every leg to win a parlay. Separately, we also have more evidence that DraftKings is the current market leader in US online gambling (not just sports betting), surpassing FanDuel. More from Robins on Q3:
  • • • “Our fantastic third quarter results demonstrate the positive impact of our product and technology investments as well as excellent preparation and execution by our entire organization. Our new and differentiated features and functionality have created an exceptional user experience that sustains engagement for our mobile sports betting and iGaming customers. We also delivered another successful online sportsbook launch in Kentucky and look forward to additional launches in Maine and in North Carolina, pending licensure and regulatory approvals. We expect to generate approximately $200 million of positive Adjusted EBITDA in the fourth quarter of 2023 based on the midpoint of our updated fiscal year 2023 guidance and look forward to sharing our multi-year outlook at our Investor Day on November 14th.”
• Stock of FanDuel parent company Flutter was down 10% after reporting earnings; the company saw revenue rise in Q3 but missed analyst estimates. A listing on the New York Stock Exchange is coming in Q1, the company reported as well.
• MGM Resorts reported its earnings as well, and the online arm, BetMGM, was profitable for the first time for an entire quarter. MGM’s partner in the online gambling joint venture, Entain, said it wants to see US market share surpass 20% within three years.
• Rush Street Interactive, which runs the BetRivers brand around the United States, continues to lead on the path to profitability, with adjusted EBITDA expected to be positive for the full year.

Live streaming in sportsbook

One of the central issues in the US sports betting industry moving forward is the live betting product vs. the latency of watching sporting events. In the cord-cutting era, streams of sporting events can be way behind live action. That makes it a rough experience for a bettor wanting to bet on anything in-game, unless there’s a timeout or other break in the action.

But low-latency streams integrated right into sportsbooks appear to be one answer to the problem. Genius Sports’ BetVision – which is just four to six seconds behind real life, is helping to address the problem of NFL betting at Fanatics Sportsbook, Caesars and BetRivers. More from Legal Sports Report on how BetVision is performing:

• 40% increase in bettors streaming Thursday Night Football from Week 1 to Week 2.
• 46% of users who streamed TNF Week 1 returned to stream TNF Week 2.
• 2x more bets were placed while streaming vs. not streaming.
• 54% of bets made by new streamers were in-game wagers.

In-game betting is already hugely popular in the United States, and that’s only likely to increase if the friction created by lag decreases.

Things to watch

• ESPN Bet arrives this month, with planned launches in 17 states on Nov. 14. This is of course not a new app, but a rebrand and relaunch of Penn Entertainment’s existing Barstool Sportsbook app that we have discussed at length previously in the American Gaming Report.
• Maine online sports betting launched to relatively little fanfare, with Caesars and DraftKings the only operators.
• Progress continues to be made toward the launch of North Carolina online sports betting, but we still don’t know when it will be live next year. The state also joined the recent wave of regulators trying to create a bright line that certain types of fantasy sports cannot take place in the state without a sports betting license.
• Oklahoma Gov. Kevin Stitt put out a plan for rolling out sports betting in the state, but it’s not clear if it will gain traction.

 

About the author

Dustin Gouker is the former Vice President of Content for North America at Catena Media, and currently serves as a consultant and analyst for the company. Gouker started writing and editing at LSR in 2015, reporting on the meteoric rise of DraftKings and FanDuel in daily fantasy sports. He also led coverage of the push for legalization of sports gambling in the US, including being on hand to cover oral arguments in the US Supreme Court as the federal ban was lifted. He’s considered one of the leading experts about the US sports betting space and has spoken at a variety of conferences and with various media outlets about the industry’s development.