Gambling Industry News Digest for May 25 – May 31, 2019
Norway and Louisiana head up the week’s gambling “odd-but-true news” and still make out better than middle managers at MGM Resorts International.
Meanwhile, irony-deficient Illinois quibbles over what constitutes a “bad actor.”
And from the very slim “good news” folder, Colorado voters may soon get the chance to vote on sports betting.
Yes, it’s already a new week, which means another sports betting bill arrives on some governor’s desk. Or gets shoved off the desk. Or gets kicked to the curb, and then curb-stomped by random passers-by.
As Mom always said: It’s all fun and games until someone gets arrested.
Let’s get started!
Turks Arrest Everybody Not Already Arrested
Over the weekend, while Americans were barbequing anything not nailed down, and people throughout the rest of the world went about their business as if nothing were amiss, Turkish authorities were busy raiding alleged gambling rings and arresting 113 people suspected of operating them.
And at first, you might be impressed that the number arrested was so high, perhaps even more impressed when you learn that another 709 people were arrested “for other crimes” during the raids.
That marvel may pale in insignificance when you learn that 28,000 police officers were involved in the raids — and more than 20,000 locations were raided.
822 arrests seems kinda small change now, doesn’t it? Okay, let’s throw in the 1,646 people and the 325 gambling venues — primarily coffee houses, according to reports — that were fined for their participation in the illegal gambling.
While Turkey is no different from other nations inhabited by humans insomuch as people enjoy gambling and will find a way to enjoy it frequently, Turkey has pretty much outlawed gambling for years, except for the state-run lottery, of course.
Oh, and online gambling is strictly forbidden there, as well — unless, of course, you are gambling with the state-run online gambling service. Sensing a pattern here?
Fun Fact: Turkey is one of the few nations that targets and fines illicit gamblers rather than the gambling operations they frequent.
Geçmiş Olsun, Turkey.
Norwegian Pension Fund Divests Itself of Alcohol, Gambling, and Pornography
The headline pretty much says it all. Norway’s largest pension fund, Kommunal Landspensjonskasse (always abbreviated to KLP, thank god) — announced recently that it was selling its interest in scores of companies it claims derive at least 5% of their revenue from alcohol, gambling, and/or pornography.
KLP’s CEO Sverre Thornes was quick to point out that KLP had no investments in pornography-related businesses.
“[A]fter deep conversations with our customers and owners, we have decided to withdraw from alcohol and gambling, while at the same time ensuring that we still […] will not invest in pornography.”
Sure, Sverre. Sure. We can check your browser history anytime, right?
“Responsible alcohol consumption and gambling can be positive elements in people’s lives,” Thornes noted, apparently unable to find anything nice to say about pornography.
KLP manages an estimated $80 billion in investments across a multitude of industries. The 90 companies on KLP’s divestment list represent about $320 million of that — less than half of one percent (0.4%) of their portfolio.
Tennessee Gets Online-Only Sports Wagering
Tennessee has become the first state to legalize online-only sports wagering.
Despite his personal distaste for gambling, Tennessee Governor Bill Lee has (through the constitutionally-permissible act of neither signing nor vetoing a bill) allowed legalized sports betting in a state where no casinos exist. And that’s the least of the “firsts” the bill establishes for the state.
The bill also requires sports betting operators to pay for the “privilege” of using official league-provided data for settling wagers (in common parlance, an “integrity fee”) — is it a privilege if it’s a requirement? No matter. Tennessee also permits the sports leagues to dictate to sports betting operations what sort of bets they may and may not accept.
Toss in the $750,000 annual licensing fee and the 20% tax on gross gaming revenue, and you have — what?
Well, some industry insiders suspect that what you have is less a recipe for success and more an ill-fated trip down the rabbit hole.
Guess we’ll find out which is the correct interpretation. In the meantime, enjoy that 20% tax revenue, Tennessee!
NBA Wants Sports Wagering Operations to Pay for Public Facts
Sports leagues are taking a tough stance on game scores and the various sports statistics involved in in-play wagering: pay for the “official” data or lose access to it.
The National Basketball Association is the latest to insist sports betting operators pay what has been called an “integrity fee” or “royalty” for access to the “NBA Official Data Feed” as provided by its official provider, Sportradar.
The fee is suspected to be in the .25% of betting handle, although an earlier rumor of a 1% royalty may have been simply a tactic to make the smaller fee more palatable.
According to reports, Sportradar sent a letter to its “official league partners,” saying that “only Authorized Gaming Operators of the NBA are eligible to receive the NBA Official Data Feed[.]”
Eligibility to receive the data feed, of course, would require payment of the integrity fee. Among the NBA’s official partners are FanDuel, The Stars Group, and MGM Resorts.
Call it an integrity fee or a royalty, sports leagues wetting their beaks in sportsbook operations may be inevitable.
Tennessee (see previous story) recently became the first state to legalize sports betting that also required the exclusive use of a sports league’s “official data” in the settling of wagers. Additionally, Tennessee’s new law gives the leagues a veto over what types of bets sportsbooks can offer.
Some experts note that in other countries, in-play betting can account for up to 75% of all sports wagers. While that may not be the case in the US, it certainly offers at least a partial explanation for the NBA’s eagerness to monetize its data in the in-play betting marketplace.
Louisiana Won’t Be Betting on Sports Legally for the Foreseeable Future
Residents of the Sportsman’s Paradise will just have to continue gambling illegally or slipping over the border into Mississippi to get their sports bet on.
The Louisiana state legislature has placed a confusing pillow over the face of a nascent bill that would have been a small first step in the legalization of sports betting that might have afforded the state with additional tax revenue and ensured protection for gamblers who — in an illegal gambling environment — have no legal protection.
SB153, introduced in the state Senate by Danny Martiny, concerned itself with wagers placed at any of the state’s 20 riverboat, racetrack, and land-based casinos, and covered virtually all types of sports betting, including professional, college, and international sports competitions.
At least that was its scope before it was passed on to the state’s House Appropriations Committee.
Once it got there, the bill became an irresistible amendment magnet that chipped away at the bill’s intent while rendering the bill unappetizing to everyone on all sides of the issue.
Among the amendments was a gambling tax of 13% (one of the highest in the nation).
Another required the exclusive use of “official data” from the various sports leagues, for which any sports betting operator would have to pay fees (often referred to as “integrity fees”).
Another amendment gave horse track operators an additional cut of the sports bets placed at their establishments.
Yet another amendment opened up sports betting to Louisiana’s 2,800 video poker establishments, which includes many bars and truck stops.
What is most fascinating about the original Senate bill is that it didn’t even directly legalize sports gambling. All it did was permit the state’s 64 parishes (analogous to other states’ counties) to place a question on local ballots this October asking whether parish voters would like to allow sports wagering.
Could the bill — particularly in its present form — survive? Not according to State Representative Joseph Marino, who was shepherding the bill through the House Appropriations Committee. “I’ve read the room,” Marino said in an interview. “I don’t see any light left at the end of the tunnel. We’re out of time.”
Indiana Joins Louisiana in Three-Legged Foot-Dragging Contest
Like Louisiana, Indiana appears destined to fail — at least in the legalization of sports betting in time for the NFL season.
We’ve been following this story for several months now, most recently when Governor Eric Holcomb signed the sports betting bill into law. At the time, we noted that Indiana wanted to have its administrative apparatus in place in time for the start of the National Football League’s 2019-2020 season in September.
Most recently, Sara Gonso Tait (yeah, I laughed too), the Executive Director of the Indiana Gaming Commission, told reporters that meeting that September goal was “a tall order” and that there were “many factors [impeding the regulatory roll-out] outside our control.”
Tait also noted that the review of applications as well as waiting while casinos reached agreements with their various vendors and data providers were prominent among the reasons for the delay.
Additionally, Tait told reporters that casino sports betting would probably be available to Indiana gamblers before mobile sports betting.
We’ll keep you posted.
Sports Wagering Operations Launch, Then Unlaunch, Million-Dollar Attack Ad Campaign
Illinois knows bad actors. Lord knows it does. It’s even considering inserting a “bad actor” clause into a proposed state law that would prohibit two prominent daily fantasy sports (DFS) operators from doing business in Illinois.
A clause being threatened (at the time of this writing) for inclusion in a broad gambling bill working its way through the Illinois state legislature would keep DraftKings and FanDuel — two of the giants of the DFS (daily fantasy sports) world — from doing business in Illinois for up to three years.
The three-year ban is ostensibly based on accusations that the two DFS operations illegally took bets from Illinois punters in the past.
In reaction to the state’s threatened rebuke, DraftKings and FanDuel launched what many called a million-dollar ad campaign. In a 30-second ad (the only one that aired), the DFS operators accused the Rivers Des Plaines Casino and its chairman, Neil Bluhm, of using “their political muscle to box the competition so they can profit.”
House of Representatives member Paul Gaynor told reporters this.
“It’s not surprising FanDuel and DraftKings are spending $1 million to try and buy a duopoly after years of engaging in conduct the Attorney General concluded clearly constituted illegal gambling, without following regulations, paying taxes or paying licensing fees.”
The attorney general to whom Gaynor refers is Lisa Madigan. She was the state’s AG back in 2015 when she issued an “advisory opinion” asserting that what the DFS operators were doing (accepting DFS wagers from Illinois residents) constituted illegal gambling under state law.
The ad premiered in Chicago on Thursday, May 23rd, and while plans were to take the ad statewide on cable networks and broadcast venues in Springfield, the campaign was halted the next day, Friday, May 24th.
Marc LaVorgna, a spokesman for the producer of the ad, BetIllinois.org (a pro-gambling organization backed by both FanDuel and DraftKings), explained.
“At [Illinois Governor J.B. Pritzker’s] request, the ad is being suspended for the time being while we engage in productive discussions to deliver smart sports betting legislation before the (spring legislative) session ends.”
At the time of this writing (June 2nd), the bill had met with approval during a whirlwind last-minute session of the Illinois House and had been passed on to the state Senate for consideration. We were unable to confirm whether the “penalty box provision” was included in the version sent to the state Senate.
MGM Finishes Layoffs With 557 Fewer Managers
Ending its second and allegedly final round of job cuts, MGM Resorts International laid off more than 500 management personnel this week. The cuts made during this round and the first (back in April) bring those management types suddenly seeking other opportunities to around 780 — about 1% of MGM’s total employees.
Debra DeShong, spokeswoman for MGM, Nevada’s largest private employer, told reporters that the majority of lay-offs were in Las Vegas and that the lay-offs “overwhelmingly” affected managers.
In a letter to employees, MGM CEO Jim Murren said this.
“I stand behind the decisions we have made and believe them necessary to assure our future, but I deeply regret the impacts they have on individuals and their families.”
“The changes we are making today bring us closer to concluding the foundational work of MGM 2020 during which we streamlined our operating model and reduced our salaried staff by over 12 percent.”
Colorado Voters Get Shot at Sports Wagering
Citizens of the highest state will soon get the opportunity to vote on sports betting, thanks to a bill signed into law recently.
The bill — HB19-1327 — was only introduced in the state House of Representatives in April and enjoyed a whirlwind romance with both the house and the Senate before ending up on the desk of Governor Jared Polis, where it was approved quickly, soundly, and to the delight of all concerned.
Don’t go counting your bankroll just yet, however.
The bill, which establishes a state Gaming Control Commission, also sets taxes on the new revenue — and because of Colorado’s unique TABOR (Taxpayer Bill of Rights) laws written into Colorado’s constitution, the voters of the state must be permitted to vote yea or nay on its final acceptance. The vote will likely take place during regular statewide elections in November.
For more information on the contents of the bill, you can see our coverage of it here.