NFL Takes An Unwarranted Shot At Jameson | Sports Betting News Today | LSR Podcast 191
Join us today on the Legal Sports Report podcast for the latest sports betting news and updates. More suspensions for betting on NFL games came down from the league last week. The Jameson Williams suspension, however, came for different reasons that have the crew fired up. Kentucky sports betting is set to launch in the spring. Also, more thoughts on what a PointsBet sale could look like and why Tennessee continues to lead the country in bad sports betting ideas.
Matt Brown (00:10):
Hello, and welcome to episode number 191 of the LSR Podcast. My name is Matt Brown, joined each and every week by the brightest minds in all of the gaming industry. With me, I have Dustin Gouker and, making his triumphant return, love him or hate him, he’s here so you’re going to deal with him, it is Adam Candee. Adam, welcome back buddy.
Adam Candee (00:31):
Interesting. That’s exactly the same message I gave to the LSR writing team, like love him or hate him, he’s back and you’re going to have to deal with him.
Suspensions for betting on NFL games came down from league
Matt Brown (00:40):
It’s going to be a fun pod here, we’re going to have some interesting discussions. I want to get your thoughts on the PointsBet sale. We did talk a little bit about that last week, but I do want to talk about that with you and get your thoughts here. We’ll talk about Kentucky, what’s going on there, Tennessee as well. But Dustin, let’s kick things off here with some more NFL suspensions in which I imagine I’m going to have differing opinions than you guys. Maybe not, but I think maybe I’m going to have some differing opinions than you guys.
Dustin Gouker (01:05):
Unless you’re under a rock, probably you’ve heard this one, at least if you follow this podcast. We had five players suspended for violating the NFL’s gambling policy of varying things. Four were Detroit Lions players; another was one of the Washington Commanders players; two of them were suspended indefinitely for betting on NFL games. And we also had an ESPN report that was saying that some Lions staffers were also let go around the time of all this was happening, that was not in the league release and not widely reported, but that is also in there. We’ve had a few of these; we’ve had a couple of players famously suspended, and since the betting ban has fallen in the United States, we also had a coach for the New York Jets suspended as well around all of this.
But this was all at one time, and there’s a lot of questions for me that come out of this. and I’m not sure what the answers are, but is the NFL doing enough to educate players on their policy? The other thing that comes out for me is, is the NFL really alone in this? I know they embrace more NFL players, but it’s hard to believe we really haven’t. The NFL is finding these with some sign of regularity. Are we to believe that this is not happening in other sports, or are they just not being found or not being reported? So there’s a lot to unpack from all of this.
Matt Brown (02:26):
Adam, I’m going to go ahead and give my spiel here, which I assume will be you refuting it, so I want to go ahead and just put it out there so you can try and rip it apart. With all of this, I am certainly for the NFL cracking down on these guys betting on their sport. Listen, I’ve been in NFL locker rooms, and this is well before legalized gambling happened, there’s no gambling stuff all over NFL locker rooms. As far as getting the message out, this message has been gotten out to these guys for years and years and years, like, do not gamble in the NFL, there are signs everywhere, there’s all this stuff like that. If you’re betting on the sport, I have no sympathy for you whatsoever. We all have things that we can and can’t do within our respective jobs, and you take on those responsibilities whenever you decide that that is going to be the line of employment that you’re going to go into.
But the nuance here with the Jameson Williams thing, where — six-game suspension for not betting on the NFL, but just betting inside of a facility in which had he walked five steps outside the door and sat in his car would be perfectly fine. But the fact that he was five steps inside of a building, I think now we are getting a little too whackadoodle here. If you want to make a point, don’t do this, fine him and then if you do this a second time, sure, you come with some suspension or something. But not betting on the sport and just the physical location of which he did this, which by the way the rule is, not inside of team facilities or on team travel, so in theory, not on an airplane or not on a bus or whatever or something like that, to me seems a little whackadoodle.
And also, the six-game suspension, we’ve seen guys get DUIs and domestic violence stuff and things like that that have gotten less games than six games. For what I consider to be a pretty harmless thing because it was found to be not on the actual sport itself, just on a different sport, and the location was the crime here, I think the NFL, while it’s great, they’re catching guys betting on the sport, I think the other thing, they’ve gone a little bit too far in one direction, let’s say you.
Adam Candee (04:51):
Matt, you know what my reaction generally is to these things, that you cannot have tolerance, you cannot have leeway and you cannot leave any gray area for players, staff, coaches, et cetera to interpret these things.
And that being said, this is an asinine decision about Jameson Williams, absolutely asinine. Being located in a team facility should not matter at all. What have we done with NFL stadiums? What have we touted with NFL stadiums – that we’re putting sportsbooks inside them? We’re talking about putting sportsbooks inside NFL stadiums. We’re talking about putting them on the grounds of NFL stadiums, but we’re going to draw some line about where bets that otherwise would be legally placed have been made, that’s ridiculous.
And the idea is that, you don’t want this to become a widespread activity within the facility among teams. I got a news flash for all of you, players have been betting for years and years. You know what they did to get caught this time? They used the same apps that you are partnering with to make money. And so the only crime they did was using the league-endorsed platform to do the thing that would otherwise have been OK in a location that you’ve deemed for whatever reason isn’t OK. So if the idea was, well, we want to prevent inside information, if you’re doing it from inside the facility, you might have inside information. Well, if it’s true that Jameson Williams was betting on college games, I don’t think he had any information about what was going on in a college game from inside the Lions’ facility.
I understand completely when it comes to Quintez Cephus and the other suspensions that were handed down for betting on NFL games. And I think we have a second point that we can probably explore as we go on here. And I actually think it’s as concerning if not more, that Lions staffers were ultimately let go over this and not that they were gambling because maybe with the players that you could argue that in some way that they were unclear, they have another job, their job is to play, their job is not to pay attention to these things day in, day out. The Jameson Williams thing could happen because it wasn’t clear on where the location was that it gets to place the bet.
Staffers are supposed to be the ones who know these things. They’re supposed to be the ones who are up to speed on everything. Because in a lot of ways, they’re the ones who are setting the guard rails for the organization. They’re the ones who are setting the standard for the organization. But when it comes to guys like Jameson Williams getting caught up over where they placed a bet, when the NFL’s goal has been to make this as widespread, pervasive and available to its customers as is possible, that makes no sense at all to me.
Matt Brown (07:39):
Dustin, so to play devil’s advocate here, there’s going to be some people listening out there and go, buddy, rules are rules, all right, and you follow the rules and that’s the damn rules, and rules are rules. And to that, I will say, that is fair. My whole thing in this is, the punishment itself just seems like the NFL has gone overboard. Listen, we have praised leagues and some of these providers and all these different things for being proactive in things and getting out in front of things and laying down the law when the law needs to be laid down. But if we are talking about a six-game suspension for a guy not found betting on the sport itself, which we all think would be bad because, yes, there could be inside information then all of that.
But because he was physically located inside a building in which, had he walked out the door 10 steps into the parking lot and sat in his car, it’s a perfectly fine bet, but since it was 10 steps inside, it’s a six-game suspension. I think the NFL’s just gone way too far; the pendulum’s gone way too much. They’re trying to make a message, and I think if you fine the guy a hundred thousand dollars and say, if you do this again, it’s going to be whatever, four games or whatever, the message is sent then at that point.
But six games is like the NFL just going like, look what we did and now don’t we feel so great and high and mighty? Where it’s like, no man, the precedent has been set for what you can and can’t do in the NFL. And we’re not going to get off on a tangent here of, the DUIs that have only been four-game suspensions and the other things were physical harm, it could be happening and all that to other players that … I don’t know, it’s … I get the rules are rules argument. At the same time, the punishment just does not fit the crime, in my personal opinion.
Dustin Gouker (09:21):
No, I’m agreeing with you both, this rule is asinine that we’re doing this. Again, for everything that Adam just said, who cares where he bets? You can also have the rule like, he is on company time, again, who cares? I think it’s a slippery slope because like Adam says, every sport, there’s gambling, whether it’s on a sportsbook or it’s on cards or what have you, there’s famous-
Matt Brown (09:46):
Ping pong in the locker room, they’re shooting dice in the corner, exactly.
Dustin Gouker (09:50):
The PGA Tour, these guys are gambling against each other in the middle of the tournaments. There’s gambling going on in all of these sports in the background, either on the things they’re doing or whatever. I don’t think the leagues really want to open up this Pandora’s box because we all know this has been going on. So it then leads me to believe, if you’re really serious about any gambling can’t happen in a team facility, what are you doing about that then? Because there’s no way you have cracked down on every last bit of that.
It comes back to what you said, the rule is dumb, there’s no reason to be penalizing this. Again, especially when you’re taking money, there’s not really that many great ways for players to make money off of this other than collectively bargaining and all of that. But there’s sportsbooks in here, there’s just nothing that tells me a player can’t gamble on other stuff that’s not related to their league. You have, not even borderline, you are encouraging that behavior I think at this point, so having the rule is just dumb.
Matt Brown (10:47):
Adam, we look at this, and I’m actually surprised that we all agree on this because I tend to be a little bit more lenient when it comes to that stuff than you guys do. But I think it’s like, can’t we have cooler heads prevail here, is common sense even common? And we’re just speculating here, but it seems like, listen, the punishment needs to fit the crime. We all agree, do not bet on your sport, you can get inside information, that is something that could affect things. We get that, and we understand that 100%, and you should be punished and you should get the hammer. Quintez Cephus, yes, a year for sure, absolutely.
I feel like the players union should go and say, league, we’re doing the best we can, we are telling these guys, don’t bet on the NFL. If they do it, you do what you got to do, I get all that. But if the guy wants to bet on cornhole, which by the way is one of the things you can bet on in the menu. The guy wants to bet on cornhole in the ice bath because he is bored and he’s sitting there in the ice bath and he’s betting on cornhole, what are we really doing here? What is the actual crime that is occurring?
Adam Candee (11:56):
Well, you’re really testing my maturity talking about cornhole in the ice bath, but I’ll move on from that set-up.
Matt Brown (12:02):
I just have because I have a sportsbook open and I was like, what’s the most egregious thing listed on here? And cornhole’s listed. So I’m like, you know what? If you’re betting on cornhole in the ice bath, what crime are you committing here?
Adam Candee (12:14):
My problem with the Jameson Williams situation is not actually the six games, it’s the suspension at all because we have a much bigger issue if we start talking about how NFL discipline has meted out discipline, and everything will go back to Ray Rice for as long as Roger Goodell is commissioner of this league. You set the standard that knocking out your girlfriend gets two games and everything from there is going to be held up into the light by that and by Tom Brady’s deflated balls and four games and all of the hoorah that went with that situation. So punishment fitting the crime has to be in some way a little bit more black and white, I think, than gray because gray talks about how many games and black and white talks about, does this rule make any sense at all in the first place?
Yes, betting on NFL games if you are an NFL player, period, hard stop, no, there’s no way in which that is OK. It’s not going to be OK in any sport, and so the NFL needs to draw a very hard line when it comes to that. But when it comes to, you placed what would otherwise be a legal bet from the wrong place, you almost set up a situation to me that’s like, a guy was walking out the door of the team facility when he placed the bet, where did the geolocation ping pick him up? Was it in the parking lot or was it inside the building? I don’t know, how precise is it? We’ve seen all the maps from GeoComply that show all of those dots, boom, boom showing up when a launch happens. Was it exactly right? Did we get him in his car or did we get him right when he got over the threshold of the door? Then we’ve gone too far when a guy’s getting six games for essentially that.
Matt Brown (13:59):
I hope there is an appeal, and I hope again that just cooler heads prevail here, that common sense prevails. We can make a statement, follow the rules with a monetary fine, with a second offense being a game suspension, whatever that might be. But leaders, six games really did jump off the page at me a ton.
Dustin Gouker (14:20):
What I want to get into, Matt, is what you said at the beginning. Everybody knows this at this point, this is the part that boggles my mind, everybody knows that if you’re betting on NFL games or you’re betting on your own sport that you’re going to get in trouble. Do they think they’re not going to get caught? It can’t be like you just don’t know, like you said, it’s almost impossible to believe these players and staffers didn’t know this. Does it mean they think they’re not going to get caught? This is the part that I just don’t understand.
And again, I take this over to, am I to believe the NFL players are the only ones where this is happening? I reject that as well, the fact that we haven’t basically had anybody caught in any other sport in North America is also hard to believe, you have to suspend your believability to believe that too. I don’t know, what do we think is going on in the NFL or in other leagues? And this is being caught, because one of two things has to be true, either there’s something different about the NFL or stuff’s going under-reported.
Matt Brown (15:24):
There is an argument you made there, we wouldn’t call the UFC a major sport or whatever, we did see guys go down for it in the UFC and doing all that. But I don’t know, maybe there’s a lot more downtime in the NFL, you’re playing games and stuff every single day in Major League Baseball, in the NBA, I don’t know, maybe there’s just some of that, but it’s-
Adam Candee (15:50):
The rosters are bigger, too. You have more potential players to get caught up in something. I’m not saying that’s a cure-all answer, but I do think you have a wider pool to choose from.
Matt Brown (16:01):
… Absolutely. But we’re going to follow this one, I want to update this one to see if anything actually ends up getting done here. Guys, as always, everything we do is absolutely free, so if you don’t mind, hit that little pause button, scroll down, give us a five-star review. We do appreciate each and every one of those and does help us climb up the charts and more people can find this here very podcast. Adam, let’s head to Kentucky, and this is not talking about horses running.
Kentucky sports betting is set to launch in the spring
Adam Candee (16:26):
No, although we’ll be doing that soon enough. Kentucky was, of course, the surprise, not only number one state to pass legal sports betting this year, but surprise period to pass legal sports betting considering how many failed tries we’d seen in the past. And we are going to see Kentucky get onto, I’ll call it the Arizona timeline, where they hope to pass this in the spring and have it up and running by NFL season. And I don’t think it’s unreasonable to see that happen. When it comes to Kentucky, you’re looking at a situation where it was set up very similarly to New Jersey’s law, and you’ll have a market that looks pretty similar to Tennessee in terms of the mostly online nature of it happening. And now, I’m more comfortable with these faster launches now that we’ve had a few more states do them without massive problems.
Arizona was the one we looked at like, all right, eventually something’s going to go wrong here. And really, other than the fact that their reporting structure and how often we hear from them, it really is pretty poor. Other than that, there hasn’t been some massive hiccup in terms of the way it’s gone. So not unreasonable to think that it could get done by the time NFL season starts. And I’ll be really curious to see what the appetite is in Kentucky because it’s an interesting state in that we know it’s a sports crazed state, it’s just a college sports craze dstate. So we don’t have the same marker I think that we would in other places in terms of how that’ll affect betting on the NFL pro sports, et cetera, because we haven’t really had a similar launch.
Matt Brown (18:08):
Dustin, it’s funny in these states that don’t have the pro teams and really it’s only college teams. We don’t get those weird, can’t bet on state college things that get introduced into the laws because it’s going, then what the hell else are you going to be betting on when it comes to all that? And yes, as Adam mentioned, when it comes to Kentucky, it’s all about Kentucky basketball there. Of course, though, they do have a guy that’s now rumored to go number two overall in the draft, and Will Levis did have a good football season for them. But when you look at Kentucky, we’re thinking along the lines of one of the smallish states from an actual hand on revenue perspective.
Dustin Gouker (18:50):
Yeah, I think there’s no reason to think it’s going to be to over-index in terms of how many people are going to be betting. But directionally, we’ve seen just these launches are bigger, there’s more conversion and more people learning about this. And if we have a Kentucky launch right ahead of NFL season, we know these are the ones that are the best. But the numbers out of Massachusetts were pretty big even without the NFL season, so while it’s going to probably fall in the midpoint from per capita, how many people live there and all of that, I think we’re just seeing these larger launches again, maybe even starting with Arizona where there’s just so much adoption right away, people know it’s coming, the excitement of NFL season, I think we’ll see.
I’d say a good over-index, but I’m with you, Kentucky also just doesn’t have quite that pro sports background. So I think we see a little less adoption around that. But come NFL season, I do think just with everything around it, I know the regulators have been working on this. It’s not like they’re starting call with the law, they’ve already been working on this. So I’m with Adam where this should be a pretty good successful launch, I would imagine, even in a relatively short timeframe if they do indeed launch by September.
Matt Brown (20:04):
Adam, we’ve seen some of these states launch over the time that we’ve been doing this podcast where it’s like, Super Bowl was the goal. And we get that, because as far as just single-day betting it’s the biggest day, single-day betting that you’re going to get, but outside of just the NFL season, for the obvious reasons in which you get football being the king of all sports here in America these days.
But one of the things I think that sneaks under the radar a little bit too, is trying to get going before NFL season is the fact that you get all those juicy futures bets that basically it’s free money for these sportsbooks. The hold percentage is so incredibly high, everybody just bets on long shots because it’s like you want to bet a little to win a lot and things like that. And these sportsbooks secretly really don’t ever really mention how great it is to get all of those dead future bets in, but you get a lot of dead money into the market if you can launch before a season like the NFL.
Adam Candee (20:59):
Sure. And it’s funny because you look at futures markets and you know what the theoretical hold is for most of them. You’re starting with astronomical numbers and the biggest challenge for a bettor is to try to figure out whether there’s value in a futures market because the numbers are not priced the same as everything else that they look at on a day-to-day basis. And most of the time, you’re not getting good value on a future, so that is something that the sportsbooks certainly benefit from, but we’ll get into this on another podcast.
When we talk about the idea of parlays and same-game parlays and just how profitable they are for sportsbooks, it’s not quite the same for futures, but it brings up a similar discussion of, is there some tipping point at which bettors say, I never win any of these, I’m going to stop betting these long shots. I don’t think there is ultimately, but is there a long-term sustainable model for that for a sportsbook? Probably not either. But I think when we talk about those futures coming in and when you talk about, can we get it open in time to get all of those Kentucky basketball national championship futures done? Yeah, that’s probably a pretty good bet.
What a PointsBet sale could look like
Matt Brown (22:14):
Yeah, let’s go ahead and get all of those in there. And again, only one team wins, so it’s pretty good whenever you get these futures bets in your account for sure. Dustin, look, we talked a little bit about this last week, but I do want to bring this up because I think, one, we’ve had a week to think about it a little bit longer. And then, two, we get Adam’s perspective as well. But PointsBet’s long rumored to be for, at least not necessarily be for sale, but one that we assumed was going to be acquired, it was one of the ones where, look, decent tech, decent menu from all accounts as far as user-friendly. Now we know there have been some complaints about limits and different things like that, but as far as just the app itself and the menu that’s there and all the stuff that it offers has been pretty good that we thought was going to be fairly appealing to maybe a potential suitor.
Dustin Gouker (23:02):
It feels like if you go to maybe in the teens, we were probably talking about PointsBet as an M and A target in our podcast history. So I was coming to a fruition with PointsBet about working with an investment bank to possibly help leverage a sale. We had a great piece by Sam McQuillan while Adam was gone, but I think the question we all have is, who is actually going to buy PointsBet, who makes sense? And that’s what we spitballed last week. I think the suitors are probably far lower than they were two to three years ago, when the market was hot, PointsBet was a little bit more of an unknown quantity, but it’s still arguably an attractive target. So just curious what your thoughts on what Sam wrote and anybody else who might buy PointsBet out there.
Matt Brown (23:50):
Adam, because one of the things that I think is obvious to us at this point is like, it’s not going to be DraftKings or FanDuel or Caesars or MGM because the customer base that we would assume anyway that PointsBet has, there’s not a lot of new customers to be had there, there’s not a lot of even value really in an email list or anything because they’re most likely a big-time crossover there. Those companies don’t need the tech, either. They all have good tech backend and things like that. So it seems like all of the big guys wouldn’t be in the running here. So then you go to either the second tier or you go to somebody completely outside of everything, be it an investment firm, be it whatever, some company that we haven’t really even thought of.
Adam Candee (24:40):
The first thought I had when I saw this news is, what took so long? Because we’ve been discussing the fact that there is no obvious endgame for PointsBet that doesn’t involve being acquired or a merger. They came into the market right from the beginning and they came into the market I thought with the most differentiated offering that anyone could have come in with the idea of Points Betting. I think the problem is, they came in too soon with it to a market that wasn’t mature enough to take part in that product. And maybe it ends up being too risky of a product for the US market in the first place, but that’s not what we’ve been talking about. We’ve been talking about this customer base in the US being interested in risking a little to win a lot. Now of course, Points Betting opens up the possibility that you could lose a lot, too, but at the same time you can win quite a bit if you want to participate in that Points Betting product. I just think they were too soon with that.
I think if you came into the market after five, after 10 years when there was a little bit more understanding of the mechanics of sports betting, that you had a path to carving something out for yourself. So what have they done? Well, they’ve tried the guerrilla marketing with the ridiculous Drew Brees stunt. They’ve tried the purchase of Mac and trying to go for optimizing their in-play, and I think the optimization of the in-play and going for no downtime, that, to me, is the most attractive part of the offering that PointsBet can put up there in terms of the sale of its US assets.
The idea of who can buy them, I’m going to push back just a little bit at the idea that all of the big players are set in terms of their tech. Anybody remember Caesars around the Super Bowl? This was not a company that was in great shape tech-wise around the Super Bowl, and the one thing we’ve heard consistently when it comes to Caesars is that there are product challenges for that company. Now, do they have the money or the interest to go out there and make this purchase? Probably depending on what the cost looks like, but I wouldn’t rule Caesars out entirely just from the product perspective, not necessarily from the, does this make sense financially?
Then you go to the next level of this, the timing doesn’t work very well for Fanatics, but Fanatics has the money to do this. The problem for Fanatics is, they’re already in beta testing for this app, and we know that they went to Amelco for some source code, and I just don’t think it makes a lot of sense for them at this moment. Could they make the acquisition essentially to get whatever database there is for PointsBet and then just try to ice the offering until they had a chance to work the tech in, or maybe they work it in during this beta testing process in some code engineering magic? That’s possible. And then we can go back to what we’ve talked about a hundred thousand times, would there be some value to a 365? I don’t think so; the one thing that we know 365 does very well is in-play. So what value is there for them in terms of the in-play product that PointsBet brings to the table?
You talked about DraftKings, FanDuel, MGM, you’re right, there’s too much crossover in the database there for that to make any sense. So I don’t know, does Penn have any money left? Probably not after what we’ve seen them do with Barstool and with theScore and they paid a super premium on theScore, so I wouldn’t imagine that they’re going to be in the PointsBet bidding either. So I don’t know, I think this was the right move to start exploring a sale if you’re PointsBet, obviously they missed the boat in terms of the most money that they could have gotten. But I do think it’s an attractive offering in certain ways because they do have a couple of things that stand out in terms of what they developed.
Matt Brown (28:31):
Dustin, we know you like to make bold long-term predictions here on this podcast, and we’ve lost track of your record, there’s no way to even go back. If someone was to go back to the 190 previous episodes and get all of the declarations that Dustin has made and then you want to tally that up, go right ahead. But if I was laying you some odds here on this being somebody that we’ve talked about a ton here on the podcast or this being somebody that’s coming in maybe a little bit from the outside, which way would you be laying your money?
Dustin Gouker (29:06):
Man, I don’t know, that’s a tough one to put me. I’ve never been wrong, so I really have to take a hot second to think about this.
Adam Candee (29:11):
Dustin Gouker (29:13):
I don’t know, it feels like somebody out of left field seems unlikely. I think Sam mentioned an analyst talking about Bally’s as well. I’d make somebody in the industry in consolidation like minus 200 favorite, that’s gut feeling, but doesn’t rule out somebody coming on and saying, we want to be in this space and do that. Is not impossible, but it doesn’t feel likely to me because for all the reasons Adam said there, there are attractive reasons still to buy PointsBet. And we crap on these second-, third-tier market shares sometimes, but it does come with nationwide, 3% of the market, that’s better than starting at 0.1% or somewhere else if you’re trying to start from scratch.
And again, the price, depending on who you talk to, it’s going to be affordable if you really want to get into the space; it’s not like the valuations we were seeing a couple of years ago. So it feels likely. I’d also say it almost has to happen. I don’t see a path where PointsBet just continues on and just makes sense. They obviously don’t have the cash position to continue doing all this, and it really makes sense for them to do the exit now.
Matt Brown (30:37):
Adam, we know it’s not going to happen because Disney is in the middle of slashing budgets and all the things like that and trying to cut its costs as much as humanly possible. But boy, if that had not been the case, if they were just flush with cash right now, Disney acquiring this is just slapping ESPN on this with a turnkey product that has a really good app already. All this stuff, you would basically have to do nothing other than just put your brand on it, that would’ve been the home run for them. But again, that seems very unlikely given the state of Disney right now.
Adam Candee (31:11):
Yeah, that’s less than 1% chance on something like that when ESPN is the front of thousands of layoffs for Disney. And beyond that, I still look at it from ESPN’s perspective and say, PointsBet’s good; they can do better. It’s still ESPN, I don’t care how many people they cut, I don’t care where they decide to ultimately turn, that brand is still strong enough that they should be able to command a better deal than picking up the wreckage of PointsBet, in my opinion.
Why Tennessee continues to lead the country in bad sports betting ideas
Matt Brown (31:44):
All right, Adam, let’s close things out here and head to, head to old Tennessee.
Adam Candee (31:51):
Well, if there’s anything that we’ve seen Tennessee do lately, it’s help us try to close things out in terms of sanity, in terms of common-sense logic. And once again, the nation’s lab for bad sports betting ideas produces another banger. The Tennessee Legislature on the final possible day passed a change to how it taxes sports betting proceeds. Now, I say proceeds because they did have a mandatory 10% minimum hold, an idea that came out of lottery games, that came out of lottery thinking that never made any sense whatsoever. No matter how many people tried to tell the Tennessee Lottery, which was running things, that this didn’t make any sense, they still imposed minimum 10% mandatory hold, no sportsbook has gotten anywhere near it, no sportsbook has decided to really take advantage of the opportunity to make payments to get themselves whole to go up from the, say, seven-ish percent that most of them are posting.
And so now, the Tennessee Legislature got involved and said, well, we’re going to make it so that we find a way to guarantee a little bit more take without worrying about this revenue stuff like everywhere else in the country, and they’re going to tax handle at 1.85%. Look, if you’ve listened to this podcast over the 190 previous episodes, I don’t need to explain to you why the idea of taxing handle is asinine. You’re taxing a high volume, low margin business essentially on the volume before you ever get to the margin. It doesn’t make any sense whatsoever. It has not been signed into law yet, but we assume that it probably will be, and for whatever reason, Tennessee seems intent on reinventing this product that no one asked it to reinvent.
Matt Brown (33:50):
Dustin, we keep coming up with these things, we knew that things were going to be tinkered with along the way, but I think we just assumed things would be tinkered with along the way to make them a little bit better. Instead, we start to see some of these things getting tinkered with and it makes it actually worse, and of course, this is just a horrible step.
Dustin Gouker (34:11):
Yeah, there must be a comp out there, but is there anything else in the world where you tax somebody on, not revenue, not money that you made, just money that you’re handling? There’s a lot of debate on how important handle is and how it’s placed in forecasting anything. But just taxing money that comes through that you touch and you’re not making any money off of, it’s maybe in a long term you’re holding it longer, but I don’t know, it is so dumb to be taxing handle. Or just take this to any other industry and say, we’re going to tax it this way, and think how just dumb that would feel, and how much pushback there would be. Again, Tennessee hasn’t listened to anybody, they don’t have entrenched casino interests there, it’s the lottery running the show, but it is just asinine.
I know this would be a bold step, but if I’m the operators, obviously they signed up for the 51% tax rate in New York, but I would say it would make sense to say, we’re done with Tennessee. I know they’re not going to just take the hit on revenue, but you have to draw a line that stands somewhere, don’t you? And maybe this is a wash in terms of how much tax money you’re actually paying versus the 10% mandatory hold plus fines and things like that. But I would say let, let’s stop this nonsense, somebody’s drafting their fan deals saying, we’re not going to do business in Tennessee because this is stupid.
Again, you’re just taking a hit to revenue, so I don’t think it’s very likely. But I feel like you have to take a stand somewhere and this is the place where you’re like, this is dumb policy and we’re not going to stand for it. If I’m all the operators, I would just say, you know what? I’m done with this, and we all just take the hit and hopefully make Tennessee say, look, you’re doing dumb crap, just knock it off.
Matt Brown (35:59):
I know, it’s easier said than done, but for sure, it seems like you could all get together and just say like, guys, let’s just get out of here, this is completely and totally not worth it. So very interesting stuff for sure coming out of Tennessee and not the greatest thing ever. Adam, welcome back my friend, it is great to have your voice, which by the way sounds great through your microphone here on the podcast. Inside joke, Adam coming through his computer a little bit earlier and said, guess what? I sound good even coming through my computer speakers. But buddy, why not give that beautiful vocal cord the majesty of this RE 30 that you’ve got going on here?
Adam Candee (36:37):
I don’t need your feedback, just ask the ladies, however they hear it, it’s fine.
Matt Brown (36:43):
There it’s, it is absolutely beautiful. Guys, again, everything we do, absolutely free, so please go over to legalsportsreport.com and take in all the great words that Adam and company are putting up on the site over there. And of course, subscribe, rate, review, if you’re doing this on the audio side, you know how to do it. If it’s on the video side, right down below, click that subscribe button. We do appreciate the support there, as well. For Adam, for Dustin, I am Matt, talk to you guys next week.