This year will forever stand alone in the annals of history — 2018 was the year the beast broke free, once the United States Supreme Court swung its mighty constitutional axe and shattered the puritan shackles that Congress fitted upon U.S. sports betting in 1992.
An astonishing amount of things have happened this year in the legal sports wagering world. The leagues, lawmakers, lobbyists, lotteries, linear television giants … everyone and everything are lining up to determine where they can best fit into this legal U.S. sports betting ecosystem, which is still five months from reaching one full year of life post-PASPA.
Always remember that you, us, we the American sports gamblers — No. 1 in the 2018 SportsBusiness Journal list of most influential people in sports business — are the fuel. Of course, we’ve been here all along, repressed, stigmatized, limited to just one legal safe haven in Nevada.
This list of the 10 Most Important Sports Betting Stories of 2018 concludes with PASPA, but otherwise the items are noted in no particular order. Here we go for posterity, before the early 2019 onslaught of statehouse activity.
1. A wild integrity fee appears
It happened in Indiana, just one week into 2018, five months before SCOTUS would rule in PASPA. Leagues lobbied for and succeeded at getting a lawmaker, Alan Morrison (R-District 42), to introduce a bill that would grant sports leagues a 1 percent, off-the-top cut of all legal sports wagers in the state.
Indeed, the leagues were arguing that PASPA was an existential threat to their leagues while simultaneously stating their case before Indiana’s and many more legislatures that they deserved a direct cut — for integrity reasons.
Meanwhile, as one industry friend notes, we may look back and marvel or at least respect the leagues for executing an effective “deadcatting” strategy — getting everyone to cover and gawk at this ludicrous “integrity fee” thing while actually wanting all along for every licensed U.S. sportsbook to be required to purchase their “official” data packages. So far, the leagues have struck out on the fee (by whatever name).
Indiana is among the states that may legalize sports betting in 2019, however the bill in progress, Morrison told GamblingCompliance on Dec. 20, “absolutely this version does not include an integrity fee.”
2. FanDuel Sportsbook’s $82K glitch
This story went fully mainstream, not quite cable news, but close. You probably recall but very quickly, the Meadowlands’ FanDuel Sportsbook during NFL Week 2 printed a ticket that put the chances of a Broncos victory late in the ballgame at 750-1 odds, though all that was required for the win was a makeable Brandon McManus field goal.
The window of opportunity was about 18 seconds for Anthony Prince, who managed to get down $115 for a potential winning ticket of more than $82,000. Initially, FanDuel wouldn’t pay Prince, citing NJ-approved house rules that excuse such mistakes.
FanDuel had many detractors and plenty of defenders. Many in Las Vegas argued that tickets go as written, while ESPN’s Scott Van Pelt and people across the pond say it’s routine for such “palps” or obvious errors to be dismissed as just that. In other words, take the $500 comp offer and accept our apologies. (Others wagered too, but Princes’s bet was the biggest.).
Pay The People!!! They put their hard earned money on me to win that game https://t.co/I7bJMj5ypd
— Brandon McManus (@thekidmcmanus) September 20, 2018
Ultimately, FanDuel, with the urging of the NJ Division of Gaming Enforcement, decided to turn the wave of negative press (although is bad press still good press?) into a positive, paid the man in full, and turned it into a wider mea culpa, promotional campaign.
The case is notable here because it’s the earliest, widely reported, nearly $100,000 goof in the new East Coast epicenter for the post-PASPA sports betting market. Like golfers taking the second shot, other new sportsbooks to inevitably write erroneous tickets in print or online will have a read. There will be more six-figure errors, and surely smaller ones have gone unreported between then and now. House rules may govern, but after this experience, we think other sportsbooks in new states may err on the side of eating it.
3. The MGM-NBA deal
In late July, the pair announced the non-exclusive “historic alliance” designating MGM as the NBA’s “official gaming partner,” for a reported three years and $25 million. No surprise it was the NBA, among the other pro leagues and the NCAA, to go first on this front. The deal will permit MGM and its properties offering sports betting to use “official” NBA league data as well as NBA logos and marks in conjunction with its sports betting products.
Such deals were inevitable once PASPA fell, but it took the NBA to act first, perhaps expediting the wave of marketing/sponsorship deals to follow weeks and months thereafter: MGM again with Major League Baseball and the National Hockey League; the NHL and FanDuel; William Hill and the New Jersey Devils; and more recently, Caesars Entertainment and the New Orleans Saint and Pelicans, among many others.
The NBA plays the villain in our web space for its hypocrisy and greed, but they do know how to make money.
4. DraftKings Sportsbook goes first in New Jersey
The DraftKings Sportsbook soft launched in New Jersey on Aug. 1, fully on Aug. 6, and has been dominating the competition since in the Garden State. FanDuel Sportsbook is stalking in second, but the rest of the field, including properties owned by MGM, Caesars and Golden Nugget, are in Ron Turcotte-on-Secretariat-at-Belmont-where’d-they-go territory.
Since launch, DK Sportsbook has produced approximately $23.2 million in gross revenue from online/mobile sports betting in New Jersey. For comparison, through its partnership with Ocean Resort, William Hill (which is also partnered with Monmouth Park) has done about $2 million in online revenue so far.
DraftKings’ prices in the beginning weren’t pretty and still leave more to be desired, but they are leading the pack, we surmise, thanks largely to recreational bettors who aren’t too price sensitive, or don’t know better, or like keeping their DFS/sportsbook account under the same roof, or just like DK’s mobile functionality. Pick a reason.
DraftKings CEO Jason Robins at a November conference said sports wagering revenue is currently accounting for about 80 percent of the entire company’s business — nationwide DFS revenue included. At the time, the company only recently began operating a brick-and-mortar shop in Atlantic City, it has a single physical site in Mississippi. It’s entering West Virginia soon in the online space.
The underlying point is that DraftKings is establishing itself as perhaps the biggest national player in legal sports betting in the online/mobile space. This just 18 months after the Federal Trade Commission announced it would block the merger of DK and FanDuel, “alleging that the combined firm would control more than 90 percent of the U.S. market for paid daily fantasy sports contests.”
5. Sportsbook launched at a New Mexico tribal casino
We change gears to head West to the Santa Ana Star Casino & Hotel, a tribal gaming operation near Albuquerque, New Mexico, which on Oct. 17 became the first state west of the Mississippi River to join Nevada in offering a full-fledged sportsbook. Although sports wagering is not technically legal in New Mexico, the state’s attorney general has opined that it’s A-OK on Santa Ana Star land, in accordance with the existing state-tribal compact.
“Sports betting at the Santa Ana Star Casino is governed by the Pueblo of Santa Ana Gaming Regulatory Commission,” said New Mexico Attorney General spokesman David Carl. “As such, we will closely monitor New Mexico’s tribal gaming compacts and work with the legislature for proper statutory and regulatory oversight to require responsible gaming and enhanced integrity to create an even playing field for all.”
The only other state with sportsbooks at tribal casinos is Mississippi, and the state’s gaming commission does not oversee Indian gaming.
The story in New Mexico, kind of like the Arkansas November ballot measure by which residents legalized sports wagering (with infrastructure and regulations to come), came unexpectedly. In 2019, I suppose we should all expect the unexpected states to make moves.
[Mailbag Mythbusting: The Indian Gaming Regulatory Act (IGRA) and Sports Betting]
6. Congress jumps back into the fray
Contributing an avalanche of pre-Christmas news, outgoing Senator Orrin Hatch (R-UT), one of the architects of PASPA, fulfilled his promise on Dec. 19 of introducing federal legislation to implement “some federal [sports betting] standards … to ensure that state regulatory frameworks aren’t a race to the bottom.”
Here you can read John Brennan’s breakdown of Hatch and Senate Minority Leader Chuck Schumer’s (D-NY) “Sports Wagering Market Integrity Act of 2018.” Hatch said in a statement that “There is much work to be done, but I hope this bill will serve as a placeholder for the next Congress, should they decide to continue working to address these issues.”
Will this or some comparable House version have legs when the 116th Congress convenes Jan. 3, 2019? Hard to predict, but we’ll say based on the current environment … gosh the federal government is actually shut down as of the time of this writing … well, considering there’s plenty of room for bipartisan agreement on the issue, we’ll say it’s about +300 Congress passes something in 2019 that in some way sets forth federal regulations for state-sanctioned sports betting. There are much bigger, real problems for Congress to address than non-problems the pro sports leagues are attempting to create for financial reasons.
7. New Jersey’s online boom
Some very raw numbers here, but, anecdotally, some Nevada bookmakers have advised that about 55-60 percent of the Silver State sports betting handle is currently generated via mobile/online wagering.
In New Jersey’s very young market that’s (a) drawing New Yorkers and Pennsylvanians over bridges and through tunnels to make a bet on an app before heading back home, and (b) allowing residents to register and deposit remotely — unlike Nevada’s long-standing practice of requiring a physical presence — the percentage of New Jersey’s online/mobile handle as compared with brick-and-mortar handle has grown to 72 percent according to the most recent DGE revenue report. (More on that here.)
This should both surprise nobody and in states that want to fully realize the market potential and serve consumers’ obvious interests in accessibility and convenience — they should follow Jersey’s lead. In Mississippi, which has approximately 25 sportsbooks concentrated in the Gulf Coast region and in Tunica, near the Tennessee border, handle has grown consistently, but won’t come close to reaching its full potential until it introduces a mobile/internet option. Regulations currently limit betting there to on-premises only. It’s more likely than not Mississippi lawmakers adjust to allow mobile wagering off of casinos premises in 2019.
8. West Virginia stands up to the leagues, repeatedly
In probably the most exciting and quietly riveting subplot of the year, officials and lobbyists for the pro sports leagues, mainly MLB and the NBA, attempted to ride into West Virginia and either charm or intimidate lawmakers into implementing hand-crafted legislation that would codify the full 1 percent “integrity fee” benefiting the leagues.
A personal favorite state legislature hearing “quip of the year” came at a February West Virginia Senate Finance Committee session, when Senator Douglas Facemire (D-District 12) told a MLB lobbyist attempting to make the case for a full 1 percent “integrity fee”:
"I don't see why we should give you 1% for anything" says Senator Facemire to MLB's Blair. "Why should we pay you to protect you own interests. Especially 1% off the top. "It's ike we're paying the insurance premium" on your game." #hammer
— Sports Handle (@sports_handle) February 12, 2018
There’s much more to the story in West Virginia, which was the first state to pass a bill legalizing sports betting this year. The entire tale involves MLB and NBA bullying, the leagues’ inside man in West Virginia Governor Jim Justice, who owns one of the state’s five casinos, quasi-lobbying rhetoric from MLB Commish Rob Manfred on local radio, a rogue intern, and state lottery officials getting forced out of their jobs.
Still, the West Virginia lawmakers did not relent, and it created a bad early precedent for the pro leagues in their ongoing state-level efforts. Hence the discussion of it here.
9. Jobs and more jobs
The fall of PASPA has already and will create new opportunities and jobs for individuals, such as ticket writers, sportsbook hosts, accountants, and app developers, to name four, and businesses. And also opportunities in sports media. I’ll start with myself.
It’s a rough environment these days for media publishers/journalists covering every industry. In February 2017, former ESPN and FOX Sports executive Jamie Horowitz began signaling that he would annihilate the entire digital editorial operation and pivot to video, I thought my time in sports journalism, blogging, opinion, “content creation” — some combination, was over. At least as a full-time venture.
One thing led to another and Sports Handle was born, its outlook enhanced by Justice Samuel Alito, and acquired in November 2018 by a fine group of individuals. I never could have predicted back then I’d be where I am now. I had come relatively close to purchasing an abandoned commercial space in northern New Jersey to open an old-school ice cream parlor.
There are many others who have or will follow a similar trajectory. Former ESPN the Magazine editor Chad Millman helped launch The Action Network (TAN) in October 2017. Darren Rovell spent about 20 years cultivating a following, or a “brand,” at the Worldwide Leader and as of November joined Millman at TAN. Another ESPNer and noted Slayer fan, John Clayton, a victim of mass layoffs at ESPN, launched a sports betting-minded media property in September, and as longtime admirers of his reporting, we wish him much success.
Scores of little-known writers and editors and “personalities” will get a shot thanks to PASPA’s demise, and also thanks to a majority of Americans approving of legal sports betting. This shift has opened up opportunities that didn’t exist seven months ago.
In the answer to if I can cover gambling news every day. This happened before 11am today:
— TheScore says it will open a sportsbook.
— NBA does betting data deal with FanDuel.
— William Hill US names president of digital biz.
— American Gaming Association names new CEO
— Darren Rovell (@darrenrovell) December 18, 2018
Yep, we’re all going to be busy.
10. Good riddance, PASPA!
The story of the rebirth of sports betting in America has only just begun. See you all in 2019.
