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   Technology StocksDraftKings, Inc. / Online Gambling


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From: Glenn Petersen9/22/2021 7:54:00 AM
   of 239
 
FanDuel Parlays Fantasy Sports Into a $1.9 Billion Betting Boom

The company has converted a rabid fantasy fan base into a lucrative clientele for its U.S. sports-betting business.


By Christopher Palmen
Bloomberg
September 21, 2021, 5:00 AM CDT



Photographer: Shawn Michael Jones for Bloomberg Businessweek
------------------------

Greg Bunnell has played fantasy football since he was a teenager. So when Indiana legalized sports betting two years ago, the 39-year-old project manager seamlessly switched from plotting his next player transfer to setting himself up to bet—all within the FanDuel app. Bunnell, who says he plans to wager as much as $100 a weekend, is one of a record 45 million Americans expected to legally bet on professional football this season, a 36% increase from last year. Thirty states are set to allow such wagering by the Super Bowl’s coin toss in February, following a U.S. Supreme Court decision three years ago to strike down a federal ban on sports betting.

FanDuel Group Inc. has emerged as the top business in this new market, nabbing a 42% share of U.S. sports wagers in June, up from 35% only two months earlier, according to estimates from research company Eilers & Krejcik Gaming LLC. It’s a meteoric rise for FanDuel, whose nearest competitor, DraftKings Inc., has a 23% share of the market. The two were neck and neck in the business of daily fantasy sports contests before FanDuel was acquired only a week after the court ruling by an Irish bookmaker in Dublin, now known as Flutter Entertainment Plc.

“We’ve got momentum, and we have a huge amount of revenue,” says Peter Jackson, Flutter’s chief executive officer. “A lot of other people are almost in startup mode.” Flutter, whose name is British slang for a bet, was formed after the merger of Paddy Power and Betfair, two of the U.K.’s largest betting brands. It owns 600 betting shops in Ireland and the U.K. and offers online wagering in many countries. Jackson, 45, had been CEO for just months when he pounced on FanDuel, spotting an opportunity to grab a piece of the nascent American market. The Cambridge-educated engineer bought a majority stake for $158 million in cash plus the contribution of Flutter’s U.S. assets, which included the horse betting business TVG.

Founded in 2009 by five friends who knew next to nothing about American football, FanDuel helped pioneer the business of daily fantasy sports, where contestants pick a dream lineup of real players and compete to win a pot of money based on their team’s performance in a single day or week, rather than over an entire season.



Customers place bets through FanDuel during Super Bowl LIII on Feb. 3, 2019, in East Rutherford, N.J.
Photographer: Eduardo Munoz/Reuters
----------------------------

The company’s millions of fantasy sports customers turned into a gold mine after it began offering more traditional sports bets, such as, say, whether the Tampa Bay Buccaneers will beat the Los Angeles Rams on Sunday. About 40% of FanDuel’s sports-betting customers come from its daily fantasy business, a database that now includes 13 million names.

Soon after the acquisition and court ruling, Flutter tapped connections in horse racing to open a FanDuel sportsbook at New Jersey’s Meadowlands Racetrack in July 2018. That position, in the heavily populated northern part of the state, gave the company a significant advantage, as New Jersey took an early lead fostering the new era of sports wagers.

Flutter’s experience with online betting overseas also gave it a leg up. FanDuel was able to introduce products such as same-game parlays, which allow customers to bet on multiple teams or events—whether the Patriots will win the game and if rookie quarterback Mac Jones will score the first touchdown, for example. These wagers proved particularly popular in Australia, where Flutter developed the product, and more than half of FanDuel’s customers used the product last football season.

Such bets are harder to win, meaning the company keeps a larger chunk of wagers and can out-earn rivals, says James Kilsby, a vice president at research company Vixio GamblingCompliance. “You’re betting on two contingencies,” he says. “That’s really helped to grow its market share.” Customers like these bets because the potential payoff is greater, and rivals are now introducing their own expanded selections of parlays after a slower start. FanDuel and other companies attempt to manage their risk by balancing bets on a certain outcome with bets against that outcome.



FanDuel’s U.K. offices in Edinburgh.
Photographer: Chris Ratcliffe/Bloomberg
------------------------------------

Flutter’s U.S. revenue, mostly from FanDuel, is expected to more than double, to $1.9 billion, this year, according to analysts’ estimates compiled by Bloomberg. The higher the revenue, the more the company can spend on marketing to acquire customers, Jackson says. He projects that the U.S. business will be profitable by 2023.

The FanDuel brand will be a frequent sight on TV this football season. The company hired Wieden+Kennedy, the ad agency behind Nike Inc.’s “Just Do It” campaign, and has rolled out a series of commercials featuring golfer Jordan Spieth. Flutter spent $300 million marketing the FanDuel brand in the first half of this year, more than in all of 2020.

Still, FanDuel’s success has come with some acrimony. The company’s founders and some employees have sued FanDuel and several of its early financial backers, claiming they got cheated when those investors sold FanDuel to Flutter. FanDuel says the suit is without merit. Fox Corp. is in arbitration with Flutter about how to fairly value FanDuel, after acquiring an option to buy 18.6% of the business when Flutter bought Fox’s betting partner, Stars Group.

In spite of all that, Jackson, who cheers for his hometown Leeds United Football Club, isn’t above trash-talking his competitors. “We’re operating in a completely different level to anyone else in the U.S.,” he says.

BOTTOM LINE - FanDuel has parlayed its fantasy fan base into a lucrative clientele for its sports-betting business, thanks to a canny acquisition by a storied Irish bookmaker.

How FanDuel Gained More Fantasy Sports Gamblers Than DraftKings (DKNG) - Bloomberg

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From: Glenn Petersen9/23/2021 4:39:58 AM
1 Recommendation   of 239
 
DISNEY CEO: ESPN READY TO TAKE ‘MAJOR STEPS’ ON SPORTS BETTING

Posted on September 22, 2021
by Brad Allen
Legal Sports Report

It is no secret that ESPN is kicking the tires on sports betting.

Media outlets like the Wall Street Journal and Front Office Sports have speculated about the company’s plans for the sector, whether that be a licensing deal or M&A.

But the company itself has been relatively tight-lipped on its plans — that is, until Disney CEO Bob Chapek clarified a few things at an investor conference Tuesday.

How does ESPN get into sports betting?

Goldman Sachs analyst Bret Feldman asked Chapek about ESPN’s plans for US sports betting.

Specifically, Feldman asked whether ESPN might just license its name to an operator, as the WSJ reported, or go further and “embed [betting] into the ESPN business model.”

Chapek suggested the answer was somewhere in-between.

“There’s a long way between embedded into the ESPN business model and licensing the name out,” he said.

“Let’s just say our fans are really interested in sports betting. Let’s say our partners in the leagues are interested in sports betting, so we’re interested in sports betting. Strategically, sports betting gives us the ability to appeal to a much younger sports fan who has a very strong affinity for those sports. So it’s definitely a place we want to be.”

Chapek added that the company was getting “more and more aggressive” in pursuing sports betting partnerships.

“It is not something that we would do necessarily solo in the gambling area,” Chapek said.

0ho will partner with ESPN?

ESPN has been linked with Rush Street Interactive as a potential betting partner by both the Action Network and analyst firm Eilers & Krejcik.

Eilers said in a recent note:

“There’s logic to a [deal between the two]. BetRivers has struggled to make a dent in markets where it doesn’t have a big retail casino gaming presence and ESPNBet would surely change that.”

However, a partnership between those two would still be missing the all-important sportsbook technology piece.

Chapek did not give specifics on partners but added that ESPN was “starting to take some pretty big steps along that way.”

How would ESPN Sportsbook fare?

As LSR noted back in July, there is no guarantee an ESPN Sportsbook would be a success.

The company has a hugely valuable brand and customer database. But those users do not already have funded wallets like those at FanDuel and DraftKings.

The jury is still out on the media/operator model in general. Companies like theScore and Fox Bet have delivered somewhat underwhelming returns to date.

ESPN Is Ready For 'Major Steps' On Sports Betting: Disney CEO (legalsportsreport.com)

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To: Glenn Petersen who wrote (228)10/13/2021 4:21:36 AM
From: Glenn Petersen
   of 239
 
DOES BETMGM GROWTH CHANGE CALCULUS FOR ENTAIN DEAL WITH DRAFTKINGS?

Posted on October 12, 2021
by Brad Allen
Legal Sports Report

BetMGM is at the center of the three-way M&A tussle between DraftKings, Entain and MGM Resorts.

While that situation is being untangled, the joint venture keeps on proving its worth.

BetMGM delivered Q3 revenues of more than $200 million, according to Entain’s Q3 results. That was good for a? 26% share of markets where BetMGM is live, up from 24% in Q2.

For comparison, DraftKings expects to generate around $230 million in total Q3 revenues.

BetMGM a top contender?

Entain’s CEO sees evidence of BetMGM approaching top status.

“Just looking at the month of August in isolation, we can see that BetMGM is now number one in the markets in which we operate,” said Entain CEO Jette Nygaard-Andersen.

“And we can see we are clearly starting to challenge for the number one market position nationwide.”

Igaming powered BetMGM growth

It’s important to note BetMGM’s total share is boosted by online casino. It is the largest igaming operator across the US with a 32% share.

That edge is especially inflated in Q3 thanks to the relative lack of sports. BetMGM is still third in sports betting revenues per state-by-state data.

Michigan is perhaps reflective of the overall picture. BetMGM had a 40% share of online gaming revenues, and a 23% share of online sports betting handle in August.

That was third behind DraftKings and FanDuel. BetMGM was also heavy on marketing spend.

Other notes from Entain call

-- Arizona sports betting is already BetMGM’s largest state in term of active players. That is likely buoyed by citizens from other states crossing the border to bet.

-- The initial bonusing frenzy around the start of the NFL season has calmed down. “We see the promotional environment normalizing,” Nygaard-Andersen said. “And as we always say, the best products will be the winners.

-- ”She said lifetime player values were still “looking good.”

-- No news on DraftKings bid

-- The CEO also refused to take any questions on DraftKings’ $22 billion bid for Entain.

“As flagged, we are now carefully considering the proposal,” Nygaard-Andersen said. “That includes a number of matters, including structure and value and then we’ll come back to the market as and when appropriate.”

A key part of those negotiations will be the fate of BetMGM. MGM has said it wants full control of the JV and can kill the takeover if it doesn’t get it.

Analysts at Regulus Partners said Entain might be wise to sell its share to MGM now while business is booming and the relationship is “amicable.”

Shore Capital pegged BetMGM at around an $11 billion valuation.

Does BetMGM Growth Change Calculus For Entain Deal With DraftKings? (legalsportsreport.com)

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To: Glenn Petersen who wrote (232)10/13/2021 10:17:35 AM
From: Glenn Petersen
   of 239
 
DraftKings stock jumps after deal with NHL to be an official sports betting, fantasy partner

Published: Oct. 13, 2021 at 9:47 a.m. ET
By Tomi Kilgore
MarketWatch

Shares of DraftKings Inc. DKNG, 1.68% rallied 2.4% in morning trading Wednesday, after the digital sports entertainment and gaming company announced a deal with the National Hockey League to be an official sports betting, daily fantasy sports and iGaming partner. In addition, DraftKings also announced a deal with Turner Sports, including Bleacher Report, to be the exclusive sportsbook and daily fantasy sports provider for their NHL coverage. "The NHL has some of the most passionate fans in all of sports and we are delighted to be working with the league once again, while developing a rich and engaging viewership and content experience that matches this fanbases' enthusiasm through our deal with Turner," said DraftKings Chief Executive Jason Robins. The stock has tacked on 5.0% over the past three months, while the S&P 500 SPX, -0.41% has slipped 0.3%.

DraftKings stock jumps after deal with NHL to be an official sports betting, fantasy partner - MarketWatch

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From: Glenn Petersen10/24/2021 6:49:47 AM
   of 239
 
OT, but interesting:

Kalshi: Kalshi

Trade on what matters to you

Kalshi enables you to trade directly on the outcome of events. We've built a new financial exchange for you to trade on your opinion and hedge everyday risks.
-----------------------------

This Sequoia- and Henry Kravis-backed prediction market wants to turn opinions into money

Connie Loizos @cookie
TechCrunch
11:21 PM CDT•August 30, 2021

More than 15 years ago, the Philadelphia Stock Exchange, which was acquired by Nasdaq in 2008, and another since-sold exchange called HedgeStreet, both announced they intended to offer something called event contracts to investors. The idea was to allow people to bet “yes” or “no” on questions about future events that were structured as all-or-nothing options, and to pay a fixed amount when an outcome either occurred or did not.

At the time, it was a novel but controversial idea; it also failed to generate enough interest from investors to succeed. Now, Kalshi, a young, New York-based, 33-person startup is testing the waters anew and it’s doing so with the help of some heavyweight investors that include Sequoia Capital, Henry Kravis, Charles Schwab and SV Angel that have collectively provided the company with $36 million in funding to date.

Their enthusiasm ties in part to a major hurdle that Kalshi — founded by former MIT classmates and researchers Tarek Mansour and Luana Lopes Lara — overcame last year by winning approval from the Commodity Futures Trading Commission to run a derivatives exchange.

Mansour says Kalshi’s small team worked closely with the agency at every turn to ensure it would pass muster. “This was quite the process, as the more problems you face, the more problems emerge,” he says now of the endeavor. (Bringing aboard a former head of clearing at the CFTC as Kalshi’s head of regulation definitely helped, he says.)

Kalshi is also emerging during a time when people are consuming more, and sometimes narrower, news stories through their social media feeds and elsewhere.

That matters, suggests Lopes Lara, because the “contracts are pretty much tied to news and things that are going on in the world and relevant in the world right now.” Indeed, though a tie-up with a social media platform would probably be ideal, one way the startup is getting in front of information junkies is advertising on the question-and-answer site Quora. (Other, more “partnership-based” tie-ups are coming, add the founders.)

Kalshi’s mission in the meantime is to prove it can entice a new generation of traders — both retail and institutional, accredited and unaccredited — to bet on all kinds of possible outcomes, like whether Turkey will join the European Union by June of next year, which is one contract on the platform currently.

Kalshi — which has a clearinghouse partner that holds the funds from all users to ensure that every contract is collateralized — is seeing some traction. Since launching in late spring, the platform has attracted 4,000 users who have agreed to its “yes” or “no” contracts and that pay either 100% if an investor bets correctly and zilch if the investor bets wrong. It’s a respectable but conservative amount of users.

The founders suggest things will begin to pick up at a faster clip this fall, given that Kalshi has a “few avenues for acquiring users and growing our user base,” says Mansour.

One if these is the consumer product that people have so far been experimenting with and which is available to anyone who wants to enter into a contract at its website.

More impactful, potentially, Kalshi also has “a few brokers that we’re going to partner with … to allow people to trade event contracts the same way they trade stocks, or commodities, or options on their preferred brokerage app,” says Mansour, adding that “by brokers, I mean the Fidelities and Charles Schwabs of the world.”

Adds Lopes Lara, “People who use Robinhood or Coinbase or other brokers are our first target, given how much they already understand about investing and are interested in these types of questions and event-based thinking for their investments.”

What interested parties should know not to expect are event contracts around sports outcomes (“That’s very much like gambling, and we don’t [facilitate] that,” says Lopes Lara.)

Owing to federal regulations, certain other areas are also very much off limits, including events contracts tied to geopolitical events, like whether a war will breakout, and most contracts regarding people in political positions of power are also not allowed. (For example, though users might be tempted to bet on whether California Governor Gavin Newsom will be recalled in September, they’d have to drum up that action elsewhere.)

As for what happens if Kalshi takes off and other brokerages or other large financial institutions attempt to create their own event contract offerings, Mansour insists that it wouldn’t be so easy for them. “A lot of the work that we’ve done over the last two-and-a-half years is [intellectual property]. Every single detail of operations was built for event contracts. It would take a bit of time — especially for some of these bigger institutions — to really get into the space.”

Other investors in Kalshi include Y Combinator and Tinder co-founder Justin Mateen.

Alfred Lin of Sequoia Capital sits on the company’s board.

This Sequoia- and Henry Kravis-backed prediction market wants to turn opinions into money | TechCrunch

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To: Glenn Petersen who wrote (229)10/27/2021 6:45:04 AM
From: Glenn Petersen
   of 239
 
NO DEAL FOR DRAFTKINGS AND ENTAIN AS TALKS TERMINATED

Posted on October 26, 2021
by Brad Allen
Legal Sports Report

DraftKings will not be buying international gaming company Entain.

DraftKings issued a statement Tuesday morning saying it would not make a firm takeover offer following “further discussions” with Entain.

The Nasdaq-listed operator said it was confident in its outlook without the deal.

A statement read: “Based on our vertically-integrated technology stack, best-in-class product and technology capabilities and leading brand, we are highly confident in our ability to maintain a leadership position and achieve our long-term growth plans in the rapidly growing North America market.”

How the market reacted to DraftKings/Entain news

DraftKings stock was last up 8% in pre-market trading to $50.40 on the news.

The stock had fallen more than 20% from when the deal was first reported.


Some of that downturn could be attributed to dilution risk. If DraftKings issued vast amounts of new stock to pay Entain shareholders, existing shares would therefore be worth less.

Jefferies said in a note the decision was positive for $DKNG stock. But it also posed some lingering questions about its SBTech technology
\
On the flip side, Entain shares were down 11% on the London Stock Exchange on Tuesday.

Under UK takeover rules, DraftKings cannot revisit the talks for at least six months.

Enter MGM?

Getting the $22 billion deal over the line always looked like an uphill battle thanks to Entain’s 50% stake in BetMGM.

Co-owner MGM Resorts had warned it would kill the deal unless it obtained full control over BetMGM, including the Entain technology that powered it.

However, DraftKings was presumably reluctant to hand that control and technology over to a key rival.

MGM could theoretically now make a renewed bid to buy out BetMGM or Entain. The casino giant already tried to buy Entain earlier this year, albeit at around half the price of the DraftKings bid.

Extra time to no avail

Entain and DraftKings were given extra time to hammer out details of their deal earlier in October.

The UK company made clear in that release it was quite happy to continue without a takeover.

Entain added in a statement on Tuesday:

“The Board strongly believes in the future prospects of Entain, underpinned by its leading market positions, world-class management team and industry-leading proprietary technology.

“The Board is confident in Entain’s ability to continue to deliver material value for its shareholders going forward.”

No Deal For DraftKings And Entain As Talks Terminated (legalsportsreport.com)

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From: Glenn Petersen11/7/2021 4:09:15 AM
   of 239
 
DRAFTKINGS STOCK GOES GREEN DESPITE MISSED Q3 EARNINGS

Posted on November 5, 2021
by Brad Allen
Legal Sports Report

DraftKings stock ticked higher Friday despite the company missing its Q3 earnings projections.

The stock initially fell 9% in pre-market trading after the earnings print, but erased those losses and flipped green after a call with analysts.

$DKNG was up 2% to $45.40 at time of writing.

DraftKings Q3 numbersQ3 revenue climbed 60% year-on-year to $213 million. That was below a consensus forecast of $231.5 million.

However, DraftKings noted revenues were hit by a string of adverse NFL betting results. Without those, revenue would have been $25 million higher, the company said.

State-by state-data suggested DraftKings held around 4.2% of bets, compared to a long-term average of around 6.25%. Losses were also higher than expected with adjusted EBITDA of -$314 million.

The operator spent $304 million on sales and marketing during the quarter.

Positive trends for DraftKings beyond stock

However, the content of the Q3 earnings call appeared to allay investor concerns.

For one, CEO Jason Robins said hold would be boosted going forward by items like same-game parlays. NFL results were also much friendlier in October.

Robins also said the transition to the SBTech platform was boosting betting activity by more than 20% among existing customers and encouraging more parlay bets.

Elsewhere, DraftKings increased its share of online sports betting handle from 31% in July-August to 33% in September. That might have been inflated by the lower hold rate.

Hot start in the desert

Out west, DraftKings also reported record results from Arizona sports betting.

The company said it acquired more than 100,000 Arizona customers in 17 days. That was around eight times quicker than it took in New Jersey.

“It just blew us away,” Robins said.

He said the acquisition rates meant DraftKings invested more than expected on promos.

Source: DraftKings Q3 2021 presentation
------------------------

What really happened with Entain?

Elsewhere, DraftKings fielded multiple questions on Entain, with analysts keen to figure out exactly why the approach was made in the first place.
Robins stressed the talks were always early-stage but said international expansion was a driving factor.

“We think global expansion is a key pillar for long term growth,” he said. “We thought this could be a good route. Entain is a great asset but there are other interesting international assets.”

As for why the deal fell through, Robins added: “Value was one reason. Another was deal complexity. But it was more about our confidence in the US strategy and a desire to focus on the US.”

He did not mention Entain’s technology that powers BetMGM.

Notes from DraftKings Q3 earnings call

-- B2B revenue from SBTech fell 19% to $24 million. That was driven by the termination of a reseller contract in Asia.

-- Robins said DraftKings would be able to achieve similar profit margins in New York as in other states. He said DraftKings would have to cut marketing and promo spend to do so.

Why Did DraftKings Stock Go Up Despite Missed Q3 Earnings? (legalsportsreport.com)

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From: Glenn Petersen11/17/2021 9:54:59 AM
   of 239
 
Disney Shows Its Cards in Pursuit of Sports Betting Dollars

Now that major leagues are getting on board with gambling, the family-friendly Hollywood giant is eyeing that revenue and may start with a splashy ESPN licensing deal.

BY ALEX WEPRIN, GEORG SZALAI
The Hollywood Reporter
NOVEMBER 17, 2021 5:00AM



ILLUSTRATION BY DREW BARDANA
----------------------
The Walt Disney Co. is taking a gamble on sports betting.

The entertainment giant, notoriously conservative when it comes to protecting its brand, will use ESPN as its entry point into the fast-growing sector. “Given our reach and scale, we have the potential to partner with third parties in this space in a very meaningful way,” Disney CEO Bob Chapek told analysts during a Nov. 10 earnings call.

The decision to pursue a multibillion-dollar betting deal is something of a strategic pivot for the company, which for years said that the only role sports betting had at ESPN was as one more piece of its TV programming.

It was on May 14, 2018, that the U.S. Supreme Court paved the way for legalized sports betting in the U.S. via its ruling in Murphy v. National Collegiate Athletic Association. A day later, speaking to reporters in a hallway in New York’s Minskoff Theatre after the channel’s upfront presentation, ESPN president Jimmy Pitaro (only two months into the job) sounded skeptical of an active role by the company in that line of business, calling the potential “interesting,” but only when it came to gambling-focused programming or segments on its TV shows.

“It is something that we will be thoughtful about,” added Connor Schell, who at the time was ESPN’s head of content.

That conservative approach continued throughout the remainder of Bob Iger’s tenure as Disney CEO, with the executive telling analysts during the company’s February 2019 earnings call: “I do think that there’s plenty of room, and ESPN has done some of this already and they may do more to provide information in coverage of sports. … But getting into the business of gambling, I rather doubt it.”

Two and a half years and a new CEO later, and the company has changed course. “We do believe that sports betting is a very significant opportunity for the company,” Chapek told analysts.

While Disney isn’t following in the footsteps of Fox Corp., which has its own betting platform, Fox Bet, it has held talks with a handful of betting operators about a partnership, multiple sources familiar with the matter confirm (Disney does own a small stake in DraftKings that it acquired from Fox). BetMGM, Caesars and DraftKings are all seen as frontrunners, though with so many players in the space, there is always the possibility for a wild card.

“It is an opportunity that many companies are spying,” Moody’s analyst Neil Begley says. “Disney’s brand in ESPN will certainly have strong advantages given its broad distribution and rights holdings. But I think that it could be a free-for-all among several of the big media groups, and there is risk of oversaturation, which could dilute the opportunity.”

Begley also highlighted some critical challenges for the Mouse House, calling it “a tricky plan for Disney, with its squeaky-clean family image.”

A former ESPN executive tells The Hollywood Reporter that the company’s family-friendly image has always been top-of-mind, noting that the company waited longer than some competitors to accept ads from sports betting firms and that even today the company isn’t running ads from cryptocurrency trading companies, unlike Fox Sports and NBC Sports.

So what changed? Changing consumer habits is one piece of the puzzle, with “gamification” becoming commonplace in apps and media. ESPN+, like other streaming services, is all but certain to add gamification functionality in the future as it seeks to grow engagement and its subscriber base.

Importantly, the major sports leagues all got on board. In August, the NFL, led by Roger Goodell, announced Fox Bet, BetMGM, PointsBet and WynnBET as its sports betting partners for the season, while the NBA, led by Adam Silver, unveiled a deal with DraftKings and FanDuel earlier in November. The MLB, NHL, UFC and other leagues have also signed betting deals.

“The market has shifted. When you have the leagues on board, when you have state governments on board, it is hard to take a moral stance against being involved with gambling,” says David Schwartz, a gambling historian and professor at the University of Nevada Las Vegas.

As a result, the perception of sports betting has changed, a point that Chapek made light of on the earnings call. “We have done substantial research in terms of the impact not only on the ESPN brand, but the Disney brand in terms of consumers’ changing perceptions of the acceptability of gambling. And what we’re finding is that there is very significant insulation,” Chapek said. “It actually strengthens the brand of ESPN when you have a betting component, and it has no impact on the Disney brand.”

“Disney isn’t entering betting, ESPN is entering betting,” adds Chris Lencheski, chairman and CEO of the strategic advisory firm Phoenicia Sport & Entertainment, and a professor of sports management at Columbia University.

But the push into betting also comes with real risks, beyond the hypothetical brand impact. What happens when gambling, journalism and programming mix? And is Disney late to the party?

“Sports betting might be a significant opportunity, but also a potentially big headache,” says former Wall Street analyst Hal Vogel, CEO of Vogel Capital Management. “This is already an area of tremendous competition, and Disney is already starting from behind many others. Also, mixing reporting at ESPN with betting operations might eventually lead to conflicts of interest.”

At the heart of the matter are the details of any partnership. If a sportsbook is just paying for the right to use ESPN’s branding in its app, it may be, as one source put it, “the lowest-hanging fruit in the Disney world.” But if the deal also includes some element of exclusivity around advertising or programming access, Disney could find itself leaving money on the table.

“You are not going to advertise Coke and Pepsi in the same commercial. You just took the yield from one of the fastest-growing segments of advertisers, and moved it away from your potential opportunity,” says Lencheski. “That one player would have to produce a significant amount of money to me as a network to make it worthwhile to walk away from three, four, five years’ worth of revenue from this segment while this land rush for the next generation of bettors is happening.”



A version of this story first appeared in the Nov. 17 issue of The Hollywood Reporter magazine. Click here to subscribe.

Disney, ESPN Sports Betting and Gambling Plans In Focus – The Hollywood Reporter

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To: Glenn Petersen who wrote (237)11/19/2021 12:26:49 PM
From: Glenn Petersen
   of 239
 
Solana-Based Sports Betting Protocol BetDEX Closes $21M Seed Funding Round

Crypto exchange FTX and crypto investment firm Paradigm led the raise, which included a number of prominent venture capital firms.

By Eli Tan
CoinDesk
Nov 17, 2021 at 4:37 p.m. CST
Updated Nov 17, 2021 at 7:52 p.m. CST



"March Madness" NCAA basketball viewing party at the Westgate Las Vegas (Getty Images)
------------------------------

BetDEX has raised a $21 million seed round to create a decentralized global sports betting protocol.

In the announcement Wednesday, the Edinburgh-based BetDEX called the raise the “largest-ever seed investment round by a U.K. startup.”

Exchange giant FTX and San Francisco-based crypto venture firm Paradigm led the round, which also included participation from Lightspeed Venture Partners, Sino Global Capital and Solana Ventures.

Scotland-based BetDEX is building its protocol on the Solana blockchain with hopes of becoming “a global clearinghouse for sports wagering,” according to a blog post.

Third parties will be able to use BetDEX’s back-end infrastructure to run their betting platforms, which takes advantage of Solana’s high transaction speeds and low fees. BetDEX says its protocol will charge a fee of less than 1% on net winnings, undercutting centralized competitors like FanDuel and DraftKings who typically charge 2%-5%.

The company also plans to build its own betting platform on the protocol, which has yet to be named. BetDEX will accept wagers in USDT, SOL and SAMO at launch, according to the announcement.

The company is led by three former executives of FanDuel, which holds 36% of the current online sports betting market share. Nigel Eccles, who serves as BetDEX’s non-executive chair, is a FanDuel co-founder and served as the company’s CEO.

With the U.S. crypto betting market still in its infancy, BetDEX is targeting European and Asian markets, a company spokesperson told CoinDesk. Wyoming is currently the only U.S. state with legalized cryptocurrency sports betting.

“It is mind-boggling that more sports wagering does not occur on exchanges,” FTX CEO Sam Bankman-Fried said in the BetDEX press release. “We firmly believe in giving consumers the ability and control to set their own price and are excited to partner with BetDEX to bring this vision to fruition.”

Solana-Based Sports Betting Protocol BetDEX Closes $21M Seed Funding Round (coindesk.com)

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From: Glenn Petersen11/23/2021 7:02:20 AM
1 Recommendation   of 239
 
HONEYMOON OVER: WHEN DO US SPORTSBOOKS NEED TO START SHOWING A PROFIT?

Posted on November 23, 2021
by Brad Allen
Legal Sports Report

The US sports betting market has hit its first real speed bump.

After a couple of years of stock upgrades, all-time highs and triple-digit growth, reality has set in.

Penn National Gaming and DraftKings are both down more than 50% from their highs, and sports betting stocks across the board are under pressure.

Analysts are increasingly flagging concerns about profitability. UBS for instance recently downgraded DraftKings because it likely won’t turn a profit until 2024.

Cash bonfire

In Q3 alone, DraftKings posted a net loss of $546 million. Through nine months of the year, the company made a net loss of $1.19 billion.

It’s not just a DraftKings problem. FanDuel expects a -$360 million EBITDA in FY21, while BetMGM is burning close to $100 million a quarter.

Elsewhere, Wynn recently decided it could no l onger stomach similar losses and vowed to cut spending.

So how long can US sportsbooks keep burning cash before investors start to get cold feet?

Original recipe

“I think investors will accept aggregate losses as long as operators can clearly show they are making profit in more mature states like NJ and PA,” said Numis Securities analyst Richard Stuber.

“William Hill used to split its US division into newly regulating states and existing states. I think operators should start doing similar – not just a slide on a particular market in the presentation pack.”

What can we learn from New Jersey?

DraftKings is clearly thinking about this already, as CEO Jason Robins said after Q3 the company had achieved profitability in the Garden State.

“It’s still only a little over three years in, and we’re still seeing really strong user growth there,” Robins added. “If you look at the iGaming market, which is in its eighth year at this point, it’s still growing 30%+ percent. I think you’re going to see growth for many years to come in New Jersey.”

Devil in the detail for US sportsbooks

It is a little bit more complex than just “Are NJ customers profitable?” Investors must also consider:

-- Are newer customers less valuable than early adopters? Newer customers are more likely to be casual, which could change the lifetime value calculation. Penn CEO Jay Snowden argued earlier this year that industry LTV figures were not 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.”

-- Would NJ still be profitable if 25% of revenues disappear when New York online sports betting goes live? States like Arizona and Connecticut are also benefiting from betting tourists. Are industry estimates for the addressable market double-counting some bettors?

-- Are the profits enough to cover all the overheads and corporate costs that aren’t specific to each state? What scale is needed if not?

-- Would NJ be profitable without online casino and poker? The expansion of online gambling has been much slower than sports betting and there’s no guarantee it ever reaches the same coverage of states.

-- Would NJ be profitable at a higher tax rate? At 14.25%, NJ is one of the most operator-friendly tax regimes in the US. How do the numbers look with Pennsylvania’s 35% tax rate for example?

Long runway to prove for US sportsbooks

The good news is that the underlying metrics in the early (and new) states are very strong. There was a reason investors were so bullish in the first place.

Eilers & Krejcik principal Chris Grove suggested in a recent podcast the change in attitude was an “overcorrection.”

“The player values suggest the US market will still end up among the most, if not the most, productive markets in the world,” Grove said.

Companies should also have a decent runway to prove themselves.

As one analyst told LSR: “In a market with an upside bias, meaning SPX just goes up every day, people stay patient longer than they otherwise would. I don’t see a major shift to people focusing on profitability in this type of climate….even if surely some are getting frustrated.”

A tale of two markets?

In the meantime, the pressure of profitability has caused an interesting split among US sportsbooks.

The likes of PointsBet and Wynn are looking to alternative strategies to compete while burning less cash.

PointsBet is investing in product, while Wynn will try to cater to high-rollers. Penn too continues to stay limiting external marketing spend as it grows the Barstool Sportsbook.

On the other side of the coin, DraftKings has no plans to slow down its investment as its models say new customers are more than paying for their acquisition costs. BetMGM and Caesars still appear to be in expansion mode too.

Will investors prefer one approach or the other? That remains to be seen, but the times when companies saw their valuation go up simply because they had sports betting exposure may be over.

The winners and losers going forward will be decided by execution rather than optimism.

When Do US Sportsbooks Need To Start Showing A Profit? (legalsportsreport.com)

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