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From: Glenn Petersen5/28/2021 5:32:12 AM
2 Recommendations   of 239
 
Inevitable:

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


LEAN DREGS AND TAM: WHY THE ADDRESSABLE US SPORTS BETTING MARKET IS BLEEDING

POSTED ON MAY 27, 2021
BY BRAD ALLEN
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 (legalsportsreport.com)

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From: Glenn Petersen5/29/2021 11:22:58 AM
2 Recommendations   of 239
 
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 239
 
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 amrith.ramkumar@wsj.com

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 239
 
NASDAQ, MURREN INVEST IN MAJOR FUNDING ROUND FOR US SPORTS BETTING EXCHANGE

POSTED ON JUNE 22, 2021
BY BRAD ALLEN
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 (legalsportsreport.com)

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To: Glenn Petersen who wrote (194)6/23/2021 5:20:21 PM
From: rogermci®
   of 239
 
This one could be huge. Big time names Murren and Wittman supply credibility. Hudson River and Tower Research are quant trading powerhouses. Count me in.

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To: rogermci® who wrote (195)6/23/2021 6:52:48 PM
From: Glenn Petersen
   of 239
 
Too bad it's not public yet. Too early for a SPAC deal.

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From: Glenn Petersen6/25/2021 2:26:03 PM
   of 239
 
ANALYSIS: IS THE STICKY US SPORTS BETTING MARKET CHANGING?

POSTED ON JUNE 24, 2021 - LAST UPDATED ON JUNE 25, 2021
BY BRAD ALLEN
Legal Sports Report

Back in March, LSR detailed why US sports betting was proving so sticky.

BetMGM and DraftKings said during Q1 earnings season that US customers had massive lifetime value (LTV) because of that stickiness. Likewise, FanDuel said US bettors were 80% more valuable than their European counterparts.

As a result, it makes sense to invest heavily in customer acquisition through bonusing and marketing, the companies said. But there’s been some dissent to this opinion in recent weeks.

Is LTV being misunderstood?

At Penn National’s own Q1 results call, CEO Jay Snowden argued that industry LTV figures were not that accurate.

“Lifetime value is something that’s thrown around a lot,” Snowden said. “And it’s interesting because people are calculating lifetime value as if that customer is going to be loyal to you forever.”

He argued that switching costs and friction were coming down across the sector as the market matured.

“This is not like switching cellphones,” Snowden added. “This is not going from your Apple phone to Android, where Apple touches every element of your life. Switching sports betting apps takes about three minutes. You download the app, you register, you deposit and then you gamble.”

Different US sports betting markets?

It is a departure from the typical industry discourse. But it makes sense, as there are arguably two US sportsbook markets at present.

On one hand, you have the new states coming online like Michigan or Tennessee. Sports bettors in these states are early adopters. And early adopters of any tech are the most avid and therefore the most valuable – as operators have been saying.

But users in more mature markets like New Jersey and Pennsylvania are potentially becoming more discerning and less blindly loyal to one brand.

They might open five accounts for the bonuses, then decide which one they like best. That leads to a more fragmented market.

Trending toward maturity“This is a consistent trend in digital consumer products, and part of a market’s transition towards maturity,” said 888’s US chief Yaniv Sherman.

Or, as venture capitalist Jason Bornstein put it in a recent blog: “Your customer acquisition cost doesn’t matter. The brands of the next decade will win with loyalty, not acquisition.”

Fragmentation is not really showing up in the US data just yet. The market share of the top three operators in New Jersey is the same over the last 12 months (80%) as in the total period since launch.

It is a similar story in Pennsylvania, with the top two holding a relatively stable share of handle:

PA sports betting handle share: DK and FD versus the field

But these markets are still far from maturity. They are growing rapidly and key operators have yet to play their hand.

More fragmentation on the wayFragmentation is a familiar path in other gambling markets too. In UK sports betting, the average customer has three accounts, and 56% of players have more than one account, per UK Gambling Commission data.

Even the largest operators in the UK struggle to get much above a 20% market share.

“We expect more fragmentation once Barstool, Caesars, and Bally’s begin to more aggressively contest the market,” said Eilers and Krejcik analyst Chris Krafcik.

What does this shift mean for operators?

For Snowden, it means the winners will be those with “real structural advantages.”

What does he mean by that? He offered three examples:

-- Daily fantasy sports database
-- Casino database
-- Loyalty via a media asset like Barstool

Snowden added: “Those are the companies that are going to have bulletproof market share as time goes by. And all of this aggressive spend on commercials and linear, I don’t think that’s going to be the business that sticks around. I think that’s going to be the business that continues to jump from app to app.”

Alternative view on US sports betting

It is worth noting Snowden might be talking his own book somewhat. Barstool Sportsbook has proven effective at entering a market and gaining immediate share, presumably thanks to the Stoolie database.

But the product is still a notch below the “very top-tier of apps,” according to a recent Eilers and Krejcik product review.

And product is what will drive market share in mature states, according to Sherman.

The grind

“Once the initial hype dust settles, then starts the real grind of retaining players,” Sherman said. “We’ve focused on product at 888 because product is sticky. Especially if you offer a consistent experience across multiple vertical and platforms.”

It seems other operators are thinking similarly. PointsBet’s $43 million deal for Banach Technology was all about product.

DraftKings too promises product innovation once it moves to its own platform at the end of Q3. Flutter is also moving entirely onto its own platform this year, while BetMGM has made strides on product, according to the Eilers & Krejcik analysis.

Two tiers of US sports betting

It is often said “US market” is a misnomer, that it is actually a collection of individual state markets.

But in the coming years, we might see those states split. In new markets, success will be about customer databases, marketing, and acquisition. In mature markets, the battle will be fought on product.

And the winner and losers might look very different.

Analysis: US Sports Bettors Have Been Sticky But Is That Changing? (legalsportsreport.com)

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From: Glenn Petersen6/30/2021 7:28:46 AM
1 Recommendation   of 239
 
HOW SCIENTIFIC GAMES SELLING SPORTS BETTING BUSINESS COULD RIPPLE IN US

POSTED ON JUNE 29, 2021
BY BRAD ALLEN
Legal Sports Report

Scientific Games is selling off its sports betting business in order to focus on its core competency of gaming.

The B2B provider announced Tuesday it was divesting its lottery and sports betting businesses in separate transactions.

How will SG flip sportsbook business?

SG said it will consider:

-- Traditional IPOSPAC transaction
-- Straight sale
-- Combination with another business

The company said it was looking at “all avenues” in order to maximize the value of the sales.

“We are very well advanced in the process,” a company spokesperson said Tuesday.

SG to focus on gaming

Following the divestitures, the SG business will consist of:

-- Gaming
-- iGaming
-- SciPlay

Proceeds from the sales will be used to pay down debt and invest in the remaining business.
Big deal for US sports betting

The announcement could have major ramifications in US sports betting, with SG supplying multiple operators. Current partners include:

-- Parts of FanDuel
-- Golden Nugget
-- WynnBET Betfred

Could one of them make a play to bring their tech in-house like DraftKings did with SBTech?

European giants like Flutter and Entain also rely on SG Digital in parts of their tech stack. They could make sense as potential bidders.

Of course, any deal would have a knock-on effect on SG’s other operator partners.

B2B bidders

Multiple providers in the industry could also consider the acquisition to beef up their sports betting capabilities. That list includes:

-- Genius
-- SportsPlaytech
-- Sportradar

As for going public, former SG Digital CEO Matt Davey is currently heading up a SPAC on the lookout for a target.

That would make for an interesting reunion.

What is actually up for sale?

The SG sports betting business includes:

-- The OpenBet platform
-- Trading services
-- DonBest
-- The recently acquired SportCast bet-builder business

SG said the timing and value of the transaction would be “decided by the market.” Some industry sources raised some concerns about the age and complexity of the tech stack.
Smart move for Scientific Games

One analyst said a move away from sports betting is right for Sci Games.

“It makes total sense for SG to divest this and concentrate on the core business,” said Jeevan Jeyaratnam, the COO at B2B sports betting firm Abelson Odds.

“From the outside, SG had a sound plan on paper of creating a sports betting hub for any third-party to integrate to. But they appear to have found the reality of creating that paradise somewhat tougher.”

Scientific Games’ share price was last up 2% to $77.65.

Scientific Games Selling Its Sports Betting Business: Who Might Buy It? (legalsportsreport.com)

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From: Glenn Petersen7/8/2021 1:40:52 PM
   of 239
 
CAN ANYONE CRACK THE SOCIAL SPORTS BETTING CODE IN US?

POSTED ON JULY 8, 2021
BY BRAD ALLEN
Legal Sports Report

As long as there has been online sports betting, there have been companies trying to “socialize” it.

That has taken various forms, but broadly it means trying to bring a casual bet between friends into a native betting app. If you can capture the banter around the bet as well, so much the better.

But as simple the concept sounds, no one has ever really nailed it — though not for lack of trying.

A route well-travelled

Back in 2002, Flutter was not the global gambling monolith it is today. Rather, it was a betting exchange built around friend-to-friend betting.

But friend-to-friend betting was also what killed it.

“They got completely the wrong end of the stick,” a former Flutter employee told the Guardian in 2002. “They thought people would bet with friends on whether they would beat each other at squash on Friday.”

Flutter ultimately lost its battle against another nascent exchange, Betfair, and was acquired by its rival. The brand was largely forgotten about until Paddy Power Betfair adopted it as its corporate name in 2019.

Still waiting for social betting to work

It is a familiar story in social betting. Since Flutter, we’ve seen many more attempts, from the so-called WhatsApp for betting to Sky Bet’s Group Bets.

Nothing has truly cut through into the mainstream.

But that hasn’t stopped US companies trying.

New solutions to old problems

DraftKings has pledged to deliver social betting experiences with new leaderboards and messaging features.

Smarkets SBK app has a social network within it, as does the BetBull app acquired by Wynn last year.

Chicago-based start-up Betsperts is also trying to build a social network for gamblers.

A new entrant to social sports betting

More recently, a US sports betting start-up closed a $4 million funding round to help it crack the social betting conundrum.

Wagr operates a sports betting app that lets friends offer bets to one another.

For instance, a user might like the Milwaukee Bucks -4 and send a $20 challenge to their friend to take the other side of the bet. The company has applied for licenses in Virginia and Tennessee.

Sports betting for non-sports bettors?

Wagr co-founder Mario Malave said he and his co-founder, Eliana Eskinazi, loved sports but had shied away from traditional sportsbooks.

“We wanted to build something so simple that anyone could use it,” Malave said. “Betting against a friend is completely different than betting against the house. It’s about bragging rights, smack talk and having fun.”

Why Wagr?

The product faces the same question as many of its predecessors. Why would a user join to Wagr to bet and banter when they can do so organically without transaction fees?

“Nothing productizes that experience from end to end,” Malave said. “Yes you could do it and chase your friends up for money. But nobody likes doing that. We make it seamless and automatic. Plus we haven’t seen a product up to the standard of a leading tech product.”

What’s old is new

There have, however, been other attempts to productize that entire experience.

Wagr is eerily reminiscent of a UK start-up called Wager that offered similar friend-to-friend betting.

Here’s what the Wager founders said back in June 2020:

“We’d have WhatsApp groups and chats in the pub about who’s going to win a game, who’s going to score, and they’d be full of disagreement but there was no real way to settle that in an easy way.”

Sound familiar?

Wager was ultimately acquired by BetBull without making much of a splash.

Can Wagr and other US companies change social betting narrative?

Perhaps the technology is now finally good enough to match the concept. But network effects are working against these products rather than for it.

If you are building a social network for gamblers, you are competing against WhatsApp, Facebook, Twitter and TikTok. If you want to productize the transaction itself, you are competing against Venmo and PayPal.

That is an uphill battle for listed giants like DraftKings, never mind for a startup.

Can Anyone Crack The Social Sports Betting Code? (legalsportsreport.com)

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From: Glenn Petersen8/4/2021 5:07:01 AM
2 Recommendations   of 239
 
All In

How gambling swallowed sports media

By Danny Funt, CJR
Colombia Journalism Review
AUGUST 2, 2021

Gamblers would give anything to peek at Ian Rapoport’s notes. In late April, Rapoport—a reporter at the NFL Network, known on air as an “insider”—was sitting on a scoop about the draft’s most intriguing story line. Until then, it had been considered a done deal that the San Francisco 49ers would select an Alabama quarterback named Mac Jones with the third overall pick; bettors, expected to risk tens of millions of dollars on the draft, were counting on it. But Rapoport’s sources told him that the 49ers were seriously considering Trey Lance, a quarterback from North Dakota State otherwise thought to be a long shot for the top five. Landing the story placed Rapoport in a devilish dilemma, one that sports journalists now confront often: publish the news and send sportsbooks scrambling to update their odds, or wait a few seconds, place a bet first, and give himself a good shot at winning a small fortune. “It’s kind of like insider trading,” he said.

Rapoport listened to the angel on his shoulder. He went straight to Twitter. “My tweet went crazy,” Rapoport told me. Someone who’d bet a hundred dollars on San Francisco to take Lance a few weeks earlier stood to profit fifteen hundred dollars; after Rapoport’s report, the odds swung dramatically. (In sports betting, odds are fixed the moment a bet is placed, no matter what news comes to light after the fact.) Four days later, when Roger Goodell, the commissioner of the NFL, took the stage to announce that San Francisco had drafted Lance, anyone who had just bet a hundred dollars on that outcome walked away up a mere fifty-five bucks.

For years, the NFL draft has provided endless fodder for proposition bets, or “props”; this year, they ranged from how many wide receivers would be selected in the first round (five) to the color of the dress worn by Marissa Mowry, the wife of No. 1 pick Trevor Lawrence (black). Annually, the illegal market for sports gambling in the United States has been known to draw an estimated $150 billion. But ever since 2018, when the Supreme Court struck down a federal ban on most sports gambling outside Nevada, more than two dozen states have legalized it, and there’s been a mad dash to build upon the fanaticism: Last summer, DraftKings, an online sportsbook, paid $100 million for the right to open a gambling parlor at Chicago’s Wrigley Field—an idea that NBA owners, too, have endorsed for basketball arenas. The PGA Tour agreed recently to open a sportsbook at one of its tournament courses. In April, the NFL partnered with three sportsbooks in a deal worth nearly a billion dollars. By 2025, legal sports gambling nationwide is projected to be worth $10 billion.

Media companies have also entered the business—sports bettors watch about twice as many games as non-bettors do, and Bleacher Report found that gamblers are five times more engaged with its app than other spectators. In the past year, NBC Sports negotiated a partnership with a sportsbook called PointsBet worth nearly $500 million. ESPN, Fox, and CBS signed deals with other gambling companies, including old-school casinos like Caesars. DraftKings agreed to pay $50 million to distribute podcasts by Dan Le Batard, formerly of ESPN. In May, the Associated Press announced that it would exclusively reference betting odds from FanDuel, DraftKings’ archrival. And still, the integration of sports media and gambling is probably in just the top of the first inning.

With thousands of props available every day, updating online in real time during games, the opportunity for journalists to capitalize on behind-the-scenes access would seem irresistible. Not everyone plays it like Rapoport. Reporters covering Wall Street would, in theory, find themselves in the same ethical mud, except that mainstream outlets strictly prohibit their employees from investing in the companies they cover. (The Securities and Exchange Commission wouldn’t approve, either.)
By contrast, some two dozen prominent sports journalists told me, gambling in the press box is common, especially in football, and few sports outlets bar reporters from betting within their beats.

Perhaps no one is as open on the subject as Bill Simmons—the CEO of The Ringer, the media company he sold to Spotify last year for $196 million, and a proud gambling obsessive. On his podcast, Simmons provides sports analysis interspersed with boasts and moans about his recent bets. Occasionally, his disclosures have gotten him in trouble: Simmons, one of a hundred media figures who votes on NBA end-of-season awards, said that he’d bet on LeBron James to win Most Valuable Player, only to let slip that, of course, he’d also voted for James; the league didn’t like that, and discounted his ballot. But by and large, Simmons, and The Ringer, have benefited enormously from going all-in on gambling. In May, The Ringer reached a partnership agreement with FanDuel for an undisclosed sum.

So it goes for many media companies, at a loss for revenue and drooling over the profit potential in sports betting. As gambling swallows up sports media, anyone pausing to consider editorial conflicts (or, in the case of bets based on nonpublic information, possible law-breaking) might feel left out. Michael Lombardi, a former NFL team executive who later became a sports reporter, now gives gambling advice at VSiN, known as “the CNBC of sports betting.” Recently, he told me, “If you don’t like change, you’re going to like irrelevance even less.”

The DraftKings vision for a betting venue at Wrigley is, in a sense, baseball come full circle. In the 1870s, gambling lured fans to the first professional ballgames, where bookmakers stood in the stands, accepting fistfuls of cash as they shouted odds on everything from the next at-bat to whether the wind would change direction. Newspapers began publishing box scores—an unintended aid to bookies, who traffic in statistics. Once it became clear that baseball attracted more gamblers than idle spectators, some papers became openly disdainful in their coverage of games. In 1872, the New York Times claimed that, despite baseball’s popularity, “it is simply ridiculous to style it a national pastime,” adding, “Base-ball, so far as it can claim to be a typical American institution at all, is simply a contrivance for gambling that most honest men would cheerfully see suppressed.” Four years later, when the National League was founded, its officials vowed to rid the sport of gambling.

On that front, baseball failed spectacularly. After years of rumored fixed games, gamblers bribed eight players on the Chicago White Sox to throw the 1919 World Series—a scandal that, for the next century, would be cited as evidence of betting’s corruptive influence, and inspired many states to outlaw sports gambling. In 1947, Jake LaMotta paid Mafia members twenty thousand dollars and took a dive in a fight in exchange for a shot at a title bout, a shameful boxing moment memorialized in Raging Bull. Las Vegas began collecting bets in 1949, but Congress did all it could to undermine bookmakers, from imposing a 10 percent tax on sports gambling revenue to criminalizing the use of wires and mail to place bets or share gambling information across state lines. Journalists often helped expose gambling scandals, as in 1951, when Max Kase, the sports editor of the New York Journal-American, tipped off prosecutors that college basketball players were taking bribes to shave points—including at the City College of New York, the reigning NCAA champion. Kase won a Pulitzer Prize.

By the seventies, sports gambling had been linked to seedy mobsters, demonized by the Christian right, and fiercely opposed by owners of teams. Nevertheless, it flourished underground as a multibillion-dollar industry. Jimmy “The Greek” Snyder, a Vegas oddsmaker and syndicated columnist, was hired in 1976 to join The NFL Today, a CBS pregame show, at a time when it was still verboten for sports broadcasts even to acknowledge gambling’s existence. On air, the Greek would predict winners and final scores—a compromise with polite society that surely fooled no one, like drinking on the street from a bottle wrapped in a paper bag. (He had a popular run until he was thrown off air for making racist comments about Black athletes.)

Across the country, sports pages increasingly featured gambling advice. In Las Vegas, full-time bettors, or “sharps,” would huddle outside McCarran Airport, waiting for deliveries of out-of-town newspapers with updates on injuries, lineups, and any other scraps of information. John Clayton, a top football reporter, started out as a teenager covering the Pittsburgh Steelers for a local paper in Pennsylvania. “It was a steelworker town,” he said. “Other than going out to drink, what you did was gamble.” Some bettors tried to bribe him for information before it was published. (He declined.) The market for gambling news was undeniable. “No medium has been quicker to adapt to that phenomenon than newspaper sports sections,” Sports Illustrated observed in 1979. “It’s now an open question whether their most avid readers are fans or bettors.” That year brought the founding of ESPN, which soon aired a gambling show from Caesars Palace during the NFL playoffs.

By the mid-eighties, roughly three-quarters of newspapers published NFL betting lines. There remained gambling dissenters: Bob Knight, the volatile Indiana University basketball coach, said that papers “might just as well run the telephone numbers of prostitutes”; the Times refused to publish lines and picks on the grounds that most of them would be used illegally, though its sports editor told SI that moral protest might seem like “sticking your head in the sand.” In 1985, the Cincinnati Enquirer announced that it would cease printing point spreads, only to relent after getting bombarded with furious calls from readers.

Gambling on certain sports was more palatable than others—namely horse racing, because of a carveout that made it legal (and taxed): horse gambling is conducted in a pool, through “pari-mutuel betting,” with odds that fluctuate based on who bets what, as opposed to everyone competing against a house oddsmaker. For a while, the Times and Washington Post each had a Harvard alum covering the horse racing scene: Steven Crist, at the Times, and Andrew Beyer, who in the Post offered such advice as “Mortgage the house. Hock the family jewels. Crack open the kids’ piggy bank. Badger Land is a mortal lock to win at the Preakness.” They were credible, as an SI profile reported: “Beyer and Crist both bet as well as they write.” At tracks with clerks ready to take bets from inside the press box, Beyer claimed to make upwards of $50,000 a year picking horses. Crist, prohibited by the Times from betting on races he was covering, still once managed to win $90,000 on other horses.

But when journalists placed illegal bets, they had to be discreet. Bud Geracie, a longtime sports editor of San Jose’s Mercury News, got his start in journalism—and gambling—working nights at United Press International in Madison, Wisconsin. “I was mostly the only person in the office except for the security guy, Jack, a small-time bookie who had moved from Las Vegas,” Geracie said. Jack took Geracie’s bet on the 1982 Super Bowl: San Francisco versus the Cincinnati Bengals. “I’m still a college student,” Geracie remembered. “I took four hundred dollars out of my savings account and handed Jack an envelope”—not realizing that illegal bets were accepted on credit. He picked the 49ers, who won 26–21. “I got eight hundred dollars back from Jack,” he said. “I was off and running.”

More than a decade before Congress declared sports gambling “a national problem” and prohibited states from legalizing it if they hadn’t already, a writer named Daniel Okrent cooked up an alternative market. Called the “Rotisserie League,” it provided a means by which baseball fans could invest in a lineup of real players, as the theoretical managers of their own teams, over the course of a season. On a trip to Austin, he pitched the idea to editors at Texas Monthly; they passed. But in 1980 he went ahead, charging friends an entry fee of $250. The winner would collect half the pot. In time, “Rotisserie” was formalized as a trademarked company; eventually, more contests sprang up, across more sports. Crucially, “fantasy leagues,” as they became known, were considered a “game of skill,” rather than a “game of chance,” making them legal even after 1992, when Congress laid down its broad ban. Mostly, prize money was modest, which helped coworkers and college buddies justify what seemed a dubious loophole. Because fantasy leagues started in an analog era, early participants sometimes attempted to collect data through extraordinary means. (As Okrent told Ben McGrath in The New Yorker, there were “people calling the P.R. department and pretending to be journalists, asking whether the pitcher’s arm was still hurt.”)
Even in the internet age, managing one’s fantasy roster for an entire season can be labor intensive. FanDuel, in 2009, and DraftKings, in 2012, began promoting daily contests—a shrewd way of attracting interest while draining customers’ accounts drip by drip. (My dad bets about a buck seventy-five on daily fantasy baseball, a seemingly modest wager that adds up to roughly three hundred dollars over the course of a season.) When these companies emerged, sports-journalism outlets recognized them quickly as gambling in disguise. Nigel Eccles, FanDuel’s founding CEO, told me, “I remember one senior ESPN executive telling us we were going to jail.”

But there were some boosters. One was Simmons, who in 2002 issued his first “manifesto” for ESPN about how to bet on the NFL playoffs. “Fans are brainwashed to believe gambling is dangerous,” he wrote a few years later. “Gambling is a part of sports; we may as well accept it.” Another early advocate was Chad Millman, the editor in chief of ESPN The Magazine, where he established a gambling beat, devoted an issue to the subject, and launched ESPN.com’s “Chalk” section for betting news. He was drawn to the lingo—“It’s a very clubby, insidery, 1950s Rat Pack cool,” he told me—and aimed to fill a massive reporting void. “Why do point spreads move the way they do? Why are professional bettors making certain decisions? At the time this was still a vein that was only remotely tapped by deep journalism.”

Today, as states legalize sports gambling, roughly 60 percent of daily fantasy players are converting to betting. At The Ringer, Simmons and his team are eager to serve that audience, with a hybrid dialect of gambling analysis and conventional sports talk. “It’s a storytelling technique,” Kevin Clark, a football reporter, told me. “In 2021, when you’re saying who’s going to be rookie of the year, it would be weird not to discuss the odds. That’s now just part of the conversation.” In Detroit, where the Pistons have had an awful few years, Rod Beard, a Detroit News basketball beat writer, took a stab at writing a fantasy advice column. “Within a day or two,” he said, “I got four thousand additional Twitter followers.” Lately, he’s covered Pistons games with an explicit daily fantasy “slant.” Doing so could be the saving grace for struggling newspapers, he said: “Just like people pay for stock tips, they’ll pay for paywalled content on betting.”

ESPN’s gambling-coverage offerings have expanded to include a Daily Wager talk show hosted by Doug Kezirian, who, in April, became part of the story: A pro bettor reportedly tipped him off that Tyson Campbell, a cornerback at the University of Georgia, was likely to be drafted much sooner than expected. Kezirian discovered that BetMGM had labeled Campbell as a safety by mistake, making his odds (100-to-1) to be the first safety off the board seem absurdly low. “We all have different strengths as bettors, and mine are instincts,” Kezirian later told the Las Vegas Review-Journal. He drove to the Bellagio, saddled up to a self-serve kiosk, and placed about a dozen $200 bets on Campbell. When the Jacksonville Jaguars selected Campbell at the top of the second round, Kezirian and his pro-bettor partner won nearly $300,000. (Kezirian never touted his bet on air.)

Increasingly, sports betting news comes directly from sportsbooks—often by way of former journalists who have decamped for higher-paying posts. Millman decided to raze the wall separating sports reporting from the action when, in 2017, he left ESPN to help found a sports betting media startup called the Action Network. Like VSiN, the Action Network offers articles, podcasts, and data-crunching tools for gamblers. The site publishes betting-minded sports coverage (e.g., a recent assessment of “swirling winds” that were forecast ahead of the MLB All-Star Game) and provides a Consumer Reports–style ranking of the best sportsbooks (DraftKings earns the top spot, with a 9.9 out of 10). “We’re digging into information; we’re providing a service,” Millman said. They’re also doing extensive business with companies they cover, such as charging a referral fee on placed bets. It’s a blatant conflict of interest—though not so different from that of conventional newsrooms striking deals with gambling companies. “Are you going to allow sponsors to dictate coverage?” J.A. Adande, Northwestern University’s director of sports journalism, wondered recently. “You can’t tell me that it’s impartial now.”

This spring, after receiving bids from DraftKings and FanDuel, the Action Network was sold to a Danish betting company called Better Collective for $240 million. “It’s pretty insane,” Millman said. Around the same time, DraftKings bought VSiN for nearly $70 million. Lombardi, who has spent his career on all sides of the sports-media-betting playing field, waved off any concern about crossing over into gambling—the only difference between covering sports for a news outlet and a gambling site, he told me, is who signs his paycheck. A number of sports journalists have, apparently, accepted those terms, as sportsbooks morph into media operations, poaching more talent from traditional outlets: Ryan Spoon, ESPN’s former senior vice president of digital content; Len Mead, recently of NBC Sports; Joe Lago, of The Athletic.

It’s slippery turf, though: gamblers are competing, in a sense, against the company taking their bets; sports reporters at DraftKings, FanDuel, and casinos could face pressure to tip off their coworkers before breaking news; analysts might be asked to promote betting strategies that favor their employers’ interests. Teddy Greenstein, a longtime Chicago Tribune writer, assured me that he hasn’t encountered any of those conflicts in his new gig, providing gambling advice at PointsBet. “My buddy said, ‘In ten years, we’re all going to be working for teams, leagues, or online sportsbooks,’?” he said. “People in the industry know who’s got the money.”

A decade ago, Jim Armstrong, a twenty-seven-year veteran of the Denver Post, was covering the Colorado Rockies. He was also, apparently, betting on games. He probably could have carried on doing both, but in 2011 he was named in an indictment that revealed an illegal, high-stakes gambling ring operating out of bars and restaurants. Some of the bettors involved wagered fifty thousand dollars a week. Armstrong wasn’t personally charged, but the Post fired him.

These days, you can place a bet from a smartphone in seconds, which makes it far more difficult to monitor journalists’ gambling—or, for that matter, bets they ask neighbors or cousins to place for them. In theory, sportsbooks can flag a bettor who has been enjoying an improbable winning streak, but companies lack the resources or incentive to investigate individuals. (Even if a four- or five-figure payday would thrill someone on a reporter’s salary, it wouldn’t draw much attention inside FanDuel.) It’s impossible to know exactly how many sports journalists are also sports gamblers, though lately more of them have become more open about placing bets. When Kezirian cashed in, he faced no penalty from ESPN.

“I think sportswriters are betting on games they’re covering,” Vic Tafur, The Athletic’s Las Vegas Raiders beat reporter, told me. He knew of a basketball writer who acted on word from a coach: his team planned to slow down its pace on offense—meaning the next game’s final score would likely be lower than oddsmakers expected. The writer “unloaded on the under and made a killing,” Tafur said. “It’s not a rare story.” The opportunities for insider betting are even greater in college sports—which, unlike the pros, don’t require teams to disclose injuries before games. Peter King, a football columnist at NBC Sports, told me that he knows “a lot of sportswriters who gamble.” He also has a friend who quit gambling when it almost ruined his life. “I have a lot of empathy for people who say maybe we shouldn’t be in bed with these gambling companies,” King said. (There’s never such thing as a sure bet, regardless of what you think you know; even successful pro gamblers get just over half their bets right.)

The increasingly comfortable relationship between sports journalism and gambling has, not coincidentally, developed alongside a decline in sports media—and a collapsing market for the press at large. In recent years, Sports Illustrated laid off nearly half its staff; employees of Deadspin, beleaguered by the desperation of their corporate bosses, resigned en masse; even The Athletic, a once cash-flush upstart, let go of forty-six people. The Athletic went on to debut a sports betting section, walled off from the rest of the newsroom, with new hires including James Holzhauer, a pro gambler who won nearly three million dollars on Jeopardy! On television, leagues and networks are panicked over declining sports viewership; they can only hope that spectators will tune in to otherwise dull matchups if they have skin in the game. To lure fans, broadcasts air ceaseless gambling promotions: NBA playoff games are interrupted so that TNT studio hosts can offer tips on FanDuel props; MLB and NHL games run live betting odds onscreen. The Sinclair Broadcast Group renamed nineteen regional sports networks after Bally’s casino; ESPN has experimented with airing gambling-focused alternate broadcasts of football and basketball games.

Displaced sports journalists may hope that gambling operators can provide them a home. But don’t bet on the heroic rescue of a struggling outlet by a benevolent sportsbook. “At the end of the day, all they want is to become the biggest gambling company in America,” Albert Chen, the author of Billion Dollar Fantasy, told me. He cited DraftKings’ reported interest in acquiring Bleacher Report. “Swallowing up Bleacher Report would certainly help acquire customers,” he said. “But that’s the bottom line. That’s it. It’s not a vision of FanDuel or DraftKings to become a repository of good sports content.” Eccles, of FanDuel, agreed. From a gambling company’s perspective, he said, if a sports site “is totally independent and really run from an editorial angle, if it’s not benefiting you, why the hell own it?”

For sportsbooks, reporters merely provide a means to an end: credibility by association. “I still follow journalism rules,” Greenstein said of his job at PointsBet. “But I joke with people, ‘It’s not journalism—it’s much more fun.’?”

All In - Columbia Journalism Review (cjr.org)

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