Mor, Mor, Mor, how do you like it?
Following the release of its H1 financial results this week, Playtech CEO Mor Weizer spoke to the Evening Standard to express some frustrations about how his company is perceived.
The business has established a strong focus on regulated markets, he said (although some revenue still comes from grey markets in Latam and other regions), while some of its competitors are taking business from black markets where gambling is specifically outlawed.
Weizer pointed out that Playtech’s regulated revenue saw double-digit growth in H1, but said it was “frustrating” to be compared to companies that continue to operate in black markets.
“It is less helpful when they operate in black markets and use that money to penetrate regulated markets. We know some that operate in sanctioned markets, countries on the US sanctions list,” he suggested.
“It is frustrating to see people compare us to public companies that are growing very quickly. But they are growing in unregulated markets and shrinking in regulated markets. We are growing in regulated markets.”
Without mentioning any specific rivals, Weizer said that some suppliers have seen astronomical growth in recent years despite having evolved to generate a declining share of revenue from regulated markets.
Playtech shares trade at a lower multiple than many of its rivals listed outside London, the article points out, but Weizer suggests that comes down to the high level of knowledge of UK-based investors.
“Shareholders in the UK are very sophisticated and are very conscious of regulated activity, regulated markets, strict regulated environments,” he said.
If that’s the case, does this mean that some of Playtech’s rivals are currently overvalued? Time will tell.
Where’s the evidence?
The Guardian this week turned its spotlight on a “retreat” from the UK government on gambling advertising.
UK lawmakers have come under fire for claiming that a decision to step back from a ban on gambling advertising was driven by a lack of evidence that it leads to harm among consumers.
“We have very much gone on the evidence [and] there’s little evidence that exposure to advertising alone causes people to enter into gambling harm,” said Stuart Andrew, the minister for sport, gambling and civil society, earlier this week.
“Once we have the research if there’s more evidence that proves advertising is causing harm then we will look at that.”
That assessment has been disputed by at least one expert on gambling harm, as consultant psychologist Dr Matt Gaskell suggested: “The evidence is clear that gambling advertising drives consumption, which increases harm.
“This is well known internationally, and as a result many European countries have taken action to protect their communities with stringent advertising curbs.
“Our children, young people, and those experiencing harm or in recovery continue to be exposed to ubiquitous gambling advertising, and the government have chosen to expose them to harm.”
Such differences in opinion – alongside pressure from broadcasters which rely on the revenue from gambling advertising – have led to the creation of “a very difficult debate at times,” Andrew acknowledged.
And there is also the not inconsiderable matter of a lack of quality evidence pointing one way or the other.
A shortage of funding for research into the matter has not helped deliver conclusive evidence in either direction, The Guardian suggested.
A new system of research funding is set to come into play in 2024, Andrew said, which should allow the government
As is so often the case, the best answer to these questions, between those offered up by gambling firms and those provided by prohibitionists, likely lies somewhere in the middle.
Wynn settles sexual harassment case
The Las Vegas Review-Journal this week gave us an update on a sexual harassment case which has plagued Wynn Resorts since 2019.
Attorneys representing the casino operator and nine anonymous women who filed the sexual harassment case have now reached an undisclosed settlement, according to US District Court documents.
The lawyers have now requested the action be dismissed, and that a status check settlement conference be scheduled within two months.
All parties have remained tight lipped on the details of the settlement, as Wynn said it would not make a comment and the nine women’s attorneys could not be reached for comment.
Each of the women made specific allegations regarding sexual harassment by former Wynn CEO Steve Wynn, while they were working as manicurists and makeup artists in the company’s salons.
Steve Wynn has repeatedly claimed that he has never harassed or sexually assaulted anyone.
In court filings, however, the women “gave graphic descriptions of how Steve Wynn asked personal questions of a sexual nature, forced them to massage him near his genital area and required them to provide services to him in secluded areas.”
The case was initially filed in 2019, a year after the former CEO left the business following public allegations made in a 2018 Wall Street Journal article.
BuzzFeed News? More like BuzzFeed Olds
As anyone working in the digital media sector knows by now, BuzzFeed News is no more.
This week, the New York Times published an impassioned obituary of sorts, of the so-described “quirky upstart that became a Pulitzer Prize-winning operation.”
It noted the newsroom’s humble beginnings, as a clickbait and listicle-driven media company designed to capture readers’ attention through the noise of social media.
Soon, though, the business took a turn for the more sincere, and as the BuzzFeed News brand began to take itself more seriously, it “soon drew attention for its ambitious, sharp reporting.”
The brand branched out overseas and invested further into investigative journalism, with several of its alumni having moved on to more ‘high brow’ publications, such as the New York Times itself, as well as the Wall Street Journal and Bloomberg News.
Those newsrooms, in turn, “have embraced many of the practices that BuzzFeed pioneered in search of readers online,” the NYT reports, as the mark made by the company on modern journalism continues to be felt across the media.
For all of its impact, however, the division failed to make enough money to survive, “unable to square the reliance on digital advertising and the whims of social media traffic with the considerable costs of employing journalists around the world.”
BuzzFeed News’ closure is set to impact some 60 members of BuzzFeed’s 1,200-strong employee base, with another 120 jobs to be cut across the parent company’s business, content, tech and administrative teams.
The layoffs are part of a broader trend which has seen other media outlets – Vox Media and Vice, for example – fail to live up to their previously massive valuations.
Vox laid off 7% of its staff in January, while Vice is “desperately seeking a buyer,” according to the NYT.
Despite the unfortunate turn of events that led to Buzzfeed News’ closure, the brand signed off in typical good humour.
The last Apple News push notification sent out by the outlet read: “BuzzFeed News is logging off with a reminder that Blippi pooped on his friend.”
Well, what more is there to say than that?
A load of old junk(ets)
The Financial Times once again took a closer look at the gambling industry this week, with a story on the “overdue reckoning for Macau’s casinos,” after the local industry’s reliance on ‘junket’ operators fell under the spotlight.
The story begins with gaming lawyer Jorge Menezes, a figure “prepared to ask on the record, difficult questions about the gambling industry in the territory,” and who was once attacked by thugs using bricks tied to their fists.
Those difficult questions include how casinos, including those publicly listed in the US, were “allowed to co-operate with parties accused of illegal practices that were carried out for years seemingly in plain sight?”
Menezes refers here to the practices of ‘junket’ operators, who promote casinos to the ultra-wealthy and encourage them to gamble stakes in the millions, transferring the money out of mainland China and into Macau in breach of Chinese law.
The issue came to a head in 2021 when Alvin Chau, the head of junket operator Suncity Group and referred to by the FT as “Asia’s gambling kingpin”, was arrested following a crackdown from Beijing on Macau’s casino sector.
Chau was subsequently sentenced to 18 years in prison for involvement in organised crime, illegal betting and fraud.
Following his arrest, MGM, Wynn and Sands all promptly terminated their agreements with junket operators, while some casinos in Australia had their licences suspended after allowing Suncity to operate gambling rooms for VIP high rollers on their premises.
Menezes suggests that casino operators have since been performing an unconvincing display of mock incredulity at the revelations, compared by the FT to the famous Casablanca gag: “I’m shocked, shocked to find that gambling is going on in here!”
“Did they not know for 10 years, can anyone believe MGM, Wynn and Sands did not know that criminal activities were taking place in their casinos, does anyone believe this?” Menezes asks.
In the end, this article brings up more questions than it does answers, as it notes: “While the big junket companies have closed, the casino businesses have continued with hardly a blip.”
And, with all six of Macau’s major operators handed new, 10-year licences last year, “their lucky streak continues,” it concludes.
Lucky indeed.
Gambling and football: a love story for the ages
Another stellar piece from the FT makes it into this week’s Hot Copy, as Samuel Agini and Oliver Barnes offer a deep dive into “How English football became hooked on gambling.”
As clubs in the Premier League now prepare to (very slowly) phase out front-of-shirt sponsorships by gambling firms, the authors looked into the past, present and future of the gambling sector’s love affair with the Beautiful Game.
They suggest that the reluctance of football authorities to cut ties with the sector altogether is indicative of the sport’s financial reliance on gambling, especially in lower leagues.
The government is accused of taking half-measures “to keep the hawks at bay,” while it’s suggested the Premier League is attempting to “portray an image of responsibility,” without giving up the revenues associated with gambling.
Of course, football is the biggest betting sport in the UK, followed fairly closely by horse racing, while no other sport comes remotely close to either.
Readers are encouraged to have a proper look at the FT’s article, which sets out several key statistics from the sector in a series of easy-to-understand graphics.
Football’s obsession with gambling firms can be traced back to 2002, when Fulham became the first English football club to sign a sponsorship deal with betting exchange Betfair.
Fast forward a couple of decades, and a 2020 study showed that a gambling sponsor was referenced every 21 seconds during a typical TV match broadcast.
The article argues that even if front-of-shirt sponsorships disappear from view over the next few seasons, the gambling sector’s obsession with football is going nowhere.
Because, while the EFL may insist that gambling sponsorships are in no way related to increased betting among football fans, “they wouldn’t keep spending the money if it didn’t work.”
Wynn’s two Las Vegas properties highlighted growth for the company during its Q4 earnings call as it continues to trim losses from its digital division and regain momentum in its Asian markets.
Topline numbers
Wynn operating revenues were $1bn for the fourth quarter of 2022, a decrease of $48.2m, from Q4 2021. Operating revenues for Q4 2022 increased $91.6m and $14.4 million at the company’s Las Vegas properties (Wynn and Encore) and Encore Boston Harbor, respectively.
Internationally, operating revenues decreased $80.9m at Wynn Palace and $54.5m at Wynn Macau for the fourth quarter as the company’s Chinese properties ran up against government-mandated COVID-19 closures. Wynn Interactive, the company’s online sports betting and casino division, saw operating revenue decline nearly $8m from Q4 2022 to Q4 2021.
Net income attributable to Wynn was $32.4m, or $0.29 per diluted share, for the fourth quarter of 2022, compared to a net loss of $177.2m, or ($1.54) per diluted share, in the fourth quarter of 2021. Adjusted net loss attributable was nearly $139m, or $1.23 per diluted share, for the fourth quarter of 2022, compared to adjusted net loss of roughly $157.4m, or $1.37 per diluted share, in Q4 2021.
In Q4 2022, Wynn’s adjusted property EBITDAR was a little over $195m against roughly $149m during that same quarter a year earlier.
Adjusted property EBITDAR for Q4 2022 increased $33m and $51m at Las Vegas properties and Wynn Interactive, respectively, between Q4 2022 and Q4 2021. That figure decreased $22.5m, $10.7m, and $5m at Wynn Palace, Wynn Macau and Encore Boston Harbor, respectively, during that same time frame.
Wynn’s overall operating revenues for calendar year 2022 were $3.76bn, flat compared to operating revenues for full year 2021.
News nugget
Wynn CEO Craig Billings said during Wednesday’s earnings call the company’s two Las Vegas properties reported $816m in normalized adjusted property EBITDA during 2022. He said an analyst in 2019, before the start of the COVID-19 pandemic, predicted the two properties would generate “only” $482m in calendar year 2022.
The eye-popping figures underscore the continued rebound of all major Las Vegas Strip operators since the depths of the pandemic in spring 2020. Other major Strip operators including MGM, which also reported strong Vegas property numbers during its Q4 earnings report Wednesday, and Caesars, which will report later this month, have seen similar results.
Wynn, however, has just two casinos in Las Vegas that essentially function as one major property, compared to more than a half-dozen at both MGM and Caesars. Wynn also appeals to a more affluent demographic, which reaffirms the Las Vegas markets’ strength in all customer subsets.
Best quote
Billings on Wynn and Encore’s $816m 2022 AEBITDA:
“I’m confident that this is an all-time record for a standalone Las Vegas Strip property. And mind you, we did not deliver this result by nickel and diming on service standards and reducing staff to drive operating leverage. The team did it by focusing on what we do best, great product, great service, great programming, and it showed in our market share and pricing power.”
Best question
Billings, who took over as CEO in 2022 after leading the company’s WynnBet division, was asked about Wynn’s digital future. He said the company was already seeing strong results from players at the retail sportsbook at Encore Boston Harbor and expected Massachusetts to be a leading digital market when WynnBet’s online platform goes live in the state in March.
WynnBet is also continuing to reduce its cash burn, a critical step for Wynn Interactive, Billings said. Though WynnBet initially chased Caesars, MGM and other rivals for online gaming market share, the company has since redirected its digital division resources to select iGaming markets as well as “high-value” online sports betting states.
Along with Massachusetts, WynnBet is set to launch in Maryland and Ohio in the coming months.
Current outlook and trading
Wynn officials said Wednesday they expect continued strength from its flagship Las Vegas properties as well as growth for Encore Boston Harbor, which they said will be even further bolstered by the new on-property retail sportsbook as well as the digital sports betting launch in Massachusetts next month.
In Macau, Wynn was already seeing a “meaningful return of visitation and demand” during the roughly two-week Chinese New Year holiday period that began Jan. 26. With COVID-19 pandemic restrictions easing, Wynn officials believe they can see significant returns from their Asian properties after years of shutdowns and financial losses.
Wynn’s stock was up more than 3% during after-hours trading following Wednesday’s earnings call. The company’s stock is up more than 8% in the past month and roughly 43% in the past three months.
UAE looks like a Wynner
Arabian Business reported this week that Wynn Resorts’ plans to build the first casino in the United Arab Emirates (UAE) have come one step closer to fruition.
The plan, first revealed in January this year, involves Wynn building a luxury integrated resort in Ras Al-Khaimah, the sixth largest city in the UAE.
It would be the first resort in the UAE to include a gaming area, after the Ras Al-Khaimah Tourism and Development Authority (RAKTDA) was reported to have created a new Department of Entertainment and Gaming Regulation.
At present, gambling is illegal in the country. Authorities are currently working on their gambling regulations, Arabian Business reported, using a combination of Singaporean and US regulations as their foundation.
On Wynn’s Q3 earnings call with investors this week, the operator’s CEO Craig Billings said of the yet-to-be-built property: “The casino component – where at least for some period of time, we will be operating on our own, which makes it quite exciting – is shaping up to be somewhat larger than Wynn Las Vegas, but with numerous pockets of energy and compression.”
When it opens in 2026, the resort is expected to boast an 18,500 square meter casino, making it one of the top 10 largest casinos worldwide and almost double the size of the casino at the Wynn Las Vegas.
Billings was also able to shed some more light on the nature of upcoming regulations in the jurisdiction.
He said: “We’re not looking at a multiyear process for legalisation like we have seen in some other markets. Regulations are well advanced, having been modelled on those of Singapore and the United States. The tax rate and license structure are very reasonable.
“And finally, with the regulatory framework taking shape and a regulator in place, we will be licensed to conduct gaming in Ras Al Khaimah.”
It appears, then, that travellers to the UAE can look forward to kicking back on the tables and slots in just a few short years.
Time to Meta your maker
As reported by the New York Times, Facebook and Instagram owner Meta employees saw a tidal wave of staff cuts this week, as more than 11,000 people lost their jobs with the tech giant.
The figure relates to some 13% of the firm’s workforce – which stood at more than 87,000 employees as of the end of September.
Layoffs were made across several departments and regions, with some areas including recruitment and business teams affected more seriously than others.
Departments which emerged relatively unscathed from the process included engineering teams working on projects related to the metaverse, NYT reported.
“I want to take accountability for these decisions and for how we got here,” Meta CEO Zuckerberg wrote in a letter to the firm’s employees. “I know this is tough for everyone, and I’m especially sorry to those impacted.”
Zuckerberg added that the cuts were the result of a too-fast expansion during the Covid-19 pandemic, where a surge in online commerce led to significant revenue increases for the firm.
At the time, he said, he thought that growth would be permanent, which led him to significantly increase the business’ spending.
“Unfortunately, this did not play out the way I expected,” he said. “I got this wrong, and I take responsibility for that.”
Having thrown around its spending power in recent years – buying up tech brands like Instagram and WhatsApp – Meta’s fortunes seem to have changed over the course of 2022.
Once valued at a staggering $1 trillion, shares in the tech giant are down 67% this year, and it now boasts a market cap of less than $300bn.
The news follows on from the much-publicised recent takeover of Twitter by Tesla owner Elon Musk, who also made enormous cutbacks on staff numbers at the social networking giant.
It seems the big tech bubble could now be starting to burst.
Save me a Barstool
According to an article in the Washington Post, a US district court judge this week dismissed a lawsuit filed by Dave Portnoy, founder of sports and culture website Barstool Sports, which is now part-owned by casino and online gambling operator Penn Entertainment.
Portnoy had attempted to sue digital news outlet Insider.com, over the publication of two articles quoting two women who accused the founder of sexual misconduct and assault.
The case filed by Portnoy accused Insider, its chief executive, top editor and two correspondents, of “willful and unlawful defamation and privacy rights violations” over the publication of the stories.
Portnoy also alleged that Insider timed the publication of the two articles about his personal conduct to hurt the share price of Penn Entertainment, which owns a 36% stake in Barstool Sports.
This week, Chief Judge F. Dennis Saylor IV granted Insider’s motion to dismiss the case, writing that Portnoy’s suit did not succeed in proving that Insider published the stories with “actual malice” or “reckless disregard for the truth,” the legal standard required to prove defamation of public figures in the United States.
Because Portnoy did not allege that the anonymous sources used for the stories were fake, or that the articles misrepresented what they told Insider, the complaint was deemed not to meet the standard for defamation.
Insider spokesperson Mario Ruiz said: “Our reporting on Dave Portnoy was careful, fair, and accurate. We are pleased and gratified that the judge dismissed his complaint.”
In response, Portnoy said in a five-minute video posted on his social media accounts that the case: “Ain’t over … but I don’t know where I’m going from here to be honest. The champagne bottles will remain on ice.”
Wynn reported continued balance sheet improvements for its online gaming division during the company’s Q3 earnings call Wednesday ahead of a highly-anticipated launch in Massachusetts.
Wynn announced nearly ($18m) in adjusted EBITDA losses from its Wynn Interactive digital gaming division the third quarter of 2022, an improvement from ($70m) in losses from Q3 2021. The company has lost ($104m) on its online properties through the first nine months of 2022, compared to ($188m) during that same time frame in 2021.
WynnBet posted similar overall online sports betting and casino handle figures in Q3 2022 and Q3 2021 despite a roughly 90% decrease in marketing and an 80% decrease in cash burn year-over-year, Wynn CEO Craig Billings said during his company’s earnings call.
In Massachusetts, the company is set for its most consequential sports betting launch since the company announced a dramatic shift in its digital gaming strategy roughly a year ago. Wynn has spent several billion dollars on its Encore Boston Harbor property, located just outside Boston city limits and has hoped to translate that to success for its digital gaming platform in the state.
Wynn officials have said for months they see Massachusetts as a key market for the sportsbook, which has been a relatively minor player in the overall digital gaming landscape. The WynnBet retail sportsbook at Encore Boston Harbor could open as early as January, several months before online platforms begin.
This early start, the location within the region’s largest metro area plus the existing casino customer data base has Wynn officials optimistic Massachusetts could be one of if not WynnBet’s strongest sports betting market in the US.
WynnBet is live in nine states: Arizona, Colorado, Indiana, Louisiana, Michigan, New Jersey, New York Tennessee and Virginia. Billings said during Wednesday’s call he remained encouraged by WynnBet’s online gaming success in New Jersey and Michigan, the only two states it operates in with legal digital casino gaming.
$WYNN adjusted property EBITDA losses for its WynnBet online sports betting and iGaming division:
Q3 2022: ($18m)
Q3 2021: ($104m)Q1 – Q3 2022: ($70m)
Q1 – Q3 2021: ($188m)— Ryan Butler (@ButlerBets) November 9, 2022
West Virginia and Pennsylvania are the only two other states with open, competitive commercial online casino gaming markets, though WynnBet has not yet gone live in either. The company also has made no mention of an online launch in Ohio or Maryland, two online sports betting-only states that nevertheless are each expected to house as many as two-dozen sportsbooks.
Once seen as a possible US sports betting handle market share leader, Wynn has pivoted its plans for digital gaming from becoming a top national revenue driver to a compliment to its brick-and-mortar properties in both Massachusetts and Las Vegas. That has led to a dramatic cut down in advertising, free bets and other player audition costs.
Company officials said Wednesday that the disciplined approach toward marketing and promotions has helped curtail WynnBet losses, a strategy that will continue going forward. Though several competing digital gaming operators have announced timelines for EBITDA-positive quarters, Billings said there is still no firm time frame for WynnBet.
Taking questions during Wednesday’s earnings call, Billings said profitability could be further delayed by user acquisition costs in Massachusetts in the months leading up to the state’s online sports betting launch, which is expected as early as March 2023.
During the call Billings also touched on the recent stock purchases by Golden Nugget casino owner Tilman Fertitta, which saw the stock spike shortly after the purchase was disclosed publicly.
“It’s a great recognition in the value of our equity. There’s not much more to say,” Billings said.
Overall, Wynn operating revenues were $890m for the third quarter of 2022, a decrease of $105m from the third quarter of 2021. Net loss attributable to Wynn was $143m or $1.27 per diluted share, for the third quarter of 2022, compared to net loss of $16m, or $1.45 per diluted share, for the third quarter of 2021.
The revenue losses came despite a new third-quarter record for adjusted property EBITDA at Wynn’s North American properties. Billings attributed the company’s financial declines largely to continued COVID-19-related travel restrictions and shutdowns in the company’s Asian markets.
Wynn plans to launch a mobile sportsbook in Massachusetts, company officials reaffirmed Tuesday, positioning WynnBet to go live in one of the nation’s most anticipated new markets.
Wynn has targeted an online sports betting launch in Massachusetts since the 2019 opening of its Encore Boston Harbor property. With statewide mobile wagering set to be approved as soon as this week, Wynn officials said the company is positioning itself to not just launch, but to be a market leader.
“We have the land-based presence there, and you’ve seen market share from fellow market participants in places where they had brick and mortar presence, this obviously warrants prioritizing Massachusetts,” CEO Craig Billings said during a conference call Tuesday announcing the company’s Q2 2022 earnings.
Wynn had originally sought to compete with other US market leaders including FanDuel, DraftKings, Caesars and BetMGM, which have combined to lose billions in a high-spending promotional and marketing blitz. The company earlier this year announced it would drastically curtail widespread player acquisition spending and instead focus more narrowly on sustainable, high-value customers.
Wynn Interactive, which includes the company’s online casino and sportsbook divisions, still lost more than $160m in the first half of 2022.
Wynn has a smaller market share than the aforementioned market leaders in all markets it operates, including New York, the nation’s largest by handle. WynnBet has low single-digit handle share in the nine-operator New York market, and an even smaller percentage of that figure by gross gaming revenue.
But Massachusetts could be different, according to management.
“Massachusetts was always an important bootstrapping event for WynnBet,” Billings said.
Encore Boston Harbor is only a few miles from downtown Boston, far and away the region’s largest population center. Company officials believe this prominent location has already built brand recognition in Massachusetts and throughout New England, which will help give it a leg up in the digital gaming arena.
Wynn CEO Craig Billings: “Massachusetts was always an important bootstrapping event for WynnBet.”
Wynn, MGM and Barstool Sportsbook parent company Penn Entertainment are all effectively guaranteed two online sports betting licenses under the state’s sports betting bill passed earlier this month. The law will permit as many as 15 online sportsbooks in the state.
Massachusetts’ online sportsbooks are set to launch within the next three-to-six months. The state’s first retail books, including a nearly completed venue at Encore Boston Harbor, could open in the coming weeks.
Billings said Tuesday he expects WynnBet to go live in Massachusetts on the opening day.
“Sports betting will soon be a significant opportunity for property-wide acquisition in Boston,” said Billings, who formally led Wynn Interactive before being promoted to CEO earlier this year.
As with other online sports betting operators, Wynn sees WynnBet’s digital sportsbook as a way to attract players to its more profitable online casino.
Though online casino legalization in Massachusetts is likely years away, Wynn envisions the pending sportsbook launch, combined with the success of its retail casino, as a way to be a digital gaming leader in the state.
Covid-19 restriction repeals helped Encore Boston Harbor see operating revenues increase from $162m to $210.2m from Q2 2021 to Q2 2022, an increase of nearly $45m. Adjusted Property EBITDA from Encore Boston Harbor for the second quarter of 2022 was $63.7m, compared to $46.9m for the second quarter of 2021, according to the company’s earnings report released Tuesday.
While revenues at its Boston casino and its Las Vegas properties increased dramatically year-over-year, Wynn’s overall operating revenue decreased $81.3m from the second quarter of 2022 compared to the second quarter of 2021. Like all other Asia-heavy operators, the company has seen massive revenue declines from its Macau properties due to the Chinese government’s continued Covid-19 restrictions.
Wynn stock ended regular trading up slightly Tuesday. It was trading down more than 2% after hours following its Q2 earnings announcement.
The potential legalisation of mobile sports betting in California is likely to appear on the state’s midterm ballot in November after a petition to include the measure gathered some 1.6 million signatures in support.
If approved, the measure would allow for statewide mobile gaming with a 10% tax rate on revenues. The proposal also calls for a $100m upfront licensing fee, and for operators to be licensed already in a minimum of 10 states in order to be considered.
The measure, as it will appear on the ballot, states: “Legalises online and mobile sports wagering, which currently is prohibited, for persons 21 years and older. Such wagering may be offered only by federally recognised Indian tribes and eligible businesses that contract with them.
“Individuals placing bets must be in California and not located on Indian lands. Imposes 10% tax on sports wagering revenues and licensing fees. Directs tax and licensing revenues first to regulatory costs, then remainder to: 85% to homelessness programmes; 15% to non-participating tribes. Specifies licensing, regulatory, consumer protection, and betting integrity standards for sports wagering.”
The measure’s inclusion on the ballot will be confirmed once state officials have been able to verify the more than 1.6 million signatures gathered by the campaign ‘Californians for Solutions to Homelessness and Mental Health Support’.
The campaign is funded by an ensemble of the largest US-facing gaming operators, including Bally’s, BetMGM, DraftKings, Fanatics Betting and Gaming, FanDuel, Penn National and Wynn.
Flutter Entertainment CEO Peter Jackson: “If the referendum is successful and California adheres to our expected timetable, we’d anticipate that the state would launch in time for the 2023 NFL season.”
The specifics of the legislation has generated ill feeling among parts of the sector, with some arguing the terms favour only larger, established operators at the expense of building a competitive market.
The reaction among bigger players has been positive, however. Peter Jackson, CEO of FanDuel parent company Flutter Entertainment, told investors on the firm’s Q1 2022 earnings call today: “We’re very excited about the Californian situation.
“Clearly, getting to this stage was not straightforward. And we’re very, very happy to be on the ballot. We’ve got a best in class campaign team that has had significant levels of funding. I’d flag that ours is the only ballot that will bring hundreds of millions of dollars in tax revenue targeted at mental health and homelessness solutions, which are real critical imperatives in the state.”
The measure will be included on California’s midterm ballot alongside a separate sports betting bill, which would allow for a retail-only, tribe-controlled sports betting market.
The state’s tribes have fiercely opposed the expansion of online sports betting to include international licensees.
Last month, Politico said the state was “mired in longstanding gambling divisions that already blunted legalisation efforts nearly two years ago.”
Commenting on the clash, Jackson said: “It’s not impossible that our ballot can be passed, and for example, the tribal retail only sports betting issue could also be passed.
“They’re not mutually exclusive, but we’re doing everything we can to ensure that ours will be successful. If the referendum is successful and California adheres to our expected timetable, we’d anticipate that the state would launch in time for the 2023 NFL season,” he added.