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From: Glenn Petersen5/1/2021 8:57:41 AM
   of 247

Legal Sports Report

A potential FanDuel US public listing would not include Fox Bet and PokerStars, Flutter announced Thursday.

It is another sign Flutter is not backing down from its ongoing dispute with Fox.

The two companies are about to start an arbitration process over the value of a 2021 option that allows Fox to buy an 18.6% stake in FanDuel.

What is the beef between Fox and FanDuel?

In short, Fox thinks it can exercise the option at a cheaper price, while Flutter has said the valuation will be based on “fair market value.”

Flutter said the appointment of the arbitrator was almost finalized, suggesting the process will start soon.

As part of the pre-arb maneuvering, Fox threatened to remove FanDuel ads from its networks. It also threatened to withhold the Fox Bet/PokerStars assets from a potential FanDuel IPO.

Relative strength ahead of FanDuel IPO

But Flutter dismissed the impact of that in its Q1 earnings call on Thursday.

Firstly, it published the FanDuel/Fox Bet splits for the first time, reflecting the relative strength of the two businesses. FanDuel Group accounted for 91.6% of Flutter US revenues in Q1. Fox Bet and PokerStars came in at 8.4%.

Across the full FY20, FanDuel Group did $800 million in revenue vs $96 million for the Fox Bet assets.

Meanwhile FanDuel did $-148 million EBITDA compared to $-71 million for Fox Bet. Those economics strongly favor FanDuel Sportsbook.

Scale is king“

FanDuel creates tremendous embedded value,” Flutter CEO Peter Jackson said. “The customer acquisition costs compared to lifetime value are very good. We get better operating leverage as we push more volume.

“Contrast that to Fox Bet, which is struggling. The product is not as good because we still have to use the legacy Stars Group sports betting platform. Customer acquisition is lower on the sports side. Fixed costs are higher. As a result, we don’t get the same benefit from operating leverage.

Jackson added: “It gives us visibility to what it’s like for smaller competitors chasing us down in the states. It’s hard.”

Plenty more advertising partners in the sea

Flutter also played down the importance of losing Fox as an advertising partner.

CFO Jonathan Hill said: “Fox is not a huge component of marketing spend for FanDuel. FanDuel was successful before the merger when Fox became a partner. While we are highly supportive of Fox, FanDuel is not overly reliant on that channel for marketing.”

In short, it seems Flutter is willing to fight its corner in arbitration and risk losing Fox as a partner in the future.

FanDuel IPO is a huge prize

That is an easier risk to take given the size of the spoils. A public FanDuel could be worth around $30 billion, analysts think.

”The clear message is Fox Bet needs FanDuel, not the other way around,” said one London analyst, who asked not to be named.

To be clear, the FanDuel IPO is still not certain. Flutter said the listing of a “small part” of FanDuel Group was still under consideration and no final decision had been made.

Fox sees it differently

Of course, the picture is different from Fox’s point of view. Sources close to the company said a FanDuel valuation would be signicantly harmed by the legal overhang of the arbitration.

It’s also worth noting Fox Bet is still a $100 million revenue brand despite its current inferior product. That would bolster any valuation. And PokerStars and Fox Super 6 are the leading products in their respective fields.

“They would be IPO’ing a significantly weakened business without the Fox assets,” the source said.

FanDuel still going full speed in US

Elsewhere, the Q1 results painted a positive picture for Flutter’s US division.

Revenues grew 135% to $396 million. The company added 900,000 new customers in the quarter, taking average monthly players to 1.6 million. FanDuel/Fox Bet combined recorded a 36% share of the online sportsbook market during Q1.

Flutter’s share price was relatively unchanged following the update.

Flutter To Exclude 'Struggling' Fox Bet From Potential FanDuel IPO (

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To: Glenn Petersen who wrote (185)5/3/2021 10:16:45 AM
From: Glenn Petersen
   of 247

Legal Sports Report

Genius Sports posted this week its first financial report since becoming a public company.

The figures paint a positive picture, with a 30% rise in FY20 revenue to $150 million. Growth accelerated throughout the year, with a third of FY20 revenue generated in Q4.

Elsewhere, group EBITDA flipped positive, from -$6.2 million in 2019 to $17.5 million in 2020. The Genius SPAC transaction officially closed last week, with the company now trading on the NYSE under ticker $GENI.

Analyst firm Regulus Partners noted the underlying business was essentially cash flow-neutral, thanks to capital expenditures of $1.5 million and capitalized development of $15.9 million.

Great momentum for Genius SportsGroup

CEO Mark Locke hailed a landmark year for the business despite the coronavirus pandemic:

“We have entered 2021 with great momentum, bolstered by our recently-completed merger with dMY II and NYSE listing, as well as our exclusive partnership with the NFL,” said Locke.

“I am more confident than ever about the opportunities ahead as we continue to leverage our unique technology and scale to grow alongside the rapidly expanding global sports, betting and media ecosystem.”

2021 a huge year for Genius

The Genius financials are going to look dramatically different in 2021 thanks to the company’s official NFL data deal.

Genius is thought to be paying around $120 million a year for those data rights over six years. Half of that will be paid in equity.

Those costs will need to be covered by increased fees from operator partners. In turn, those fees could make NFL betting a loss leader at some US sportsbooks if they take the official feed.

“The extent to which US-facing operators are able to make room for this additional cost and whether they will be tempted to take ‘open source’ data … is a significant value question for Genius,” Regulus said in a note.

“One way or another, the sports data landscape will be changing beyond recognition in the near future.”

That battle over official league data versus open-source data could even spill over to the courts, as it has in the UK.

Following the results announcement, Genius share price climbed 0.7% to $21. That equates to a market cap of around $3 billion, or 20x trailing 12-month revenues.

NFL Data Move Holds Key To Genius Sports Future After Solid 2020 (

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From: Glenn Petersen5/7/2021 8:06:16 AM
   of 247
DraftKings raises full-year guidance, expecting a return in sports

Jessica Bursztynsky @JBURSZ


-- DraftKings reported first quarter results Friday morning.

-- The sports-betting company said it had 1.5 million million monthly unique paying customers.

-- The company also raised its fiscal year 2021 revenue guidance to a range of $1.05 billion to $1.15 billion from a range of $900 million to $1 billion.

Sports-betting company DraftKings reported better-than-expected loss per share and revenue for its first quarter, and raised its full-year revenue guidance.

Shares were down more than 1% in the premarket after an initial pop on the report.

Here are the key numbers:

Loss per share: 36 cents vs 42 cents expected, according to a Refinitiv survey of analysts

Revenue: $312 million vs $236.2 million expected, per Refinitiv

DraftKings said it has 1.5 million million monthly unique paying customers as of its first quarter, holding on to the gains in made in its fourth quarter. It was expected to report 1.31 million, according to Factset.

Average revenue per monthly unique paying customer came in at $61 in the first quarter, representing a 48% increase versus the same period in 2020. The company said that was boosted by increased engagement with its iGaming and mobile sports betting product offerings, as well as cross-selling.

The company also raised its fiscal year 2021 revenue guidance to a range of $1.05 billion to $1.15 billion from a range of $900 million to $1 billion, which equates to year-over-year growth of 63% to 79%. DraftKings credited the expected return of normal sports seasons for the increase in guidance.

“The increase reflects solid performance in the first quarter of 2021, continued strong user activation due to the effectiveness of our marketing spend, well-executed launches of mobile sports betting and iGaming in Michigan and mobile sports betting in Virginia, and a modest contribution from our recently completed acquisitions,” the company said. “This guidance also assumes that all professional and college sports calendars that have been announced come to fruition and that we continue to operate in states in which we are live today.”

Friday’s report marks the company’s first full year as a publicly traded company, since it went public last April via a SPAC. The company has been able to ride growing sports betting legalization across the United States, helping expand its market reach. DraftKings is live with online sports betting in 12 states.

Currently, 21 states, plus Washington, D.C., allow online sports betting, up from 20 this past quarter. Six states legalized sports wagering but are not yet operational, and 13 states are working on legislation.

DraftKings (DKNG): Q1 2021 earnings (

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From: Glenn Petersen5/17/2021 1:28:06 PM
   of 247

POSTED ON MAY 17, 2021
Legal Sports Report

Barstool Sportsbook has been better than others at turning bets into revenue across its young life.

According to recent figures from Penn National, Barstool Sportsbook has taken $660 million in handle in the seven months since it launched.

It turned those wagers into $61 million in gaming revenue, good for a 9.2% hold.

That is well clear of the average 7.2% hold across all states since the repeal of PASPA.

Outpacing DraftKings and FanDuel

A 2% difference might not sound much, but on that $660 million in handle, it is worth $13.2 million.

The hold rate is also well clear of the big two in US sports betting.

DraftKings is at 6.3% hold according to state by state data for 2020/21. FanDuel is at 7.5%.

Interestingly FanDuel recently talked up their hold rate at their recent Q1 results, pointing to the strength of their Same Game Parlay product.

What’s driving high hold for Barstool Sportsbook?

Penn gave some clues about the reasons for the high hold at its Q1 results:

High adoption among casual bettors
Custom parlays like the Dave Day Night Parlay
Exclusive and “boosted’ bets
Overindexing in younger bettors
The Sky Bet model

Interestingly, Penn CEO Jay Snowden said the operator was modeling itself after UK sportsbook Sky Bet, which also boasts a high hold rate.

Sky uses boosted odds and parlays, although it is perhaps best-known its wildly popular RequestABets.

Snowden explained:

“The lion’s share of bettors in our ecosystem are under 30. So we see a lower average bet size but higher hold rates. They are betting a lot of parlays, and recreational wagers. That’s what Sky Bet has been doing for a long time.

“Sky Bet also overindexes on hold. It’s still early, but life to date, our hold is higher than the competition and I think that’s because we have a younger, more casual bettor. And think about lifetime value. I’d rather have bettors under 25.”

Big NFL push for Barstool Sportsbook

Elsewhere, Snowden pledged to ramp up marketing ahead of this football season, with Barstool Sportsbook expected to be live in eight states.

However, he said that marketing spend would be concentrated on media outlets and “influencers” like Barstool, rather than TV and radio.

“I’ve been in PA all week and every TV commercial is sports betting,” Snowden said. “It’s overwhelming, you don’t even know who is advertising to you.

“We’re not going to play that game. That’s a very low ROI and you get customers with no loyalty.”

Dry marketing powder

Snowden said Barstool Sportsbook cost per acquisition (CPA) was under $100 in its three states so far, giving the company “dry powder” to spend this football season. For one comparison, PointsBet said this week it was satisfied with $500 CPAs.

Snowden was also asked about some of the concerning trends in monthly state-by-state data, but warned analysts not to read into those figures too much, especially out of football season.

“Dave Portnoy and Big Cat, their best sport is NFL which was coming to an end as we launched in Michigan,” Snowden said.

He promised better results come September, with increased marketing spend and learnings from the first season.

How Barstool Sportsbook Modeled Itself After UK Giant Sky Bet (

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From: Glenn Petersen5/23/2021 8:12:03 AM
   of 247
GENI closed at $20.26 on Friday.


POSTED ON MAY 20, 2021
Legal Sports Report

Sports shares jumped nearly 10% on Thursday as the company posted strong Q1 results and upgraded its revenue guidance for 2021.

The data company reported Q1 revenue growth of 52% year-over-year to $53.7 million.

Adjusted EBITDA rose 414% to $9.3 million, up from a net loss of $5.3 million last year.

“We delivered superb results in the first quarter of 2022,” said Genius CEO Mark Locke.

Upgraded outlook for Genius Sports

The company raised its FY2021 revenue guidance from $190 million to $250-$260 million.

“Our strategy of powering the global sports data ecosystem has supported our growth in the quarter,” said Locke.

“We are confident in our ability to continuously improve our end-to-end solution and deliver on our increased guidance for the year.”

EBITDA guidance for the core business was also raised from $35 million to $35-45 million.

More details on NFL data deal

The company also held its first earnings call since becoming a public company on Thursday.

Analyst questions centered around the company’s NFL data deal, worth an estimated $120 million a year over six years. Half of that will be paid in equity.

However, Genius said the deal would be cash breakeven for 2021, i.e. excluding the equity consideration.

The company said it would then be cash positive in 2022 and profitable over the lifetime of the deal.

CEO Mark Locke referenced a similar deal for official UK soccer data. He said that agreement allowed Genius to package up other services and ultimately secure a higher share of operators’ B2B spend.

Official vs unofficial data

Of course, it means operators are going to have to pay up, and $120 million is a lot to take out of the NFL betting market each year. In fact, US operators made only made $278 million in NFL betting revenues in 2020, according to state-by-state data.

Genius, however, dismissed concerns that US sportsbooks might not pay up for the official data feed.

The official product is more than just data, and includes advertising and engagement tools to find and keep players, Genius said.

Focus now on execution for Genius Sports

Analyst firm Regulus Partners said the key question now was whether Genius could add enough value from those areas to justify “premium pricing.”

Regulus added: “Genius will sink or swim on commercial drivers, technical competence and operational execution – not daydreaming about what the size of the US market might be in five year's time."

Genius Sports Stock Jumps On Strong Q1, Upgraded Guidance (

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From: Glenn Petersen5/26/2021 6:23:00 AM
   of 247

POSTED ON MAY 25, 2021
Legal Sports Report

Flutter is facing a growing number of problems as it considers an IPO of a portion of its FanDuel asset in the US.

FanDuel CEO Matt King announced his sudden departure from the company this month, surprising investors and analysts alike.

Flutter stock dropped 5% following the announcement as the company admitted the departure would “affect the timing of any potential US listing.” Flutter kicked off a search for King’s replacement, but there is not a huge pool of candidates qualified for such a job.

Changing environment for FanDuel IPO

That uncertainty is far from the only hurdle for a FanDuel IPO to overcome.

For starters, the wider market is not what it was when the IPO was first mooted back in March. DraftKings and Penn are both down around 40% from their highs at time of writing.

Applying a similar discount to FanDuel drops the suggested $35 billion valuation to around $21 billion.

What’s more: simply by listing, FanDuel increases the supply of sports betting companies in the stock market, potentially driving prices down further.

No Fox assets in FanDuel IPO

It is important to remember too that initial valuations were built around the entire FanDuel Group, including Fox Bet and PokerStars.

We since learned that Fox would not allow those assets to be included in the IPO, thanks to an ongoing dispute with Flutter.

That could knock off another chunk of value as the dispute between Fox and Flutter continues.

What is Fox Bet worth?

Flutter executives downplayed the importance of those assets in a recent earnings call, saying Fox Bet was “struggling.” It also pointed out that 90% of US revenues came from FanDuel and the TVG horse racing brand.

But of course, Flutter is incentivized to minimize those assets. So what do the numbers say?

Industry analyst Chris Grove said DraftKings was a “reasonable comp” for establishing a Fox Bet valuation. The two operators both have a mainstream brand with national reach and a number of unique assets, Grove said.

Of course ,Fox Bet has less scale than DraftKings, but it has the market-leading poker brand in PokerStars. It might not have a DFS customer database, but it does have 5 million users of the free-to-play Super 6 prediction game.

The math of the potential deal

Fox Bet/PokerStars had just under $100 million in revenue in 2020. DraftKings is trading around 20x its trailing-12-month revenues, so applying that multiple to Fox/PokerStars gives an approximate $2 billion valuation.

But the Fox assets go beyond the gambling brands. Fox has also threatened to stop advertising the FanDuel brand across its networks, so what is that worth? Flutter again played down the importance of that at its Q1 results, but we can get an approximate value from similar deals.

The PointsBet deal with NBC, for instance, was worth around $500 million over five years. The announcement also added around $1 billion to PointsBet market cap.

Additionally, Fox controls the Super 6 game. Given Action Network and its 1.5 million customer database just sold for $240 million, Super 6 alone could be worth potentially $1 billion.

Taken altogether, the Fox assets that would be excluded from a FanDuel IPO could reasonably be worth $3+ billion.

What next for Flutter?

Bringing it full circle, that mooted $35 billion FanDuel valuation from March could well be half of that now. So is the juice still worth the squeeze?

“I can’t believe they will push ahead with this,” said Simon French, a gaming consultant at Bixteth Partners “They need a period of consolidation, calm markets, and a new CEO.”

Flutter declined to comment further on its IPO plans when contacted by LSR. But for now at least, the best move might be no move at all.

Analysis: FanDuel IPO Seeing More Hurdles In Front Than Before (

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From: Glenn Petersen5/28/2021 5:32:12 AM
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Consolidation is perhaps inevitable, especially as share prices dip and it is no longer so easy to raise free capital.


POSTED ON MAY 27, 2021
Legal Sports Report

It has not been a great month for US sports betting operators.

The leading publicly listed companies have seen their market caps cut almost in half. And a key concern for investors is a shrinking total addressable market (TAM) in the country.

Here’s a quick rundown of some negative news in recent weeks:

-- New York demands at least 50% of GGR for anyone wanting to operate mobile sports betting in the state. That figure could make it nearly impossible for the winning bidders to deliver profit.

-- Florida gives the Seminole Tribe control of the FL sports betting market. Online operators might be allowed in, but only as brands on Hard Rock technology and only with significant revenue-share payments.

-- California tribes say they want retail betting for 5-10 years before mobile.

-- Texas sports betting will not happen until at least 2023.Those four states account for a third of the US population. All now look like tough — perhaps impossible — places to make money in the near-term.
US sports betting TAM ain’t what it used to be

BetMGM recently called for a “long-term” US sports betting TAM of $14 billion. DraftKings called for a mature market TAM of $22 billion.

Yet these projections do not come with specifics about which states will legalize. And it is hard to reach those numbers without the ‘big four’ states.

“It’s becoming increasingly clear that the basis for many of the more optimistic TAMs is questionable,” said Regulus Partners analyst Paul Leyland in a recent note. “New York and now Florida present far more problems than opportunities for the queue of US digital stakeholders”.

Worst to come for US sports betting TAM?

It could get worse too. Deutsche Bank warned clients recently that other states might mimic the NY model if it proves to be good for the state’s tax take.

Similarly, Florida could be a template for California and other tribal states looking to legalize sports betting.

As gaming consultancy Eilers & Krejcik put it in a newsletter:

“Past in US sports betting policy (e.g. the New Jersey model) is no longer prologue.”

Too many mouths to feed

A shrinking TAM is not the only problem for operators. The recent legislative movements highlight another issue facing firms: everyone wants a slice of the pie.

New York wants its 50% cut, the Seminole Tribe wants a 40% cut, and the NFL is getting $120 million a year for its official league data rights. Then sportsbooks must pay market-access fees and fund giant advertising deals with networks like CBS and NBC.

Those costs help explain why regulated sportsbooks are not laying $20,000 a pop on golf matchups like their offshore counterparts.

“The market is going to be huge but there are so many people looking for a slice of the same pie,” said Gavin Kelleher, a gaming analyst at stockbroker Goodbody. “If we look at the market over the next 10 years, I question the sustainability of being in one or a handful of states. It’s so hard to compete without pan-national scale.”

The importance of scale

The importance of scale is not new. But it is only becoming more important as costs rise and opportunities shrink.

For example; a well-capitalized giant can afford to bid 50% of GGR for a license in New York and lose money for five years. But many can’t afford to subsidize the future like that.

Similarly with market-access fees: every casino in Michigan (for example) wants to work with FanDuel or DraftKings, and is willing to take a smaller cut of revenue to do so.

It is the same with marketing. DraftKings has said previously it is three times more cost-efficient to advertise nationally than locally. As a result, smaller firms are finding it hard to cut through the marketing firewall put up by the big operators.

Not easy being sub-scale

This is the case even in theoretically wide-open markets.

Colorado sports betting, for instance, recently reached 20 operators. But only the usual suspects are making an impact.

Eilers noted:

“According to our proprietary tracking, the Colorado market remains top-heavy as none of the smaller brands have been able to capture meaningful share.”

Over in Michigan, the top four firms had an 84% share of handle in April. The remaining eight operators split 16% among them.

A route forward in US sports betting market?

So what next?

Consolidation is perhaps inevitable, especially as share prices dip and it is no longer so easy to raise free capital.

The current environment might favor the US casino chains like Caesars, Penn, MGM and Bally’s, who all see cash flow from their retail properties.

No white knights on the horizon

There is also not much help coming from online casino.

Returning to those operator TAM estimates, BetMGM called for $13.4 billion in annual iGaming revenue at maturity. DraftKings called for $40 billion from iGaming when including Canada.

Those projections, as much as anything, helped drive massive valuations for US operators. But the iGaming momentum has not materialized as many envisaged during COVID.

“Other than Michigan, no state has legalized iCasino in the aftermath of the pandemic,” said Deutsche analyst Carlo Santaralli in a note this week. “And Michigan was approved for iCasino prior to the pandemic.”

Online cannibalization?

Santarelli’s research found that the brick-and-mortar casinos in Pennsylvania and New Jersey have been slower to rebound than other regions.

A regional subset of casino properties tallied by Deutsche grew GGR by 19% in April 2021, compared to 2019. But properties in NJ and PA actually declined.

To Santarelli, that suggested some cannibalization from online gaming.

After all, PA online casino has been generating $65 million per month over the last 13 months. That is a huge amount of money to be entirely new gambling spend, though the pandemic’s limiting effect on the overall economy cannot be dismissed.

“As such, we think the rollout of iCasino is likely to be a lot more challenging than most expect,” Santarelli wrote. “We think there is some merit to cannibalization of traditional casino operations, which would thereby lessen the desire of certain casino operators to push for legalization.”

More TAM trimming

Subsequently, Deutsche called for a 2027 iCasino TAM of $4.9 billion, including $3.3 billion from currently legalized states. That’s a far cry from the operator-generated projections.

To sum up then: the online betting and gaming pie now looks smaller than many hoped. And it is being divided into many pieces beyond operators themselves.

Small wonder, then, that valuations are coming down across the board.

Lean Dregs And TAM: Why Addressable US Sports Betting Market Shrank (

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From: Glenn Petersen5/29/2021 11:22:58 AM
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Capital One Arena just knocked down the final wall between gambling and U.S. pro sports

By Adam Kilgore
The Washington Post
May 26, 2021 at 3:12 p.m. CDT

Having waited three years for the first-of-its-kind occasion, Ted Leonsis has just one regret about this week’s opening of a 20,000-square-foot sportsbook inside Capital One Arena. He wishes it were bigger.

“I think we should be utilizing more of this space,” Leonsis said. “Because when you go into it, it looks and feels like what sports’ future should look and feel like: lots of data, lots of comfortable settings, lots of televisions, lots of ways to learn about gaming.”

For a century, North American professional sports leagues blockaded themselves from gambling, fearful fans would lose trust in the integrity of their games. The barrier between teams and sports wagering has crumbled in recent years, never more viscerally than this week in Washington.

On Wednesday morning, Capital One Arena became the first U.S. professional sports arena with a sportsbook inside its walls. Monumental Sports, the Leonsis-owned local sports empire that owns the Wizards, Mystics, Capitals and other teams, leased the space to sportsbook operator William Hill on a 10-year contract.

It takes up two stories and can be accessed from the street or the arena, with ticketed Wizards fans able to come and go during games without leaving the building, starting with Saturday’s home playoff game against the Philadelphia 76ers. The NHL has not approved entry and exit from the sportsbook during Capitals games, but Monumental and William Hill officials are hopeful the league will by the start of next season.

On Wednesday morning, Leonsis stepped to a podium bearing the logo of William Hill Sportsbook, a video board hanging over his head and a panel of odds and television screens over his left shoulder. He called the sportsbook “the first step in reinvention of the role that arenas play in the community, in the city.” Tom Reeg, the CEO of William Hill’s parent company, Caesars, followed and declared it a “groundbreaking moment.” Five men cut a blue ribbon with five pairs of oversize scissors.

In the three years since the Supreme Court overturned the federal ban on sports betting and opened the door to state-by-state legalization, Leonsis has evangelized sports wagering’s potential to generate revenue and engagement, casting it as a pillar of the data-driven, digital-savvy sports fan experience. Leonsis views the sportsbook as a means to attract younger fans, provide a unique experience and get more use out of Capital One Arena. Leonsis said he has encouraged William Hill to make sports betting comprehensible for beginners, to make clear what odds mean and how to place a bet.

The opening of a sportsbook inside Capital One Arena represents a culmination of Monumental Sports’ embrace of gambling and, in the eyes of some industry experts, a logical endpoint that could be copied as states, teams and leagues continue their full-steam-ahead approach to betting. It also may provide insights into possible downsides: whether it frays trust in the product, diminishes rather than enhances the arena experience for some fans or increases problem gambling.

“Everyone is watching what we want to accomplish as kind of a harbinger of, what can you be putting in your business?” Leonsis said in an interview Monday. “What can you be putting in your arena to benefit the fans, benefit the city, create jobs?”

The past year only intensified Leonsis’s belief in sports betting as central to his sports empire. As leagues shut down and Capital One sat dormant, leagues’ financial reliance on television rights deals became stark. Those rights fees already had been threatened by younger viewers opting out of cable for over-the-top subscriptions.

To replace lost revenue, along with attracting those eyeballs and bringing them to the arena, Leonsis believes younger consumers need to be engaged through new technology. He talked about turning the arena into a “portal” where the experience is both physical and digital. Betting — ancient in practice, still legally novel in most of the country — is at the center of it all.

“The pandemic showed the fragility of owning a building and the necessity for us to try and find new ways to take our core essence — which is competition, data, video — and find new ways to create new businesses and new ways to engage fans,” Leonsis said. “And gaming is huge right now. It’s kind of saved sports short term. Every team, every league, every network has embraced it fully.”

For Leonsis, the future looks like a two-story, 764-person-capacity space plastered with 100 screens, 17 betting windows and a dozen betting kiosks. The entrance is on F Street, where the Greene Turtle used to be. Televisions cover the walls from eye level to ceiling. Betting kiosks line one wall, and on the other side of the first floor is a horseshoe bar with 24 beer taps. A board of odds and point spreads is displayed behind a counter where bets can be placed. A staircase leads to the second-floor lounge and restaurant, for which William Hill hired local chef Nick Stefanelli, known primarily for his Michelin-starred Masseria in Northeast Washington.

“We really think this is going to be a model for these types of experiences inside professional sports arenas,” said Dan Shapiro, William Hill’s vice president of strategy and business development.

How widespread sportsbooks inside arenas and ballparks become remains to be seen. It’s happening in Washington because the law allows for it. Most states with legalized sports betting permit it only on mobile devices or at casinos. “So I actually don’t think that there will be many arenas out there that feature the experience that we can,” said Zach Leonsis, Ted’s son and a Monumental Sports senior vice president.

It’s also possible other states and teams, which have had powerful lobbying sway in the legalization process, will look at the Capital One sportsbook as a model. In January, the Nationals announced plans to open a sportsbook at Nationals Park, in partnership with BetMGM. Arizona recently passed legislation that will allow the Arizona Diamondbacks to partner with an operator for the opening of a sportsbook in downtown Phoenix, across the street from their ballpark.

“This is the shape of things to come,” said University of Nevada Las Vegas gaming professor Joe Bertolone, a former William Hill executive and an industry regulator. “The agreement you see happening around the country between leagues and sports betting, this is just a natural progression.”

By law, Monumental Sports can have no financial interest in bets placed inside the arena. Monumental leases the space to William Hill and receives a portion of the proceeds from food and drink purchased in the sportsbook, but it never touches any of the money wagered.

“There is certainly a division of labor there, which is how it should be,” Zach Leonsis said. “And, you know, we are learning as we go, but we were definitely writing the rules alongside the [NBA]. And I think the league has been very conservative in many respects, very thoughtful in many respects, while also acknowledging that the change is real and here to stay.”

Giving sports fans what they want — or what teams think they want — can prove tricky. Surveys frequently show fans, especially younger fans, want healthier, more creative concessions options, Ted Leonsis said. When they look at receipts, they always find the most popular items are hot dogs and beer.

Ted Leonsis believes in betting’s ability to attract future generations, but the present also includes families and others who do not want or may be turned off by gambling. Monumental Sports executives said the sportsbook’s influence, even with advertisements throughout concourses, can be avoided if desired. Zach Leonsis pointed out the sportsbook takes up 20,000 square feet in a building of more than 1 million square feet.

“If you’re just there to enjoy a game or a concert, it’s something that, you know, you’ll be able to do without it being in your face,” Capital One Arena General Manager Jordan Silberman said.

Last summer, William Hill experimented by opening a “pop-up” sportsbook in the arena’s ticket lobby, where fans could place bets on kiosks. In 10 months — when the arena wasn’t in heavy use and many neighborhood businesses were closed — it generated more than $100 million in handle, Zach Leonsis said.

Ted Leonsis pointed out that Capital One Arena operates 220 to 240 nights per year, usually only for four or five hours. He envisioned a bustling arena on NFL Sundays or busy late mornings for cricket matches and European soccer games. The sportsbook, to Leonsis, enables the arena to transform from usually closed to almost always open, which he argued will lead to increased foot traffic in Chinatown and help businesses and jobs return.

The benefits, advocates say, do not come without costs. “There’s never a free lunch, especially with something as lucrative and addicting as sports betting,” said Keith Whyte, executive director of the National Council on Problem Gambling.

As the District shaped its sports gambling law in 2018, the National Council on Problem Gambling lobbied for and won the inclusion of a provision that the first $200,000 in revenue the city took in would be spent on programs designed to “prevent, treat, and research” gambling addiction through the Department of Behavioral Health.

It is unclear whether or how the money has been spent. Whyte said his staff has contacted the department constantly without success. Messages left with the department by The Washington Post this week were not returned.

“We have not been able to identify that any of that money has been disbursed and certainly not that it’s been spent,” Whyte said. “… It just speaks to the general indifference towards the social costs of this issue.”

Whyte believes a disregard for combating gambling addiction would place “an enormous burden on the league and the team, as well as on William Hill,” he said. “They are now operating and profiting from sports betting in a community that is completely unprotected.”

Any fan who carries a smartphone into the arena has a sportsbook in their pocket, but Whyte saw ways in which the sportsbook could invite an increase in problematic wagering. The two biggest predictors of problem gambling, he said, are proximity and frequency, two enticements provided by a sportsbook inside an arena. Leonsis believes in sports wagering’s ability to attract a younger generation, and according to NCPG studies, young men who bet on sports are the most likely demographic to suffer from gambling addiction. The physical sportsbook also provides tacit endorsement of betting from a prominent civic entity.

“Monumental Sports, they can’t just say it’s William Hill’s problem, and they can’t just say it’s D.C.’s responsibility,” Whyte said. “Monumental Sports, that organization, they’re the ones that are reaping the most revenue. They’re the ones that probably have a fairly large share of the responsibility to make sure that there are net benefits to the community. If you don’t prevent and treat gambling addiction, it’s going to be a net negative.”

Monumental Sports President of Business Operations Jim Van Stone said addressing problem gambling is “near and dear to our heart.” Monumental has partnered with the American Gaming Association, he said, and promoted its responsible gaming program through PSAs that air inside and outside the arena. Van Stone said Monumental chose William Hill in part because of its responsible gaming program.

“That’s probably something we are going to move forward and promote very aggressively,” Van Stone said.

As for Leonsis, he said offering a legalized version of sports gambling was “a public service.”

“I remind people that hundreds of billions of dollars that was being bet illegally — I don’t think that the underground was very, very concerned about people’s financial and mental well-being,” he said. “The AGA and companies like William Hill, they’re very, very committed to it.”

As he spoke, Leonsis stood near the entrance to the sportsbook, the physical embodiment of his bet on sports gambling. He may yet get his wish to make it bigger. The sportsbook has only just opened, and Monumental Sports executives can already see talks about expansion.

“Actually, on the third floor directly above, it’s actually my office,” Van Stone said, laughing. “I’m sure there is a way of building up.”

Capital One Arena’s sportsbook is the first inside a pro arena - The Washington Post

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From: Glenn Petersen6/16/2021 5:00:35 AM
1 Recommendation   of 247
DraftKings Shares Fall After Hindenburg Unveils Short Position

Research firm alleges the company’s gambling-technology unit SBTech operates in countries where gambling is banned, an allegation DraftKings denies

By Amrith Ramkumar
Wall Street Journal
Updated June 15, 2021 4:24 pm ET

Shares of DraftKings Inc. DKNG -4.17% slid as much as 12% on Tuesday after short seller Hindenburg Research said that the sports-betting firm’s gambling-technology subsidiary SBTech operates in countries where gambling is banned and said it is positioned for DraftKings shares to fall.

Hindenburg published a report early Tuesday that said DraftKings’s gambling-technology subsidiary, SBTech, makes about half of its revenue in countries where gambling is banned. According to the report, SBTech created an entity for what Hindenburg calls its black-market operations ahead of last year’s merger with DraftKings and a blank-check company that took the combination public. DraftKings shares slid in early trading, then recovered. They ended the day down more than 4%.

“SBTech does not operate in any illegal markets,” a DraftKings spokesman said. “We conducted a thorough review of their business practices and we were comfortable with the findings.”

New York-based Hindenburg said it based its report on conversations with former employees, regulatory filings and assessments of illegal international gaming websites. It claimed SBTech poses a risk to DraftKings because SBTech accounted for roughly 25% of the firm’s overall sales at the time of the 2020 SPAC merger and brought its technology to the combined company.

The Wall Street Journal hasn’t been able to verify independently the accusations in Hindenburg’s report. DraftKings CEO Jason Robins has said publicly that SBTech gives the company a technological advantage and provides better user experiences.

Boston-based DraftKings, which is considered a leader in the sports betting industry, has partnerships with major sports leagues including the NFL, NBA and PGA Tour. As the market expands, operators like DraftKings and FanDuel are in heated competition for customers, spending big on advertising and technology.

Sports betting has boomed since the Supreme Court in 2018 cleared the way for states beyond Nevada to legalize wagers on sporting events. Now, 30 states and the District of Columbia have legalized sports gambling. Boston-based DraftKings had a market value of about $20 billion entering Tuesday’s trading session. It is unprofitable and had sales of about $615 million in 2020.

Tuesday’s share-price drop is the latest triggered by Hindenburg and founder Nathan Anderson. The firm publishes financial research and often bets against shares of companies it deems overvalued. DraftKings shares are down about 30% in the past three months.

Hindenburg’s Mr. Anderson and a reporter for The Wall Street Journal are among the more than 20 defendants in a lawsuit brought by private-equity firm Catalyst Capital Group and Callidus Capital Corp. alleging a short selling conspiracy related to a 2017 article about Catalyst. A Journal representative has said the news organization is confident in the fairness and accuracy of its reporting. Mr. Anderson has said Hindenburg stands by its research.

DraftKings’ share decline comes a day after electric-truck startup Lordstown Motors Corp. said its chief executive and chief financial officer resigned after a board committee found disclosures about preorders for its truck to be inaccurate, partially confirming claims from a March Hindenburg report. Lordstown’s CEO previously declined to comment to The Journal, and efforts to reach the CFO were unsuccessful.

Mr. Robins has said publicly that SBTech gives the company a technological advantage and provides better user experiences. PHOTO: SHANNON STAPLETON/REUTERS
Hindenburg has also published reports about two other notable companies that have gone public by merging with special-purpose acquisition companies—electric-vehicle firm Nikola Corp. and Clover Health Investments Corp. Regulators are investigating both companies as well as Lordstown. Like Lordstown, Nikola also partially confirmed Hindenburg’s allegations after initially saying they were untrue. Hindenburg’s report was critical of Clover’s stock but the research firm didn’t take a short position in Clover. Clover has called the claims false.

Also called a blank-check company, a SPAC is a shell company that lists on a stock exchange with the sole intent of merging with a private firm to take it public. The private company then gets the SPAC’s spot in the stock market. SPAC mergers let companies make projections about their business, which wouldn’t be allowed in a traditional initial public offering. They also often offer startups a quicker way to raise large sums from investors who are excited about future technologies.

SPACs have raised more than $105 billion this year, surging past last year’s record north of $80 billion, according to data provider SPAC Research.

Hindenburg’s latest report could also have implications for SPACs, which have become a popular way for startups to raise money and access public markets in the 2020 and 2021 in part due to the lofty valuations of companies like DraftKings. A SPAC backed by former film and media executives Harry Sloan and Jeff Sagansky took the company public. The SPAC team declined to comment. The executives have also taken mobile gaming firm Skillz Inc. public.

DraftKings and other popular companies linked to SPACs have become trendy with ordinary investors in recent months. Some professionals like Hindenburg, meanwhile, have been betting that shares of many companies that merged with blank-check firms will fall, putting the sector at the center of the recent tension between day traders and pros on Wall Street.

Some analysts say SPACs enrich their creators at the expense of other investors by giving the blank-check executives deeply discounted shares, a point that Hindenburg mentioned in its report.

—Katherine Sayre contributed to this article.

Write to Amrith Ramkumar at

Copyright ©2020 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8

Appeared in the June 16, 2021, print edition as 'Short Seller Attacks DraftKings.'

DraftKings Shares Fall After Hindenburg Unveils Short Position - WSJ

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To: Glenn Petersen who wrote (117)6/23/2021 12:35:35 PM
From: Glenn Petersen
1 Recommendation   of 247

Legal Sports Report

Sporttrade, the company aiming to launch the first legal US sports betting exchange, announced Monday a $36 million funding round with investments from some of the biggest names in finance.

The round was led by Chicago VC firm Jump Capital and also included Jim Murren, former CEO of MGM Resorts International, and Tom Wittman, former CEO of the Nasdaq Stock Exchange.

As part of the raise, Sporttrade also issued convertible debt to Nasdaq’s investment arm, Nasdaq Ventures.

Investors providing more than just moneyOther investors in the round included:

Impression Ventures,
Hudson River Trading
T ower Research Ventures

The latter two names are both quant trading outfits.
Sporttrade plan to launch its first product in the second half of 2021 in New Jersey, pending regulatory approval.

How will Sporttrade spend new funds?

Sporttrade said the new cash would be put toward:

-- Customer acquisition
-- Expansion into additional states
-- Continued investment in staff

The company currently has an employee headcount around 50.

Finance meets sports betting

Sporttrade CEO Alex Kane told LSR the company wanted to apply principles from the financial world to sports betting. That starts with making an accessible app that non-sports bettors can understand.

“People without a financial background can open Robinhood and understand how to invest in stocks,” Kane said. “Why should sports betting be any different?”

“In finance, retail traders get a good experience but they also get good execution. When my sister opens Robinhood and makes a trade, it gets executed at the best price in America because of regulatory requirements. I believe the same things should happen in sports.”

Kane said Sporttrade’s market-makers were used to working on penny spreads in the financial markets, and could potentially lower the margins on sports bets too.

Bye bye US odds

For ease of use, Sporttrade will use percentages rather than odds, with winning contracts making up at 100.

For example, a trader might buy the Jets pre-game at 20, then close out at 40 after they take a 10-0 lead.

Those live prices will be “always on,” unlike sportsbooks, Kane said.

Retail offering as well

Jump Capital partner Yelena Shkolnik said Sporttrade had built a “retail solution for betting.”

“We are thrilled to back Alex and his amazing team at Sporttrade,” said Sholnik.

“To enable low-cost wagers, they’ve assembled a team from across capital markets and betting, locking in partnerships with institutional market-making partners to enable a powerful and liquid exchange.

“The US bettor will finally have a transparent open market of sports betting wagers to trade, and we couldn’t be more excited to be a partner.”

US sports betting has room for improvement

Kane said he was excited to bring financial powerhouses into the world of US sports betting.

“Nasdaq has the same vision we do,” Kane said. “They think sports betting looks like the stock market in the 1950s with huge room for improvement. They bring tech knowhow to the table along with market structure expertise.”

Nasdaq already provides bet matching technology to the Hong Kong Jockey Club and Swedish horse racing operator ATG.

The funding round is the second major crossover between US sports betting and Wall Street in recent weeks. Earlier in June, Susquehanna acquired a minority stake in US-facing sportsbook firm Smarkets.

Nasdaq Joins $36 Million Funding Round For Sporttrade Betting Exchange (

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