Analyst: Florida sports betting coming back soon, among other developments

July 13, 2023 9:11 PM
Photo: Shutterstock
  • David McKee, CDC Gaming Reports
July 13, 2023 9:11 PM
  • David McKee, CDC Gaming Reports

Sports betting in the Sunshine State and the uncertainty surrounding it dominated an address by B Global founder and political pundit Brendan Bussmann to analysts at Truist Securities. The remarks were made as part of a Wednesday luncheon, then summarized for investors by Truist analyst Barry Jonas.

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A federal court of appeals recently held that the disputed compact between the Seminole Tribe and Florida Gov. Ron DeSantis was valid under the Indian Gaming Regulatory Act (IGRA). If the decision holds, the Seminoles could restart sports wagering as early as the beginning of this NFL season. However, if the appellate ruling is appealed by August 21, all bets are literally off, as “the current stay would remain in effect until a final decision is reached.”

Bussmann said that while there might be alternative paths to upending the Seminole pact, whether at the federal or state level, operators may have to explore realpolitik. This would entail legalizing online sports betting (OSB) via ballot initiative, taking their case to the voters, or finding some accommodation with the Seminoles.

“It is unclear to us how another expensive ballot initiative would be perceived in 2024 or beyond, as several online sports betting companies should be otherwise approaching profitability then,” Jonas wrote. Although the compact gives the Seminoles a monopoly on Florida sports betting, rival operators such as FanDuel and DraftKings could still enter the market.

They would have to give the tribe 40 percent of their pre-tax revenue, as well as partner with Seminole-allied parimutuels. “It was previously announced that the Seminoles had five parimutuel deals, but it is unclear if those are still in play, since some time has passed,” Jonas added.

The Florida situation could be further complicated by the Bureau of Indian Affairs’s exploration of changes in how land is put into trust, potentially increasing the number of locales where Native Americans can provide gambling. Bussmann thinks the rule change is still iffy from a BIA standpoint and “pointed to the lack of desire to modernize IGRA through the legislative process at the congressional level.”

Turning to Ohio, Bussmann made note of its recent 100 percent increase in the tax rate on sports-betting revenues, from 10 percent to 20 percent. He implied that the action was punitive, quoting Gov. Mike DeWine’s remark that OSB operators had a “Wild West mentality.” Bussman said that the tax hike would hurt smaller operators the most.

Although the doubling of the Buckeye State’s tax levy was “easier to accomplish” than Bussmann expected, he doesn’t foresee it leading to a wave of tax increases in other states. “There were some unique characteristics in Ohio around the governor’s view of sports betting, while other states may see more material tax drivers in other areas,” such as icasinos.

Igaming may be on the move again, Rhode Island having become the seventh state to legalize it. (Monopoly status in the state redounds to the benefit of partners Bally’s Corp. and International Game Technology, Jonas notes.) Bussmann believes that the expiry of federal largesse, plus looming budget problems in individual states, mean new opportunities for gambling on the web.

For instance, New York and Maryland were deemed likely to hop on the bandwagon via ballot initiative. Bussmann is also monitoring legislative developments in Illinois, Indiana, Iowa, Louisiana, Mississippi, North Carolina, and Washington, D.C.

As for state legalization of sports betting, Bussmann said both Georgia and Minnesota will be falling dominoes by the end of 2024. He also believes Missouri to be a strong possibility, given legislative stalemates in the Show Me State.

Pivoting to New York, Bussmann described the downstate casino-selection process as “stalled” after six months. He still believes that Empire City Yonkers (MGM) and Resorts World New York (Genting) are frontrunners for two of the three eventual licenses.

“Interestingly, Mr. Bussmann questioned if a full casino was the highest [return on investment] path for Genting, as they’d be paying ~$1B ($500M for the licensing fee and $500M of capex) to add table games to what’s already a wildly successful VLT-only property in Queens,” Jonas chronicled.

The soonest that Bussmann thinks the final license will be awarded is late 2024. Still, in spite of high tax rates and license fees, he believes “a downstate casino would generate significant monetary contribution for the winner.”

Chicago Mayor Brandon Johnson wants slot routes in the Windy City. According to Bussmann, Johnson believes that he has momentum, but it’s ultimately an issue of whether the city needs the money. If Johnson prevails, it would flood the area with as many as 25,000 terminals, a boon to manufacturers and route operators.

North Carolina is also toying with slot routes and the legislature remains in session. “The potential expansion comes from a desire to deal with the numerous gray machines in the market. However, the state is considering a number of avenues around gaming expansion (also including commercial casinos and some discussion around igaming) and B Global sees a wide range of outcomes as possible,” Jonas wrote.

Globally, Bussmann is bullish on prospects in three countries. In Japan, MGM Resorts International is looking at a potential monopoly when its $10 billion Osaka casino opens in 2029. Several operators have expressed an interest in Thailand, while Wynn Resorts’s $4 billion project in the United Arab Emirates is so far the only casino mooted for that region.