The SCALER Weekly 2/14/24

The Launch of a Comprehensive Streaming Platform by ESPN, Fox, and Warner Bros. Discovery

ESPN, Fox, and Warner Bros. Discovery are joining forces to launch a comprehensive sports streaming platform in the fall. This platform, which will include content from 15 networks and all four major professional sports leagues, aims to be a one-stop app for sports fans. The three companies will each own a third of the joint venture, with the service’s name and pricing to be announced later. The aim of the JV, at least currently, is strictly distribution, it is not meant to collaborate on bidding for rights or content acquisition.

The platform will feature games from the NFL, NBA, MLB, NHL, WNBA, NASCAR, and college sports, as well as golf, tennis, and the FIFA World Cup. It will also offer content from 15 linear networks, including ESPN, ABC, Fox, and TNT. Subscribers will have the option to bundle the service with Disney+, Hulu, and/or Max.

The announcement comes as ESPN and Warner Bros. Discovery prepare to renegotiate their NBA rights, which expire at the end of the next season. The NBA is seen as a key trigger for this collaboration, as it is the second most popular franchise on TV after the NFL. The partnership is viewed as a strategic move to stay competitive in the face of potential new bids from tech giants like Google, Amazon, Netflix, and Apple. Outlayed in the plans are a path to profitability, which some analysts believe to be understating possibility. Regulatory headwinds on this type of JV are certain to crop up and the target demo seems to be rather elusive but most are supportive of the long term strategic decision.

The launch of this new service is seen as a significant step forward for the media business and a major win for sports fans, offering them more choice and value. It also marks an important moment for Disney and ESPN, as it means the full suite of ESPN channels will be available to consumers alongside the sports programming of other industry leaders.

The Full Story Here.

Regulating the Game: Ontario’s New Advertising Standards for Internet Gaming

The Alcohol and Gaming Commission of Ontario (AGCO) has issued final guidance to support the implementation of amendments to the Registrar’s Standards for Internet Gaming. This guidance, which is now available for operators to review, pertains to restrictions on the use of athletes and other individuals who are likely to appeal to minors in igaming advertising and marketing.

The AGCO had announced these planned changes to advertising and marketing standards back in April 2023, with the aim to restrict the use of athletes, celebrities, and influencers. These changes are set to take effect at the end of the month.

The new guidance includes several requirements. For instance, advertising, marketing materials, and communications should not target high-risk, underage, or self-excluded persons to participate in lottery schemes. They should not use or contain cartoon figures, symbols, role models, social media influencers, celebrities, or entertainers who would likely appeal to minors. The use of active or retired athletes in advertising and marketing is only allowed for advocating responsible gambling practices.

The commission remains committed to continued dialogue leading up to and beyond the February 28 implementation date. With the football season officially over, it is expected that there will be a decline in the amount of ad time spent by Ontario-licensed operators.

The Full Story Here.

The Uncertain Future of Missouri’s Sports Betting Bill

A bill to legalize sports betting in Missouri, introduced by Rep. Dan Houx, is progressing through the House of Representatives. The bill, HB 2331, proposes a 10% tax on adjusted gross revenue from retail and online sports betting, with the state’s 13 casinos and professional sports teams being able to offer these services. The bill’s future is uncertain due to consistent Senate blocks and upcoming elections.

The Senate’s chaos, exacerbated by the demotion of four senators from the Freedom Caucus, threatens to derail the bill. Senators Denny Hoskins and Bill Eigel, who have previously blocked sports betting legislation, are among those demoted. The situation is further complicated by the upcoming Secretary of State election, in which Hoskins and Senate President Pro Tem Caleb Rowden are running against each other.

Despite these legislative hurdles, the Winning for Missouri Education campaign is collecting signatures to put a sports betting initiative on the November ballot. A recent poll showed that 62% of surveyed Missouri voters support legalizing sports betting to fund education, indicating public support for the initiative.

The Full Story Here.

Rising Money Laundering Risks in the US Sports Betting Industry

A report from the US Treasury Department has raised concerns about the risks of money laundering in the sports betting industry. The National Money Laundering Risk Assessment indicates that the recent growth in both physical and online gaming platforms has increased the risk profile for US casinos and gaming activity.

The report specifically focuses on online gaming and the legal sports betting industry. It identifies the volume of betting activity, the rapid growth of the sector, and the lack of uniform regulations across different jurisdictions as factors that present significant and increasing money laundering risks.

The American Gaming Association (AGA) has been actively seeking guidance and rules around anti-money laundering. Alex Costello, the vice president of government relations at AGA, has stated that AGA members have used their experience from robust casino compliance to create and deploy Anti-Money Laundering (AML) controls for online gaming. They are prepared to work with the Department of Treasury to ensure that legal, online operators have the necessary guidance to build on current programs and meet the high standards already employed by the casino industry.

While the legal and regulated sports betting and online casino industry is not immune to risk, money laundering is more likely to occur at an offshore sportsbook or casino that serves the United States illegally. The US government is urged to pay more attention to offshore activities instead of dismissing them as unsolvable problems. Criticism is also directed at the lack of regulation in adjacent industries, such as real-money fantasy apps, which are subject to none of the same regulations as sports betting and have less robust AML controls. These companies should be included in discussions on money laundering risks.

The Full Story Here.

Why US Sports Betting Could Become a $45 Billion Business

Since the 2018 Supreme Court ruling allowing US states to legalize sports betting, the industry has swiftly grown into a $10 billion market, with potential for further expansion, as per Goldman Sachs Research. Analysts predict Americans will annually spend $45 billion on sports betting once the market matures, driven by new state openings and increased consumer spending. Notably, the rise of app-based betting has led to a surge in parlays, offering high payouts and attractive margins for operators. Like every other industry, the focus of adopting and integrating A.I. has compounding ramifications for sportsbooks. As it currently sits, most offer the same promotions to the same people.,Advancements in in-game betting and personalized user experiences are expected to shape the future landscape of sports betting, with integration into media platforms becoming increasingly prevalent.

The Full Story Here.

A Leap Towards Regulation and Revenue in Governor Shapiro’s Budget Proposal

Governor Josh Shapiro of Pennsylvania has proposed a budget for FY 2024/2025, which includes plans to regulate skill games in the state starting from July. This comes after years of debate and attempts by retail and online casinos to ban these games. However, the proposal is not final yet.

The Commonwealth Court ruled the games as legal two months ago, and Governor Shapiro has included them in the budget with a proposed tax structure. The tax would be 42% on the daily gross gaming revenue from electronic gaming machines that involve an element of skill and are regulated by the Pennsylvania Gaming Control Board (PGCB). The budget assumes that the board collects the tax and deposits the money into a restricted account, which is then transferred to the General Fund. The effective date of this regulation is assumed to be July 1, 2024.

The regulation of skill games would create a new vertical of gambling, allowing them to co-exist with retail and online casinos. This is welcomed by Pace-O-Matic (POM), a Georgia-based skill games manufacturer, whose Chief Public Affairs Officer, Mike Barley, has been advocating for the regulation of skill games.

Governor Shapiro estimates that the regulation of these games will generate more than $150 million in tax revenue in the next fiscal year, and more than $313 million by FY 2025-2026. The retail and online casino industries, which posted revenues of $2.5 billion and $2.1 billion respectively last year, are not expected to be significantly affected by this change. The tax dollars raised from skill games are expected to benefit Pennsylvanians the most.

The Full Story Here.

Legislative Tug-of-War: The Future of Sports Betting in Oklahoma

In Oklahoma sports betting remains illegal. However, lawmakers are not losing hope, with two new sports betting bills filed for the 2024 session. One of these bills, Senate Bill 1434, filed by State Senator Casey Murdock, could potentially allow the State Lottery Commission to introduce mobile sports betting. This bill aligns with the governor’s vision for legalized sports betting, which was announced in the fall. However, this plan has faced opposition from tribal nations, who argue that they should have exclusive rights to oversee mobile sports betting (similar to Florida). The Oklahoma Indian Gaming Association insists that all gaming should be under tribal control. Geoff Zochodne, a sports betting journalist, suggests that achieving legal sports betting in Oklahoma will require alignment and agreement with the tribes. A previous bill to legalize sports betting passed in the House last session but was never assigned to a Senate committee.

The Full Story Here.

ESPN Bet Expands Reach with Strategic Acquisition in New York’s Online Gaming Market

ESPN Bet, operated by PENN Entertainment, has made a significant move into America’s largest online gaming market. And the market with the highest tax rate. The company has agreed to purchase the online sports betting licenses in New York from Wynn Interactive Holding for $25 million. These licenses were previously held under a Wynn Resorts entity, WSI US.

WynnBet, Wynn’s sports betting platform that launched in New York in February 2022, will cease its online wagering operations in the state as part of this transaction. This acquisition is a strategic move for ESPN Bet, as it allows the brand to expand into the largest regulated online sports wagering market in North America.

PENN Entertainment initially launched ESPN Bet in November last year, starting in 17 states across the U.S. The platform was a rebrand of Barstool Sportsbook, a media brand in which PENN had purchased a 36% stake in 2020 for $163 million. In 2023, PENN acquired the remaining 64% of Barstool Sports for $388 million, before selling it back to founder Dave Portnoy for $1 to launch ESPN Bet.

The ESPN Bet app quickly gained popularity among sports bettors, with over 1.2 million downloads in the first two weeks of its launch, including approximately 235,000 on its first full day.

ESPN Bet is also set to expand into a new market next month. In December, the company agreed to a partnership with Quail Hollow Club to launch operations in North Carolina. The state will allow licensed operators to commence wagering activities on March 11.

The Full Story Here.

The Look Ahead…

Fintech & Sports Wagering Innovation Center: Webinar Series, Innovation in Integrity

When:Thursday February 22nd, 12-1pm

What: Join us for our next webinar in our Gamble4Good series. We invite innovators from across the industry to share with us their work and to talk about what’s ahead for integrity in gaming. We’ll talk about how technology is changing how companies and leagues tackle integrity issues, what more is needed, and where the industry is headed.

Who: David Rebuck (NJ Division of Gaming Enforcement), Leo Villalobos (MLB), Chris Adams (SharpRank), Matt Heap (Prohibet)


Cost: FREE

Towson University: Sports Betting Done Right

When: Thursday February 22nd, 5:30 pm

What: Learn how two CBE alum have transformed their business & economics education into a career in sports betting regulations, protecting investments, and maintaining the integrity of America’s financial system.

Who: Russel Kemp (FINRA), Brendan Logan (Sharprank), Chris Adams (SharpRank)

How/Where: email for registration, Towson Center 3rd floor lobby

Cost: FREE