It’s been three months since Sports Handle handicapped the prospective operators in the contested field for dominance in the new, and burgeoning, U.S. business of legal sports betting. It’s time to see how our predictions have played out so far. And in the spirit of our original mythical future book, as any prudent bookmaker would do, let’s revise our odds and once again look ahead at the sports betting business.
Below is a look at what was expected prior to the U.S. Supreme Court’s ruling that overturned PAPSA — the 1992 law that barred single-team sports betting in every state except Nevada — plus a review of recent events and acquisitions, and what may unfold in the immediate future.
We have 11 top contenders in our future book that merit individual analysis below, in addition to a significant group we classified as our “field,” those being other contenders in the race to become a nationwide sports bookmaking leader and major brand name in the business. The field will be examined in a forthcoming Part II. As with any business, it’s profits that count. Biggest might not be best in what is going to be a competitive run up as sports betting legislation get inked in more and more states.
With an Expansion of Legal U.S. Sports Betting as More Sports Betting Legislation Passes, Which Operators Will Reign Supreme? Handicapping the Field.
For a day with only baseball and golf and World Cup, this is quite a crowd. pic.twitter.com/jIN0xMr55H
— Sports Handle (@sports_handle) June 14, 2018
William Hill: 4/1 (opening line: 3/1)
The U.K.-based company’s U.S. CEO Joe Asher has continued a seemingly endless series of appearances at gaming conferences in all corners of the U.S. even after the Supreme Court decision, altering his message from “let’s make it (sports betting) legal” to “let’s regulate it reasonably.”
This means low taxes and no fees, “integrity” or “royalty” or otherwise, to the various sports leagues. William Hill has made a significant investment at Monmouth Park racetrack in New Jersey and sprung open that venue on June 14 after New Jersey Governor Phil Murphy signed the enabling legislation earlier that week.
Asher’s public remarks, as always, have been measured and thoughtful and it has become clear that William Hill won’t open up shop just anywhere — only where there’s favorable regulation. It’s clear to this observer that if William Hill can make money for New Jersey in the form of tax revenue and for itself, other states with model legislation like New Jersey’s will roll out the red carpet for Asher and William Hill.
Because the company is married to Monmouth Park in a sense, its future depends on how well it does there. It also has a deal with Ocean Resort Casino in Atlantic City. There are no guarantees when it comes to booking sports. That uncertainty causes this handicapper to raise the odds, but only slightly. The company’s risk manager, director of trading, head bookmaker or whatever you want to call him, Nick Bogdanovich, is one of the best around. He’ll make the New Jersey and Delaware forays successful. If they are exceedingly successful, other states will seek out the company to manage their bookmaking, as well.
MGM Resorts International: 8/1 (opening line: 8/1)
— Ava Graham (@_avagraham) June 15, 2018
The odds of MGM dominating the sports betting industry in the U.S. are viewed here as significant. Company CEO Jim Murren says he’s “all in” on sports betting, and Las Vegas sportsbook director Jay Rood went to Atlantic City numerous times to make sure opening last week went smoothly, which it did.
There was speculation that MGM may have been seeking to establish sportsbooks beyond its own properties, but upon further review, that now appears unlikely. MGM will soon have a major property in numerous northeast states including in Massachusetts (MGM Springfield set to open in late August), New York (it has purchased the racino at Yonkers Raceway just outside New York City), New Jersey (the company now owns 100 percent of the Borgata, generally regarded as Atlantic City’s finest venue) and in metro Washington D.C. (its National Harbor casino/resort in Maryland has been highly successful since opening in December 2017).
The amount of possible sports betting handle at these locations alone is mind boggling, especially if a mobile app is in play and if marketed with comps and free play for opening an account. MGM has recently implemented a news sports betting platform that was developed by IGT. It ties sports betting to the rest of the casino operations, certainly a positive for its overall business operations.
But it was slow to roll out and has some limitations. That’s not to say it can’t be improved. However, to win the business where it competes with other experienced sport wagering operators, having a top-flight betting platform will be crucial for success. IGT is likely already working on V.2 (Version 2).
Paddy Power Betfair/FanDuel: 8/1 (opening line: 10/1)
— Kip Levin (@kip) June 11, 2018
In March, we grouped FanDuel, the No. 2 daily fantasy operator, with leader DraftKings and indicated both might need a physical presence to go along with their mobile and online dominance. DraftKings’ alliance is detailed below. Meanwhile, FanDuel has been gobbled up in “Pac-Man” fashion by another of our leading contenders, Paddy Power Betfair (PPB).
The move gives the enterprise an immediate television presence because the company already owns TVG, the horse-racing network and has an operating online gaming platform in New Jersey. FanDuel claims a robust seven million registered users. PPB also found its first New Jersey partner at the Meadowlands racetrack, a facility located adjacent to Metlife Stadium Giants and Jets) – a quick jaunt from midtown Manhattan.
Once PPB “Americanizes” what is regarded in the United Kingdom as its top sports betting software and once more states reveal their licensing and taxation requirements, look for this new entity to be a significant player, especially (eventually) in California where TVG is located and where, pending the “piecing in” of the state’s monopoly-like tribal gaming interests, a multi-billion dollar sports wagering market awaits.
Most likely, later rather than sooner PPB/FanDuel will be a major player, so our odds have been lowered. The company will need to show the patience waiting for regulation in California that William Hill displayed in New Jersey.
DraftKings: 10/1 (opening line: 15/1)
first look: DraftKings wasted no time after SCOTUS ruling in getting billboards up in New Jersey advertising forthcoming sportsbook.
billboards on highway and at train stations say: “WHY SHOULD VEGAS HAVE ALL THE FUN?” and “LEGAL SPORTS BETTING IN JERSEY? YOU BET” pic.twitter.com/vHmxdwWgPJ
— Daniel Roberts (@readDanwrite) May 22, 2018
In March, we indicated that both of the major Daily Fantasy Sports (DFS) leaders would need some corporate adjustments to enter the regulated expanded sports betting marketplace and that seems to be just what has occurred.
DraftKings recently announced its joining Resorts Casino as a “licensing partner” to set up sports betting in Atlantic City. Now, having achieved a physical presence in New Jersey, DraftKings can assuredly move forward as a major player. The company claims it has 10 million current DFS participants and the e-mail addresses that go along with them. Even half that number would be impressive.
The key will be a devising a formula to meld the two decidedly different kinds of sports betting into a two-pronged product. Although DraftKings lacks physical locations, it certainly has an edge in its mobile and online capabilities. It will be interesting to see if the Atlantic City deal translates to a deal in Connecticut. Mohegan Sun, one of the two tribal gaming entities (Foxwoods is the other) that controls gambling in the Constitution State, operates Resorts Casino in Atlantic City. Resorts is owned, however, by real estate tycoon Morris Bailey, so it’s possible this deal won’t mean much in any other market. DraftKings has also indicated it would not be up and running at Resorts until the NFL season starts in September.
Caesars Entertainment: 15/1 (opening line: 8/1)
Three months ago, the prognosis was for Caesars to quickly move into any state where it already had a brick-and-mortar presence when it becomes legal in that jurisdiction. Soon after the Supreme Court ruling, CEO Mark Frissora proclaimed that Caesars Entertainment is in the “best” position to take advantage of legal sports betting. “We’ve been very focused on digital and mobile as platforms that we want to incorporate in our business model, and this plays right into that,” Frissora told CNBC.
Although the company sold its online games business during its bankruptcy proceedings (from which it emerged in October 2017), it still has the core capability in-house, he said.
Therefore, the company will be able to “set up very quickly” in states that pass sports-betting legislation, he said. Caesars is ready to operate in Atlantic City when the enabling law is signed, and sources have told me there is now a more aggressive sports betting marketing strategy in terms of fair lines, customer incentives and an increased marketing budget in place to compete with its New Jersey brethren on and near the Atlantic City’s historic boardwalk.
Just this week, the company began advertising nationally for sport betting personnel in Mississippi and has posted, in-house, job availabilities in Atlantic City, where it has yet to begin operations.
Caesars’ sports betting business in Las Vegas makes money, but its not significant when compared to other parts of its massive casino/resorts on the Strip. The company attracts customers to its Las Vegas casinos and offers sports betting largely as an amenity. Their tight lines and few incentives for smaller players reflect this. There’s nothing wrong with that as a business strategy. It appears that this same strategy could be in play in the numerous other states, such as Indiana, where it has a major presence. The odds have been raised because it’s likely Caesars will inaugurate sports wagering at its own locations and only go elsewhere if a casino operator in a locale where Caesars is not doing business seeks to take advantage of its significant brand profile.
Penn National: 18/1 (opening line: 15/1)
Penn is now the largest regional casino operator in the U.S. and should never be discounted. It has an industry reputation as a well-run enterprise and cost-conscious company. At the end of March, Penn’s growth continued with word that its $2.8 billion acquisition of Pinnacle was complete, adding 16 casinos in nine states and a racetrack in Texas to the Penn National portfolio.
It was the first major casino to spin off a Real Estate Investment Trust (REIT), a tax-saving maneuver quickly emulated by MGM and Caesars. The company has been strangely quiet about sports betting. CG Technology runs the legal sports books at its two Nevada locations, M Resort (off Strip) and The Tropicana (on Strip). The relationship with CG was inherited when they bought the properties.
Many view a sportsbook as an amenity that drives foot traffic, and driving foot traffic to other casino activities never seemed to matter to CG. Penn, just as CG’s other leased Nevada venues (Venetian, Hard Rock, Cosmopolitan and Palms), receives significant rent and benefited from a sportsbook remodeling from CG as part of the deal that allows it to operate. Thus Penn’s sportsbook profits are guaranteed because of the rental arrangement. It’s just not known nor has any hint of speculation emerged as to whether Penn likes this arrangement and would want to export the concept to its other properties. The company itself has had little to say on sports betting.
However, stock market analysts have repeatedly called attention to Penn’s huge portfolio of properties and ability to be a major player. What is certain is that Penn will do due diligence and find the best way for sports betting to bolster the bottom line. The lack of any public statement by Penn as to how it will approach sports betting has caused a slight uptick in our future book odds.
Boyd Gaming: 20/1 (opening line: 15/1)
Boyd mirrors Penn in many ways. But a big exception is its long experience running sportsbooks. It’s one of the biggest sportsbook operators in Nevada, and is expected to open sportsbooks in its own properties in other states after state after laws are passed.
It already operates casinos in Louisiana and Iowa, and recently bought a Pennsylvania casino (Valley Forge) in King of Prussia, planting its corporate flag in a state expected to soon have sports wagering when lawmakers reach a consensus on a more reasonable tax schedule, reduced licensing fees and regulation of online betting.
Just like Penn, stock market prognosticators see Boyd as being in an especially beneficial position to take advantage of the ability to book sports wagers where it operates. Unlike Penn, Boyd has lots of experienced sportsbook executives, including longtime director Bob Scucci. He knows how to run a book and he knows how to make sports betting appeal to the masses with an extensive array of proposition bets and a continued emphasis on highly profitable parlay wagers. Boyd’s odds have only moved slightly upwards because it looks like extensive legislative battles will be fought in middle America and in the south, where the company has its largest footprint. When the time comes, Boyd will be ready to move forward. Bet on that!
Next time: a closer look at other players, a couple of household names and the “new shooters” in what appears to be a highly contested battle for sportsbook supremacy.
Robert H. Mann, a 31-year resident of Las Vegas, is the industry writer and columnist for Gaming Today newspaper and gamingtoday.com. His opinions are his own and may not reflect those of Sports Handle.