The Sunshine State has long marketed itself as a welcoming slice of paradise to would-be tourists. However, historically, it’s been anything but for the expansion of non-tribal gaming interests.
Little traction for commercial gaming expansion
The daily fantasy sports industry has found that out first-hand in recent years. The Florida legislature has attempted to pass bills expressly legalizing DFS in three consecutive sessions, with the current effort part of an omnibus gaming bill that also includes a proposed new compact with the state’s powerful Seminole Tribe.
One of the main stumbling blocks for DFS legislation has been centered on whether it’s officially considered a gambling activity. If it is, that would qualify legalizing it as an expansion of Internet-based gaming in the state, something the current compact specifies is cause for a reduction or cessation of hundreds of millions in payments the Seminole Tribe makes into state coffers annually.
Florida sports betting chances murky at present
Of course, there’s no such ambiguity when it comes to sports betting, meaning that presumably, it would potentially have to be limited to brick-and-mortar sportsbooks if it were to avoid running afoul of the current agreement.
Just keeping the present revenue-sharing agreement uninterrupted proved challenging enough for legislators. On Wednesday, after 18 days of operating without one, they were able to come to an agreement on extending the tribe’s current commitment to its monthly payments of approximately $19.5 million until May 2019.
That’s good news on one end of the gaming spectrum.
- The extra time provides the two parties a chance to resolve pending issues related to banked “designated player” card games being offered at pari-mutuel facilities that the tribes believe infringe on their exclusivity (which caused the previous revenue-sharing agreement to technically lapse on March 31).
- It also will allow further discussions regarding the implementation of slot machines in counties outside of Miami-Dade and Broward where voters have already approved them.
However, the development doesn’t equate to much for Florida sports betting interests, at least on the surface. That admittedly could change if legislators attempt to include a provision regarding potential future sports betting legislation into a renegotiated version of the existing compact that would also address the aforementioned issues. However, there doesn’t seem to be any movement in that direction at present.
Fundamental change in future Florida gaming expansion could be imminent
Another major development regarding gambling interests in Florida is Amendment 3, set to be voted on during November 2018 mid-terms.
The measure would change the state constitution to stipulate that any future casino gambling expansion would have to be approved by 60 percent of voters, as opposed to being decided on by legislators. Amendment 3 has some heavyweight backers that make for strange bedfellows.
Disney has reportedly contributed at least $4.7 million to the political action committee spearheading it, Voters in Charge. The Seminoles – which would be potentially further insulated from competition from commercial gaming establishments if the measure passed — are the second-largest donor.
As currently written, Amendment 3 wouldn’t affect any potential future sports betting legislation, as the activity does not fall under its definition of “casino gambling”. However, the fact it received more than enough signatures to get on the ballot and has some considerable money behind it is a tangible reminder that there is still an anti-gambling contingent in the state.
Naturally, if the Seminole Tribe expressed an interest in eventually implementing sportsbooks at their Hard Rock-themed facilities throughout the state, that would likely be a game-changer. That would seem likely given that the tribe is already expected to open a sportsbook in New Jersey via the Hard Rock property in Atlantic City.
If Amendment 3 passes, sports betting might soon be one of the few remaining forms of gaming that Florida legislators may still have the power to authorize by 2019, and that they may be able to reach achieve synergy with the Seminole Tribe on.
The NBA and sports betting seem to be inexorably linked these days. The most prominent connection at present seems to be the league’s ask of an integrity fee in many states that are pursuing sports betting legislation.
Of course, the dalliance actually goes back further, considering NBA commissioner Adam Silver took the then-extraordinary step of publicly supporting sports betting legalization in a New York Times Op-Ed piece in November 2014.
However, what the league is willing to term as a gambling endeavor seems highly flexible these days. Take Exhibit A — its NBA Playoffs Bracket Challenge.
As described on its official website, the Bracket Challenge awards a Grand Prize of $1 million to anyone who can correctly identify the winning team of each upcoming playoff series AND the number of games they’ll clinch the series in. There will be up to 99 other participants rewarded for finishing in places 1st-6th with prizes that include a 4-day, 3-night trip to the 2019 NBA All-Star Game, two tickets to a 2018-19 regular-season game, and “electronic gift codes” of varying denominations for use on NBA.com.
The fine print of any advertisement typically makes for fertile ground to find some rather interesting statements, and the Bracket Challenge is no different. One line particularly stands out — “This is a non-gambling Promotion and is intended solely for entertainment purposes.”
There’s a certain degree of semantics at play there, but technically, a competition such as the Bracket Challenge isn’t gambling in the traditional sense – participants are not putting up anything of value, as the contest is free to enter. Therefore, the NBA is not acting as the “house”, as there’s no handle at play.
Then again, the NBA isn’t offering fans a chance at $1 million and multiple other prizes purely from the goodness of its heart. They may not be raking in any entry fees, but they’re looking to get their money back over the longer term through the promotion of their postseason product with the best incentive possible – the promise of a five-figure sum of cold, hard cash.
Despite no rake, plenty of residual benefits
As is the case with a more well-known bracket-centered basketball contest — the NCAA’s March Madness tournament — when money is up for grabs, more eyeballs naturally tend to gravitate to the product.
The domino effect is obvious – more vested interest in the product leads to higher viewership, which in turn leads to higher ratings. That, of course, eventually results in more leverage when negotiating broadcast rights fees.
And there are undoubtedly residual benefits of a more immediate nature – more fan engagement is likely to lead to a bump in visits to the NBA’s and individual teams’ digital platforms. That inevitably leads to revenue boosts stemming from additional sales of all types of team merchandise and paraphernalia.
In fact, the majority of the prizes being offered – the aforementioned gift codes for the NBA’s online store – places the winners in front of the full array of league merchandise when they go to redeem them, with a better-than-average chance that they end up investing at least a little (and quite possibly a lot) more than amount of the money they were awarded.
More similar than different?
Despite having joined the other pro sports leagues for decades in railing against sports betting, the NBA clearly recognizes that fans enjoy having a vested interest (beyond basic rooting interest) in the games they consume. The very existence of the Playoff Bracket Challenge is derived from this principle, as is the league’s insistence on an integrity fee that they’ve also begrudgingly acknowledged doubles as a royalty for their games serving as the basis of wagers.
Ultimately, the Playoff Bracket Challenge isn’t as radically different from conventional sports wagering as the NBA might want it to appear – the former just allows them to realize a return through more indirect methods, while the latter could give them a direct cut without the league putting up any additional investment.
They’ve been scoffed at when they’re referred to as athletes. Their matches have often been dismissed as falling way short of legitimate sport.
But the amount of cash already being wagered on esports and those who play them is anything but child’s play. Try $6.7 billion on for size. That’s the number projected to be bet on eports in 2018 alone based on a report by software analytics company Narus and renowned industry research firm Eilers and Krejcik Gaming.
The same study forecasts a $13 billion number by 2020. In both cases, those figures constitute both legal and illegal betting.
In other words, it ain’t exactly wagering a pack of baseball cards with your buddy on a game of Super Mario Bros. anymore.
Esports betting options could multiply quickly
There aren’t currently many options in the U.S. when it comes to legal esports wagering, by the way. The Downtown Grand in Las Vegas had the distinction of being the first U.S.-based casino to take a bet on an esports competition when it booked wagers on an Oakland-based League of Legends event in 2016. To date, it remains the only U.S.-based location in which you can place wagers on esports matches.
Naturally, that’s all poised to change drastically if there’s a decision in Murphy vs. NCAA that involves the elimination of the Professional Sports and Amateur Protection Act (PASPA).
There’s been no shortage of speculation on how extensive the U.S. sports betting market would eventually get in the wake of such a decision. However, essentially all of those projections have been based on wagers for conventional, on-field/court sporting events. Based on the aforementioned numbers, esports betting holds substantial potential, if it can enjoy enough market penetration.
Companies such as Unikrn (which counts Dallas Mavericks owner Mark Cuban as an investor), Betway, Pinnacle, William Hill and Ladbrokes have long been taking wagers on esports competitions worldwide via their websites. A repeal of PASPA would open the floodgates for not just those entities with respect to legally serving U.S.-based bettors, but casinos and other sports betting-licensed entities in states with favorable sports betting legislation, as well.
Existing esports demographics point to potentially explosive betting market
Newzoo’s Global Esports Market Report 2017 divulged the following pertinent numbers:
- Growth to 589 million esports viewers by 2020.
- Approximately half of the esports fan base is age 21-35.
- An estimated 71 percent are male.
- 62 percent of esports enthusiasts have full-time employment, and 50 percent are classified as high-income earners.
All of those numbers are certainly conducive to a particularly lucrative potential esports betting market, considering many of those demographics match or exceed those that have previously been correlated to sports betting in past studies.
Pro leagues’ involvement would likely drive betting market to new levels
There’s also an x-factor that could become increasingly common in coming years – esports tournaments and competitions based on the signature video games of the actual professional sports leagues.
Official association with the leagues will inevitably drive credibility and interest from a certain percentage of the general public that may not be familiar with or doesn’t presently take esports seriously. Heightened interest in any “wagerable” competition in turn typically results in a more robust betting market.
Coincidentally – or perhaps not – it’s the NBA, already an envelope-pusher with sports betting in more ways than one, that has broken the ice in this regard. They jumped into the esports arena in early April with the rollout of the inaugural NBA eSports League based its renowned NBA 2K video game franchise.
Amidst what were some snickers from the masses, they even held an honest-to-goodness draft night, complete with commissioner Adam Silver announcing the selections of 102 gamers that made the cut out of over 70,000 applicants. And no, the draftees didn’t emerge from their basements in pajamas to accept their official team hats.
Rather, it was a first-class event that crystallized the seriousness with which the league appears to be taking the venture. In all, the NBA 2K League boasts a total 17 esports teams, all backed by existing NBA franchises.
It’s likely the tip of the iceberg.
If the NBA meets with any success, it’s wouldn’t be a stretch whatsoever to see the more monolithic NFL eventually spring into action with a similar concept based on its legacy Madden franchise. And next month, Major League Soccer (MLS) is debuting its FIFA eClub World Cup in anticipation of the actual event.
The consensus view is the short-term future of widespread legalized sports betting lies in the hands of the highest court in the land. That’s technically accurate, of course.
But from a practical perspective, the fate of legalization in certain states may ironically rest with entities that enjoy sovereignty within their jurisdictions — Indian tribes.
Tribes wield considerable influence in Minnesota
Indian gaming interests have often served as formidable opposition to expansion of other gaming in states where they have a presence. Minnesota is certainly one such example – their 18 casinos, run by 11 tribes overall, give them a great deal of leverage.
The fact they contribute a reported $1.8 billion annually in direct and indirect revenue back to the state likely has something to do with that.
According to a report by the Minnesota Indian Gaming Association, tribal casinos and related industries annually:
- Employ 13,371 people.
- Attract 23 million visitors.
- Channel $482 million to other Minnesota vendors.
In short, they carry plenty of clout. A recent comment by Minnesota Representative Pat Garafolo, the architect of a still-to-be introduced sports betting legalization bill that he’s considerably optimistic about, crystallizes the sphere of influence perfectly:
“I won’t submit a sports gambling bill the tribal casinos are opposed to,” Garofalo said. “Nonnegotiable.”
Tribes’ power rooted in decades-old gaming compact
That type of deference isn’t overly surprising, considering Minnesota’s tribes literally and figuratively hold all the cards.
Minnesota’s claim to fame as the first state to have officially reached a compact with its local tribes for gaming back in 1989 is not a point of pride; their initiative actually led them into a heavily one-sided agreement.
With no real foresight of how profitable Indian casino operations would eventually become, Minnesota signed a compact that allowed the tribes to be perpetually free of any revenue-sharing obligations to the state. Renegotiate a better deal, you say? The compact also stipulates that only the tribes can initiate such a process.
To the surprise of absolutely no one, they’ve subsequently used this outsized influence and deep pockets to make the path of entry for any other gaming interests thorny at best. The combination of their intense lobbying and lucrative campaign contributions has reportedly played a pivotal role in derailing efforts to bring ventures such as racinos and riverboat gambling into the state.
Sports betting legislation’s chances largely in the tribes’ hands
Will sports betting fare any better? Garafolo’s comments are a surprisingly frank admission from an elected official that an outside party – one that technically doesn’t even answer to the state government that he helps manage – dictates potential legislative initiatives to an extent.
Supposed apprehension expressed by an unnamed Minnesota tribal official about sports betting early this year strikes a bit of alarm, as well.
“Most tribes are not really excited about this,” said a Minnesota tribal official who requested anonymity. “It’s not really profitable. Then there are the risk factors, technology and space issues. You still can make more with slot machines.”
Past foray into DFS could be a positive sign
What happens in a state like Minnesota if matters come to a head between the tribes and lawmakers over sports betting? Banking on the legislature to buck their wishes would likely be a sucker’s bet.
It’s not equitable by a long shot, but it’s reality in the North Star State. However, sports betting supporters in Minnesota could draw cautious optimism with respect to the tribes’ willingness to expand their gaming offerings from one example in the recent past.
In 2016, the business division of the Mille Lacs Band of Ojibwe — a tribe that owns and operates Grand Casino Mille Lacs and Grand Casino Hinckley – delved into the daily fantasy sports industry in significant fashion. They rolled out the real-money version of their Grand Fantasy Sports platform that fall in their casinos.
Moreover, they began offering the underlying software, EZ Fantasy, as a white-label solution to casinos in 11 other states. That type of forward thinking with respect to new real-money gaming activity could certainly repeat itself when it comes to sports betting.
The fact all of the tribes’ casinos seamlessly fit the description of a potential “sports wagering premise” licensee under a draft of Garafolo’s potential legislation certainly doesn’t hurt, either.
Before landing a gig on CBS’s NFL Today in 1976, Jimmy “The Greek” Snyder had a famed career as a Vegas bookmaker. He’d run afoul of U.S. gambling law along the way, with President Gerald Ford eventually pardoning his 1963 conviction of “interstate transportation of bets and wagering information” 11 years later.
Despite that checkered past and the league’s supposed staunch anti-gambling stance, take a wild guess as to who supposedly gave final blessing for the Greek to be featured in a nationally broadcast, thinly veiled homage to sports betting each week — then-NFL commissioner Pete Rozelle.
The only concession on CBS’ part was for the Greek to refrain from specifically talking point spreads.
Instead, he and NFL Today host Brent Musburger would go over who the Greek felt would win each game straight up. The rub was that he also threw out a score prediction – a wink-wink way of discussing who’d cover without ever mentioning the spread.
Across the dial on NBC, Pete “The Ax” Axthelm had even more freedom. This 1984 clip with him openly discussing the Dolphins being favored by 3.5 points over the Raiders in a key matchup and how a “gambler” would approach the game serves as some tangible evidence.
One of many contradictions
The point is, the league allowing its two biggest broadcast partners at the time to devote precious weekly TV time to the subject is just one of countless examples of what’s long been a conflicting approach.
The existence of a weekly injury report for each team is yet another, and its creation actually stems from a gambling-related scandal dating back to the 1946 NFL Championship Game.
NFL potentially moving from denial to (allegedly) grudging acceptance
Some of this sordid history came to mind when examining the latest public pronouncements from NFL Commissioner Roger Goodell regarding the issue of sports gambling. Those unfolded last week at the NFL owners’ meetings when Goodell conceded time had been devoted to discussing a potential future legalized sports betting environment.
This time around, Goodell refrained from affirming that the NFL was “very much opposed to gambling on sports”, a line that has often been trotted out in various iterations over the years whenever the subject has come up. In fact, there finally seems to be a tacit admission from the league that sports betting is something they should be preparing for, as opposed to continually pushing back against.
NFL profits handsomely from money-based gaming on its product
The collective “about damn time” that you hear comes from anyone who’s been paying attention. Despite their decades-long public railing against sports betting, the NFL would be extremely hard-pressed to deny a significant part of its popularity and subsequent profitability is intertwined with the following:
- Legal Nevada-based wagering on the Super Bowl alone has seen its handle increase for three consecutive years, peaking at an all-time high of nearly $138.5 million for this year’s Eagles-Pats Super Bowl.
- An estimated $4.6 billion was wagered on the game with illegal offshore sportsbooks.
- A total of 22 NFL teams have individual partnership agreements with daily fantasy heavyweights DraftKings and FanDuel.
- Just this past season, DraftKings typically saw its users put between $25 million and $38 million in play on a given NFL week, while the range for FanDuel fell between $14 million and $22 million. Those types of dollars undeniably equal many more eyeballs on the product, a fact the NFL ultimately profits from.
And naturally, the NFL’s approval of the Raiders relocation to Las Vegas – where they’ll play in a stadium in which fans will presumably be able to wager on games through any of the state’s sportsbooks’ mobile apps – is likely the biggest contradiction yet.
Ironically, it may require taking a loss as a defendant in Murphy vs. NCAA to finally unburden the NFL from persisting with an act that wore thin decades ago.
Opening Day in Major League Baseball (MLB) has long been romanticized, credited with evoking a number of sensory delights — the sharp crack of the bat, the resounding pop of the ball in the glove, the smell of fresh popcorn and peanuts in the stands and freshly cut grass on the field.
This year, may we suggest the decidedly more cynical “whiff of duplicitousness” as a nominee for the season-opening lexicon?
Parlays and props soon to be part of America’s favorite pastime?
From a purist’s point of view, the advent of the 2018 baseball season is much like any other. However, there’s an added layer or two of intrigue from those in the sports betting realm.
There’s a legitimate possibility that U.S. residents in certain states besides Nevada could be placing wagers on the sport long before the regular season concludes at the end of September. That, of course, would only come to fruition if there’s a full repeal of PASPA (Professional and Amateur Sports Protection Act) in Murphy vs. NCAA.
Moreover, MLB would presumably be profiting from each of those wagers in states where it’s able to successfully shoehorn an integrity fee into legislation. There’s already been plenty of outcry from states and gaming operators who view such a fee as a thinly veiled effort at simply collecting a trumped-up royalty for the mere existence of the games being bet on.
Contrasting stances between DFS and sports betting
The whole issue brings to mind another real-money gaming activity with an abundance of gambling-related aspects that MLB has been heavily immersed in for years. One that they’ve never made the slightest public rumbling about any type of integrity fee for, most likely because they’re already profiting from it in other ways – daily fantasy sports (DFS).
MLB’s multi-level relationship with DFS industry leader DraftKings includes the following:
- MLB has owned an equity stake in DraftKings since 2013
- Multi-year sponsorship deal in place since 2015 that made DK the “Official Daily Fantasy Game” of MLB, as well as an official sponsor of All-Star week and “select Postseason events”
- A total of 27 MLB teams also have individual sponsorship deals in place with DK.
Naturally, MLB-themed DFS contests are also offered on essentially every other U.S.-based DFS platform in addition to DK, regardless of market share. FanDuel and DraftKings are offering Guaranteed Prize Pools (GPPs) with $100,000 top prizes for Opening Day, as well as a multitude of contests with smaller but nevertheless formidable prize pools. The same will hold true for virtually every other day of MLB season.
No “integrity monitoring” needed with DFS?
Yet despite the substantial amount of money at play in DFS on baseball daily – much as there would be with sports betting — there’s never been a peep from MLB in terms of DFS contests potentially compromising the integrity of the game on the field. Or, for that matter, of an ongoing revenue stream to fund a monitoring system to guard against this.
In fact, commissioner Rob Manfred notably came to the defense of the industry — making a point to say it was distinctly different from gambling — in the thick of the legal maelstrom that engulfed it in the fall of 2015.
Likewise, nary a whisper with respect to any type of royalty-type compensation owed by operators for raking in millions in entry fees on contests based on MLB games. Not exactly an earth-shattering revelation, but the fact the league’s and individual team’s pockets are already being lined through the aforementioned agreements seems like an excellent place to start when trying to unravel this “mystery”.
Increasingly more alike than different
Some would argue that sports betting and DFS remain two distinctly different animals. As a result, they say, those wagering significant sums of cash on the outcome of an entire game – as opposed to those betting on the performances of individual players spread out over multiple games – are much more likely to have a corruptive influence on those that could help sway certain outcomes in a game.
That position has some merit – with varying degree – in certain sports. Between MLB, the NFL, the NHL and NBA, it’s been the latter that’s always been believed to be the most susceptible to game fixing. The infamous Tim Donaghy scandal of the previous decade is one fitting example where manipulation of the point spread was at play.
However, the theory is on an increasingly slippery slope overall, thanks to DFS becoming much cozier with traditional sports betting elements in recent years:
- FanDuel and DraftKings offer single-game slates for MLB, meaning significant amounts of money are riding on the individual player performances of one particular game.
- Sites like Boom Fantasy and USFantasy incorporate what are essentially traditional individual player prop bets with a fantasy scoring component attached.
In other words, the amount of overlap between sports betting and DFS is becoming increasingly noticeable in certain respects. Consequently, MLB’s position that the former requires a whole different level of oversight – one that can only be maintained from raking in millions upon millions from each state’s sportsbooks — is an increasingly difficult one to argue with a straight face.
Would partnership/sponsorship agreements make integrity fees disappear?
Ultimately, the urgency for an integrity fee would likely dissipate if sportsbooks were able to strike partnership agreements with MLB as well. That might seem like a far-fetched idea, given the distance all the pro sports leagues have traditionally kept from sports betting. And while there have been relatively seismic shifts in those positions recently, it’s still a bit of a stretch to envision any establishment being labeled as the “official sportsbook partner of MLB” in their state, for example.
Or is it? Interestingly, DK’s recent signaling of its full intention of entering the sports betting realm would automatically make MLB a minority owner in one such enterprise. That in itself sums up how entangled the whole issue is – and could become – in a potential future legalized sports betting environment.
The old “variety is the spice of life” adage is applicable to countless scenarios, even carrying a bit of a salacious connotation on occasion. Daily fantasy sports (DFS) has embraced the philosophy over the last several months in particular, which could well prove to be an even more prudent strategy in the near future.
After all, the latest hottie in the real-money gaming realm – legalized sports betting — might be strutting down the block very soon in certain states, assuming a favorable decision in Murphy vs. NCAA. Industry leaders DraftKings and FanDuel undoubtedly want to prevent a wandering eye on the part of their DFS customers as much possible.
New Contest Types Looking to Recharge Industry?
To their credit, DraftKings and FanDuel haven’t let a slew of challenges – including a failed merger – prevent them from innovating. That’s a particularly advisable approach to take in an industry that was founded on tweaking an already wildly popular pastime – season-long fantasy sports – and giving it a toe-tingling jolt.
The two companies have rolled out new contest types in recent months that reshape or altogether eliminate the traditional salary-cap format for DFS. A good number seem to have one common theme coursing through them – added simplicity.
FanDuel opted to come up with a snazzy new virtual “wing” of the company where these new offerings are concocted – the appropriately labeled LABS.
Some of those game selections that have made their debuts over the last few months. Most still carry a salary-cap format, except when noted. These include:
- NFL Super: A contest type that does away with both the Kicker and Defense position. The FLEX roster spot can be filled with either a running back, wide receiver or tight end.
- NFL Mini: Contest rosters are reduced to five positions — One quarterback, two running backs and two receivers.
- NBA Starting Five: Rosters mimic a real-world NBA starting lineup (two guards, two forwards, one center)
- NBA Positionless: All eight roster spots are designated as Utility, allowing contestants to roster as many players of the same position as they wish.
- Pond Hockey: 5-player rosters with 1 center, 2 wings, 1 defenseman and 1 Utility spot
- Captain: 5-player rosters consisting of 1 center, 2 wings, 1 defenseman, and 1 captain who gets 2x points
- 5 A-Side: 5-player rosters with 1 forward, 2 midfielders, 1 defender and 1 Utility spot.
New Game Formats
- Beat The Score: Participants build a full roster featuring that sport’s typical lineup construction, but their goal is to beat a preset score with their roster, as opposed to competing against the scores of other users’ lineups.
- Single Game: Participants build a reduced roster based on players from one predetermined game. One roster spot is designated as MVP and awards fantasy points on a predetermined multiplier.
- Big Game Bingo (used for both Super Bowl and NBA All-Star Game): Non-salary-cap game. A virtual bingo card is assigned to each FanDuel user, and the squares consist of potential in-game events that could transpire, as well as a few peripheral occurrences (i.e., the Super Bowl cards had squares pertaining to certain types of commercials that might air during the broadcast). Users who successfully check off an entire row or column on their card can claim a prize.
DraftKings has played it much closer to the vest in their offerings. In recent months, they’ve introduced:
- Pick ‘Em: No salary-cap game where participants pick one player apiece from six pre-set tiers.
- Showdown: DK’s version of single-game slates. Six-player rosters based on one preselected game, scoring is the same as the site’s usual classic salary-cap format.
Catering to Both New and Existing Users
Many of these new games appear to be welcoming the DFS novice with open arms. Giving them a DFS “safe space”, if you will.
After all, a long-standing criticism of the industry is that an inordinate amount of time and research is required to consistently profit. However, with their reduced rosters, the absence of any salary cap in certain cases, and even a contest in a format that Grandma would love, these new kids on the block seem designed to woo and retain casual players, first and foremost.
But they’re naturally looking to hook their existing users as well. With the advent of a rapidly spreading legalized sports betting environment potentially around the corner, DFS can’t afford to be cast aside in favor of what could be not just the flavor of the month, but of the foreseeable future. Granted, DraftKings is already taking a proactive approach to this matter with its recent hire of its first-ever Head of Sportsbook.
The Big Two seem invested in the idea offering something for virtually everyone’s tastes will cast a wide enough net of customer acquisition and retention. Whether it’ll be enough to keep plenty of their customers’ dollars even if temptation eventually summons in the form of a local sportsbook will likely start being revealed over the next several months.
As with many legislative issues that have even a modicum of controversy attached, there’s a tortoise-and-hare dynamic at play with sports betting legalization (and subsequent readiness for implementation).
Some jurisdictions — West Virginia, Connecticut and Pennsylvania, for example — threw on their FitBits over the last several months, hitting the ground running by passing legislation. Numerous others are milling around the starting blocks, trying to get to consensus on pending bills in their respective statehouses.
New Jersey, of course, has been the pacesetter all along. They were out running gassers long before the crack of dawn, first attempting to partly repeal their sports betting ban in 2011.
Massachusetts once again taking deliberate tack
And then there’s the Commonwealth of Massachusetts, which looks to be on Team Slow and Steady. Much as it did with daily fantasy sports (DFS) back in 2015-16, the Bay State is taking a deliberate approach to studying how a legalized sports betting environment would impact their area, from both sides of the equation.
The path being taken is similar in many ways.
With DFS, a white paper was eventually produced by the Massachusetts Gaming Commission shortly before Attorney General Maura Healy issued some short-term regulations for the industry in January 2016.
That step was preceded by:
- A hearing on DFS facilitated by the Massachusetts Gaming Commission (MGC) in late October 2015
- A day-long DFS Educational Forum in December of that year.
On the sports betting end of things, the MGC made a triumphant return March 1 with — to no one’s surprise — a 29-page white paper that was fairly exhaustive in terms of covering different angles of the industry.
Much like with DFS, the report was preceded by other notable and related events. In this case, it’s primarily a bill that’s been in deliberation since late January.
Although it tackles DFS regulation as well, the salient portion of the proposed legislation with respect to sports betting calls for the formation an eight-member commission to:
- Thoroughly study the industry, including the online sports betting segment, and delve into aspects such as “economic development, consumer protection, taxation, legal and regulatory structures, burdens and benefits to the commonwealth and any other factors the commission deems relevant”.
- Submit a report to the MGC within 120 days of a SCOTUS decision in Murphy vs. NCAA that strikes down PASPA.
Massachusetts sports betting likely in future
The feeling here is that Massachusetts will eventually jump right into the sports betting fray if there’s a favorable SCOTUS decision, all of their “due diligence” — aka legislative foreplay — notwithstanding.
A clue appears fairly early on in the white paper. The document notes that the state’s Expanded Gaming Act of 2011 — which allowed for three resort casinos and a slots-only casino in separate areas — came into being precisely because gaming dollars had been headed to neighboring states for far too long.
Massachusetts would be poised to be shut out of the Cool Kids’ table once again — this time on the sports betting end — if PASPA is struck down and they simply stand pat.
- New York, New Jersey, Connecticut, Pennsylvania and West Virginia would all potentially be ready roll with their sports betting markets quickly.
- Delaware is already one of the few places outside of Nevada where sports betting exists already, albeit in non-single-game form at present.
- Moreover, nearby Maryland and Rhode Island are currently deliberating bills that could quickly come to fruition with the impetus that a favorable PASPA decision would offer.
A DFS-related X-Factor
There’s yet another, less obvious angle that points toward an eventual legalized sports wagering environment in Massachusetts. And there’s a DFS tie-in.
Industry leader DraftKings was founded in the state in 2012. Although it’s expanded its reach to multiple cities (and countries) over the years, it remains headquartered in Boston. In fact, it just announced a move to more expansive offices in the city’s Back Bay neighborhood this past January.
However, they made exponentially more waves with another revelation shortly thereafter. After months of speculation – some of it fueled by the company itself – DraftKings provided the most tangible evidence yet it plans to make a splash in a future legalized sports betting environment when it named its first Head of Sportsbook.
That hire, Sean Hurley, will be based out one of those new DraftKings satellite locations in Hoboken, New Jersey. However, that’s relatively irrelevant in this context. The bigger picture is that it’s highly unlikely that Massachusetts would be left on the outside looking in while one of its homegrown successes initiates a momentous new chapter in its evolution.
In most courtroom dramas, there’s typically that poignant period when both sides wait for the jury to return with a verdict.
Stretch out that scenario to multiple months, and that sums up the level of anticipation for New Jersey, the professional sports leagues and NCAA — and by extension, an ever-growing number of other states – from early December to the present.
Oral Arguments Seemed to Favor New Jersey
Oral arguments in front of the Supreme Court for Murphy vs. NCAA (formerly Christie vs. NCAA) unfolded back on Dec. 4, 2017. Many legal experts weighing in post-hearing felt the proceedings went decidedly in favor of the Garden State.
Those assessments were ultimately just speculation, of course. However, they were forged by those with an abundance of experience in the field that actually witnessed how each side made their case, and the subsequent tone of questioning each was subjected to by many of the nine justices.
One of the main tenets of New Jersey’s arguments that seemed to resonate with the Court was the idea that the federal government is violating the commandeering principle via the enforcement of the Professional Sports and Amateur Protection Act (PASPA) of 1992, the law at the heart of the case.
PASPA prohibits states from regulating sports betting without an actual federal prohibition on the activity being in place. Under this arrangement, New Jersey argues, the federal government is forcing them to carry their proverbial water on the matter.
The follow-up inquiries on the part of more than one justice appeared to betray the fact they were inclined to agree – at first blush, at least – with that position. That’s potentially crucial, as the commandeering issue appears to be one that the outcome of Murphy vs. NCAA could well hinge on. And that was more than 90 days ago.
Why the Delay?
So, what exactly is the hold-up then? Asking for New Jersey, six other states that have already passed sports betting laws, 15 others currently debating such bills and millions of bettors across the country anxious to plunk a few dollars down on some of their favorite sporting events.
Well, to begin with, the amount of time that’s transpired isn’t inordinate…yet. However, the 93-day average that Adam Feldman, a postdoctoral fellow at Columbia Law School and founder of the Supreme Court “metrics” site EmpricalSCOTUS.com, has been the norm between oral arguments and a SCOTUS decision since 2000 was just exceeded when no decision was announced by March 6.
The wait could soon be over, though. While not intended to serve as an exact schedule, the Supreme Court does “earmark” the dates when it’s most likely to announce decisions on a yearly calendar. There’s another one just around the corner –April 2. Absent a ruling that day, April 30, May 14 and May 29 loom as the next three likely possibilities.
Lots to Hash Out
Five of the court’s nine justices must be in agreement on a core decision before a ruling is announced. With as complex an issue as PASPA is, how long it’s been on the books, and the number of times New Jersey has already been defeated in lower courts on the matter, there’s plenty of precedent and history for the justices to examine. Therefore, getting to that magic number is likely far from a slam dunk, and potentially the overriding reason for delay.
Moreover, Murphy vs. NCAA involves a substantial number of the heavyweights in the multi-billion-dollar professional sports industry, as well as the NCAA. The impact on those entities is undoubtedly being weighed, as is the always thorny matter of federal vs. states’ rights that can sometimes be a divisive factor between left -and right-leading justices. Those impact of those issues likewise shouldn’t be underestimated.
While the exact timing is still up in the air, the one sure bet – pun intended – it that there will be a long-awaited verdict in Murphy vs. NCAA within a matter of months at the latest. With it, it’s highly likely the immediate and long-term future of U.S.-based single-game sports betting is crystallized.
Once considered ahead of its time in legalizing a popular real-money gaming option, Maryland recently played catchup on regulating a somewhat similar activity. This time around, they stand to get a little something (or significantly more) in return.
Its House of Delegates passed sports betting legislation – H1014 — by a robust 124-14 margin on March 15. The bill cut an efficient swath through the chamber after its early February introduction. It authorizes sports-based wagering through the state’s horse racing tracks and casinos if the Supreme Court issues a ruling striking down the Professional Sports and Amateur Protection Act of 1992.
The bill does not presently contain any provision that requires the dreaded integrity/royalty fee be paid to the professional sports leagues.
Progress of Neighboring States Speeds Up Process
It’s the second state to pass a sports betting bill through a full chamber thus far in 2018. The other, West Virginia, eventually saw its legislation progress all the way to the finish line and become law on March 9. Maryland obviously still has a couple of steps to take before it reaches that milestone.
The brisk progress being made enables the state to make up for a bit of lost time. The following neighboring jurisdictions have already passed sports betting laws that are ready to go into effect upon a favorable SCOTUS decision in Murphy vs. NCAA:
- West Virginia
- New Jersey
The relative proximity of all three is enough to warrant concern that a lack of action would essentially cede plenty of would-be gaming-based revenue to those states.
Once a Pioneer in DFS Legislation
Ironically, Maryland took much more of a pioneering tack approximately six years ago by expressly legalizing paid-entry fantasy sports, an activity that offered them zero tax revenue.
At the time, the industry already included a relatively nascent daily fantasy sports (DFS) sub-set. FanDuel had been in existence since 2009, while current industry leader DraftKings was just getting started the same year the law went into place. A handful of smaller operators such as Draftstreet had been in existence for several years at that point as well.
The 2012 law gave oversight control to the state’s comptroller’s office. It remained on the books in almost complete anonymity for several years and was initially passed without much fanfare.
The legal maelstrom that encompassed the DFS industry beginning in fall 2015 brought it back into the spotlight. The law’s applicability even came into question, with Maryland’s Attorney General’s office issuing an opinion that a voter referendum may have been necessary to pass the legislation in the first place.
The comptroller’s office ultimately clarified matters to an extent in early 2017 by enumerating a set of provisions for what constitutes lawful DFS activity.
Rapid Legislative Progression Explainable
What does Maryland’s surprisingly proactive stance on paid-entry fantasy sports more than a half-decade ago have to do with its sports betting legalization quest? It arguably could lead one to conclude that the state has a generally progressive mindset toward the issue of real-money gaming in general.
Theoretically, that’s one reason that explains the rapid progress of H1014. By that logic, one could also prognosticate that passage of the bill through the Senate – or advancement of a separate piece of legislation sponsored by Sen. Nancy King (D) – is also likely.
However, as is often the case, money — or the prospect of it — is really the main impetus at play. State legislators have undoubtedly found plenty of motivation in a report from industry consulting firm Global Market Advisors that concluded the following with respect to how lucrative the Maryland sports betting marked could be by 2023:
- Potential sports betting handle between $227.6 million and $2.8 billion.
- Potential sports betting revenue between $13.7 million and $182.1 million.