Massachusetts On Our Minds | LSR 157
Welcome back to the Legal Sports Report Podcast, Ep. #157! Will sports betting in Massachusetts get done in the next couple of days before the legislative deadline? (1:07) We also break down FanDuel TV that’s apparently on the way (10:53) and the eye-popping valuation for Underdog Fantasy. (16:03)
Matt Brown (00:10):
Hello, and welcome to episode number 157 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. You can follow him for free on the Twitter machine, and you should @dustingouker. If you hate yourself, you can follow me @mattbrownm2. Of course, if you are watching us on the YouTubes, go ahead, hit the little subscribe button. We do appreciate that. And then if you’re just listening to us, you can find us over on the YouTubes. Go ahead, subscribe to the channel over there and then subscribe, rate and review. Leave a little comment. It helps us climb the charts there, so really do appreciate all of that. We’ll talk about maybe some rebranding for some television stuff in the sports betting world. That could be super interesting. We have a new valuation for a company that is kind of still relatively a new kid on the block, and we’ll talk about that as well. But, Dustin, let’s kick things off as we always do, getting some state updates here, and let’s start off with Massachusetts.
Governor renews hope for legal MA sports betting but will it happen?
Dustin Gouker (01:07):
Yeah, I always start with Massachusetts right now. It is the only state really that’s still in session and actively considering online sports betting legislation. The Legislature is supposed to wrap up on Sunday, and man, there’s just been a deluge of news around sports betting. So, you’re always like, “Where there’s smoke, there is fire.” There’s stuff going on behind the scenes in Massachusetts. The latest is that the governor of the state there, Charlie Baker, said on Thursday in a scrum with reporters that he really wants to. He hopes this bill makes it to his desk and that he can sign it, which is certainly good news. He’s been a proponent of this for some time, but we still have this divide between the House and the Senate that’s going on in the background. We’ve talked about this more than once, I know. The Senate has approved a bill, wants a bill that does not allow college sports betting at all.
The House has passed one without. There are other differences in those two bills. We’ve also seen casino execs send a letter out urging for passage of this. We saw another group in the state, asking for it. There is a lot of pressure right now, a trade group that has a lot of businesses there, and of course, this is the home of DraftKings. It remains sticking out like a sore thumb that DraftKings has not been able to help get this across the finish line. They are a major employer in Boston. They are Boston-formed and have just gotten through everything in Boston, and it’s weird for them that they have been the leaders in sports betting so far, and can’t do it in their home state of Massachusetts where everything is going on, so a lot of moving parts. We don’t work a whole lot of weekends over here, but I know we’re going to be following this over the weekend to see if a compromise can be hammered out, and that if sports betting can get across the finish line in Massachusetts in the next couple of days.
Matt Brown (03:01):
You love when I do this to you, Dustin: You’re handicapping this. How big of an underdog would you say this is?
Dustin Gouker (03:08):
I’d say it’s still an underdog, man, but not a huge one. I’m going to go with +150 to get done. We just don’t know what’s going on. Again, all of this pressure belies that this has a chance. You wouldn’t see people actively putting letters together and trying to push for this if there wasn’t a chance of this. If it was done, everybody had took their toys and went home, I think we’d already know that. So, this is on the table. There is pressure, again, all the way up to the governor’s office, saying, “Let’s get this done.” Does that mean it will get done? Absolutely not.
Again, we don’t really have a sense of what the compromise is going to be, and I’ll argue not that you shouldn’t legalize sports betting if you’re not going to legalize college sports, but you’re creating a bad product. You’re just setting people offshore to continue to bet on college sports. You might as well get that into light and regulated in the US. So, somebody who is following a little bit more closely like Mike or Matt on our team would probably make it a little longer, I’m guessing, if they were the ones here, but you can get it down at DG Sportsbook at +150.
Four the love: Sportsbooks late in failed online NC sports betting bid
Matt Brown (04:20):
So, let’s take a look over in North Carolina. As we know, Dustin, didn’t get across the finish line there in North Carolina, but as we kind of look back and see how the dust settled here, some interesting stuff coming out of there.
Dustin Gouker (04:37):
I’m a big democracy guy. I went to school for political communication, and, always, voting matters. This is an instance where making your voice heard and engaging in democratic processes could have made a difference. The bill in North Carolina lost by one vote, and what came out is that DraftKings … This is just more of a funny tagline of this … DraftKings sent an email trying to activate customers after the bill had already been defeated, but, you know, at least they tried. Nobody else really even tried to do anything to activate customers. If you get enough people … And it’s also so strange, because the sports betting industry, and the operators, FanDuel and DraftKings particularly, have been really good about trying to activate customers to get things across the finish line in the past. And we know from the daily fantasy sports days, those activations actually probably made a difference, especially in New York, where people just came out en masse, and they called and emailed, or what have you, and did this.
So, the fact that there was not a push in North Carolina to activate players to any great extent, all you have to do is change one legislator’s mind in North Carolina. You get enough people to call one person who is like, “I don’t care. Sure, let’s have sports betting.” There’s got to be. There probably is one person who is on the fence, and if they heard a ton of feedback from their constituents, “I want sports betting. Give it to me,” maybe we get a different vote. This is all, “Hindsight is 20-20,” of course, but it is … And again, this belies how I think this is how hard it is to get stuff across the finish line in legislation in general. We’re finally seeing this slow period of … It’s hard to get the rest of these states. It might be a grind. Massachusetts doesn’t get done this year, there’s no guarantee it gets done next year, and then we’re onto other big states.
But it’s hard to get stuff done, and we had a real chance in North Carolina, and everybody might be kicking themselves that they didn’t try harder leading up to that vote, that critical vote that ended up killing North Carolina sports betting, at least for another year.
Matt Brown (06:35):
Moral of the story for anybody out there listening, “Your voice does matter, and it can matter.” So, don’t think that email you send, or that phone call, or that message you leave is not going to do anything whatsoever, because like you’re saying, all it is is one person’s mind that you had to change, and there definitely was somebody who was basically just on the fence, and was like, “OK, no,” as opposed to, “OK, yes,” and maybe a couple of calls, a couple of emails, like you said, could have actually flipped it to the, “What the hell?”
Dustin Gouker (07:03):
And Adam could probably talk to a better extent than I am on this, because he’s been more in political offices and PR in his life than I have, but I interned in Congress when I was in college, and letters, obviously, people aren’t reading every letter that comes in, but if you get enough of them, that moves the needle. It gets up to a legislative aide, or it moves up the food chain. If there are enough people on an issue, it gets into notes from a chief of staff or whatever. There’s no doubt that if you had a critical mass of people talking about what’s going on in North Carolina and calling their legislators, it could have moved the needle for sure.
Barstool Sportsbook takes marquee partner for Kansas sports betting
Matt Brown (07:40):
We talked a couple of weeks ago here on the pod about how Penn National went ahead and shut down theScore here in the states, and is going to just go with the Barstool brand. And with that, Dustin, we have some news coming out of another state with that very Barstool brand.
Dustin Gouker (07:58):
Kansas Speedway announced that the September 11th NASCAR Cup Series race is now the Hollywood Casino 400 presented by Barstool Sportsbook. That’s a mouthful, but they got two for one there. They got their casino and the Barstool Sportsbook in there. The casino is right next to the track there in Kansas City, Kansas, not Kansas City, Missouri, and could have a temporary sportsbook possibly open by race day if everything goes. The backstory of this obviously is Kansas legalized sports betting, and there’s some chance that we see a launch, at least of retail and/or online sports betting, before or sometime after NFL season. September 11 sounds like it’s going to be cutting it close for that. It’s not impossible. We’ve seen states move heaven and earth from passing a law to getting it live. Barstool, the branding of the Barstool has been something they really try to do.
They’ve really focused on NASCAR, in terms of branding. We will remember that they actually tried to … Well, they actually did … Back a bowl, sponsored a bowl, a bowl that ended up getting canceled famously, and they didn’t. That was in Arizona, where they were hoping to get a spike around the launch of sports betting there as well, so a lot going on here, but Barstool is taking this, really going after niche sports, and I’d say the NASCAR audience and Barstool, I think, kind of obviously, there’s a lot of synergy there, in terms of their audiences, and we’ll see. We’ll see if that moves the needle in Kansas, not a huge state, as we’ve said, but this is the only launch people are getting a shot at right now. We’re still waiting for Maryland. Ohio is off, as we know, into January 1st, next year. So, right now, Kansas, all eyes are on Kansas, as well, in terms of the legal sports betting market here in the US.
Matt Brown (09:47):
I mean, I look at this and I say, from a NASCAR perspective, Dustin, I mean, if you’re talking about at least kind of on location, point of sale, right then and there, I mean, we know tens of thousands of people show up to these NASCAR races and stay all damn day long at these races or whatever. And so, I’m sure Barstool will figure out a creative way to take advantage of the hours and hours and hours and hours that these people are spending at this racetrack, and look, I mean, it’s all about customer acquisition right now, and if you can get those guys to sign up right then and there on the spot, as we’ve seen, sometimes people are sticky. So, I mean, if you get them on your book first as opposed to getting on one of these other books, then maybe you kind of won that customer.
Dustin Gouker (10:39):
Yeah. I’m sure Mr. Portnoy will be at the race, getting people excited about it. I mean, it plays toward branding, and obviously getting to be in Kansans’ minds whether if it launches or not. I mean, it’s a lot better if they could activate people that day with a legal app or a retail sportsbook, whatever. If it’s just branding for the future, a little less exciting, but it’s also national advertising on top of that as for being a title sponsor of a NASCAR race. So, we’ll see, definitely interesting though, and we see Barstool really pursuing this. This is one of their main ways of marketing their product.
FanDuel to create 24/7 sports betting network through rebranded TVG
Matt Brown (11:19):
So, if you are a horse bettor, you are familiar with TVG. If you are not, you probably are not. I mean, it is really high up in the channels depending on which provider that you have. A lot of times you have to have an extra tier in your package if you want to be able to get it, different things like that. But, I mean, if you’re an avid horse race bettor, then it’s certainly something that is a big utility for you. But, Dustin, you and I, I don’t think, are big horse bettors. I’ve probably been on TVG just a couple of times over the course of my life, just more to check it out than anything else, but it looks as if FanDuel, who, by the way, owns TVG, has some unique plans for this channel in the future.
Dustin Gouker (12:05):
First off, I used to be … Well, in my younger days, I bet a lot of horses when that was the only thing you could bet on as a kid. I grew up in Pennsylvania. We had an off-track place, well, not when I was a “kid,” obviously, but when I was a little older than that, but would bet on the ponies once in a while. I’m, by no means, a huge horse racing bettor who is handicapping very well. Anyway, big ups to Brad Allen, first off, who broke this story and got this news first that we’re basically getting … It sounds like, from all indications … He got some internal documents about what FanDuel was talking about, FanDuel TV, rebranding TVG, which is a horse racing channel, to FanDuel TV, to be more focused on the sports betting industry as it develops here in the US, and this makes 100% sense.
We see these largest sportsbook operators, especially DraftKings, FanDuel, and MGM, want to be content creators in addition to just being the sportsbook. They put endless resources into creating content around that, and this is now apparently going to take place as a TV station that FanDuel is going to use it for that. From the initial spec of it, it’s going have some daily programming. Pat McAfee is obviously the cornerstone to that, is retained by FanDuel, is apparently going to have a show on this new network. And then a couple other shows they’re going to have … Still going to be racing on the network, because they have to fill up 24 hours of programming, and a lot of live programming. There’s going to be break-ins, I presume, some highlights, some other betting material and information throughout the day, but super interesting, as this desire by the books to own the media and own their own media and not just rely on external spending is definitely interesting. And then, again, like you said, they have TVG, which is a fine product if you watch horse racing and you watch horses all day.
It’s perfect if you’re a horse bettor. It gets people engaged with their TVG betting app. It’s very holistic, but there’ll still be TVG2, which will become FanDuel Racing. They also have a mirrored app that is called/branded FanDuel. It’s basically the same app as TVG, and then they have the OTT app that’s for TVG that’s going to become FanDuel plus, so super serious foray into sports betting media even moreso than they had been before, and it’ll be really interesting to see what this looks like and how they iterate it, because it’s going to start off a little small, but it’s going to become probably a 24/7 sports betting network, one would assume.
Matt Brown (14:41):
And, Dustin, you have to assume this is just a look into the future. You and I both know we’re not quite there yet as far as live betting on these apps, and things like that. I mean, it’s getting better. Everybody seems to be trying to work at it, but we’re not quite there yet. But, listen, two, three years, four years down the line here, maybe they’re really going to look at this channel as more of a second-screen experience for your in-game betting when there’s stuff going on. And so, I think, from their engagement aspect, you can perhaps start to get a little bit of a fan base now, but this is probably a play for the future.
Dustin Gouker (15:21):
Absolutely. I mean, right now, it’s even transitioning. We talk about this all the time on the podcast, that customer acquisition is the number one priority, getting customers in the door, knowing what your brand is, et cetera. This is FanDuel. Again, this is part of why FanDuel is the leader. They’re now, they’re looking moves ahead right now. They are looking at the future, where retention is important. Second screen experience for somebody who has got a FanDuel app, and keeping them engaged, and using their app, and betting. That’s the next step of this. Once you have all these customers, and they’re doing very well at retaining them, you have to continue to keep them there and give them the reason to be there. I mean, FanDuel TV, rebranded TVG, may pretty small at the start, but you can see it. Who else is doing this? I mean, there’s SportsGrid that works out there. That’s basically OTT.
There’s VSiN doing stuff, but FanDuel owning and operating this themselves. I mean, we can also mention that DraftKings owns VSiN. Obviously, you do some work over there, as well. Right now, it seems like another step ahead, and it is, like I said, looking at the future of the sports betting market and planning for that.
What is driving massive $485 Million valuation for Underdog?
Matt Brown (16:34):
If you are into DFS, you have probably heard of Underdog Fantasy. You are aware of their giant best ball tournaments that they run. There is, I mean, for a very small amount of money, you can win seven figures in a format in which you just draft, and that’s it. You leave it alone. You draft before the season starts. You don’t have to worry about waiver wires. You don’t have to worry about trades, any starting people, anything like that. So, if you do any of that, you’re probably aware of Underdog. If you’re not, you probably haven’t heard of Underdog. Underdog, again, is some people that you and I well know, been in the business super long time. The app is pretty slick. The marketing, I think, is pretty good for at least their target customer right now, but it looks like they have their sights set a little bit bigger here, Dustin, and through that, they’ve raised another big sum of money, which has created a pretty big valuation, led by some people that we know pretty well as well.
Dustin Gouker (17:35):
Let’s start off with the news. Underdog raised a Series B funding around $35 million, valuing it at just under half a billion dollars, $485 million, led by Acies Investments, which a partner, Chris Grove, used to run and operate our site here, Legal Sports Report, was part of that. So, it’s an eye-popping number as investment in the sports betting industry has pulled back a little bit. So, we see all this investment in this valuation, and it’s super interesting. The last time we saw a comparable deal, Monkey Knife Fight bought Bally’s for … I mean, sorry … Bally’s bought Monkey Knife Fight, a similar but different product, in terms of the audience being served, just pre-sports betting. That’s more of a fantasy prop style thing … $90 million, January 2021. So, this is interesting because, I mean, this is not obviously based on them being a fantasy site. That is, nobody is buying, paying that much, or valuating a fantasy site just at that number.
This is the people behind this believe in the product, and that they’re going to be in sports betting. They’re supposed to be going live soon. They’re targeting Ohio and Colorado for launches. That’ll be a sports betting product, and they have people who are great at product over there that are iterating products that are much different from the typical sports betting offering, and there’s belief from their investors that that will cut into the noise of all of the different US sports betting operators in offering a differentiated product. Mark Cuban, also an investor, actually gave us a comment, “Great management, great approach, great customer understanding and great agility,” is what Cuban said. So, it’s an eye-popping number. We’ll see there’s a lot of differentiated products coming out. There’re these more trading-style products that I know we’re going to see hit in not too long, probably in New Jersey first. “Does any of this move the needle?” is the question, or do people just want the basic sports betting experience that’s offered by DraftKings, FanDuel, MGM, Caesars and the like?
We’ll see, but there’s a lot of people who believe this differentiated product that Underdog and others are going to offer is wave two of the US sports betting industry.
Matt Brown (20:05):
One of the interesting things I think from you and I suspect just because we are aware of a lot of these other people, but the thing is, with Underdog, when they do decide to go live with sports betting … You mentioned Mark Cuban … But there are some other very big-name investors in this company that you do wonder if you’re going to get their marketing and promotion services for free or at a drastic discount because they are investors in the company. I mean, we’re talking about Kevin Durant, Adam Schefter, Jared Goff. We’re talking about The Chainsmokers. We’re talking about Steve Aoki. We’re talking about rappers Nas and Future. We’re talking about some of the major players in just the sports betting and fantasy industry that you and I well know in Cal Spears, Peter Jennings, Jon Bales, Al Zeidenfeld. All these are people who have various ways of maybe adding to this company.
I mean, obviously, the super familiar names that I’m talking about in the rappers and the athletes and things like that, just from a sheer marketing perspective, putting their face on something helps. And then from the player aspect of a guy Cal Spears, who built up this company and sold it. Peter Jennings built up this company and sold it. John Bales built up this company and sold it. Been around for a super long time. They also understand how to build something up from a player perspective as well. So, it’s fairly … I don’t think it’s one of those deals where we should look at this like, “How cute.” I think it’s fairly interesting.
Dustin Gouker (21:44):
And I’m saying all this, and I’m not belittling the effort, for sure. This is a-
Matt Brown (21:48):
No, not at all. I was just saying anyone listening to this who is sitting thinking, “Well, isn’t that cute that they’re going to start in two little states,” or something like that. Well, it’s like, “Yeah-”
Dustin Gouker (21:59):
You’ve got to start somewhere.
Matt Brown (22:00):
… You’ve got to start somewhere, and two, there’s a lot of people who know what’s going on behind the scenes here.
Dustin Gouker (22:05):
Yeah, absolutely. And the money behind it, they’re going to … It sounds like I think it’s a hundred new employees they’re going to put behind this, the sheer will of that. They have something special cooking, for sure. It’s that I guess I’d rather be fantasy … sorry, Underdog Fantasy … rather than somebody who’s in like five, six, seven, eight right now in sports betting, because they have an upside. We talk about the pecking order all time, but right now it’s still FanDuel, DraftKings, MGM, and Caesars, and granted, MGM and Caesars were not three and four that long ago, but before that, everybody was a distant third to one and two, and they’re just now taking market share, a little bit of market share, away from DraftKings and FanDuel, possibly. But everybody else, what’s their path? Underdog is coming in at least like, “Hey, we’re selling something different. We’ve got something exciting. We have this funding behind us.” It feels like they have a critical mass to do something.
There’s still a lot of room between that and actually cutting into the noise and becoming a legit player in the US sports betting space, but I agree with you. This is well beyond cute. The numbers and the people involved here belie a seriousness of this that I’d dismiss them at your own risk.
Matt Brown (23:23):
Guys, as always, everything we talk about here on the pod, you can find over at legalsportsreport.com. So, be sure to head over there. Take in everything the team is putting down in words in much more detail than we can even get to here on the pod. If you are watching this on the YouTube, go ahead, hit that subscribe button. We do appreciate that, and if you’re just listening to us on the audio version, if you could subscribe, rate, review, maybe even leaving a comment, that helps us climb the charts, as well. More people will find this very podcast. We do appreciate that. If you want to follow Dustin over on the Twitter machine @dustingouker. If you want to follow me because you hate yourself, @mattbrownm2. For Dustin, I’m Matt. Talk to you guys next week.