EPISODE 238 | LSR Podcast

Supreme Court Gives Sunshine To Florida Sports Betting | Sports Betting News | LSR Podcast 238


28 min
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Supreme Court Gives Sunshine To Florida Sports Betting | Sports Betting News

The US Supreme Court chose not to hear a challenge to the Florida gaming compact that paved the way for Hard Rock Bet to launch. What could that mean for tribes in other states? Plus, Boyd shows interest in acquiring Penn, Massachusetts goes back to the limits discussion, and more states take action against a major offshore sportsbook.

Full transcript

Matt Brown (00:14):

Hello and welcome to episode number 238 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 Adam Candee, your friend and mine. You can find him on the Twitter machine @AdamCandee, two E’s, no Y. If you hate yourself, you can follow me @MattBrownM2. Two hundred and thirty-eight of these puppies, Adam. Off we go with all of this. We’ll talk some Boyd stuff, we’ll talk some limit stuff, we’ll talk some Bovada stuff. But let’s kick things off with the big deal going on over in Florida here, Adam. We know the whole landscape that is Florida right now, the turn-on, turn-off, now kind of a monopoly-type situation over there. What do we have as further developments?

US Supreme Court chose not to hear a challenge

Adam Candee (01:00):

What we have as the actual news of the moment is the US Supreme Court choosing not to hear the West Flagler case challenging the Seminole Tribe compact with Governor Ron DeSantis that facilitated Hard Rock Bet being able to open in Florida. Now, we had a feeling this was going to be the outcome. This was the most expected outcome of this situation was that the Supreme Court was going to say that they are not going to hear the case. They only hear about 2% of the requests that they get every year. And it seemed, at least to our legal experts that we talked to, that the way things had been denied coming up to the Supreme Court did not suggest this was one that the Supreme Court was going to take on, Seminole Tribe obviously pleased. More than anything, what this decision does is begins the discussion in other places of will other tribes attempt to follow suit in the way that the Seminole Tribe has acted in Florida?


I’ll take a pause right here. If you want to know more about the actual legal machinations of all of that, definitely go to legalsportsreport.com and look back over the last three or four years of articles that John Holden, our legal expert at the time, was writing for us. He laid out a lot of the groundwork of this. There are related issues when it comes to placement of servers and so on. But the fact that the Supreme Court chose not to hear this does potentially open some kind of path. It also maybe sets up Florida in a situation where you could end up with more brands. There’s always been a way for FanDuel, DraftKings, et cetera if they wanted to get into Florida. However, there are myriad issues when it comes to that, including the revenue share that would be required, including sharing of information that would likely be required with the tribe because the tribe is in charge of everything in Florida.


What really will be interesting coming off the back of this is to see if there will be movement in any other states where there is tribal exclusivity, and whether they will use the fact that the Supreme Court did not hear this decision as legal basis to be able to try to launch in their places.

Matt Brown (03:11):

Spokesperson for the Seminole Tribe, “Seminole Tribe of Florida applauds today’s decision by the US Supreme Court to decline consideration of the case involving the tribe’s gaming compact with the state of Florida. It means members of the Seminole Tribe and all Floridians can count on a bright future made possible by the compact.” That is a verbal backflip right there, Adam, is what that is.

Adam Candee (03:36):

I can see the backflip happening. I can picture it in my mind from what is being said there. Now keep in mind, there are still avenues for this to be challenged at the state level, which was essentially what was said prior to this in the last denial of the West Flagler case at the federal level. So there is a way for this to be challenged at the state level. However, the Supreme Court avenue was probably the biggest threat to what was out there, at least in the immediate term for the Seminole Tribe and for Hard Rock in Florida. How well is it doing? We don’t really know. We assume that Hard Rock is probably in a situation where they’re very profitable in the state of Florida, considering they’re the only operator and the appetite for online sports betting that has been there. But what will really be interesting will be to see not only down there but anywhere else whether this leads to tribal movement in iGaming, and that is a much larger question than it is with sports betting because we know that many tribes throughout the country who operate brick-and-mortar casinos have been fearful of what the potential for cannibalization would be when it comes to online casino taking away from brick and mortar.


Now, there are a number of studies out there including one that we featured at a sister site of LSR recently, talking about how that’s not actually the case, how online casino does not take away from brick and mortar. However, that has been one of the fears that’s been out there over time. It’ll be interesting to see whether this leads to any more movement toward iGaming in the long run for tribes. Because as we know, it’s been something that’s been stalled out at the legislative level for states at least this year in particular. Will tribes be able to try to offer that in some sort of capacity via their brick-and-mortar casinos? We will see.

Matt Brown (05:37):

Yeah, it’s a deal, Adam, where it’s the same thing that we’ve talked about with sports betting before where you hear the argument in Nevada where we hear the deal of, “You need to go sign up in person, because you’re going to walk through the casino and you might drop $20 in the slot machine,” all that. It’s been proven time and time again, yet all of this, it’s like, “Guys, all these things aren’t necessarily related,” and talking about online sports betting taking away from casino gaming and all of these things that we keep hearing from some people that get floated out there.


You and I well know the decision whether I’m going to sit in my underwear on my couch and place a $5 bet on the baseball game that I’m about to watch or shower and put on actual pants and go and physically go play blackjack in a casino are not related at all. I’m not going to do one or the other when it comes to all of that. And so I think the more that we start to understand that, or at least come to grips with the fact that that’s the way that this is, it’s not necessarily, “I’m going to choose this or this,” it’s more complementary type deals of each other.

Adam Candee (06:38):

Well, the whole idea of cannibalization, you’ve had to take the idea in with the thought that there’s a limited pool of people who is choosing to play, right? And that is not the case. It’s been proven. And I think the first six years of legal sports betting in the United States is only evidence of the fact that you’re talking about different customers, right? You’re talking about people who, as Matt mentioned, and speaking of visuals, take that one in, Matt on his couch watching his six televisions in his living room placing a $5 bet on baseball in his skivvies. Take that one in, folks. You got that one for free. The next one, we’re going to make you pay for the little visual of Matt doing what he does.

Matt Brown (07:24):

But the thing here, it’s a podcast version, Adam, so imaginations can run wild imagination.

Adam Candee (07:30):

Let me tell you: over on this end of the microphone, they already are. But when it comes to the idea of that player, the same-game parlay player firing off $5, $10 same-game parlays, that is not the same player as the person who is sitting down at a blackjack table, sitting down at a slot machine, whatever the case might be. So yeah, it more is about offering an amenity that people who otherwise might not be interested in gaming in the way that you’re used to seeing it happens might be interested in taking part.

Boyd shows interest in acquiring Penn

Matt Brown (08:01):

We talk a lot about MGM. We talk a lot about Caesars. We actually talked a lot about Penn. One of the names that we haven’t talked a ton about, Adam, is Boyd. And if people aren’t really familiar with the gaming business in general, Boyd is actually a decent little player in the gaming business. It’s just one of those things where they aren’t front and center like a lot of the big brands. They own a lot of the regional casinos. You’ve probably been to a Boyd property and didn’t even know that you were at a Boyd property sometime in your life. You kind of go in, you start to look, and you’re like, “Oh, Boyd’s got a pretty big presence across the country. I guess I wouldn’t have totally realized that had I not really dug into the numbers. They do decent business, they make some money.” And so this story is fairly interesting I think to a lot of people out there, because they probably would’ve thought it would’ve been the other way around.

Adam Candee (08:51):

Yeah, Boyd Gaming, actually a company coming up on its 50th anniversary. They’ve been around for quite a while. If you’re in Nevada, you know them well because of the presence that they have there. But it is a regional operator in multiple states in the same way that Penn National, or I should say Penn Entertainment now, formerly Penn National Gaming, is a regional operator in a number of states. The news this week kind of confirming a report that had been out there speculatively previously about a new addition to Boyd’s board, which seemed to spark talk that maybe because they were bringing in someone with banking experience and potentially M&A experience that they might be wanting to make an acquisition potentially of Penn. Reuters reported earlier this week that Boyd has at least made an initial approach to Penn about a potential acquisition. This would be a massive, massive deal, multibillion-dollar deal.


Go to our articles that we have on this at legalsportsreport.com. See what Matthew Waters has written up on it because he explains a number of the challenges that would be in place of the path to a deal here. There are numerous challenges. I’ll let you take a closer look at them on the LSR website. However, it’s important to note this would definitely be a complicated deal for Boyd to pull off.


But what did we see on Thursday and now as we record this Friday morning, Penn stock jumped about 8% on the news that Boyd would be interested in acquisition. Boyd stock actually sank a little bit on that news. We have seen a lot of news around Penn recently and what their investors think and what might be the future for them. We know all about the Barstool Sportsbook situation that did not work out the way that they intended, and I think it’s fair to call the ESPN Bet start sluggish for Penn, and they’re coming up on a very important football season for them in terms of being able to make ESPN Bet into more of a success than it has been thus far.


Also important to keep in mind, and I think this is something that gets forgotten, Matt, among a lot of people, is that Boyd actually has a 5% stake in FanDuel. This was a market-access deal done at the very, very beginning of legal sports betting in the United States. And so that is something that has only grown in value over time and is another consideration in terms of where Boyd might ultimately be in the long run when it comes to sports betting. Because as you know, Matt, it is not a company that has really made an enormous push to do anything in terms of online sports betting thus far.

Matt Brown (11:28):

No, not at all. And like Adam said, if you’ve been to Vegas, if you’ve looked over off the side of the strip, you might’ve seen the Gold Coast. That is one of their properties in Las Vegas. If you go down, properties in Louisiana, in Missouri, in Indiana and Iowa, Mississippi, Kansas, Illinois, all that; Pennsylvania, they even have a property, have some racinos in Ohio, a couple in Louisiana as well. So like I said, there’s 28, I think 28, 29 properties countrywide for Boyd, and they’re all strategically positioned in places where you’re certainly not going to walk in and feel like you’re going to a strip property or whatever, but they’re in these places where they don’t have a ton of competition and they do pretty dang well. I know a few of these, been to several of these as well.


And I think Boyd, we’ll talk about it obviously now moving forward with this and see what happens with this story, but again, not a company that we’ve talked a ton about here on this pod, and this is certainly something that’ll perk up the eyes. I think of a lot of people out there who go, “Oh, I had no idea Boyd would even be in the stratosphere of being able to talk about doing something like that.”

Adam Candee (12:46):

We’re talking about a company that does multiple billions of revenue, right? This is not just a matter of a Boyd property downtown in Las Vegas. It’s a very large operator.

Massachusetts goes back to limits discussion

Matt Brown (12:57):

All right, Adam, so let’s head over to Massachusetts and a story that I think that we are going to be following a lot as we move forward, not just in Massachusetts, but just in every state as we start to get, as we said, maybe not version two, but maybe it’s version 1.5 here of like, let’s go in and look at some things. We got this going, now we’ve got some sample size here. Maybe we need to start making some tweaks.

Adam Candee (13:26):

You and I did, I think, one of the more rational discussions of limiting that has been done a couple of podcasts ago because of the news in Massachusetts that nine out of the 10 licensees in Massachusetts had ducked out of a public discussion on limiting, that the Massachusetts Gaming Commission was inviting all of its operators to the only operator who showed up was Bally, and Bally wasn’t even live in the state. And so that drew a pretty decent wave of negative sentiment online and some in the press about the operators ducking that discussion.


What we’ve seen now is that at least some of those operators have now come back to the commissioners and said, “OK, you know what? We’ll be willing to have some form of discussion on this. We will agree to do this.” FanDuel, I believe, and Fanatics came back and said that they would be interested in having this discussion.


Well, at yesterday’s MGC meeting, the commissioners kind of pumped the brakes a little bit on it and said, “Well, wait a second. If you told us last time that there would be too much in terms of trade secret that you would have to reveal in order to have a discussion about how you limit bettors, well then why would we come back and do this again? What’s going to be different the second time than was the first time? Is this just going to be performative that you say you showed up and you don’t say anything?” Or are they maybe going to regroup and give a more sober look and talk to their legal team and say, “All right, well maybe there are things that we can discuss in public without giving away too much of whatever we consider to be our secret sauce”? There’s more in the article by Sam McQuillan at LSR talking about some of the things that have happened between these two Massachusetts Gaming Commission meetings. There was apparently some discussion that one of the guests they had to represent the betting public had said some things that they did not like on a podcast between here and there. Again, I’ll let you take a closer look at the article to find out more about that.


But Matt, it just goes to show overall that there is no easy solution to this discussion. We talked all about it on our last podcast that you can talk about, yes, bettors should be able to know what they can get down. You can talk about these are private companies and they have the freedom to run their business the way they see fit to make sure they are taking the business they want and not taking the business that they don’t. And regulators are going to find themselves, at least in this situation, potentially in the middle, trying to figure out is there some sort of action that we could take? We know that the operators would not be very fond of anything along those lines.

Matt Brown (16:16):

Yeah, I look at this and wonder if this isn’t the most complicated discussion that we’re going to have kind of moving forward with all this. Because as the market continues to mature, Adam, one of the things that we’ve seen in all forms of gambling, be it the poker boom, be it daily fantasy sports, then now in sports betting, is the more people do it, you will get a population of those people that just get better at doing that thing. At the beginning when poker was exploding, everybody was terrible. And so as people got better, the rules had to change, things had to change. All the people got more keen to what rake was and all the stuff like that. Same deal with DFS. DFS came out, everyone didn’t care. Everyone was just playing. Then they got rake sensitive, and then they got, “Oh wow, these guys are really, really good. These are power users. These guys are putting in thousands of lineups. How do I ever beat that?” They had to address that issue, right? Lineup limits, all the things that went into all that with DFS.


This, though, is such an incredibly nuanced conversation. Because as you and I mentioned, again, as Adam said, please go back and listen to a few podcasts ago when we talked about all this, there’s actually no right answer to this. I mean, there’s no right answer. Yes, people should be able to get down bets. If you’re going to offer bets to people and you’ll take all the losers that you want in the whole wide world, and definitely the winners should be able to get down too. But at the same time, these are for-profit businesses. There’s no right for me or you to be able to exploit something that we think is able for us to go in and make a killing on. So it’s a very, very delicate conversation that I am sitting here going, I don’t envy anyone involved in any of this because there is no right answer. We could come with a very sane, rational viewpoint for both sides, and I think both people could listen to us talk and say, “Oh yeah, I believe that.” Or on the other side, “Oh yeah, that sounds right to me as well.”

Adam Candee (18:14):

Without question, Matt. And again, Episode 235 of the Legal Sports Report podcast is the one that where we talk about limits. You can come from one side and say that limits only matter to a small percentage of your customers, right? Limits are only something that your players who are working at higher dollar values in the first place or who are sharp enough to be flagged by an algorithm or by a trader in the first place, it’s only going to affect that small amount of people. And I can come back to you from the other side and say, “Right, but we’ve been told repeatedly that 90% of revenue in the legal market is coming from 10% of players.” And so it affects a lot of the revenue even if it doesn’t affect a lot of the players.


I think where some of the pain points have come in is when the algorithm is affecting smaller dollar players, where you’re trying to get $50 or $100 down, and you’re getting cut to $10 or you’re getting banned on a certain sport or whatever the case might be. There really is no simple one-size-fits-all answer. That is where it gets really tricky when we talk about regulating this, when we talk about regulators getting involved in this. That’s an issue. Because this is the same discussion with different clothing on when we talk about federal regulation of sports betting in the first place. This is why there is such reticence for the federal government to get involved in terms of regulating the sports betting industry because they’re going to have to paint it with such a broad brush that it’s likely not going to take in a lot of the nuance of the discussion that those who have been involved in the industry on both sides of the counter have been dealing with for years and there ends up being a lot of unintended consequence when it comes to that as well.


It’ll be interesting to see if there is this discussion in Massachusetts, what the sportsbooks are willing to discuss, and then also what are the commissioners going to ask of them. Part of what they said in terms of going back and considering if they want to do this roundtable a second time is that they wanted to take a look at what has been done with limiting and regulation in other countries. Again, anytime we want to actually use the experience of looking at other countries who have been doing this longer than we have, I think it is a very good idea to at least consider that information, especially when we start talking about advertising and regulation. And really, we can even look at the UK and stake limiting that has happened there, and say, “You might want to just at least have the information about what has been done in other places before you begin the discussion of what you might do here.”

Matt Brown (20:48):

That’s just a reminder here, Adam. We’re sitting here in June. We are a mere, let’s call it 45 days away from what I can only assume will be kind of the revving up of the football season advertising spins for all of these books. And so we’ll be curious to see, do we start seeing Fanatics? Do we start seeing some of these other actual real pushes in the advertising realm? Do we see more bet365 as opposed to just kind of the stuff where it’s around kind of event-based stuff that you see with bet365. So it’s going to be interesting as we head into that. We’ll talk about that the closer we get there.

More states take action against major offshore sportsbook


Let’s wrap things up today over in Michigan. I think for what we have talked about multiple times here on this podcast I think is a good thing. I think this is something that if we’re trying to make people go to a regulated market and make sure that they have consumer protections and there are these regulations in place and all that, I think states stepping up and taking some action is a worthwhile cause, and that’s what Michigan has done here.

Adam Candee (21:52):

So in Michigan, we told you last week that Bovada had received a cease-and-desist letter from the Michigan regulatory body there and that they had 14 days to comply. Actually that means we told you two weeks ago about that to be most accurate. But what happened there is that Bovada apparently, according to the Michigan Gaming Control Board, complied with the request to go dark in Michigan. We do have some information that some people we’re still seeing them as an active state as of this morning, so we’re asking for clarification on that. But the word we had from the MGCB is that Bovada had agreed to go dark in Michigan. The letter, by the way, if you’re asking, “Well, where did that letter go if you’re talking about an offshore website?” That letter was sent to a company called Harp Media that is based out of Curacao. And if you’ve been involved in the sports betting industry long enough, you’re well aware Costa Rica, Curacao, many places in that area of the world are where we’re talking about these places being headquartered.


So Bovada also likely to go dark from what we’ve heard in Colorado, and then Connecticut also sent a cease-and-desist letter. Again, to be clear, this is not a situation where these gaming control boards or regulatory authorities have a clear and obvious path to enforce against an offshore sportsbook, but we have seen that Bovada at the least has been willing to comply when it comes to these individual state requests. And Matt, as you and I talked about when we first discussed this with Bovada, when we talk about it being Michigan or when we talk about it being Colorado or Connecticut, Bovada’s business is large enough, especially in the United States, that losing those states doesn’t really make that big a difference. Now, losing New York certainly did for them, but then there’s still a very large market out there for Bovada and the rest of the country. And a lot of that is in states that gaming regulation looks much different. Whether it’s California or Texas, those are states with enormous populations, and gaming regulation looks a lot different in those places.


It’ll be interesting to see if there is a state or a group of states that would be a tipping point at which Bovada or any other offshore that would be targeted might not be as compliant, but we have not reached that point yet.

Matt Brown (24:21):

For every state that Bovada gets kind of ticked off of the list, it’s not only a win for the legal sportsbooks there, Adam, just strictly because Bovada is no longer available, it’s also because, again, if you’ve been around this industry a long time, Bovada is known as a air quote if you’re watching the video, part of the “square books.” It’s the casual rec bettor that is betting at Bovada. It’s not the super-serious guy. And so you would think in theory, not only is Bovada not allowed in the state, but also might repopulate at least a little bit with some people who are interested in sports betting, but are probably your same-game parlay player. Or your guys that are going in there and don’t really care all that much about winning and losing, it’s more about just the experience and having a little bit of action down and all that. We know that those guys are super, super valuable to all the sportsbooks out there.


And so again, it’s kind of a double win, right? Bovada not being allowed, and then also putting some more of those players that are so highly coveted back out there into the ecosphere.

Adam Candee (25:20):

Yeah. And it will be very interesting to see also if any of the other offshores ultimately get any of the same treatment from state-level regulators. But we’ve talked for a long time about the fact that we expected if any significant action would ever come, it would come from the Department of Justice at the federal level. That’s what the American Gaming Association has asked for in the past. Will that be the case? We haven’t seen anything that would indicate it would come from the federal level, so states are taking action to protect their tax revenues. Because in the end, when we talk about states taking some level of action, these states that have chosen to legalize online sports betting and/or iGaming are trying to maximize the tax revenue that they get out of having that activity regulated and taxed. And if offshore is available and is taking some of that money away, it would seem to follow that if states really want to get the most money out of choosing to legalize online sports betting and/or iGaming, that this would be a prudent path to consider.

Matt Brown (26:21):

Guys, everything we talk about here on the podcast you can find over at legalsportsreport.com. I’ve waited until the very end, and we do appreciate you hanging around to the very end, go ahead and hit that subscribe button. If you haven’t done so yet, that’s all right. Go ahead and hit it. You waited until the end. You heard the whole podcast. I didn’t pander to you in the middle or anything like that. So here, you made it to the end, hit that subscribe button. We do appreciate it. And if you want to rate and review, it also helps us climb the charts out there, so I do appreciate that as well.


If you want to follow Adam on the Twitter machine, @AdamCandee, two E’s, no Y. If you want to follow me because you hate yourself, @MattBrownM2, Apple, Spotify, Google, all the places that you get your podcast. And if you’ve seen this on the video form, go ahead, hit the subscribe button on YouTube as well. For Adam, I’m Matt. Talk to you guys next week.

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