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Note: There is not going to be an Indy Gaming Newsletter on Nov. 30.
It wasn’t weekend for the sports betting industry.
On Sunday, DraftKings revealed that hackers stole some $300,000 in customer funds through a series of compromising moves to wagering accounts, which led to unauthorized bank withdrawals. DraftKings is committed to paying customers any money lost in illegal intrusions.
DraftKings’ stock price, nevertheless, tumbled nearly 10 percent on the news before regaining its footing.
Earlier that day, The Latest York Times also handed the sports betting community a nasty beat.
The newspaper published a four-part series following a virtually yearlong investigation into the national expansion of legal sports betting and questioned among the consequences.
Throughout the articles, the Times questioned different state-by-state sports betting tax structures and the lobbying practices used to influence lawmakers. The articles also disputed figures cited by the industry surrounding illegal offshore gambling operations, criticized efforts by sports betting operators to advance responsible gaming practices and examined questionable customer acquisition efforts that concentrate on college students.
One article covered Penn Entertainment’s acquisition of Barstool Sports and the corporate’s continued relationship with Barstool founder Dave Portnoy, who was accused of sexual misconduct charges by online publication Insider.com last yr and was termed a “degenerate gambler” by the Times within the story’s headline.
Nevada gaming regulators have questioned Penn about Portnoy. The corporate, which operates M Resort in Henderson, doesn’t have its Barstool brand in Nevada and declined comment on the Times article.
The response from the gaming industry to the stories ranged from hyperbolic to measured.
The American Gaming Association, the industry’s Washington, D.C.-based trade organization, offered an affordable response on social media late Sunday, saying in the primary of a half-dozen Twitter posts that the Times had “several mischaracterizations” of their reporting.
“We’ll proceed our investment in advancing a secure, well-regulated environment that protects consumers and generates profit for communities,” the AGA wrote.
David Briggs a co-founder of GeoComply, a Canada-based geolocation and anti-fraud company that services the gaming industry, wrote in a LinkedIn post that “sports betting has been a successful example of how you can demolish a income for organized crime.”
Las Vegas-based gaming industry advisor Brendan Bussmann said the stories clearly prove the industry needs to higher educate its stakeholders, not only advocating the explanations for extra laws and regulation but to beat “the fiction that was promulgated as a part of this story.”
Bussmann, the managing partner of B Global, said gaming is “probably the most regulated industries, and the portrayal that it’s anything less on this series of articles is ludicrous.”
The rapid growth of sports betting has outpaced the expansion of any type of legalized gambling.
Following a May 2018 decision by the U.S. Supreme Court that opened sports betting across the nation, 31 states and Washington, D.C., currently have legalized and controlled sportsbooks and/or online sports wagering. One other five states are expected to launch the activity by early 2023.
If sports betting was a sprint, casino expansion was a marathon.
South Dakota became the third state behind Nevada and Latest Jersey to legalize casinos in 1989. Previously 33 years, the number of economic casino states has grown to 34. Tribal casinos, which began their nationwide expansion in 1988, at the moment are in 30 states.
Even state lotteries, which launched in Latest Hampshire in 1964, finally grew to 44 states in 2019 when Mississippi approved the activity.
Growing pains were an expected end result of sports betting.
“We’re heavily regulated by the federal government and hundreds of dedicated professionals across legal gaming jurisdictions set and implement regulations,” the AGA wrote in its tweet thread. “There is a high bar to clear to receive and retain a gaming license and any assertion on the contrary is fake.”
Meanwhile, responsible gaming has grown from Harrah’s (now Caesars) Entertainment putting a 1-800 phone number for Gamblers Anonymous on slot machines to most casino corporations making available information that describes responsible gaming programs, policies and practices and where to search out assistance.
The UNLV International Gaming Institute also began research around responsible gaming, led by former MGM Resorts International executive Alan Feldman.
In the previous few years, the AGA established the “Have a Game Plan” program for sports betting that features partnerships with sports teams and leagues and promotes responsible wagering habits.
Bussmann suggested the sports betting industry needs to extend that effort with college and university sports programs to teach students on responsible gaming and the warning signs surrounding offshore sites.
“Betting on college campuses is occurring today,” Bussmann said. “Having a partnership with an operator only supports those educational initiatives which have lacked for many years.”
The AGA said research previously yr found that 92 percent of sports gamblers were accustomed to responsible gaming tools and greater than half saw more responsible gaming information previously 12 months than within the previous yr.
On Tuesday, the Massachusetts-based International Center for Responsible Gaming, which was founded by the gaming industry in 1996, announced a $180,000 donation from sports betting operator BetMGM to support the organization’s research and education on responsible gambling and the effect promoting has on problem gambling.
Apollo executives depart AGS after the $41M stock sale closes
Per week after private equity giant Apollo Global Management said it was selling its 22 percent ownership in gaming equipment provider AGS, its two representatives on the Las Vegas-based company’s board departed their positions.
The resignations of Apollo Partner and Co-Head of Private Equity David Sambur, who served as AGS chairman, and Apollo Partner Daniel Cohen weren’t a surprise, given the firm’s stock sale, which closed last week. The announcement got here in a filing with the Securities and Exchange Commission.
Apollo held the ownership stake in AGS since 2013. During that point, Apollo directed the acquisition of 20 different gaming businesses, the most important being slot designer and supplier Cadillac Jack in 2015. Apollo also took AGS public in January 2018.
Apollo’s 8.2 million shares of AGS were sold for $41 million last week in response to an SEC filing. Shares of AGS, traded on the Nasdaq, closed at $5.32 on Tuesday.
Stifel Financial gaming analyst Jeffrey Stantial told investors within the research note that AGS shares had suffered due to Apollo’s ownership stake.
“We consider Apollo’s exit could open up additional markets for AGS, as gaming licensing requirements in certain states likely proved too extensive for Apollo to undergo given a planned eventual exit,” Stantial wrote.
B Riley Securities gaming analyst David Bain said business and tribal casino operators have increased their purchasing of latest slot machines following historically low sales in the course of the pandemic. The shortage of sales earlier this yr created year-end “use it or lose it” budgets for casino slot floor executives.
“Operators cite a more acute deal with the casino floor as many hit record (money flow) out of COVID with gaming floors because the engine and a lower non-gaming amenity mix,” Bain wrote in a research note.
AGS has six remaining board members, including CEO David Lopez. Other board members include former Monarch Casinos executive David Farahi, former Mandalay Resort Group general counsel Yvette Landeau, former Multimedia Games CFO Adam Chibib, former gaming analyst Anna Massion and former American Gaming Association CEO Geoff Freeman.
Within the SEC filing, the corporate didn’t say when or if latest board members can be appointed.
In February, Apollo paid $2.25 billion for the operations of the Venetian, Palazzo and Venetian Expo as a part of a $6.25 billion purchase from Las Vegas Sands Corp. Real estate investment trust VICI paid $4 billion for the land and buildings.
Las Vegas Sands provided Apollo with $1.2 billion of seller financing, with the private equity company putting up one other $1.05 billion in money and financing.
Stantial said Apollo’s “at-times controversial history within the gaming industry” was also an overhang on AGS.
Apollo previously owned Caesars Entertainment but sold the holdings in 2019, two years after the completion of a sophisticated two-year Chapter 11 bankruptcy restructuring that modified Caesars’ ownership structure and wiped $16 billion of the corporate’s pre-bankruptcy $25.6 billion in debt off the books.
Resort Association PAC endorsed candidates prevail within the election
The Nevada Resorts PAC saw 16 of their 17 endorsed Assembly candidates win their races within the midterm elections this month.
The hassle, backed by the gaming industry’s leading trade group, added two more endorsed candidates to its roster after it released its third quarter contribution and expenditure report in October – Democratic Assemblywoman Elaine Marzola from Las Vegas and Duy Nguyen, a Democrat running for an open seat in Assembly District 9.
Each won their elections.
Nguyen was one in every of eight non-incumbent candidates backed by the PAC who won their races. Only Tiffany Jones, a Republican searching for election to Assembly District 35 in Reno, lost her race.
The organization can be on record as having backed several incoming Democratic leaders to the Assembly, including presumptive Speaker Steve Yeager from Assembly District 9 in Las Vegas, who’s the Democratic Caucus Leader and speaker pro tempore.
Other incoming leaders backed by the PAC include Assemblywoman Danielle Monroe-Moreno from District 1 in Las Vegas, who will chair the Assembly Ways and Means Committee, and Assemblywoman Sandra Jauregui from District 41 in Las Vegas, who will tackle the role of majority floor leader.
The Nevada Resort PAC raised greater than $2.35 million for its 2022 election effort. In announcing the PAC’s formation in January, the Resort Association said its membership of nearly 80 casinos statewide desired to “recruit, assess, endorse, and elect state legislative candidates in 2022.”
R&R Partners CEO Billy Vassiliadis, the resort association’s longtime lobbyist, said the week before the election, “We covered the candidates that we thought deserved support. We said before, this group isn’t going away.”
Analyst report: FanDuel shall be tough to topple from its market leadership
Can one other U.S. online sports betting operator slice into FanDuel’s industry-leading market share?
That’s an issue analysts at gaming industry research and advisory firm Eilers & Krejcik Gaming (EKG) attempted to reply earlier this month.
FanDuel, a subsidiary of world online gaming giant Flutter, has not relinquished its position atop the rankings of sports betting providers within the last 4 years. FanDuel accounts for 40 percent of all sports betting revenue produced online.
“FanDuel enjoys nearly every conceivable advantage within the U.S., from institutional knowledge to scale, from product quality to brand equity,” EKG analysts led by managing director Chris Krafcik wrote in the manager summary of the research report distributed to the firm’s clients.
The firm has quite a few “key success aspects,” equivalent to product quality, which might be challenged. Nevertheless, other aspects, equivalent to brand equity and its market scale, can be tough to match.
How lucrative is online sports betting?
Based on EKG, revenue from online wagers accounted for greater than $5.8 billion – 89.2 percent – of the $6.5 billion in total sports betting revenue collected within the U.S. since June 2018.
That’s one reason the advisory firm said FanDuel has a goal on its back.
“FanDuel’s lead is considerable, but not bulletproof,” EKG analysts wrote.
The advisory firm highlights eight sports betting operators with the capabilities of cutting into FanDuel’s market, but only two, BetMGM and DraftKings, as significant threats.
BetMGM, a 50-50 three way partnership between MGM Resorts International and United Kingdom betting giant Entain, emerged because the “clearest pound-for-pound challenger to FanDuel’s U.S. dominance.” Nevertheless, BetMGM had major caveats, notably the “at time shaky-looking” three way partnership foundation.
FanDuel, together with DraftKings, first gained U.S. consumer awareness of each day fantasy sports applications. The activity became controversial when Nevada gaming regulators determined each day fantasy sports were akin to sports betting and operators needed to be licensed sports wagering providers.
Nevertheless, FanDuel rapidly profited from the 2018 U.S. Supreme Court ruling that allowed states to legalize sports betting and expanded its presence as latest states opened up.
“FanDuel has benefited hugely from its installed database of sports-mad, tech-savvy customers with funded wallets,” EKG wrote, saying the crossover rate from each day fantasy to online sports betting was roughly 50 percent to 60 percent.
Notably, neither FanDuel nor DraftKings operates in Nevada, although FanDuel took initial steps to realize market access. Through its partnership with Boyd Gaming, which owns 5 percent of FanDuel, the corporate was approved by state gaming regulators to brand the sportsbook inside Boyd’s Fremont Hotel and Casino downtown. FanDuel operates sportsbooks at Boyd’s regional casinos in eight states.
From the last three months of 2019 until the tip of September, FanDuel’s share of online sports betting revenue grew from 7 percent to almost 40 percent, despite the emergence of multiple brands and the expanded market. FanDuel also accounts for greater than 20 percent of all spending on digital ads, including sports inside social media platforms, promoting on ESPN.com, and having a presence on streaming services with promoting, equivalent to Hulu.
EKG expects FanDuel to lose incremental market share to multiple brands, possibly over the following yr, but not one challenger grabbing a ten percent piece of the motion. The firm believes FanDuel could eventually fall into the 30 percent-to-35 percent range.