US Sports Betting Update – Maine becomes the latest state to legalize sports wagering
Maine Governor Janet Mills ushered in a new era of legal sports betting when she signed LD 585 into law this week. It will permit in-person wagering at retail sportsbooks located at casinos and off-track betting parlors across the Pine Tree State. The bill also allows online sports betting, which will be controlled by Maine’s four federally recognized Native American tribes. The tribes will gain master licenses, but they can host famous brands such as FanDuel or DraftKings on those licenses.
Mills previously vetoed a bill that would have legalized sports betting in 2020. The bill, approved by the legislature in 2019, would have made Maine the 14th state to roll out a legal sports wagering industry, but Mills said she was unconvinced that Mainers wanted that. “Before Maine joins the frenzy of states hungry to attract this market, I believe we need to examine the issue more clearly; better understand the evolving experiences of other states; and thoughtfully determine the best approach for Maine,” Mills said at the time.The State Senate voted to override her veto, but they could not get it over the line.
Meaningful Economic Opportunities for the Wabanaki Nations
Another attempt to legalize sports betting failed last year. Thirty-two of the 50 states have now legalized sports betting in some form, and Mills accepts that Mainers favor it. The governor said in a press release that she was pleased to sign it into law, asserting that it will deliver important tax relief to tribal members and tribal businesses; and it gives the tribes the opportunity to benefit from online sports wagering, providing a meaningful way for tribes to participate in the gaming industry in Maine from which they have been historically excluded.
“This law provides meaningful economic opportunities for the Wabanaki Nations. It incentivizes investment in Tribal communities, and it formalizes a collaboration process on policy that sets the foundation for a stronger relationship in the future,” said Governor Janet Mills. “I am proud of the work that the Wabanaki Nations and the state put into drafting this legislation, and I am grateful for the honest effort, the extensive research and the hundreds of hours of negotiations and discussions which bore fruit in this bill. We will continue to work closely with the Tribes to make progress for the Wabanaki people.”
Sports betting is already legal in Connecticut, New Hampshire and Rhode Island. Massachusetts is edging closer to legalization too, leaving Vermont as the only outlier in New England now. We do not have an official start date yet for Maine’s legal sports betting industry. It will be regulated by the Department of Public Safety’s Gambling Control Unit. Operators will pay a 10% tax rate after certain deductions. LD 585 paves the way for 10 retail sports betting licenses, which will each cost just $4,000 for 10 years. Each of the four tribes would need to pay a $200,000 fee for a four-year online sports betting master license, and they could then set about tying up deals with leading operators.
FanDuel Delivers “Unparalleled Scale”
Flutter Entertainment chief executive Peter Jackson hailed the power of the FanDuel brand when
unveiling the company’s first quarter results this week. The firm delivered 6% revenue growth to £1.57 billion ($1.94 billion), despite a tough comparison to Q1 2021. The share price climbed 5.4% higher on the news. Flutter owns Betfair, Paddy Power, Sky Bet and PokerStars, among other brands, but FanDuel is the juggernaut within the business.
Jackson reported that it remains the most popular online sportsbook in the United States, with a 37% revenue share. Its online casino gaming share was 20% in the quarter, leaving it behind market leader BetMGM for slots and table games. FanDuel Sportsbook had more than 1.5 million active customers on Super Bowl Sunday, according to Jackson, while new launches in New York – where it is now the market leader – and Louisiana exceeded expectations. “In the US, we had another exciting quarter as FanDuel continued to deliver unparalleled scale, with the US accounting for over half of all stakes for the Flutter Group in Q1,” said Jackson.
Peel Hunt analyst Ivor Jones said: “Flutter’s US business continues to add states, customers and revenue at a remarkable rate while retaining a leading market share. The rest of the group is struggling to deliver growth against tough comps and responsible gaming measures aimed at improving the sustainability of the business. Within 18 months the US should start to become materially profitable and cash generative while still driving the growth of the group overall.”
Caesars Sportsbook Outlines Path to Profitability
Caesars Entertainment also delivered Q1 results this week. Chief executive Tom Reeg admitted that Caesars Sportsbook’s $3,300 welcome bonus when it launched in New York back in January was excessive. That instantly gave the brand 40% market share in the Empire State’s new online sports betting market, but it has since dropped below 20% after reverting to a more modest sign-up offer, leaving it trailing FanDuel and DraftKings.
The company has started to scale back its marketing spend. Its digital business reported revenue losses of $53 million and EBITDA losses of $554 million in Q1, driven by promotional spend, marketing and licensing costs. “About two-thirds of our cumulative EBITDA loss is now in the rearview mirror,” Reeg said. “Our losses will come down considerably as we move forward.”
He said that the “Wild West” days of $3,300 bonuses are “already in the rear-view mirror” and that the Caesars Rewards loyalty program would be a key focus in future. Reeg added that the company would focus on high-value customers in future as it aims to achieve profitability.
“What you’ve seen us do repeatedly in the brick-and-mortar business is target spend to our most valuable players and not waste money on unprofitable players,” he said. “That’s the task in front of us in digital. So you’re going to see us segmenting our marketing as we move forward. And that’s going to be a dramatic improvement in profitability.”