North Carolina Sports Betting Almost A Reality | Sports Betting News Today | LSR Podcast 196
Legal online sportsbooks appear to be coming to NC after a bill faces just a few formalities, but a launch could be far off. We also talk about an update on college betting bans, and the latest call for the feds to get involved in stopping offshore sportsbooks.
Dustin Gouker (00:11):
Welcome to LSR Podcast number 196. I am Dustin Gouker here to talk about all the news and goings on in the US sports betting industry. With me this week, Eric Ramsey. Thanks for sitting in again two weeks after we talked about everything that’s happened in the last five years in sports betting. We’ll go through the news this week. We’re going to talk about some horse racing. I don’t know if anybody wants to talk about horse racing, but we’re going to. Talk about some the latest in in-state college betting bans. Some asks for help for offshore sportsbook. But we’re going to start with North Carolina sports betting, which our colleague Pat Evans tells us and reports this morning is all but a done deal, advanced past third reading in the Senate I believe this morning. Everything else is supposed to be just a formality. We are, as we sit here, Eric, on the cusp of North Carolina sports betting, which I know is near and dear to your heart.
Eric Ramsey (01:08):
Yeah, hard-earned. I’ve ties to North Carolina. I have friends and family there. Went to school there, so this is near and dear to my heart. Something I’ve been getting a lot of questions about for a couple years. It’s been a long road from North Carolina. Obviously, this is one of the states that has a tribal retail operation already. That was pretty early, I think, 2019 that launched. It’s been around for a couple years, may have been 2020, but now finally bringing this into the modern era. This took some time in the legislature. They’ve been picking at it. Really the issue has been getting the two chambers onto the same page, and we’re still not quite there.
The last step is to get the House to agree to these Senate changes. But from everything we hear and see, it looks like it’s pretty much a foregone conclusion. Big margins in the Senate. The changes are relatively minor compared to things that were holding this bill up in the past. The interesting thing to me is the inclusion in the Senate of the sports facilities in North Carolina. There’s eight sports facilities that’ll be eligible for a retail sports betting license, and that’s a modern take on what they’ve been working on there. I mean, all in all, it looks like a really good framework to me, should be a top 10 market in the country, maybe even pushing for a top five, top seven spot, should be a thriving sports betting market from everything I can see.
Dustin Gouker (02:25):
Easily trillions of dollars in revenue, wouldn’t you say?
Eric Ramsey (02:27):
Dustin Gouker (02:29):
Eric Ramsey (02:29):
No, I think we’re talking about something like maybe $6 billion in handle, something like $500 to $600 million in operator revenue. Comps would be something like bigger than Virginia, bigger than Michigan, maybe rivaling Arizona, close to Pennsylvania levels. Like I said, big market.
Dustin Gouker (02:52):
As we sit here, this is heading for the concurrence in the House. That, again, is supposed to be a formality. Governor Roy Cooper has said he will sign whatever hits his desk related to sports betting, so that makes it easy. As we sit here, the launch is not very close though. Pat’s reporting that the law is not effective until … It doesn’t even officially become a law until January. It’s obviously June 1st as we sit here. And then they must set a launch within 12 months of that date. I know everybody wants to know when is North Carolina sports betting launching? We don’t know a whole lot about that. This is what we’ve heard and read from the bill.
Pat is investigating this. I’m sure we’ll see more from him on this topic, but especially as late as this year with the existing framework, that doesn’t really exist in North Carolina. I’d say even if they were to change any of what I just said, it would be hard press to see how they launch this year. I’d say we’re looking at a launch sometime next year. This is one of the ones that we expected almost heading into the year or at least had a good chance of happening. Now we put two states on the books for this year. Kentucky will obviously probably launch sometime this year. We add North Carolina to the launch date next year.
And then as we always talk about, the map gets smaller and smaller every year for what we can legalize. Texas, we know off to 2025 in a best-case scenario where they can put it back to voters potentially if the legislature passes it. A launch is more than three years away. California, God only knows, not any time soon. Florida, in court. There’s not a whole lot of possible wins in sports betting. North Carolina getting across the finish line is a big one. We have the likes of Missouri and Minnesota and a few others that we’ll be looking at probably next year, but that’s where we’re at. But for now, you can rejoice for North Carolina. Obviously a pretty vibrant sports scene between all the teams that are based there, college teams, et cetera, et cetera. It’ll be interesting to see how North Carolina develops.
Eric Ramsey (05:00):
It looks like the in-state college betting was one of the big hiccups for the last couple years that has derailed progress, a sticking point, and a bigger issue in North Carolina than it is for most states. They have pro sports there, but my family’s right between the Duke and UNC campuses. It is college sports country there. It looks like in-state college betting is going to make the final cut here, and that’ll be important to the industry as a whole.
Update on college betting bans
Dustin Gouker (05:27):
I’m just going to change the agenda around because I can, which that goes right into one of the topics we have on the list where Illinois legislators recently extended the ban on betting on in-state colleges online on apps. You can apparently still do this if you go to a sportsbook in-person. For me, I know I’ve ranted about this before; you’re not accomplishing anything by banning, especially even a partial ban. I don’t understand what you’re supposed to accomplish with this. We actually saw an example of this doesn’t matter with the Alabama baseball coach basically calling somebody in Ohio. The person bets on the Alabama-LSU baseball game in Ohio.
Your ban just caused it to cross state lines. This is wrongheaded policy for me to continue doing this, and obviously Illinois is going to do this again. Thankfully it’s not permanent. They have to extend it because it was supposed to expire on July 1st. I hope the messaging around this gets better. And that if we’re really going to get more insight in the market and in the end of the day stop this and stop it from happening offshore is to just let it happen legally and then catch and deal with the people who are doing this and trying to manipulate games. Because a prohibition we know is not really stopping anything from happening.
Eric Ramsey (06:51):
Unfortunately, the timing for Illinois to decide on this was pretty bad with the recent news in college sports betting. They had to make a decision on this before the end of session, and it just happened to be when we’re talking about some college betting scandals. I fully agree with everything you’re saying. I think we’ve talked at length about how these isolated bans on most things are bad policy for what this industry is trying to accomplish. I will play devil’s advocate for a minute and just say that something is clearly not working with college betting. We do have some issues that we have to sort out.
We’re almost past the point of kicking the can down the road and saying, “We’ll measure this and see if we need to make policy.” It’s time to start figuring out what we’re going to do about this. Given the news, I don’t necessarily fault policymakers for making the easy decision to cut in-state college betting or to look at college betting as a whole. This dovetails really nicely with a piece that Mike Mazzeo has on LSR from a conference in New Jersey this week, a conversation with the MAC commissioner, Jon Steinbrecher, who basically is just sounding the alarm that this is a scary thing, that we don’t quite have this under control; education needs to get better. I have some trouble just in this day and age squaring these two thoughts of, yes, it’s bad policy, but the policy we’ve enacted so far maybe has some shortcomings, too. It’s something we need to take a little harder look at as an industry, too.
Dustin Gouker (08:20):
I mean, I don’t even think you’re actually devil’s advocate. I agree with you on everything you said, too. Yes, you can hold both these thoughts in your head at the same time. This is bad policy, but what we’re doing isn’t working. Iowa State with all these athletes betting, clearly there’s some education shortfall in whatever is going on in the ecosystem in college, whatever is going on, whether it’s the betting on their teams, just betting in general. The NCAA said they were doing stuff about this before PASPA fell five years ago. They said they’re doing more now. Clearly that stuff isn’t working.
We also have, on top of that, we have reports of more coming in the NFL in terms of players facing possible suspension or fines around what’s going on with gambling. I think it is just a larger clarion call, whatever’s going on, and maybe this is growing pains, but we need to take a hard look at what is going on in the market. Prohibition isn’t good, but also not having a prohibition is still leading to bad behaviors. Also, some amount of this was going on offshore or with local bookies before, and we have no insight into it. I defy you to tell me this is just a new problem, as well. There’s no way. Yes, the problem might be worse, but this is already going on, and we had no insight into what was going on, is my argument. So I agree with you. There’s some kind of reckoning that has to come down on all this because we can’t just let the status quo persist at this point.
Latest call for the feds to get involved in stopping offshore sportsbooks
That’ll move us on to the next topic. Another one that we’ve heard the drum banged on for some time. Mike Mazzeo reported for us that Massachusetts Gaming Commission has asked the Department of Justice to get into dealing with offshore sportsbooks/online gambling, and I’ll just read a little bit of what they addressed to US Attorney General Merrick Garland. “We hold” — Massachusetts of course, recently legalized sports betting — they said, “We hold our licensees to the highest standards to meet these priorities. Illegal offshore gambling operators are not held to these same standards by a regulatory authority and often take advantage of the legalized landscape and jurisdiction such as Massachusetts to attract customers to their products.” Great. I agree. Stop offshore sportsbooks from operating illegally in the United States. Also, we can wish for unicorns and rainbows. That’s probably not going to happen either. I don’t know. I don’t know where this goes.
Yes, it’s good when states call on the DOJ. The DOJ is not going to drop whatever they’re doing and just all of a sudden start pursuing everybody who’s operating illegally. These are tough cases to bring. Very complicated, deal with international trade law licensure and other places. Yes, clearly. Except for the most extreme voices in our industry, everybody knows they’re operating here illegally. What is the impetus for the DOJ to just say, “Yeah, we’re going to start going after these”? If there’s ties to terrorism, mob operations, sure, maybe they get involved, but it’s just not going to be the priority. They go after the lowest hanging fruit, going after highly sophisticated international businesses that have been doing this for, in some cases, decades.
I just don’t see that being their priority. I don’t see how that’s going to happen. So while I applaud saying, “Yes, let’s go after it.” I don’t know about you, Eric, but I just don’t see the DOJ getting meaningfully involved in this.
Eric Ramsey (11:53):
Sort of have their hands full it seems like these days with things already on their plate. That being said, it wouldn’t be the first time. We’ve obviously had a crackdown come through the poker community in 2011. Even as recently as 2020, there was some federal intervention with 5Dimes, a settlement with the DOJ and 5Dimes. Maybe not quite apples to apples with what we’re talking about here, but obviously these bookmakers are on the federal radar. I think there are some real questions about the mechanism of enforcement, just like there was with poker. What do you go after, and how do you go after through the laws that exist? So maybe it’s something that Congress will eventually get around to taking a look at. Again, we can hold our breath on that just as much as the DOJ. I think we all agree that we’d like to see a solution but not clear exactly how or when, or if that would ever play out.
We’re moving into different territory in the era of expanded, regulated sports betting where a number of states have criminalized offshore sports betting in their state laws. Again, there’s not really an enforcement mechanism for a state to shut down a website based in Aruba or Antigua. But the fact that these operators are now operating in contravention of state law does add another legal element to it that maybe we haven’t had in the past. So I don’t know. I don’t think it’d surprise either of us if we got a press release across our desk that the DOJ was involved in this. But at the same time, it seems pretty unlikely.
Dustin Gouker (13:23):
At least applaud Massachusetts for connecting these dots because this is where I get there’s this real crackdown on regulated sportsbooks and what they’re doing. Meanwhile, nothing’s being done about, nothing can be done about these, but we’re talking about advertising everywhere. You can’t stop these guys from advertising. Yeah, they’re not appearing on TV, on NBA broadcasts, but they’re on local radio, they’re on the internet. There is no shortage of places you can find operators that are operating illegally, and Massachusetts kind of connects these dots. They say, “We hold these people, to DraftKings, FanDuel, everybody who’s operating in Massachusetts, to very high standards.” Absolutely. Very good that they are. But while you’re cracking down on this and putting more regulatory pressure on them, they have no vehicle to stop everybody else who’s operating in Massachusetts or other states around the country. And that’s a tough square to check is, how do we say that?
We’re like, we’re making it harder for you to operate here in the legal and regulated environment and other states are doing this too, like you said, but there’s no lever we can pull to stop this. So that’s why you go to the DOJ, I guess, and ask for help. And you also hit the nail on the head and there’s no state government that’s going to go out there and be able to stop this. Again, Kentucky trying to do things in the past in poker notwithstanding, this is not easy for a state attorney general that already has generally not enough resources to go after a large, an international company that’s escaped prosecution in almost everywhere it’s been. So it is interesting.
I’d say it would make more sense if every attorney general or gaming commission got together and said, “Here’s what we want to do.” I guess American Gaming Association has done this as well, has called for this. But again, it’s a wish, and if you’re counting on that to come and help and save everyone or to take everyone off of offshore and onto the regulated market, I’ve got news for you, probably not coming real soon.
Concerns about horse racing
So there’s that. And we’re going to wrap up talking about the ponies. I like betting on ponies sometimes, and I have bet recently on the Kentucky Derby and the Preakness. I’ll just maybe start, use this as a larger jumping off point and talk about horse racing to the extent that you’re prepared to do that. But Preakness Stakes recently took place, lowest handle on that race since 2020. That despite the fact that the Kentucky Derby winner Mage actually did compete. Sometimes we’ve seen horses being pulled out despite a chance of the Triple Crown. I guess this, from the very top level, this is a little concerning for horse racing. There’s a lot going on in horse racing these days that I want to get into, but this top level not growing the Preakness, especially with a Triple Crown on the line, is concerning I’d say for the horse racing industry on its face.
Eric Ramsey (16:19):
Yeah, I’m not prepared to talk horse racing. I know precious little about it. Certainly not as deep in the horse racing and horse betting data as I’m with sports betting. My off-the-cuff thoughts are, I wonder how much of this is related to both COVID and sports betting. Anytime I see a gambling form that is setting records in 2020 and 2021, my first thought is, “Well, everyone is trapped at home. Everyone’s looking for something to do.” All of these sort of recreational activities around sports and gaming sort of picked up steam in that period. So I wonder how much is related to that. Also, we’ve seen an appetite for other forms of gambling as sports betting has spread around the country. People seem eager to get money on something that they’re watching on TV. So I think there’s maybe a little effect to that too.
But really, I don’t feel qualified to talk about this because I think I have maybe the wrong perception of the industry. You might have better insight from the time you were managing content for these sites and we were probably looking at some of the sports betting data and things like that, but I’ve never gotten the sense that horse betting is a profitable business for states or a particularly popular activity. I know little bits of anecdotal evidence. Horse racing in most states is heavily subsidized. Certainly the case in Maryland. New York gives the industry a quarter billion dollars a year, something like 40-to-1 subsidies in West Virginia.
I’m surprised that we still have horse betting at the level we do. So it’s not really surprising to me that it might be declining. I don’t know how to really put that in a broader context. It doesn’t really surprise me. I will say it’s also as a casual bettor and a fan, the problems we’ve had with the horse racing industry itself, with horse deaths and things like that are off-putting to me, and I wonder if I’m maybe not alone in that either.
Dustin Gouker (18:20):
Yeah, I don’t think you are. The COVID comparison is a great point too, because there was a lot of horse racing going on around the world when nothing else was going on that you could still stream and bet. People were betting on marble races at that point in time too, on YouTube at some point, at least at offshore sites. But yeah, there’s a larger problem with the industry, and people keep thinking, “Oh yes, this is going to pull us along.” But there’s so much going on. You also pointed out that, I think the last count, there’s been a dozen deaths at Churchill Downs in recent weeks and months. That’s concerning whenever Santa Anita had a rash of these not that long ago, too. In today’s day and age, we’re seeing a lot of horses dying, and it is hard to just see what is the future of horse racing from that.
Again, just from a casual perspective, you can debunk all that you want that it’s been happening forever. But in today’s day and age, do we need to be running horses and seeing them die right after their race? Not a great look. I’ll also say this. Anecdotally, some of the large sportsbooks have really been diving into this, right? DraftKings has a deal now to promote the Churchill Downs app in other states. It’s now DK Horse. I actually did sign up when it came to Oregon. Not a tremendously great project next to TVG and FanDuel Racing. But we also see Caesars is really into this. I guess without a whole lot of context, I guess this is a new path for people to get people into sports betting, because like I said, I don’t think the end goal is to just get them into the horse racing app.
You want to get them into online casino or sports betting in the states that you have it. But I can say there’s a lot of operational focus. FanDuel Racing, I said it’s also alongside the TVG brand, basically re-skinned. The large operators have a lot more operational focus on this as a customer acquisition funnel and just new business. So that’s interesting. People also always make like, “Oh, fixed odds is going to fix horse racing.” Yeah, good luck with that. It’s not going to fix horse racing. There are just so many inherent problems. It is just wild to think about how big horse racing was in our country not that long ago. There’s been obviously several movies made about horse racing in the past. Secretariat stands out for me. This was a huge thing in American culture not that long ago, and it’s now taken a sideline.
I don’t know where it’s coming. You can love horse racing, but I just don’t see the path where horse racing is coming back to its former glory or even to hold onto its current status in the American culture and just in the betting wallet as well. So, interesting to see where it goes from here. But also a great story over at LSR by Jim and the LSR team, who’s been in horse racing for a long time and talking a lot about Maryland-specific and some of the problems around Pimlico and the Preakness track there. So I encourage you to go read that. I think that’s all we got for this week. Hopefully some of the A team, Matt and Adam, will be back with us next week. But for now, we will call it a day. For Eric, I’m Dustin. We’ll talk to you next week.