THE YEAR AHEAD U.S. SPORTS BETTING OPPORTUNITIES - ASEAN Gaming Summit
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THE YEAR AHEAD
U.S. SPORTS
BETTING
OPPORTUNITIES
1
Presented by John English
MARCH 20th 2019
Copyright 2019 All Rights Reserved
Leader in Gaming and Hospitality Consulting
Strategic Planning • Public Policy • Tourism Development
Gaming and Integrated Resort Market Assessments
Sports Betting • Internet & Social Gaming
Market Research • Operations Analysis
Government Relations • Legal
Las Vegas • Bangkok • Taipei • Denver
3
Partner, Managing Director of Sports Betting and Technology,
Global Market Advisors
Former Partner of American Wagering Inc.
Developed and released the first approved sports betting kiosk
Developed and released the first approved smartphone betting
app
◦ First available on BlackBerry in 2010, later on Android
◦ First betting app in the Apple store in 2011
◦ Sold to William Hill in 2012
Joined Betfair and TVG in 2013 to oversee development of Asia
and the Americas
Founder and President of WEBE Worldwide an Asia based
consulting firm
4
Professional and Amateur Sports Protection
Act of 1992 (PASPA)
◦ Essentially prohibited sports betting nationwide
◦ Did not include pari-mutuel racing or jai alai
◦ Nevada was the only state with full sports betting
◦ Exemptions for skill gaming, fantasy sports betting
and in many states Daily fantasy sports.
Delaware had NFL lottery, other exemptions for
Montana and Oregon
5
PASPA backfired: prohibition was ineffective
◦ AGA estimated more than $150 billion wagered
illegally each year
◦ Legal sports books must win back customers from
the illegal market to be successful in the U.S.
◦ NBA, NHL, MLS, and other leagues have agreed that
legalized sports betting is a better alternative
Adam Silver NBA commissioner issued a New York
Times op-ed on legalized sports betting in 2014
6
Non-regulated bookmakers have a strong
advantage
◦ Ability to offer credit, better odds and pricing, cash
back, online solutions
◦ Illegal books often don’t pay taxes, and ignore the
Wire Act
Convenience is a critical aspect of sports betting
◦ Operators will have to be creative and offer
convenience to win back the customer
7
Murphy v. NCAA: states’ rights issue
◦ State of New Jersey attempted to legalize sports betting
in 2012, sued by NCAA and pro leagues
◦ N.J. argued that PASPA violated the Tenth Amendment,
states should have the right to enforce sports betting
laws
◦ May 14, 2018, Supreme Court ruled 6-3 in favor of
New Jersey
◦ New Jersey legalized sports betting less 3 weeks later
and Delaware took the first bet June 5th. To date there
are 8 states that have legalized sports betting and at
least 22 states are considering legislation
8
The Interstate Wire Act of 1961 (“The Wire
Act”) Modified in 2011
◦ Prohibits the transmission of money and
information related to bets or wagers across
state lines.
◦ U.S. Fifth Court of Appeals ruled that the Wire
Act applies only to sports betting, no other
types of online gambling
◦ DOJ has made a recent opinion to reverse
modifications and disrupt online gaming efforts.
Hearing set for June 14 2019
9
Sports betting currently legal on a state-by-state
basis
◦ States beginning to enact laws or start moving in the
direction of legislation and regulation
◦ Sports leagues campaigning to receive an “Integrity
Fee”, royalties from bets places on their sport. Now
sports book operations are forming partnerships with
leagues to include sponsorships and branding
awareness
◦ Operators and systems suppliers looking to capitalize
on the untapped U.S. market
10o NFL Football o Olympics
o College Football o Boxing
o NBA Basketball o MMA
o College Basketball o Horse Racing
o WNBA Basketball o Dog Racing
o Baseball o eSports Events
o Hockey o Daily Fantasy Sports
o Golf o Soccer
o Poker
o Tennis
11• Money Lines • Teasers • Decimal
• Point Spreads • Pleasers • Virtual
• Totals • Futures • Contests
• Propositions • In-play • Pari-Mutuel
• Parlays • Event Wagers
\
12 States now with legal and regulated or pending
sports betting:
◦ Nevada ◦ New Mexico (one
tribe)
◦ Delaware
◦ Pennsylvania
◦ New Jersey
◦ Arkansas
◦ Mississippi (pending)
◦ West Virginia ◦ New York
(pending)
◦ Rhode Island
13 High volume, low margin business
◦ Capital Ex & FFE ◦ Know Your Customer
(“KYC”) & Geolocation
◦ Risk management
expertise ◦ Compliance reporting
◦ Systems cost ◦ Marketing
◦ Data feeds ◦ Staffing, Customer
Support & Admin
◦ Bankroll & reserve
accounts, Internal
controls
14$0.94 $0.06
In Nevada, over $5 billion in sports betting handle
$300 million in revenue in 2018, hold (win) of 6%
Operators hold 6¢ of every $1.00
15 Nevada tax 6.75% of all
gaming revenue
Federal tax 0.0025% of handle,
roughly 5% of revenue
Operating costs 2.4% of
handle, roughly 48.25% of
revenue
EBITDA of 40.0%
◦ 2-3¢ of every $1.00
16 Some sports leagues have
lobbied for a 1% of sports
betting handle as an “integrity
fee” built on a 5% hold model
◦ 20% of sports betting
revenue
◦ EBITDA cut from 40% to 20%
1¢ of every $1.00
No integrity fees are currently
paid in any legal jurisdiction,
including Nevada
17 Gaming taxes on sports betting vary state-by-state
◦ Nevada: 6.75% (applies to all forms of gaming revenue)
◦ West Virginia: 10% of revenue
◦ Mississippi 12% of revenue
◦ New Jersey: 8.5% for land-based, 13% for online
◦ Pennsylvania: effective rate of 36% plus a one-time
licensing fee of $10 million
◦ Rhode Island: 51% (run by state lottery)
Services provided by William Hill & IGT
Delaware is a similar structure with Scientific Games.
18 Operations, bankroll and reserves vary by state
Operators could be in-house, state lotteries, or
third-party operators
Varying bet requirements and limits
◦ May allow mobile betting or just brick-and-mortar
◦ May or may not allow in-play wagering
◦ May or may not allow bets on events such as Oscars,
eSports or Daily Fantasy Sports (“DFS”)
19 Certifications and state approvals:
◦ In-depth testing for the integrity of a gaming system
GLI is a proven leader in testing globally in a timely and
cost effective format
◦ States must validate and verify that operators maintain
hardware and software, avoid glitches and enforce
integrity
◦ Customer acquisition costs and marketing
20smartphone betting cost efficient and
convenient
◦ First smartphone
sports betting
app that could
safely be used
anywhere in
Nevada in 2010
◦ Exact Geolocation
technology
ensured that the
bettor was within
state borders
21◦ 2008 NGCB Board was
skeptical, performed
rigorous testing
◦ Research In Motion
(“RIM”) agreed to
sponsor American
Wagering
◦ A point of sale terminal
that is portable and has
better capabilities than a
terminal
22 There will be several system suppliers, risk management
services, comprehensive brands, publishers and payment
processors. Geolocation companies and tech providers from
all parts of the world
Tribal Gaming will play a major role in the expansion of
sports betting in America
We are seeing unprecedented partnerships forming. William
Hill had a early start in NJ and DE, FanDuel and Draft Kings
have strong branding, MGM and Boyd as well as UK based
GVC have all partnered. Leagues such as NHL and NBA all
have partnerships with betting operators
Scientific Games, IGT, Stadium Technology, and many
European and Asian systems such as SBTech, Kambi and BF
Games, are positioning themselves for the U.S. market
23 The United States has long been considered the “holy
grail” of sports betting
◦ AGA estimated $150 billion wagered illegally before PASPA
repeal (initially estimated $400 billion)
◦ GMA knows of at least 30 states and territories where active
sports betting discussions are taking place, including tribal
◦ Nearly 500 tribal casinos nationwide, represents great
potential for sports book operators
◦ GMA estimates up to $138.0 billion in handle if maximum
convenience and availability is realized
◦ $10-12 billion nationwide sports betting revenue
24 Global market size of $47 billion in 2017
◦ Projected to reach $82 billion by 2022
2526
• Don Best • Bet Radar
• Perform • BetConstruct
2728
29
Win, Lose or Tie
30THANK YOU FOR ATTENDING
2019
For more information contact
John J English
Partner, Managing Director
*Photo credits
Google, Willian Hill, US Treasury,
Sports Betting and Technology
jje@globalmarketadvisors.com
www.globalmarketadvisors.com
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