Pulse
SPORTS BETTING IGT: JOE ASHER
CONSOLIDATION, OR NOT
Last year saw Penn National purchase theScore and DraftKings acquire Golden Nugget Online. Offering his verdict on the M&A landscape, Joe hesitates when asked if a sustained period of consolidation has begun.
“A little bit of consolidation perhaps but in a couple of specific scenarios. Golden Nugget’s solid online gaming business had a factor in the DraftKings acquisition and theScore’s popular brand in Canada and technology emphasis was attractive to Penn. Te consolidation thus far has been discreet.
“It remains to be seen what happens with the players outside of FanDuel, DraftKings, Caesars, MGM, and Penn/Barstool. At some point you would expect some consolidation below that, but the growth is going to led by new states opening.
“Tere is also the possibility of somebody else coming into the market. Tere have been rumours of Fanatics being interested and bidding for a licence in New York, whilst the possibility of ESPN and what could they do in the market suggest there is significant reason for them to want to be involved. Tere is a lot left to develop and play out.”
EXCESS ADVERTISING
In February, the New York Post ran an exclusive quoting an industry analyst (who didn’t want to be named) stating that online bookmakers’ profits show they’ve ‘very likely’ lost money - around $200m to be exact - since launching in New York in January.
Te acquisition cost is estimated to be between $100 to $150 per customer, with one promotion by Caesars enticing bettors in with a ‘free $3,000 if a gambler ponied up the same amount of his own money.
Speaking to G3 at the time, Bill Miller, President and CEO of the American Gaming Association, said that he understood complaints about the number of sports betting advertisements, but urged people to ‘remember what we are trying to do which is move the market away from offshore, illegal websites.’
Joe shares similar concerns over the amount of advertising: “Te concerns around advertising are valid because of the frequency. It has weaned a bit since the start of the football season and there is a seasonality aspect to the marketing. When new jurisdictions open there is a flood of advertising as people want to establish their brand and attract early adopters to work with them leading to aggressive offers
P74 WIRE / PULSE / INSIGHT / REPORTS
for new consumers. Tis has been most evident in New York.
“It's not like it was in the early fantasy days when it was both frequency and content. With more advertising you have more problem gambling. It is a very difficult problem to solve because you can't control what your competitor does.
“From a regulatory perspective it is difficult to do anything at state level because if you're advertising on a Philadelphia television station that is being carried into Pennsylvania, Delaware, and New Jersey. You have multi-state media markets - New York is advertising into Connecticut and New Jersey, for example.
“It is a particularly difficult issue to address and historically the concern at the federal level has been the truth in advertising as opposed to the level of repetition. You are seeing this start to subside a bit driven by a sensitivity around responsible gaming issues and the economics. We need to be continually mindful of it as an industry, ensure the content is appropriate, and hope the frequency is only at the initiation of new states and the start of the football season.”
Tere is an increasing danger that as sports betting gains in popularity and its presence becomes increasingly obtrusive in the media there may be a backlash from government officials.
“Tere will be media stories about sad and unfortunate situations. Tere will be headlines about issues involving sports integrity, whether its player betting or questions around insider trading. Tis is inevitable.
Joe says the situation is unlikely to escalate to European levels of intervention. “It is far more complicated to regulate in the US given the fact gambling has always been viewed as a matter for the states. Te concern is there, but culturally the U.S. is different than somewhere such as the UK, as well as from a governance perspective.”
EVEN UTAH
We conclude the interview discussing whether the long-term future for the American sports betting market really is as bright as everyone says it is and whether Joe still believes in all 50 states legalising sports betting.
“Even Utah. I'm not giving you a date so you can't ever say I was wrong. One thing is clear - the American public likes to bet on sports. Te appetite is there, as is the support of the leagues and media companies. Eventually sports betting will be legalised in all 50 states. If I live a long and proper life I might even see it happen!”
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