EPISODE 165 | LSR Podcast

Sugar, We’re Going Down Swinging

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26 min

Sugar, We’re Going Down Swinging | LSR 165

Welcome back to the Legal Sports Report Podcast, Ep. #165! The two California sports betting initiatives have spent more than $400 million on advertising, yet both appear destined to fail in the latest polling. Also, why Geocomply is suing a competitor, when we’ll know Massachusetts and Maryland launch dates, and a friendly debate on election betting.

Full transcript

Matt Brown (00:12):

Hello and welcome to episode number 165 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 one of those bright minds, and that is Adam Candee. You can find him on the Twitter @adamcandee, two Es, no Y. If you hate yourself, you can follow me @MattBrownM2.

Matt Brown (00:30):

Everything we do, absolutely free, guys. So if you’re watching us on the YouTubes, hit that subscribe button. Really do appreciate that. And then if you’re just listening to the audio version, subscribe, rate, review all that stuff. Help people find this very podcast by giving us a little bit of a thumbs up by a five-star rating and maybe even some kind words in the comments section there about Adam’s beautiful voice or Dustin’s glasses or whatever it might be. Not my glasses.

Adam Candee (00:57):

Matt’s beautiful hair. Matt’s beautiful hair. Come on.

Matt Brown (00:58):

My whatever it might be. Any of that stuff.

Adam Candee (01:01):

Be nice to yourself.

Matt Brown (01:02):

Hey, listen, as long as there’s interaction, the algorithm loves it. Doesn’t really matter what you’re saying.

Adam Candee (01:06):

Fair enough.

Matt Brown (01:07):

Just say something, it doesn’t really matter. The algorithm absolutely loves it. We’ll talk about GeoComply, we’ll talk about Massachusetts. We’ll talk about maybe a little bit of election betting stuff as well. But Adam, let’s kick things off here with California. And listen, I don’t think this is any surprise to anyone that’s been in the industry for any amount of time, but things not looking great.

Independent poll: CA sports betting Prop 26, Prop 27 likely to fail

Adam Candee (01:30):

More than $400 million have been spent on advertising Proposition 26 and Proposition 27, the retail and online sportsbook measures in California. And it is the surprise to me that we are talking about how both of these measures are going to go down in flames. It’s one thing to say that they’re going to lose. It’s another to go by the LA Times poll that we saw come out yesterday that says that the Prop 27 measure has as much support as the name of the proposition, 27% at the moment for Prop 27 for the online, and then 31% for Prop 26, the tribal retail initiative.

Adam Candee (02:12):

I think it says a few things. First of all, it goes to show that negative advertising works. Everybody hates it, but negative advertising 100% works because you have had some nasty ads going back and forth on both sides of this. And you have campaigns that are willing to spend to get their people to go against what they want them to go against.

Adam Candee (02:34):

So here we are. Where we’re likely going to end up, Matt, is we’re going to likely going to end up with both of these measures failing, which tribal representatives have said, “We’re fine with the status quo. We have no problem with that,” because we know that their biggest fear is that DraftKings FanDuel, et cetera, come in and start online casino. They don’t really care about sports betting. They care that the others would come in, start online casino, and keep people from coming to their properties.

Adam Candee (02:57):

I’ve had people ask me, “Well, what comes next, Adam?” Well, what comes next is a whole lot of nothing at this point, because we’ve seen how poorly things have gone trying to go the legislative route. We’re about to see how poorly things are going to go by the ballot route. And that doesn’t leave anyone who wants to come in from out of state, without coming up with a solution that the tribes approve, with many options.

Matt Brown (03:18):

Adam, it’s one of those things where being able to watch the local feeds of the various sports networks, I was getting some of those ads as I was just watching the Shohei Ohtani play or whatever it might be. And listen, the traditional political ads we get, this guy’s corrupt and this person can’t be trusted and all this stuff like that. You get what you get with ad. It’s basically like, is it patently false? Not really, whatever. Or there’s no way at least to prove it.

Matt Brown (03:52):

I was getting multiple different ads on the negative side about saying, your kids are going to be able to bet on their phone. It’s already dangerous enough for them to be on their phone, and now they’re going to be able to gamble their lives away and all this stuff, which is just patently false, but it’s like that is what you’re talking about.

Matt Brown (04:15):

If someone has no idea at all about how this works, which by the way, we don’t have legalized sports betting in California, so someone who’s not in the know, how would they know how this all works and everything? And so you’re seeing this ad like, wait, I don’t want my child to be able to online gamble, so of course I’m going to vote no on this.

Matt Brown (04:35):

It was not only negative ads, but it was negative ads where basically the messaging was completely false. And still, as you mentioned, it’s like it’s working and it worked with flying colors.

Adam Candee (04:46):

Yeah, let’s talk about that ad in particular, Matt, because that is a disingenuous advertisement where you have a mother talking about how her son could be exposed to online gambling. And they show all these images of the kid sitting at the dinner table on his phone, the kid in his room on his phone.

Adam Candee (05:01):

Stop it. I mean, it’s ridiculous to talk about the idea that 16 year olds are going to start opening sports betting accounts and be able to wager on their phone. Know your customer is better than that, two-factor authentication is better than that. It doesn’t happen. It’s a scare tactic. And that’s an embarrassing ad.

Adam Candee (05:17):

It’s not as embarrassing as the ad that the No on 27 people ran trying to shame Boston and New York people by saying 90% of the profits are going to go to Boston and New York and showing these ridiculous caricatures of people with New York and Boston accents talking about how dumb people in California are. Come on.

Matt Brown (05:38):

Wow.

Adam Candee (05:39):

These are the most base level, classless kind of ads that have been run by the No on 27 people. It’s not necessary, quite honestly, but I’m going to tell you from the political strategy standpoint, Matt, what the yes on 27 people did is leave themselves open to this by not defining what 27 does. They talked a lot about homelessness and a lot about the fact that the money would go to help, but they never really discussed what 27 actually does. So if you don’t define it, someone else will for you.

Matt Brown (06:09):

That was my next point here. And then you see the pro ads, which I saw several of them, and you leave going, oh, okay. Again, if you’re not in the know and you don’t know what’s going on, you see this ad and you’re kind of like, oh, all right, I guess, or whatever. What if homelessness isn’t an actual issue for you? That basically seems like the only thing they’ve been pushing in a lot of these things. And it’s just kind of like you leave going, okay, so we get sports betting to deal with that. I mean, cool, I guess. I don’t know.

Matt Brown (06:41):

But like you said, you don’t define, no, this is highly secure, highly safe, several levels of authenticate. All of that should have been laid out. All of that should have been defined. And as you said, that was just not the strategy, which is just bonkers to me because again, you and I don’t do this for a living. We’re not ad people, we’re not whatever. They could have come to us and we could have put together a better ad.

Adam Candee (07:03):

Oh, without question, Matt, because look what happened in California and then also look what happened in Florida. Basically what you’re going to see is these big companies have not done well when it comes to running their campaigns. They managed to not qualify on the ballot in Florida because in Florida what the tribes did is they basically went out and got all the signature gatherers and paid them more to not be working for the ones who would be gathering signatures to get it on the ballot.

Adam Candee (07:32):

And then in California, what we’ve seen is this strategy to pitch on homelessness when as you mentioned, for some people it’s not a big deal. For some people homelessness works the other direction. They look at homeless people and look down upon them. So there’s not really a call to action when it comes to the sports betting side that I think was going to work in that regard, but trying to avoid it entirely, that seems like a bad plan.

Adam Candee (07:58):

The ads that they ran, where the three tribes that have signed up with them talked about how they’re small tribes and they don’t get the same impact as the large gaming tribes do, I think that had potential to work a little bit for them. But otherwise they just didn’t run a very smart campaign in what was likely an underdog in the first place.

Matt Brown (08:19):

Sure, sure. But I think both of us agree that it’s just kind of like it was a long shot anyway, but it’s like you didn’t really give yourself the best chance to succeed. I don’t think at the end of the day with all this. We know as we continue to grow in this industry and as more people continue to enter and/or exit, there will also be lawsuits that come along with all of that. And with that, we’ve got us one here from GeoComply.

Geolocation wars? GeoComply sues Xpoint for patent infringement

Adam Candee (08:45):

This is interesting to me, Matt, because when we talk about geolocation and the ability to make sure that a better is where they say they are or is where they need to be on their phone, this is one of those ancillary B2B things that developed in such a way that I was surprised there wasn’t more competition.

Adam Candee (09:04):

GeoComply essentially cornered the market on this very quickly. And now we’ve seen in the last few months a company called Xpoint coming and trying to make a name for themselves, essentially doing the same thing and signing up a couple of clients and so on. I kind of wondered when I saw Xpoint coming out, huh, I wonder what they do that’s different. What GeoComply is saying is not enough.

Adam Candee (09:27):

Essentially what they’re arguing is that the patent that GeoComply has on their technology is being infringed by Xpoint. And not only that, they’re also saying that Xpoint knew what they were doing, that this was a willful thing that they chose to do.

Adam Candee (09:40):

We’ll see how this ultimately gets worked out in court. We haven’t seen a lot of these big legal fights to this date, but this one will be interesting to watch when it comes to the geolocation suppliers in the sports betting industry.

Matt Brown (09:52):

Got a couple of states we have talked a ton about here on the podcast, and mainly it’s just question after question after question for us, but where are we with Massachusetts and Maryland?

No legal Massachusetts sports betting until 2023

Adam Candee (10:02):

Let’s start in Massachusetts where we might finally be answering some questions instead of asking them, Matt. They have been very cautious as we expected them to be at the gaming commission level with giving out a timeline for when sports betting might start, but it looks like the meeting happening tomorrow as we record this on Wednesday should be where a vote happens on a launch timeline for Massachusetts.

Adam Candee (10:25):

Now, keep in mind that’s not just mobile. We could be talking about retail. We could be talking about a split start for retail and mobile. Most of the sports book operators in Massachusetts said, “No problem. We have no trouble with going early with retail because some of those include Wynn and MGM.” DraftKings, who is located in Boston, of course, DraftKings said, “We don’t want a split start. We want a universal start because we don’t have a way to do a physical sports book, obviously.”

Adam Candee (10:55):

We’ll see if that is defined with this vote, but I think what’s going to be very interesting to see if Massachusetts can get up and running by the Super Bowl, that has been obviously everyone’s goal. New York was able to accomplish that last year. That’s what we’re looking for in terms of Massachusetts.

MD regulator ‘Confident’ mobile sports betting launches this year

Adam Candee (11:10):

Now, in Maryland, essentially we just got additional confirmation of what Pat Evans had already reported. Pat reported probably six weeks ago at this point that John Martin, the executive director of the gaming authority there, said that a 2022 launch was not only possible but likely. He was on a regulator panel yesterday put on by GamblingCompliance and said on there that he’s confident that it’s going to happen within 2022.

Adam Candee (11:36):

Now, the application period closes later this month for Maryland online sports betting. Remember they already have retail in Maryland, but they approved online, oh, let me check my watch, a good solid two years ago, and we’re just about to talk about launch now. I would say we’re probably looking at the holidays, but some time between Thanksgiving and Christmas for a launch of online sports betting in Maryland.

Adam Candee (12:01):

It’ll be really interesting to watch how that goes, especially in terms of marketing because in the DMV, the DC, Maryland, Virginia area, you have very different versions of sports betting. You have mobile in Virginia, you have the interlock soggy version in DC and now you’re going to have it in Maryland too. So very interesting to see how those companies decide to funnel their customers.

Global Gaming Expo

Matt Brown (12:27):

Now, we will be off next week here on the pod because all of you people won’t be listening anyway because you’ll all be at G2E, as will we. And so Adam, this is the first big one here in a couple of years, obviously during the COVID thing, and then obviously when it got going back again, there was still some restrictions on travel and still a lot of people who weren’t very comfortable going into big crowds and things like that. And so this will be the first big one in several years for everything. What are you most looking forward to as we head into kind of 2022 version of G2E?

Adam Candee (12:59):

Well, judging by the conferences that I’ve gone to earlier this year, Matt, going to NCLGS, and going to SBC, I think everyone is appreciative of just being able to have face-to-face conversations, things that we took for granted in the past.

Adam Candee (13:12):

I would not expect to see a lot in the way of innovation or new products or anything that would be defined as reinventing the wheel because there really hasn’t been any of that of late, and this isn’t where we’re going to see it. So I think what we’re most looking forward to is the ability to talk to some of the folks that maybe we haven’t seen for a while.

Adam Candee (13:31):

I’m going to encourage everyone to be safe out there, to use best practices when it comes to health measures and so on, because we’ve seen at a couple of these events over the last few months that there can be challenges, that COVID is still a real thing. So be safe and be smart, and we’re looking forward to seeing everyone.

Matt Brown (13:49):

Specifically, we talk 90% sports betting on here and about 10% casino. But specifically on the casino side of things, I think we’ll see very, very, very little innovation because if you’ve tried to buy a car lately or if you’ve seen anything, you can’t get microchips. I don’t know if you know what those slot machines and all these other things run on, they run on microchips. And so there has been a big time slowdown when it comes to all of that type of stuff.

Matt Brown (14:14):

I actually have a buddy who works in the industry who kind of invents, comes up with new slot machines and different things. And he’s like, “Yeah, we’re kind of hamstrung right now. There’s not really anything we can really do because even if we have an awesome idea or want a lot of stuff, we can’t get the supplies to do it anyway.”

Matt Brown (14:31):

So as you mentioned, definitely on the sports betting side of things, I don’t think we’re going to see anything groundbreaking and certainly on the casino side of things. I bet it will look a lot like it did a couple of years ago.

Adam Candee (14:42):

Without question, Matt. I think you see that in the advertisements that we’ve seen from companies that have come out, their pitches and what we’re going to be talking to people about. Really a lot of the pitches that I’m getting are for sort of startup innovation type products of just derivatives of sports betting. I think that’s the best way to put it, virtual sports sorts of things and exchanges that aren’t really exchanges that might or might not be legal. We’ll deal with that later. But not a whole lot in terms of the technology side.

Matt Brown (15:15):

Look, I understand this year, first big one in a few years and all that, looking down the rundown, Adam, just the itinerary of everything, it is pretty familiar with anybody who’s been to G2E before. It is a lot of the same panels, a lot of the same speakers, a lot of the same everything. And again, we’ll have a full recap of G2E on an episode in two weeks.

Matt Brown (15:39):

But for me, and this is kind of something I was voicing to you through text message, I would like to see some different angles and different voices. Again, I get it this year, we hadn’t had everyone together in a few years. We need to have the mainstays back up there and doing their thing.

Matt Brown (15:58):

But for next year, I would like to see a little bit of differentiation in some of these panels and different people talking and different point of views and things because I do think that there is kind of a lack of diverse opinions. I think there is a little bit of an echo chamber thing that’s going on with all this.

Matt Brown (16:18):

If we really are trying to grow this industry, and we really are trying to get to, as you mentioned, best practices and different things and hearing the voices of everybody else, I think there is a way to diversify this thing that would really, really make attendance almost a 100% must be every single year because you are really getting every single different point of view.

Adam Candee (16:40):

I think what’s going to be interesting to see, Matt, especially as it relates to sports betting, what we talk about here for the most part, how long is sports betting going to be a focus at G2E? Because G2E is at its heart a casino show that kind of had to pivot to sports betting over the last few years because of the ubiquity of it and the interest in it. If we get to the point where the market starts to consolidate a little bit, are we going to still see that level of focus?

Adam Candee (17:04):

The second thing, and I mentioned this to you, this is a show run by the American Gaming Association. The American Gaming Association is trying to, shall we say, represent the most diverse widest group of viewpoints without really offending anyone. They’re trying to make it something that everybody can be happy with. And I think the more you get into some of the diversity that you and I would like to see, the more you risk upsetting that apple cart a little bit.

Adam Candee (17:31):

I’m not saying it’s not going to happen. I’m not saying it shouldn’t happen. I think it would make for a much more interesting experience for all of us. I’m just kind of laying out for some people who might not understand, if you go look at the agenda and say, huh, I think I’ve seen that a bunch of times before, those are sort of the parameters that we’re working within.

Election betting: Yes or No?

Matt Brown (17:47):

One of the things I do want to close with here, and it’ll just be a very quick little back and forth, we talked about all the ads we keep seeing as we know we’re heading towards midterm election cycle coming around, we still do not have legal election betting here in the United States. I kind of feel like we might have it by the time the presidential election rolls around a couple of years from now, at least in a few different states. But I might be a little off target with that.

Matt Brown (18:13):

But I know you and I are at least on a little bit of different sides of this because I know you don’t think that there’s any room for it or real need for it. On my end, I’m kind of more of the no harm, no foul type thing. I don’t really see a problem to it.

Matt Brown (18:28):

I do want to just for people out there as a friendly discussion, and again, if you have an opinion, please leave it in the comments or send Adam an email. We’ll certainly read your opinion on the podcast and continue to discuss something like this. Adam, what is your position on the whole election betting thing and why you don’t think it’s the greatest idea?

Adam Candee (18:48):

In short, I do not think that betting on elections should be legal in the United States. I think that when you talk about betting on elections, when you talk about things where the better has a hand in the outcome of the bet, then you start to get into a whole lot of questions about the veracity and integrity of voting that frankly have been, let’s say, exacerbated for nefarious purposes over the last few years that aren’t necessarily true.

Adam Candee (19:17):

But I do think you could get into a real trick bag when it comes to betting on elections. Think about it this way. When people have the ability to bet on the outcome of the election, they’re no longer necessarily betting or voting for a candidate who is the candidate who they want to win, who the candidate is the best for the country.

Adam Candee (19:39):

They could be very much in a GameStop situation, where you could have this whole thing set up in such a way to try to make a lot of money for someone getting a candidate on the ballot where the only purpose for that candidate is for everyone to bet on that candidate and then everyone to vote for that candidate. And you end up in a situation where democracy essentially is being subverted for profit in that way.

Adam Candee (20:01):

Now, I understand why it’s legal in the UK, say, because you can bet on it in the UK, but you don’t have an influence over the outcome of the US election. It’s probably to me, the same reason why players are not allowed to bet on sports, why coaches aren’t allowed to bet on sports, because they have a direct hand in the outcome of that potential wager.

Adam Candee (20:24):

It’s a smaller impact, of course, when you’re talking about hundreds of millions of people who have the ability to vote and obviously you’re diffusing the potential for their individual impact a lot greater than you do in sports. But I also just ultimately feel like it is a situation that creates more problems than solutions in the US.

Matt Brown (20:43):

I do hear and respect that opinion if I thought that the limits would be anything where it would make it to where something like that would actually move the meter. That’s the only reason. For me, I think there’s a way that this works with just a couple of caveats that it’s more skin in the game type fun type situation, which would be obviously you have low limits on this.

Matt Brown (21:06):

I think that that has to be the very first thing across the board because if you have low limits on this, then anything nefarious or whatever, anything like that, the juice isn’t really worth the squeeze at the end of the day because if you’re putting thousand dollar limits on these bets or something like it doesn’t behoove anybody to do anything illegal really for something like that or anybody that could actually make something happen. It doesn’t behoove them to do anything if you can only win a $1,000 on a bet or something.

Matt Brown (21:34):

So low limits, I think. And then also just keeping it into major elections as well would be the other caveat for me, president, Senate, different things like that House Representatives, where there’s hundreds of thousands of people, or at least tens of thousands of people voting. You don’t want this on a local level. You don’t want this on a smaller level where like you said, 10, 12 30 votes could matter, it could swing an election or something like that.

Matt Brown (22:01):

That I would not have. It would be strictly to president, Senate, all the stuff like that where you’ve got tens of thousands if not hundreds of thousands if not millions of people voting in those. That would be my two little caveats to where I think that it works without having to really worry about there being too much nonsense going on.

Matt Brown (22:22):

I actually think in a weird way, if you did allow betting on elections, I actually think you would get people who would otherwise not vote to go vote. I mean, if we want people to vote, I think that getting people out and experiencing the thing and all that, I don’t know if it’s the worst situation in the whole world. I mean, I kind of feel like there’s even a tangent way that this is a net positive in the whole would be people who are not inclined in the least bit to go vote might actually get off the couch and go vote. I think there’s a few different ways that this could work.

Adam Candee (22:56):

I would question if those people have not been motivated to vote, if we’re bringing them out for the purpose of wagering or because of wagering, let’s say, then are we bringing them out to participate in the process as the hopes of like, bey, get a taste and come back when you don’t have skin in the game? Maybe there’s an argument to be made for that.

Adam Candee (23:17):

I would also say in terms of the limits, right, I agree that no group or syndicate is going to get involved in something that has thousand dollar limits to try to manipulate anything. It doesn’t mean anything to them. However, thousand dollar limits to the average person, if it were somehow loosely organized by, let’s say a political party, then if you make clear to everybody that you have the potential to get out there and win $500, $1,000, for the average person might even be a hundred dollars to go out there and vote, you might have that as a political organizing tool that I’m not sure really is what we’re involved in the process for in the first place.

Adam Candee (23:57):

Maybe I’m kind of clinging to some idealism from the days when I worked in politics, et cetera, et cetera. Maybe the era that I’m looking for is already long gone, but I do still have a front lawn at my house, and I will stand on that front lawn and yell at the kids as they go by.

Matt Brown (24:14):

Yes, you can, and shout at the clouds and all that. Just to put a bow on my thing about the people getting off the couch and going voting, when I say it’s like a net positive would be if we’re only allowing them to bet on the major elections as it is anyway, like the bigger ones, then if they’re going into the voting booth, then they’re probably not just going to vote on those three and leave. So you’re actually getting someone to participate in all of the other election stuff as well that they don’t have skin in the game.

Matt Brown (24:39):

You’re getting people at least more involved I think, as a whole or whatever. And again, that’s in an ideal world. I don’t really know if that was how it would play out or not. But again, in my little mind of minds, that’s kind of how I see that somehow that this could be a positive as well.

Matt Brown (24:53):

It’s all hypothetical. It’s a fun debate and certainly something that there’s no right or wrong answer. It’s just how we all feel and whether we think that this could actually work without there being a gigantic ‘S’ storm. And I think you know what the ‘S’ stands for in all that.

Matt Brown (25:09):

Adam, you and the team, tons and tons and tons of awesome work over there. Not going to spill the beans. Got some surprises coming very soon down the line as well. So be sure and take in all the awesome stuff that Adam and team are doing over there at legalsportsreport.com.

Matt Brown (25:24):

Again, guys, if you’re watching us on YouTube, we’re trying to build this channel, so please go ahead, hit that subscribe button, and if you’re on the audio side, hey, you know what, go ahead. Subscribe, rate, review as well. We certainly do appreciate all that. Yes, sir?

Adam Candee (25:34):

I had just one thing to add before the end of the podcast. Our team is expanding here at Legal Sports Report.

Matt Brown (25:40):

Awesome.

Adam Candee (25:40):

If you have ever been someone who has looked at the work and thought, I can do a better job than those guys, come on down because we got some jobs open.

Matt Brown (25:49):

There it is. Come be a part of the team here because again, if you’re listening to this, you’re probably interested in all of this as it is anyway. So if you’ve got a background in some journalism and think you can do some stuff for us over there, be sure and shoot Adam a message as well. For Adam, I’m Matt. Talk to you guys next week.

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