Will Bettors Inside NFL Stadiums Have An Edge? | Sports Betting News Today | LSR Podcast 188
Join us today on the Legal Sports Report podcast for the latest sports betting news and updates. NFL owners voted to allow gameday betting at sportsbooks inside their stadiums, and the crew discusses how that could affect the overall market. Also, how Ohio led a sea change in US sports betting ad regulation, why California’s legalization prospects look dimmer by the day, and which states are close to passing bills in 2023.
Matt Brown (00:09):
Hello and welcome to episode number 188 of the LSR Podcast. My name is Matt Brown, joined each and every week by the brightest minds in all the gaming industry. With me I have two of those, one of which is Dustin Gouker. You can follow him on the Twitter machine @DustinGouker. The other is Adam Candee. You can follow him on the Twitter machine @AdamCandee, and that is two E’s, no Y. And if you hate yourself, you can follow me @MattBrownM2. We do appreciate every single subscription, every single rating, every single review. Absolutely free. Everything we do absolutely free, so your way of helping us absolutely free as well.
Going to talk some legislative things to close things out. We’ll talk about Flutter, we’ll do some stuff with what’s going on with the AGA and maybe some of the college stuff that’s going on out there as well. But Adam, let’s kick things off here. This was something that was … we were getting some NFL meetings, stuff coming out. We know people debate where’s Odell Beckham going to end up. Are we going to be able to roughen the passer? All the different things. But some other stuff has also come out of the NFL owners’ meetings, as well.
NFL owners voted to allow gameday betting at sportsbooks inside their stadiums
Adam Candee (01:15):
Well, what we’re going to talk about here is sort of a secondary thing from the NFL owners’ meetings. And the primary thing is that the number zero, which is actually not a number, but zero is allowed, but it’s not allowed on defensive linemen. The fact that we are not going to get a Vita Vea zero is so disappointing to me. But I guess that’s not the only thing that happened at the NFL owners’ meetings this week related to our little corner of the world. The NFL owners voted to allow sportsbooks in stadiums to accept bets on game day. And you probably think to yourself, “All right. Well, if you were going to have a book in a stadium, wouldn’t you think it would be allowed to take bets on game day?” But that needed to be clarified in the rules for the NFL.
Now, currently that only applies to the Washington football team. And yes, I’m sticking with the Washington football team, because it’s better than the Commanders. The Washington football team has a book that had opened in January in FedEx Field. And as you know, they don’t play a lot of football in FedEx Field in January these days. Sorry. Dustin and I are both from the NFC East, so I got to just get my Washington shots in while I can. And so, there are three other teams that have stadiums outside of … I should say sportsbooks outside of the stadium. You have the sportsbook for BetMGM at the State Farm Stadium in Glendale, and then you also have the Jets and Giants having the Meadowlands book right on property there with FanDuel, just not actually inside MetLife Stadium.
Now, it brings up a whole host of other issues that I think we could talk about when it comes to this, which is of course, yes, you want the game day sportsbook experience in stadium to be worth something to ownership. But at the same time, we’re talking about the need for mobile betting to be widely adopted, and we have 18 stadiums in which that is a possibility here these days with mobile betting in the NFL. And so, what we’re looking at here to me is a couple of things. First of all, what truly is the value of retail? We’ve had that discussion, I believe about a month ago, in terms of where retail in stadium in particular fits back into the overall equation these days. But also, I think we’re going to start to get into questions when it comes to in-play and being able to bet in the stadium, versus being able to bet outside of the stadium, versus being able to bet on TV where there’s a significant delay in the in-play betting experience, versus those who are in the stadium might actually have a fairly significant advantage when it comes to in-play if they choose to bet that way. And what effect might that have in the long haul?
So it’s interesting. I think this piece of news ultimately raises as many questions as the news itself answers.
Matt Brown (04:11):
Yeah. I’m glad you brought that up and that was good. I was going to follow up with Dustin. As we know, one of the things that is the problem, and I say problem in air quotes, I know that they are working on certain things to help … Really, we’re slaves to the cell service and how fast our cell service is and different things like that. And of course also, if you’re watching a game streaming or something like that, there’s going to be latency when it comes down to all of that.
But there actually really is a distinct advantage to being inside the stadium as compared to the rest of the people. Because a lot of times these odds are changing and the play has already happened and you don’t really realize that unless you are a super savvy gambler. Because that’s one of those things that you learn along the way, that they’re a play or two ahead of you a lot of times whenever you’re betting live. But if you’re actually inside the stadium, it’s impossible for that to be the case. And so, if these odds are actually updating in real time, then you do actually find yourself at an advantage being inside the stadium comparatively to a person who’s just somewhere else outside watching on television.
Dustin Gouker (05:17):
I mean, it also just underlines that it’s a … Who cares? Because you could already bet online in football stadiums. This is not new. If your state legalized it, you could place a bet at any game recently in any of these places that have legalized sports betting and have an NFL team. Yeah, I mean there’s that. It certainly is … It’ll be interesting to see if we get more adoption of people betting there. I don’t know what the take-up is of somebody sitting in a sportsbook and watching. Certainly if you’re going to the game, you’re going to place a bet prior to the game. That’s sort of interesting.
But, I mean, more of the interest of this is having a use for the stadium on the hundreds and hundreds of days when it’s not being used. The game day option is … I don’t know, it felt sort of irrelevant to me. Like Adam said, we’ve already crossed this bridge. We have sportsbooks in stadiums. Not just the NFL. This is coming a lot of places. We have had the leagues come out and say, “We want to be the licensing vehicle for sports betting.” It’s actually kind of minor in my mind. The NFL and all these teams and leagues have already crossed this bridge. And to make a little bit of a difference for, oh, we’re open on game day now, I mean good. Because there’s not really any difference. You’ve already put a sportsbook next to your team and in the stadium for decades you opposed sports betting. This is just really from that standpoint normalizing it.
Though it is interesting, in the wake of this … We don’t think we’re going to get into this particularly with Bradley Beal and the story about the Wizards and the Orlando Magic and a bettor calling him out that he lost a bet. This is maybe a little bit more dangerous, when we talk about, oh, we’re now having bets here and fans are not going to be happy if their players placed. This is what leagues have said. At least I know the NHL has decried. You’re putting that right in front of the players then. It’s a little bit different from that optic standpoint again, I think. It’s the only part that maybe is a little bit of wishy washiness out of this. That, yeah, now you have … Oh, you’re taking a bet, then you can watch the players right in front of them. NFL stadium, you don’t have a whole lot of access to players, but it is an interesting discussion, that part of it, as leagues try to open up and get more and more into sports betting. The end state probably is that they want to be the ones taking the bets themselves. I mean, that may not be tomorrow, but it’s probably something that they’re looking at down the road.
Matt Brown (07:54):
And Adam, frankly, at the end of the day, if you’re one of these sportsbooks, this is the bang for the buck. I mean, this is the whole reason you did it in the first place. I mean, you have the captive audience, you have the people, the way to expose your brand to the most amount of people who might be prone to making a bet with you and getting exposed to your brand. And maybe you figure out a way at the counter to get them to download the app, et cetera, et cetera. This is what they’re paying for. This is the bang for the buck in these sponsorship deals.
Adam Candee (08:24):
Yeah. And I think what it’s going to lead to is a lot of speculation about who will now consider this option that might not have considered the option in the past. Is a mobile sponsorship deal going to be sufficient for you if you are an NFL team dealing with a sportsbook? Or do you want to put that retail into the actual stadium? And I mean that from both sides of the partnership. What does the sportsbook want, too? Do they want the build-out cost of doing some sort of lounge, or an actual sportsbook? Do they want to actually have to go through the setup of putting an actual operation in the stadium? What sort of operation will you have in the stadium if that’s the case? Are we talking about something where we’ve got, what, a $500 limit? Are we going to be handling cash at this sportsbook? There are all sorts of questions when you talk about this environment of having a book in the stadium that I think will be interesting for those of us in the industry to keep an eye on.
Matt Brown (09:22):
Because at the end of the day, Dustin, that is where the impulse buys happen, right? I mean, that is where you’re going … No one on the face of the planet has ever been sitting there on a random Wednesday and be like, “You know what I’m going to do? I’m going to go buy a giant foam finger. I just can’t get through today without buying them.” But you’re in the stadium and you’ll frigging pull the trigger on a foam finger and all this. So even from a betting aspect, that’s where you’re going to get the impulse bets. It’s like, “Oh, you know what? I’m here. I want to feel a little bit more in this game. I want a little bit something going on.” I mean again, from the book standpoint as well. I do think that this is a pretty big deal actually. Just from a, hey, there is still a barrier to having to download an app and fund an app and do a lot of things like that, and there isn’t one to just walking up to a counter, handing 20 bucks over and then getting a ticket in your hand.
Dustin Gouker (10:15):
I’m curious, for the sportsbook for the Washington football team, if they’re going to have more liability on betting against their team. Because apparently people in Washington hate the franchise now. I think I saw a survey about that. Not very popular in the Washington area. I’m shocked at that, what a debacle of a franchise that is. But yeah, I mean, you got people coming in. Yeah, again, you are open pregame. What are you doing? If you’re not tailgating, like, “Oh, maybe I’ll go place a bet.” It’s certainly the type of engagement that I think sports leagues envisioned when they started getting into all the sports betting stuff.
Matt Brown (10:50):
Here we are and we knew that there was going to be some evolution to all of this. I mean, I know that we have been in this for so incredibly long that it feels like this has been around forever, but this is still the infancy of all of this here in the United States. And so, we figured that there would be some sort of amendments to things along the way. And Dustin, that is kind of what we are looking at right now.
Dustin Gouker (11:12):
Yeah. American Gaming Association back in 2019 put a responsible marketing code out there for its members around sports betting. Obviously 2019, very early days for the expansion of all this. Came back here now just this week and said, “Here’s what we’re changing.” And I’ll be curious what Adam thinks. It’s not like game changing stuff, but it is worth saying all this stuff out loud, I think, and putting it into a code. People will say, “Oh, they didn’t go far enough.” But I’m here to tell you at least they’re saying it. Nobody else is saying this on behalf of the industry, so it’s good that they’re at least coming out here and saying very basic things that we’ve been talking about on this podcast, but saying it. Stop using risk-free, formalizing a process for reviewing this every year and making sure it’s keeping up. Not having NIL deals for amateur and college athletes, stopping basically college partnerships to promote them on college campus, making sure it’s over 21. Again, seems like very basic stuff, but nobody has said all of this together in one cohesive way out loud.
It’s good that we’re doing. Maybe it didn’t go far enough, but AGA represents a diverse membership, and at least we’re going down the road of, hey, we’re trying to do something and as an industry saying, “Here, we’re going to do these things that, again, have really changed really quickly in the past few months.” And also, let’s look at this all the time and not just say, “Oh, this thing in 2019 works in 2025 or ’26.” We’re going to start looking at this more. So I’m saying it’s good, because we’ve kind of lost the narrative in the sports betting industry about all this. AGA is at least saying, “Hey, we’re not going to do these things as an industry,” and that’s interesting.
Matt Brown (12:49):
Yeah. Adam, this is one of the things that we talked about whenever it got announced, and we were saying it was just kind of a slippery slope to begin with. I mean listen, I’ve been to Tiger Stadium, and LSU is one of the schools that’s going to have to end their relationship with Caesars Sportsbook. I’ve been to Tiger Stadium. The majority of the advertising is found in the suite area, the expensive area where you assume that … I mean, again. But that’s the problem. It’s assumptions. You assume that it’s going to be 95% adults. Because again, they’re super expensive seats and everything like that.
But we always talk about just the optics of things and how things are just like, if you allow this, well are you going to allow this? And does that lead to this? And whatever. And so, I’m glad the AGA actually came out and said this. I mean, at the end of the day, Caesars and whoever else, I know there’s a handful of schools that have had these deals done, they’re going to find ways to market to the collegiate football fan without having to put it right dead center in the middle of the stadium.
Adam Candee (13:45):
A few things that I think are important to keep in mind when it comes to this. First of all, not all sports betting operators in the United States are part of the AGA. And so, those who are not part of the AGA probably aren’t going to have to play by these rules for the purposes of being in good standing with that organization. You can look in our story on legalsportsreport.com where we have it listed out as to which operators are members of the American Gaming Association.
Now you talk about those college partnerships. There were carve-outs within the rules that the AGA changed in which, if it’s a responsible gambling message or if you are pitching to the alumni network of a college, then those are things that are still allowed under that code.
How Ohio led a sea change in US sports betting ad regulation
I think it’s also really important to keep in mind how this came about. This really goes back to one state, Ohio, bucking up, getting a spine on this and saying, “You know what you can’t do? You can’t use risk-free or free bets.” That is the genesis of all of this. And how quickly has it all happened? We’re talking about the better part of three months for this sort of change to have happened in multiple states and now with the trade group that represents the entire industry. And I think what it goes to show is that, if the industry chooses to self-regulate, and when I say the industry, I’m counting regulators as part of the industry, everyone who has an interest in this being done in a responsible way, that is sustainable for the long haul; then if it can be done in a way that is self-regulating by the industry, it just goes to show the fact that it is possible for this industry to make better choices without being hit over the head with a hammer from state legislators, from the federal government. It can be done. It just takes a will and it takes a collective willingness to play along if someone says, “You’ve got to do this.”
Could the operators have tried to fight this harder in Ohio? Sure. They could have, but they didn’t. And now it’s going to be something that is pretty much standard practice throughout a lot of places in the United States.
Matt Brown (15:57):
And Dustin, really, at the end of the day with all of this, it just comes down to what we’ve said before. It’s just better to get ahead of all this stuff than to let something happen to where you have to go back and try and fix things and whatever. It’s just good to go ahead and get ahead of all of this stuff. And so, when you see things like this, while we do believe that there are other steps that could be taken and other things that could be done, I mean listen, it’s still a positive for the industry as a whole. Because we don’t want to be playing catch up. We should always be trying to look ahead.
Dustin Gouker (16:28):
Yeah. And again, it’s codifying what Adam just said, that these things started to happen in the self-regulatory, or just because Ohio regulated it, and then it’s become de facto the standard across the country. And again, it’s worth it to say, “We’re going to do this here and everybody who’s a member of the AGA is going to now be beholden to this. This is what we expect of our membership.” That’s good messaging. It’s again taking control of a narrative that has escaped us, I think, as an industry in recent months. It’s from that standpoint really good.
Matt Brown (16:57):
Adam, we talked about … We’ll be talking a lot about Texas and what may or may not be going on with Texas, but of course California was the big thing that we had our eye on last year. This is a state in which there were, as we talked about, some very crazy ad campaigns that were being run and a ridiculous amount of money that was being spent to either try and get this passed or to try and get it not to get passed. And so there are some people who are starting to talk about California yet again, but not necessarily about anything getting done anytime soon.
Adam Candee (17:30):
To go back to what you said at the beginning there, the hearings have begun in Texas. So, at least in terms of the things that are coming this year in terms of possibilities, that is on the way now. Not a lot of note happening there quite yet. In terms of California, as you just mentioned, an interview that Jason Robins, the CEO of DraftKings, did with Joe Pompliano talking about the future of California, sounded a very different tone than what we heard directly after the election from not only DraftKings but FanDuel as well. And I want to give the quote exactly here from Jason Robins so that we represent this accurately. And we know that it’s a situation where these words really do matter in terms of understanding what the intent is.
Quote, “The fact is, if someone wants to spend that much in opposition, it makes it tough. So until we figure out a way to work that out, I don’t think it’s a 2024 thing in terms of California sports betting. I think I’m talking long term when I think eventually it doesn’t matter what someone wants to spend. It’s just self-evident that this is something California should be doing, but that’s not in the next year or two, I think. There’s got to be a deal worked out, or else we’re just going to be a stalemate there for at least another cycle or two.” And the other interesting part of this quote, as he went on during the interview, was there were more statements about how difficult it is when you have an opponent who’s willing to spend hundreds of millions of dollars in opposition.
OK, a couple things here. First of all, right after the election, both Jason Robins and Amy Howe from FanDuel made it sound like we’ll be back to fight another day, we’ll take another shot in 2024. I don’t know that that sounds like the dynamic from what we’re hearing now. Secondly, did you not know before the election that you were going to have hundreds of millions of dollars spent in opposition? The tribal gaming interests were not shy about this. They were very clear right up front that we will spend whatever we have to to make sure that our interests are represented and that, if there’s going to be online sports betting in California, which we don’t know if there ever will be, but if it happens, that it’s going to be done in a way that benefits the tribes. That to me seems like a miscalculation on the part of all of the sportsbooks who took part in this initiative to try to legalize sports betting. Because not only did you have that money spent in opposition, but they did a terrible job of trying to convince people that this is something that should be in their interest.
When you talk about it should be self-evident, well if you want it to be self-evident then don’t couch it inside this idea of we’re going to benefit homelessness to the point where a lot of people in California had absolutely no idea that the initiative was about sports betting. You went about it in a way that suggested you were not proud of it, that suggested you were not being transparent in that sports betting as an activity should be legal and regulated for reasons beyond tax revenue to the state. But obviously because of that as well. But because of the responsible gambling elements of it, because of the fact that in California especially there is such a massive market that is not being captured here that could benefit the state that is dealing with all sorts of budget problems.
I think it’s good that there’s reflection within the industry as to what went wrong and what didn’t go well. I just hope there’s acceptance of the way that it happened the first time so that whenever they try again, it can be a more coherent effort in terms of presenting to people why they think online sports betting should be legalized.
Why California’s legalization prospects look dimmer by the day
Matt Brown (21:03):
Yeah. Dustin, I think the industry as a whole just basically got some really bad advice by whoever was manning this push in California. And a couple different angles. I mean, one Adam just mentioned was trying to get it passed. Not just like, “Hey, here’s a personal freedom. This is why it should be passed,” whatever, as opposed to trying to attach it to this whole homeless thing and all the stuff like that. Obviously we were very against that from the get go here on the podcast. But anyway, that was … This isn’t something that all of the sportsbooks got together and invented. Someone pitched this to them and they were like, “Oh, you think this is how this gets done?” And they’re like, “Yeah, this is how it gets done.” Someone pitched this to them, and they got almost sold a bill of goods in all of this.
I think that maybe someone also sold them on the fact that the interest would be much, much higher within the state, even with the tribes putting up this massive amount of opposition. I mean, you and I have a little bit more intimate knowledge of this, because we know how much they went after keeping online poker out of California. It was crazy how much they went after keeping online poker out of California whenever that was the big push over there and all that. So, it just seems like, more than anything, maybe the whole industry got fed some bad information and got really sold something that was never really there.
Dustin Gouker (22:20):
Yeah, I think it’s all hubris at this point. This is what happened. There’s a book to be written about the amazing lobbying effort that happened across the United States. The fact that we took basically three years … The sportsbooks and the leagues were going around getting bills passed wherever they wanted. Just wins everywhere. They lost some too, but it’s hard to point to too many lobbying efforts on a multi-state basis that are successful as legalizing sports betting.
So they probably went into California … You got the leagues on board. You’re like, “Oh, we’re going to just come in here and spend a lot of money, get this bill passed. Maybe we don’t get it this year, but we’ll set up the stage for the next time and really get people … This will happen.” And yeah, again, you could listen to this podcast for free advice, because we might have been more bullish on it at the beginning just because things sounded good. But we could’ve all told you this is not just coming in here and do the same thing that you did, run the playbook you did everywhere else. It just was never going to work.
Now it’s to the point where they made it worse than the starting point. The situation in California, because of this lobbying effort, is worse than what it was when we started. If you go back in time and just not even try, we’d have a better shot in 2024, pretty clearly at this point, than we do right now.
So yeah, it’s amazing that in retrospect that they decided … I think they just thought they were just going to … just like they did everywhere else. We’re going to run over everyone and just win and get this … Again, maybe not get it all the way, but get it close enough that we can get another chance at it at a future ballot. That part of the book … Again, I think somebody will write a book just on lobbying. Whether it’s sports betting or not. This is an amazing … the whole thing is interesting and fascinating to me. But the fact that this was, after all these wins, just a colossal failure in California, will kind of haunt this industry, I think, for the next couple of years.
Matt Brown (24:09):
Adam, I’ve had a couple of people ask me, “How could it gotten to a point, not just in Florida but in California as well, where these tribes hold so much power and basically the will of what they want gets done and things like that?” And I’m like, “Well, I mean, that’s kind of a question, a topic for another day, but you can’t put the toothpaste back in the tube.” I mean, they have that much power. What they say basically goes when it comes to the gaming industry. So it’s kind of like … Is it fair that you basically have to do everything on their terms? Again, argument for another day, but that’s how it’s going to have to go if we realistically think anything’s going to get done in the next, I don’t know, decade let’s call it. Because, I mean, unless something happens on a federal level, which we don’t think is going to happen, it’s going to basically have to run through the tribes whether you like it or not.
Adam Candee (25:00):
Fairness is an interesting way to go about this when we talk about why tribes have been allowed to have gaming historically going back hundreds and hundreds of years. I think that could be maybe the wrong tack for someone to take with this if that’s the way they want to approach how business gets done in California. The reality of it is, it is a multibillion-dollar business for gaming tribes in California alone. That is a powerful, powerful interest that … You talk about not putting the toothpaste back into the tube. You’re 100% right. That’s not going to happen anywhere in California. The reality is that tribal sway over gaming in California is as strong as it is, if not stronger, than it is in any other state. And so, if you try to look forward to how this goes, you have to then look backward and say 16% of people voted in favor of Prop 27, the operators’ online initiative. Realize how difficult it is to get 84% of people in the year 2022 and now 2023 to agree on anything. And 84% of people who voted in California in 2022 said, “No, we don’t want this.” That has to be something that is a reckoning.
Dustin said you would be better off had this never gone to the ballot. You are absolutely right. That set this effort back a minimum of two years and probably more realistically half a decade. Unless the industry wants to come hat in hand 100% to the tribes and say, “Whatever you want it to be is what it’ll be.” And keep in mind, even if they were to do that, tribes have been very clear about the fact that they don’t necessarily want online sports betting. Period. They don’t have the same interests as the industry. They want people to go to their properties, and they don’t see the opening up of online gaming in any form as a good thing for their long-term prospects. Because in the end, this was all about online gaming for the tribes and them not wanting any of the operators to have an in to potentially start offering iGaming, which is where they really believe that their interests will be affected.
Matt Brown (27:24):
Dustin, one of the things I … Dustin, real quick, one of the things I love to do to you is put you at an over/under. And hopefully this podcast will still be running at the time that whatever date that you set on this that we will actually have sports betting in the state of California. But if I had to set an over-under right now, what year would you do this?
Dustin Gouker (27:43):
Man, I’m not even sure I’m putting this on the board. It’s that bad. I don’t know. I could envision 2029, I guess.
Matt Brown (27:53):
Dustin Gouker (27:54):
But even that sounds optimistic to me. Again, with the starting point … Unless we have this real conversation of the operators and the leagues come hat in hand to the tribe and say, “Here’s what we want to do. We want to help you and do this in the best way for you.” Is that going to happen? I don’t know. I don’t think so. Because again, they think long term they’re still going to win. Again, the leagues, their interest in all this is they thought … going back way in history, they thought they’d have … when Adam Silver was saying nice things about sports betting and we need to legalize and things, they thought they were going to own it. They thought they had infinity time to own this and just to figure out how it was going to be regulated in the United States. And then PASPA fell and then they just lost the argument entirely. It’ll be interesting to see what’s going on in all of this long term.
I’ll also say one other thing. Tribes get a lot of talk, at least on Twitter and just in the industry, that they’re obstructionist. They’re not obstructionist. They’re looking out for their best interests. There is nothing good going on for Native American tribes really right now other than gaming. They deserve to continue to win this argument as long as they want to. They should get whatever they want on this. I used to think maybe they should relent and at least have it through them. They can do whatever they want. This is their game in California and some other places. They’re not being obstructionist in any way. Yes, technically they’re being obstructionist, but I don’t begrudge them at all for not believing what governments are trying to sell them or anybody is trying to sell them on sports betting.
Which states are close to passing bills in 2023
Matt Brown (29:21):
Adam, I guess to put a bow on this, I wonder if we get to a point. Now, we understand California is certainly like the golden goose. It’s got a population the size of Canada. But if we’re talking about hundreds of millions of dollars and we’re talking about, hey, this could … if it keeps failing over and over and over again, we could be looking back on this a decade later and be like, “Wow, we lit $500 and $600 million on fire doing this.” I don’t know if it’s out of the realm of possibility for California to just get tabled for several years. I mean, you just focus on the entire rest of the country. You focus on getting Texas done; you focus on somehow trying to figure out something in Florida, whatever it might be. You’ve got the rest of the country. And where California, even though you really want it, you’re probably saying, “Is the juice really worth the squeeze here?” Because the likelihood of it actually getting done to the cost and what we might end up just lighting on fire, might not be actually where it is.
Adam Candee (30:26):
Well, we’re going to start to get into total addressable market dynamics here, and also shareholder interests and growth potential, and a lot of questions for those publicly traded companies about how do they continue to show their investors a reason to put money into them when they have been chasing profitability for quite a long time here, and some of them are only talking about getting there later this year, if not into 2024. Now you look at California, you look at Texas, you look at Florida and say, “Where are your probabilities?” Well, if you think tribal interests are strong in California, go ahead and take a look at Florida, where one tribe basically controls everything when it comes to sports betting in Florida. Under the structure that was going to be there prior to this ending up in federal court, you were looking at operators having to pay something in the range of 40% of revenue share back to the tribes just to be able to participate in the first place, and that was going to be a non-starter for them.
Now you start to look at Texas, and when you look at Texas you see more hope than you do in the other places, but it’s sort of in the land of the blind the one-eyed man is king, because it is just a matter of relative hope in Texas. It is still a significant underdog for sports betting to get passed in this legislative session in Texas. And if it doesn’t get passed in 2023, we know they only meet in opposite years, so you’re looking at 2025 before anything becomes a real possibility. And if something were to happen in Texas this year, it still has to go to the ballot and win a fight there.
I don’t think they can afford to give up on California from the perspective of continuing to tell their investors a story about how these companies grow when you have FanDuel and DraftKings in particular dominating this market. If you’re MGM, if you’re Caesars who chose not to play in California because of competing interests there, it’s going to at least force questions about, OK, if it’s not California, if it’s not Texas or Florida, then how do you continue to show growth? Unless you are going to take over another operator or somehow bank on being able to pick up the minuscule market share that some of these smaller operators eventually are going to lose if they have to either sell, or if they just go out of business entirely. And I don’t know if you’re MGM or Caesars sitting around saying, “We’re going to wait to pick up the scraps from Barstool and PointsBet,” is going to be convincing enough to your shareholders to continue to make these massive investments in sports betting.
Matt Brown (33:02):
Yeah. Dustin, the one thing I do wonder and then we’ll move on to our next topic here, which you will man for us, but I do wonder though, do you look back on this and, say, hundreds of millions of dollars over the course of, let’s call it five years, of trying to get something done in California, or do we take that money and invest it into iGaming lobbying efforts in states that we’re already in with sports betting, which we know is incredibly lucrative and things like that? Do you basically just get to a point where you shift those funds to just another effort that might actually make people get excited about something?
Dustin Gouker (33:38):
Yeah. I mean, after this cycle of legislation, the map doesn’t look great for sports betting. I think all the lobbying needs to go into online casino and poker right now. That’s the growth story, and it’s been slow to happen. But once we get through Texas, we’re going to have two years. If it passes, great. If it doesn’t, then we’re going to have two years in Texas. We have basically a handful of states that could legalize. You should be going to iGaming. All these companies, they’re focused on this as their future. Ticking off a few wins here and there for sports betting, not as great as focusing on and driving this narrative for online casino that … It’s still this uphill battle. I remember people saying, “Michigan passed then we’re just going to have this onslaught of online casino.” Nope, not going to happen. Nobody’s winning that narrative, and we continue to hear that sports betting … again, some of this pushback, but it’s really this huge pace of legalization. And online casino has benefited almost not at all from that tailwind of sports betting and online sports betting being legalized.
That’s where I would be putting all the money. I’d stop worrying about California and Florida, and even Texas after this election cycle, and be going into smaller state houses and working on where you’ve already passed online sports betting and drive the casino discussion forward.
Matt Brown (35:00):
All right. We talk a lot about Flutter on here. It is the parent company, of course, to FanDuel, if you have not been paying attention. And we have also talked a lot about stocks. We are not … #disclosure, all the things like that. We are not stock experts, so do not take any of our financial advice here on any things like that. But we did talk a lot about the fact that you could invest in basically all of the big companies that we talk about here on this podcast. Except for Flutter, because they were only listed overseas. But that might be coming to an end here, Dustin.
Dustin Gouker (35:30):
Yeah. Positive notes out of Flutter about the possibility of a secondary listing here in the United States. They apparently have polled shareholders back in February, and then just last week they announced that they’ve consulted widely with shareholders representing a majority of Flutter’s issued share capital and received very strong support, which is good news. They need 75% of shareholders to agree to a US listing here for Flutter. And obviously with a lot of the business at Flutter now coming from FanDuel and its US operations, this is a big deal.
Interesting, from the story done by Matt Waters at LSR, here’s the most interesting and here’s why. Flutter average volume, 700,000 shares. DraftKings listed in the United States, 13.5 million daily average volume. They want that access to North American capital, and that’s the story here. And again, if you’re the leader in the US, you don’t really get that benefit from trading in Europe. And seeing this US listing, I think, will give them great access to capital and help their growth story here in the United States. Which is, I’d say, concerning for everyone else in the sports betting and online casino industry here in the US.
Matt Brown (36:46):
Adam, we used to end every single podcast with you giving us state roundups and then those states kept getting legalized and things would just get done. And then we got to a point where we didn’t have any state roundups anymore. But guess what? We got a little bit of a legislative roundup to take us home here today.
Adam Candee (37:03):
I’m actually going to do this one off the top of my head, because we have been so deep into this that I have a pretty strong sense of what’s happening in all of these states without even rereading any of the stories that we’ve posted at Legal Sports Report. And that is something that goes with a big shout-out to Pat Evans, Matthew Waters, to Sam McQuillan, as well as Mike Mazzeo who have been watching all of these hearings, sometimes late into the night.
All right. Let’s start where it appears there is the strongest possibility of legalization of online in the short term, and that is down in North Carolina, where the bill that we expected might have a chance, but it stalled out last year in the house. Actually looks like it needs one more vote to get out of the house and to get to the desk of the governor. And in that case, you would add online sports betting to the couple of tribal casinos that have retail sports betting in North Carolina. It’s a bill that looked like it had some hope last year before stalling out. There were some questions around banning college sports. An amendment to that failed yesterday. And it looks like with all of the amendments yesterday having been voted down, and most of those would’ve been restrictive on sports betting, it looks like that is moving toward the possibility of passing. We don’t know when that would actually legalize. But passing in the spring, we’ve seen in the past, states like Arizona, has led to launching in the fall, so it’s not out of the realm of possibility.
There’s also unexpected hope in Kentucky where, if you’ve been following this podcast, you’ve heard us talk about the possibility of sports betting in Kentucky for the absolute longest of times. Representative Adam Koenig had been at the front of this. And the strange irony is that Koenig is no longer in the legislature, but it looks like his work has a chance of moving forward here. We had a bill pass the House in Kentucky, but that’s not really the news. Our Pat Evans has been staying really close to this story and heard from the bill sponsor in the house that even though, because it’s an odd year, the threshold is two-thirds for a vote in the Senate as opposed to a simple majority in even years, it looks like they might have the votes to get this by the senate. That’s at least the informal whip count that they’ve been doing. If it is to get through, you have another governor who has been public in his support of legalizing sports betting, Kentucky could be another state that gets through this year.
You go up to Minnesota, you have multiple bills that are winding their ways through committee, but it has been largely favorable feedback in Minnesota to this point. It’s a state that … again, another one Pat Evans has been watching, that he put at the top of his rankings in terms of where he felt states were most likely to legalize at the beginning of the year. We also have Georgia still in the mix here. It’s not hopeful at this point. It looked like it was dead earlier in the session, and then there was this sort of hostile takeover of a soapbox derby bill that came out of committee that had sports betting language inserted after the bill had been stripped. It made a lot of folks upset in that committee, and there was some discussion about whether this was potentially going to set back sports betting in Georgia through the lieutenant governor having pushed to keep it alive. We’ll see what happens there. Not as hopeful as in other states, but Georgia is still technically alive through the rest of this week.
As we mentioned earlier, we’re keeping eyes on Texas. Nothing really new there to report, but of course we’ll keep talking to you about what’s happening there. But we are looking at three states that have possibility of getting something through this year. As longtime listeners know, that doesn’t mean it’s actually going to happen. But it is more than I think we might have thought at the beginning of this year might be possibilities.
Matt Brown (40:59):
So Adam, I mean, we already have it, right? I mean, we already know it. They’re going to be betting on soapbox derbies and whatever and all. We can already hear it right now. We know exactly how this is going to go. I mean, we’ve got the bulletin board material already.
Adam Candee (41:15):
Oh listen, we already this week have had talk along the lines of legalizing sports betting is what is going to bring in the drug dealers and the prostitutes. Yeah, that has happened in a legislature this past week.
Matt Brown (41:29):
So if you had that on your bingo card, go ahead and scratch that one off.
Adam Candee (41:33):
Listen, we’ve had it compared to murder, we’ve had it compared to slavery. Really, it has been a cornucopia of bad ideas that have been ascribed to sports betting that are worth a good laugh.
Matt Brown (41:48):
As we say each and every week, all of the stories we talk about here you can find over at legalsportsreport.com. So please go in and take in all of the words that Adam and company are putting on the site over there. We do appreciate every bit of your free support here. So if you go down, subscribe, rate, review, all the different things that you can do like that. And if you’re watching us on the video side of things, on the YouTube button as well, hit that subscribe. Do appreciate the support over there as well. If you want to follow Adam, @AdamCandee. Two E’s, no Y. @DustinGouker if you’d like to follow Dustin on the Twitter machine. For Adam, for Dustin, I’m Matt. Talk to you guys next week.