Sports Betting: The Business of Risk

 

The business of Sports Betting is at an all-time high. Just 5 years ago, you could only make wagers on single games in Nevada. Now you can bet on a single game in over 30 states. Last year over 57 billion was bet legally by Americans on sports. I am not counting the illegal market that is still available to a segment of the gaming patrons.

So why is the stock market not reflecting this renaissance period? A review of the leading sports betting companies and gaming operators stock prices show dismal results over the past 6 months. While the amount of money wagered is staggering, the investors in the companies are seeing red digits on their portfolios.

While the slide could be due to global inflation, there are long term profitability concerns for the industry. Look for a merger or acquisition as a way for one or two operators to turn things around. CNBC Jim Cramer stated “But as we see what the reality looks like, there’s tons of competition for market share and little in the way of profits. Too bad because profits are what this market wants right now. That is why every single one of these stocks has been obliterated,”

According to Yahoo Finance, MGM Resorts International announced an offer to acquire the global gaming company Leovegas. MGM is attempting to build on the success of BetMGM in the United States with this acquisition allowing them to expand globally with an omnichannel strategy. I also found that MGM, as part of the Maryland Education Summit for Sports Betting, will offer a mentorship program to a qualified applicant that is pursuing a Class C sport betting license. This week, MGM was approved for a takeover of the Cosmopolitan amid questions about a monopoly on the Las Vegas Strip. MGM International is making progressive moves and has a stock price of 36.56.A year ago it was $51.17.

Any organization that has an established following on social media, does a high volume of sales and is known internationally may want to purchase a gaming company as a caveat to provide entertainment value to their customers. Imagine if Google or Facebook decided to offer sports betting to their followers. They would have to gain the trust of the public in a manner comparable to Uber and Disney. The patrons would have to be comfortable sharing their banking information and be guaranteed an enjoyable experience that is not based solely on winning.

Since gaining market share is the driver for the more renown operators, the winner of the Sports Betting race will be the operator with a brick-and-mortar venue in cities with a large population along with online gaming presence. The operator that provides visual content of the event to coincide with in game wagering will corner the market.

Check out my articles about sports betting in IGaming Player & Bettors Insider. Follow me on Twitter and Instagram.

 

 

 

This Week in Gaming Review

Pennsylvania Governor Tom Wolf submitted his budget proposal for 2017-18. His budget includes over 250 million from new gaming revenue. This is a great sign for online gaming in the Commonwealth. There are two bills that are being talked about during this legislative session.

One is the bill sponsored by State Rep Youngblood and Dunbar. This bill includes online gaming and fantasy sports. It expands gaming to the Philadelphia International Airport via tablets. This bill also allows multi state linkage  on slots to increase jackpots. It also allows for the PGCB to set up new regulations to authorize skill based and hybrid slot games.

The second bill is sponsored by State Senator Acosta. Acosta's bill would impose a 25-percent tax on gross revenue from either form of gambling. The most recent House-approved bill from 2016 had  an online gambling tax rate of 16 percent and a DFS rate of 12 percent. In traditional casinos, the state gets 54 percent of gross slot revenue and 16 percent of table game revenue. Costa's proposal would ban Internet gaming on casino property because of the difference in tax rates. He anticipates some action on his bill by April 2017.

Both bills have similarities but the Youngblood and Dunbar bill has language stressing consumer protection that reins in  black market and off shore operators that target compulsive and underage gamblers. The proposed tax is casino favorable with a rate of 14% along  with a 2% local share. Youngblood and Dunbar's bill does not get blinded by the numbers and wants government and the economy to work for all people. There is a provision for Pre K Funding for Philadelphia I Gaming that occurs at the airport from ticketed passengers.

MGM Grand National Harbor

MGM Grand National Harbor has been open a little over two months and doing phenomenal numbers. They have surpassed Maryland Live as the top grossing revenue casino in their region.

The new Prince George's County casino, which opened in early December, generated $48.8 million from slot machines and table games, making it the state's top money maker by nearly $5 million, the Maryland Lottery and Gaming Control Agency reported Monday.

The Baltimore Sun reported that Maryland Live Casino, historically the top money-maker, brought in about $44 million in January, down 15.6 percent from the same month last year.

Horseshoe Casino Baltimore generated $20.2 million in January, down 14.5 percent from the same period a year ago. The State of Maryland showed prudent leadership by anticipating some measure of cannibalization from MGM's arrival. They allowed both casinos to keep more of their profits to account for the loss of revenue. Click here and read the entire article.

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MGM Grand National Harbor

The opening of MGM Grand National Harbor is the most anticipated casino in the past 5 years. The hype surrounding this property is only rivaled by Revel Casino in Atlantic City.

This is where the comparison ends. The signature restaurants and cocktail lounges include  Marcus Samuelsson, Fish by Jose Andres, Voltaggio Brothers SteakHouse and Blossom.

The 3,000 event center will feature entertainers that will appeal to all genres. They include Boys to Men, Cher, Bruno Mars, Sting, Ricky Martin and Lionel Richie to name a few.

Bruno Mars

If you are thinking about staying overnight the rates run from $299 for a room to $599 for a suite. Luxury accommodations will cost substantially more. Ask yourself what's in your wallet.

King Accomodations

MGM Grand National Harbor will offer gaming that will include 3,300 slots,table games and poker.

The cost of this magnificent facility is over 1.2 billion. Since MGM is an international brand, they will have a leg up based on name recognition in the region. Their competition includes MaryLand Live and the Horseshoe Casino Baltimore.

Resort general manager Bill Boasberg said, "Under one roof, guests will enjoy a sophisticated hotel experience, high-energy casino, celebrity-chef restaurants, world-class entertainment, nightlife, destination spa, upscale retail and curated art, complemented by incredible panoramas of D.C., Maryland and Virginia." 

Maryland is a very lucrative gaming market without MGM. We see MGM Grand National Harbor expanding it. Enjoy this video of MGM.


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This Week in Gaming Review

Gaming News from New Jersey took the spotlight with the announcement that Rush Street Gaming is entering the Garden State and accepting Online Wagers. Rush Street Interactive can now accept wagers from any patrons within the State of New Jersey. The website is playsugarhouse.com.

DraftKings paid millions of dollars this past week to make good on a promotional claim that a guaranteed jackpot would be in place. This is a good business move that shows credibility. FanDuel and Yahoo reported similar shortfalls though not as high as DraftKings.  It does not bode well for the marketing analysis that allow for an overestimation of the amount of entries. The next several weeks should have a lower guarantee based on the amount of interest from week 1.

MGM National Harbor is still on target for a 4th quarter opening. The Tables Games Team and the Food & Beverage Department are participating in community events in the DC area. Here are two photos that will give a glimpse of what to expect in the coming months.

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                                                          7 days until #G2E2016