|From: Glenn Petersen||6/25/2021 2:26:03 PM|
|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.
“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 Petersen||6/30/2021 7:28:46 AM|
|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:
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.
Multiple providers in the industry could also consider the acquisition to beef up their sports betting capabilities. That list includes:
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
-- 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 Petersen||7/8/2021 1:40:52 PM|
|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.”
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.”
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 Petersen||8/4/2021 5:07:01 AM|
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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|To: Glenn Petersen who wrote (200)||8/4/2021 6:59:58 PM|
|From: Glenn Petersen|
|Want to Build an Online Sports-Betting Empire? Start With a Gas Station Casino|
A patchwork of laws leads a gambling app to buy a room full of slot machines in Nevada
By Katherine Sayre
Photographs by Tracy Barbutes for The Wall Street Journal
Aug. 4, 2021 9:56 am ET
LOVELOCK, Nev.—West Hollywood entrepreneur Mark Thomas walked into the Big Wheel Casino, tucked inside a Conoco gas station off Interstate 80, and surveyed his next big deal.
About 50 slot machines with names like Wheel of Fortune and Wild Wolf chimed and flashed in the race-car-themed gambling room. The casino, about 90 miles from Reno, mostly draws truckers and miners, and the room was fairly empty that day. A gambler or two occasionally strolled in and out.
Mr. Thomas is buying the truck-stop casino to be the centerpiece of the digital sports-betting company he co-founded, ZenSports. The company’s app launched internationally in 2019, and now Mr. Thomas is looking to start taking bets in the U.S.
“It’s very far removed from this,” Mr. Thomas said, amid the faint smell of smoke. “Maybe the opposite.”
The Big Wheel is tucked into a building at a Conoco gas station off I-80.
That leaves companies like ZenSports, who have no connection to a physical casino, searching for a way to sign up digital bettors in the state. The apps use location tracking to ensure users gamble only where it’s legal.
Mr. Thomas’s solution was to agree to buy the Big Wheel in an all-stock deal from its owner, Strategic Gaming Management. ZenSports is also taking over the sports gambling operations at Strategic Gaming’s other casino, Baldini’s, outside Reno.
“This is going to be our home base for ZenSports,” said Mr. Thomas, who has plans to branch out to other states, along with rolling out cryptocurrency wagers and an emerging form of betting that cuts out the bookie.
Lovelock, with a population just under 2,000, has a history as a launch point for fortune seekers. Green meadows in the area mark the last stopping point where wagon-riding migrants in the 1840s got water before crossing the Forty Mile Desert to California.
The gold-rush era for Mr. Thomas’s industry began after a 2018 Supreme Court ruling cleared the way for states across the U.S. to legalize gambling on athletic events.
While sports betting was legal in Nevada before the ruling, the prospect of broader profits has multiplied. Such gambling is now approved in 32 states and the District of Columbia—though not all those states allow online betting. U.S. sports-betting revenue of all kinds last year was $1.6 billion, according to the American Gaming Association, and analysts expect that to expand as more states sign on.
Lovelock resident John Renfroe said he comes into the casino a few times a month.
For Lovelock’s leaders, the tiny casino industry fails to capture much revenue—about $8,000 a year toward the town’s roughly $1 million budget from a fee imposed on gaming machines, according to Mayor Mike Giles.
Grant Lincoln, chief executive of Strategic Gaming, kicked off the relationship with ZenSports by sending an email through its website’s contact page a couple of years ago. He had been searching for exchange betting, in which users make bets with their peers. Bettors can set their own odds, including offering larger bets than a traditional establishment might take, while the operator takes a fee.
Mr. Lincoln made an initial investment in ZenSports in 2019. “I think the horse is kind of out of the barn, in terms of where sports betting is going,” he said. “It’s all going to end up on mobile.”
Messrs. Lincoln and Thomas hashed out the deal for the Big Wheel last year. Mr. Thomas expects it to close later this year, after he goes through a licensing process with the state. The state must also sign off on Zen’s technology.
Mr. Thomas has been going through the Nevada gambling regulators’ background inspection. In the intensive process, designed decades ago to keep organized crime and corruption out of casinos, investigators asked Mr. Thomas about whether he’d registered for the draft a couple of decades ago—he had, but it turned out his name had been misspelled. They sorted through years of minute transactions on his bank statements.
Mark Thomas looking at the ZenSports app.
A $1 slot machine at the Big Wheel.
They also asked Mr. Thomas about the total value of his clothes. Mr. Thomas, a casual dresser, said he gave a generous estimate of $2,500. “I think my boyfriend would say otherwise,” he said.
On his recent trip to the Big Wheel, Mr. Thomas sported a Milwaukee Bucks shirt and some dressier-than-typical shoes for his first visit. It was 104 degrees outside, and many of the machines were vacant.
“We’ll have like killer days and some days are not—this area’s really transient,” said Connie Gottschalk, the Big Wheel’s manager.
Framed driver uniforms hung on the walls. A small sign at the bar laid out some guiding principles. “Rule #1—Bartender is always right. Rule #2—If bartender is wrong see rule #1.”
‘This is going to be our home base for ZenSports,’ said Mr. Thomas.
Mr. Thomas, 43, said he got a taste of running a business while attending the University of Wisconsin in Madison. He was captain of his college bowling team for two years, and organized an on-campus league five nights a week. “I would call that my entry into entrepreneurship,” he said.
In early 2012, he founded Reesio, a tech platform for real-estate agents to manage transactions. He sold the company 3½ years later to Realtor.com for an undisclosed amount.
ZenSports, based in an angular office building that hovers over West Hollywood, started in 2017 as an app for recreational sports and player meetups, but there wasn’t much room for profits.
The company has also started applications to operate in Virginia and Tennessee, which don’t require the bricks-and-mortar footprint. At the Big Wheel, Mr. Thomas plans to give ZenSports a presence inside the room, along with fixing a few broken machines and other revamps—and to take over sportsbooks in other casinos across the state.
The future of ZenSports, he said, won’t be “only in the middle of nowhere.”
A truck moved along I-80 on the western side of Lovelock, behind a sculpture honoring those traveling west in the 1840s.
Write to Katherine Sayre at firstname.lastname@example.org
Want to Build an Online Sports-Betting Empire? Start With a Gas Station Casino - WSJ
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|To: Glenn Petersen who wrote (200)||8/5/2021 11:29:27 AM|
|From: Glenn Petersen|
|Penn National to Buy Score for $1.74 Billion in Betting Push|
John J. Edwards III and Derek Decloet
Thu, August 5, 2021, 8:42 AM
(Bloomberg) -- Barstool Sports backer Penn National Gaming Inc. agreed to buy Score Media & Gaming Inc. for about $1.74 billion in cash and stock, moving to expand in the fast-growing North American sports-betting market.
Toronto-based Score Media’s app, called theScore, is the top sports app in Canada and No. 3 in North America, Penn National said in a statement Thursday. The companies have had a strategic partnership since 2019.
Score shareholders will receive $17 in cash and 0.2398 of a Penn National share for each Score share, or $32.88 a share based on Wednesday’s close -- an 81% premium to the $18.14 closing price for Score’s U.S.-listed shares. The companies valued the deal at about $2 billion.
Score surged 56% to $28.33 at 9:37 a.m. Thursday in New York after climbing as much as 63%, the most intraday since November. Penn National fell 1.2% to $65.44.
“We are now uniquely positioned to seamlessly serve our customers with the most powerful ecosystem of sports, gaming and media in North America, ultimately creating a community that doesn’t currently exist,” Penn National Chief Executive Officer Jay Snowden said in the statement.
Penn National, which bought a 36% stake in Dave Portnoy’s Barstool Sports in January 2020, has seen its stock fizzle in recent months amid a dearth of sporting events and as the company struggled to gain market share for its mobile gambling offerings in closely watched states like Pennsylvania and Michigan.
The high multiple of about 120 times earnings for Penn National shares shows that investors still believe the company will be successful in mobile betting, Loop Capital Markets analyst Daniel Adam told Bloomberg News on Wednesday. The Score deal is part of the Wyomissing, Pennsylvania-based company’s effort to make that happen.
Score Media had its roots in television with a cable channel that was also called the Score and showed a range of highlights and events.
But the network perpetually trailed two established Canadian sports networks and Chief Executive Officer John Levy, who controls the company, opted to bet the future on digital assets. He sold the TV license and related assets in 2012 to focus on a sports website and app, then pivoted to sports betting.
Score’s Toronto-listed shares doubled in price last year as the Canadian government moved to liberalize the rules around gambling, allowing bets on single sports events for the first time. Score took advantage to list the company in the U.S. in February.
“We’re not building this as a shiny new object just to hold it out there to say, come and get me,” Levy said in a January interview. He said the company would look at any offers.
Goldman Sachs and Code Advisors are providing financial advice to Penn National, with Wachtell, Lipton, Rosen & Katz and Blake, Cassels & Graydon serving as legal counsel. Score is getting financial advice from Morgan Stanley and Canaccord Genuity Group, and legal services from Paul, Weiss, Rifkind, Wharton & Garrison and McCarthy Tétrault. Greenhill & Co. Canada Ltd. is an independent financial adviser to Score’s board.
Penn National to Buy Score for $1.74 Billion in Betting Push (yahoo.com)
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|To: Glenn Petersen who wrote (202)||8/5/2021 12:16:18 PM|
|From: Glenn Petersen|
|CAESARS SPORTSBOOK TO INVEST $1 BILLION IN US SPORTS BETTING BUT IS IT ENOUGH?|
POSTED ON AUGUST 4, 2021
BY BRAD ALLEN
Legal Sports Report
Caesars pledged to invest $1 billion in its digital business over the next two and a half years, as it seeks to climb into the top-tier of US sports betting.
The company relaunched its Caesars Sportsbook on Monday on new technology following the William Hill acquisition.
On Tuesday, CEO Tom Reeg said the entire organization was ready to “lean into the vertical.”
Caesars going big on sports betting
That effort includes major investment, a nationwide marketing campaign, and a frontline worker effort.
“We are activating the entire enterprise,” Reeg said at the company’s Q2 earnings.
“We are activating our player development teams across the organization to sign up new accounts. We’ve got 54,000 salespeople in our company that work with customers every day that can open accounts.”
Invest big to win big?
Reeg said the digital business at maturity could generate $500 million to $1 billion EBITDA a year.
However, he warned that US sports betting was intensely competitive.
“You should expect us to spend over $1 billion in the next (two and a half) years to build our customer base,” Reeg said. “I can’t give you a more precise number because a lot of the acquisition spend is success-based.”
How does Caesars investment compare to US sportsbook leaders?
While chunky, the CZR investment works out around $400 million annually for the next couple of years.
That is still some way behind the leading brands, per Bloomberg estimates, compiled by Roundhill Investments.
Both FanDuel Group and DraftKings project to spend more than $750 million on sales and marketing in 2021, per those figures.
New focus for Caesars Sportsbook
The CZR digital business was reported as a separate line item in results for the first time Tuesday.
The new segment includes the old William Hill business (including retail books,) and the Caesars betting and iGaming revenues.
For the quarter, the segment posted same-store net revenues of $117 million and same-store adjusted EBITDA of $2 million.
Expect teething troubles
Reeg sounded keenly aware of the realities of the US market.
“We know this is not going to be a straight line up,” added Reeg. “We expect that we will make mistakes. We’ll have to continue to evolve both from a marketing strategy and a technology strategy. But we have the tools to execute on this opportunity and I’m really excited to play this hand.”
Analysts asked Reeg whether that planned investment could increase to $2 billion, and whether any M&A might be needed.
The exec did not rule anything out, but said Caesars had everything in place to “launch with strength.”
What to expect from new Caesars Sportsbook
As for the product itself, CFO Bret Yunker said it was “best-in-class.”
“We encourage you to download and experience it yourself,” Yunker told analysts. “It has very deep betting markets. It’s very fast, the UX is great. And then you layer on top J.B. Smoove and a great marketing campaign, and we like our digital mousetrap.”
The switch to William Hill technology should indeed improve the app. In Eilers & Krejcik testing, the William Hill app finished 15th out of 31, with Caesars 25th.
As for a limits, the company told partners this week it was potentially open to bigger players than William Hill was.
“One hundred percent, we are open for business for the larger bets,” a spokesperson said. “It is very different coming from Caesars Entertainment and working on larger bets than just from a sports betting standpoint.
“Flexible limits is part of our campaign. We’re fine with small bets, we’re fine with big bets. It’s a whole new world, very different from the William Hill world.”
Caesars stock climbed around 2% following the earnings report.
Can Caesars Sportsbook Make Its Mark With $1 Billion In Spending? (legalsportsreport.com)
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|From: Glenn Petersen||8/6/2021 9:55:01 AM|
|GENI and DKNG are both up this morning. A big win for GENI.|
IS DRAFTKINGS THE FIRST DOMINO FOR GENIUS SPORTS OFFICIAL NFL DATA PUSH?
POSTED ON AUGUST 5, 2021
BY BRAD ALLEN
Legal Sports Report
DraftKings became the first US sportsbook to sign up for the Genius Sports official NFL data feed.
The two companies announced a new partnership Thursday that sees DraftKings take on a broad range of Genius data and content services.
-- Official NFL data
-- Official league data from other leagues such as the English Premier League, Liga MX and NASCAR
-- The automated BetBuilder product from Genius/Sportscast
-- Live streaming for more than 170,000 events a year
What is official NFL data?
The NFL official league data product covers the “full player lifecycle,” per Genius.
That means using assets like NFL.com and NFL logos on ads to acquire customers and then retain them.
As for the data itself, it will be around six seconds quicker than unofficial versions. It also includes proprietary NFL data like Next Gen Stats, taken from tracking chips in player shoulder pads.
What DraftKings said
DraftKings chief business officer Ezra Kucharz said the agreement was “mutually beneficial:”
“We are excited to expand on the capabilities of our products and provide new and exciting features for our customers like single-game parlays, while having confidence in the integrity of the data we utilize to fuel our offerings.”
A key domino falls
The deal marks an important inflection point for Genius which has seen its stock drop around 40% from its highs in recent weeks.
The company won the rights to distribute official NFL data back in April. But it paid handsomely for the opportunity thanks to a competitive bidding process.
Genius subsequently faced criticism from operators for the cost it tried to impose.
However, now that the first domino has fallen, other large US sportsbooks will almost certainly follow DraftKings.
$GENI was up 9% in early trading to $17.30.
‘Historic’ deal for Genius
DraftKings was always a strong candidate to take the official feed. The operator is one of three NFL “ tri-exclusive official sports betting partners, ” along with FanDuel and Caesars.
Genius CEO Mark Locke said the deal was a “historic” achievement for his company:
“This partnership reinforces our commitment to official sports data and demonstrates its intrinsic value in helping our sportsbook partners stand out from the competition.”
“Our data, trading, streaming and marketing services deliver a complete set of sportsbook solutions that are backed by the largest leagues in world sports, including the NFL.”
NFL chief growth and strategy officer Christopher Halpin said the league was committed to creating a “highly engaging, secure and sustainable sports betting environment for fans to enjoy.”
Is DraftKings The First Domino For Genius Sports Official NFL Data Push? (legalsportsreport.com)
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