Good morning, and welcome to the Indy Gaming newsletter, a weekly look at gaming matters nationally and internationally and how the events tie back to Nevada.
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Illegal and unregulated offshore sports wagering sites do a good job of imitating their legal and regulated counterparts.
The homepage of Bovada, headquartered in the Central American country of Costa Rica, flips between action photos of Milwaukee Bucks center Giannis Antetokounmpo and Los Angeles Dodgers outfielder Mookie Bets while offering incentives to entice gamblers to bet on the NBA Playoffs and Major League Baseball.
Similarly, MyBookie, also located in Costa Rica, offered similar sports betting promotions for the final weeks of the NHL season featuring an action photo of Toronto Maple Leafs center Auston Matthews.
The sites, which are not overseen by any state gaming regulatory body and do not pay U.S. taxes, have confused American consumers.
The American Gaming Association made that fact clear to the Department of Justice last week.
With sports betting now legal and regulated in 30 states and Washington, D.C. — and likely launching in three more states this year — the AGA wants the Justice Department to “stamp out” the illegal market.
In a letter to Attorney General Merrick Garland, AGA CEO Bill Miller said the expansion of legal sports betting opportunities has cut into the illegal market’s business, but not enough.
Miller cited research conducted by the Washington, D.C., trade organization that showed 74 percent of sports gamblers believed it was important to only wager with legal providers. However, 52 percent continued to patronize illegal bookmakers. Most of the sports bettors – 63 percent – told researchers they were surprised to learn the sites they were using were unregulated and illegal sportsbooks.
“The availability of these illegal sites is driving confusion,” Miller wrote in the letter.
He said nationwide internet searches for offshore sportsbook brands increased 38 percent last year, which was “faster than the search growth for legal U.S. operators.” He added that searches for offshore brands represented a majority of all sportsbook searches.
Bovada, for example, accounted for 50 percent of all searches.
The AGA found support for its effort from a DraftKings executive — Griffin Finan, vice president of government affairs — who said the Boston-based company has long maintained that “eradicating the illegal market and bringing customers onto a legal, regulated platform must be a top priority for the industry.”
Finan said without legal sports wagering, “customers are left unprotected but states are also losing out on significant tax dollars.”
Miller said the Justice Department needs to “make it a priority” to crack down on the illegal sports betting market to protect a legal gaming industry that has an annual economic impact of $261 billion nationwide and supports more than 1.8 million jobs.
“Our industry is one of the most highly regulated in the country and at every level by federal, state and tribal agencies,” Miller wrote. “The Justice Department is the only law enforcement entity that can credibly address these illegal offshore sportsbooks and casinos.”
Eleven years ago, government prosecutors cracked down on another form of offshore internet wagering – illegal online poker websites.
In April 2011, the Justice Department unsealed a nine-count indictment against the top executives of PokerStars, Full Tilt Poker, and Absolute Poker, and filed a civil complaint against the companies.
The event became known as “Black Friday” in the online gaming world.
Access to the three sites was blocked to the U.S. market and many American poker players waited for months to get back the funds they had on those accounts. Some players were never made whole.
Operators of the sites cut deals with federal prosecutors and paid millions of dollars to settle the charges. Several executives served time in federal prison.
While It seems highly unlikely another “Black Friday” could happen in the offshore sports betting world, Chris Cylke, the AGA’s senior vice president of government relations, hopes Miller’s letter will cause the Justice Department to “elevate this up the chain” and “get more aggressive” with the offshore market.
In an interview with The Nevada Independent, Cylke said the AGA has a “good working relationship” and held “constructive conversations” with Justice Department and FBI officials concerning illegal sports betting.
“We recognize the challenge of actually getting convictions when you have people who are located in different countries who are perpetrating the crimes,” Cylke said. “But I think, as we suggested in our letter, even having some government action against them in the form of investigation or an indictment could be useful.”
Cylke said a crackdown by federal authorities on sites such as Bovada, MyBookie and BetOnline, “that openly violate federal and state laws,” would send a message, “in terms of public education, while also putting the ecosystem on notice that it’s not okay to be supporting these kinds of entities.”
Forming a regulated sports betting market, which has taken place in the last four years in more than 30 states, has helped decrease the flow of sports wagers to offshore betting sites, Cylke said.
The challenge for the AGA is to educate the remaining states looking to legalize sports betting – namely, California and Texas – on both the educational and enforcement sides of the equation and to institute ways to ensure customers wager on state or tribal-regulated sites.
“We know from our research that sports bettors and those who engage in gaming online want to go through legal channels,” Cylke said. “They know that there’s safety associated with the regulatory environment and they are going to get paid their winnings and (the sites) are not just going to disappear overnight.”
Resort Association PAC draws in $2.35 million and has donated to one lawmaker
The Strip’s three largest casino operators combined for nearly $1 million of the $2.35 million raised by Nevada Resort PAC, a political action committee launched in January by the gaming industry’s primary trade organization to focus on state legislative races.
The Nevada Resort Association typically shied away from direct contributions to legislative candidates, with casino companies and gaming equipment manufacturers individually deciding where to direct campaign contributions.
The gaming industry made nearly $770,000 in donations to legislators in the 2020 election cycle and $1.6 million in the 2018 cycle.
According to the first campaign period expense report filed Friday, the Resort Association contributed $343,000 itself to the PAC.
Caesars Entertainment, which operates nine resorts on or near the Strip, and MGM Resorts International, which operates 10 Strip properties, each contributed $347,000 to the PAC. Wynn Resorts, which operates Wynn Las Vegas and Encore, contributed almost $278,000.
Southern Nevada’s two largest local casino operators, Boyd Gaming and Station Casinos, each donated almost $277,000 to the PAC. Las Vegas Sands Corp., which was a member of the Resort Association before it finalized the $6.25 billion sale of its Strip properties in February, was not listed on the campaign filing.
A total of 18 companies or individual casinos located in southern and northern gaming markets contributed to the PAC, which is focused on legislative candidates of both major political parties who support the state’s gaming industry.
“The industry is united in this effort. Nearly all of our members are participating,” Resort Association President Virginia Valentine said in an email.
In announcing the PAC’s formation, the Resort Association said its membership of nearly 80 casinos statewide wanted to “recruit, assess, endorse, and elect state legislative candidates in 2022.”
Valentine said Monday that the Resort Association committee was “most interested in a candidate’s views on the interconnectedness of a strong tourism industry and a thriving Nevada economy.”
She said the organization wants to support individuals “who align with our values of expanding economic opportunity and job creation, understand how policies impact our workforce and who will continue to ensure Nevada’s travel and tourism industry remains a competitive global leader in gaming and hospitality.”
According to the report, just one candidate, Assemblyman Steven Yeager (D-Las Vegas) has received a donation of $10,000, which was made on Feb. 25.
Valentine said the Resort Association will make endorsements in several races ahead of the June primary election and is still reviewing candidate questionnaires and plans to conduct in-depth interviews.
“We take this process very seriously and so we are taking our time to do our research,” Valentine said. “The speaker pro tempore (Yeager) was our first announcement, and there will be more in the future.”
Benenson Strategy Group, a Denver-based market research and consultancy firm, was paid $134,400.
Analyst says Las Vegas’ F1 race could provide a boost to motorsports betting
The announcement that Formula One will bring the Las Vegas Grand Prix to the Strip in November 2023 has one gaming analyst already thinking about the sports wagering opportunities it could present.
The European-based racing league, which will have three championship events in the U.S. once Las Vegas is added, has a fanbase of more than 500 million international followers.
Last year, F1 signed a deal with PokerStars as its official betting sponsor.
PokerStars, which is owned by Ireland-based gambling giant Flutter Entertainment, is featured exclusively on F1’s European broadcasts until 2023.
Flutter also owns FanDuel, which rivals DraftKings as the largest licensed sports betting operator in the U.S.
FanDuel, DraftKings and other daily fantasy sports providers offer different wagering opportunities for players during the F1 racing season.
In Nevada, motorsports, including Indy cars, NASCAR and F1, haven’t been a big draw at the sportsbook betting windows. Revenues from motorsports wagers are included in the “other sports” category – everything other than football, basketball, baseball and hockey, which are broken out separately.
In 2021, “other sports” accounted for just $46.6 million of the state’s record $455.1 million in sports betting revenues.
The Las Vegas Grand Prix announcement led Eilers & Krejcik Gaming managing partner Chris Krafcik to imagine the sports wagering propositions surrounding a race along a 3.8-mile, 14-turn track that will encompass a large section of the Strip fronting high-profile resorts between Sands and Harmon avenues.
“Las Vegas, with its expanding professional sports footprint and an outsized focus on entertainment, is uniquely positioned to serve as a proving ground for some potentially novel sports and gambling integrations,” Krafcik wrote in an email.
He highlighted DraftKings as a sports betting operator that would want to cash in on F1. DraftKings is the official daily fantasy partner of NASCAR, so the firm has experience with racing events.
However, DraftKings is not licensed in Nevada. The company is acquiring Golden Nugget Online Gaming in a $1.56 billion deal, which includes the rebranding of retail sportsbooks under the DraftKings name “at current and future Golden Nugget casinos.” Boston-based DraftKings has a licensing application on file with Nevada gaming regulators, but it is not connected to the Golden Nugget transaction.
“Given DraftKings’ penchant for boundary-pushing and expensive self-promotion, we would not be surprised to see the company – assuming it’s eventually licensed in Nevada – attempt a truly eyebrow-raising sports gambling integration in Las Vegas,” Krafcik wrote.
Sports betting is not foreign to F1, which partnered with Interregional Sports Group in 2018 in a deal thought to be worth $100 million over five years to create wagering opportunities. Sportradar was brought into the deal to provide data and integrity solutions, such as the development of new in-play betting markets.
In 2019, ISG and Sportradar launched Live Odds, a betting service providing live and pre-race odds that used exclusive and historical F1 data to create new wagering models.
Golden Entertainment taps MGM Growth CFO for a board position
Andy Chien, chief financial officer of real estate investment trust MGM Growth Properties, joined the board of casino owner and slot machine route operator Golden Entertainment last week.
MGM Growth is being acquired by rival REIT VICI Properties in a $17.2 billion transaction.
In a filing with the Securities and Exchange Commission, there was no mention of Chien joining Las Vegas-based Golden in a capacity other than as a board member.
Chien has been with MGM Growth since its inception in 2016 when it was spun off from MGM Resorts International. Prior to his role with MGM Growth, Chien worked for seven years in investment banking at Greenhill & Co., and was responsible for the firm’s REIT, gaming, lodging and leisure clients. Chien also worked in the investment banking departments at two large firms.
In the SEC filing, Golden said Chien’s appointment gives the board six directors, five of whom are considered independent from the company’s day-to-day operations. Golden CEO Blake Sartini serves as the board’s chairman.
“We believe Mr. Chien’s qualifications to sit on our Board of Directors include his business, leadership and investment banking experience and his familiarity with the gaming, entertainment and real estate markets in which we operate,” Golden said in the SEC filing.
Golden owns nine casinos in Las Vegas, Pahrump and Laughlin – including the STRAT Casino Hotel and Skypod – and the Rocky Gap Casino in Maryland. The company has the largest slot machine route operation in Nevada and is the second-largest in Montana, managing games in more than 1,100 taverns, bars and convenience stores. Golden also has slot machines in more than 60 taverns the company owns in Nevada.
Golden is also licensed in Illinois and Pennsylvania to operate video gaming terminals.
MGM Growth owns the real estate of 15 casinos and resorts in eight states, including seven properties on the Strip. All of MGM Growth’s properties are operated by MGM Resorts.
When VICI’s acquisition closes, the combined company will be one of the gaming industry’s largest REITs with the eventual ownership of 43 properties in 15 states.
Other items of interest
Light & Wonder – formerly Scientific Games – extended an agreement with United Kingdom-based Entain plc to supply more than 10,000 wagering terminals to the company’s licensed betting offices under the Coral and Ladbrokes brands.
Financial terms were not disclosed and the contract, first established in 2018, runs through 2030.
Wagering terminals are the UK description for slot machines. Under the terms of the deal, Light & Wonder is providing Entain with access to more than 3,000 game titles available from design studios worldwide that have licensing with the Las Vegas-based gaming equipment manufacturer.
Entain, one of the world’s largest sports betting and gaming groups, is the 50-50 joint venture partner with MGM Resorts International in BetMGM.
Las Vegas-based Everi Holdings has acquired a player-loyalty marketing platform developed by privately-owned XUVI for an undisclosed price. The technology will be used to enhance the current customer loyalty program Everi provides to casino operators through its financial technology division.
Casinos use loyalty programs to provide various rewards, such as restaurant vouchers, hotel rooms and other entertainment opportunities to customers.
In a statement, Everi said the new technology was designed to value, target and engage casino players and increase loyalty rewards by using data analytics and artificial intelligence.
Everi Executive Vice President Darren Simmons said the technology provides casino operators “with actionable information to enhance their patrons’ gaming experience and drive revenue growth.”