“Two months into the legislative cycle, there are lots of losers and no winners.”
So wrote B Global founder and gaming analyst Brendan Bussmann, taking the political pulse of gaming expansion. In a report published Sunday, Bussmann opined that igaming legislation “will be more challenging than first thought,” falling to “the buzzsaw,” and that sports betting “saw the same fate,” especially in Georgia.
On the plus side, online sports betting went live in Massachusetts last week and Puerto Rico is likely to follow in the spring. But “With only two states left that have legalized, the field is getting more and more narrow for expansion opportunities in 2023.”
Bussmann first looked to Massachusetts, noting that Friday’s launch involved only six online sports betting (OSB) operators, fewer than had applied in the Bay State. Some are holding off until as late as the first quarter of next year. “While the numbers will tell how this new mobile market starts off out of the gate, the brick-and-mortar side that launched a few weeks ago has proven to be a strong start into a sports-dominated market.” Bussmann added that Boston-based DraftKings, WynnBet, and Barstool Sports were all claiming favorite-son status.
Observing the controversy over OSB advertising, which has encountered pushback in both Massachusetts and New York state, Bussmann wrote that it would be the center of controversy in legislatures debating legalized sports betting, as well as catalyzing changes to existing laws in states where sports wagering is already legitimized. He said, “This is due in part to the industry’s lack of pushback of [a] series of publications that turned a constructed narrative into what is presumed to be fact in how this still emerging industry acquires new customers.”
This prompted a series of questions from Bussmann: “Does a BetMGM not get to advertise in a building they own when they host the Pac-12 basketball tournament because of a ban on college advertising? Does a Barstool Sports that sponsors a bowl game have to give up its sponsorship? Can a regulator challenge an operator not to advertise on public transit, because it may be seen by a minor? The challenges are endless, but the science is lacking.”
An even greater agent of change could be the Biden administration’s recent proposal, via the Bureau of Indian Affairs, to loosen the rules under which gaming-enabled tribes could offer igaming and online sports betting. Suggested new regulations would redefine cyberspace as “tribal lands,” so long as the servers on which gambling transactions are processed are within the reservations.
Bussmann himself believes that the Indian Gaming Regulatory Act (IGRA) is “in need of an overhaul. The world has changed, but Congress has little appetite to touch these pieces of legislation for a host of reasons.” But, he continues, this does not justify presidential “overreach” or “that agencies take steps beyond” what is laid out in IGRA. Any alterations to IGRA, he’s convinced, will land in court. “What is almost certain is Congress’ ability to not do anything.”
In New York, Bussmann resumed, the casino-application process will stretch onward, as the New York Gaming Commission continues to field literally hundreds of questions before requests for applications can even be issued. “Based on the current trends, it appears the earliest that applications will be put in as part of round one would be late Q2 in June, but this may be an optimistic time frame.”
The real challenge, the veteran analyst wrote, is for the winners to realize the kind of revenue that Gov. Kathy Hochul anticipates. Part of this is because igaming “is left in the scrapyard in 2023,” due to Hochul’s lack of support for it. Bussmann is confident that the Empire State will baptize igaming “at some point,” but only when it will becomes a budgetary necessity. The state “is one that sees gaming as just another revenue line and only needed when the cow needs more milking.”
Turning to Missouri, he described the situation as a tango between sports-betting proponents and backers of slot routes, each seeking legitimacy. A bill yoking approval of one to the other has apparently failed, leaving two standalone pro-sports-betting bills in contention.
“Senator Denny Hoskins, proclaimed sports betting champion but VGT-driven legislator, has vowed to kill any bill that does not include VGTs. The killing of Hoskins’s bill in committee shows the direct result of his actions over the years, where he has governed by self-interest, as opposed to what his constituents or the people of Missouri want,” Bussmann wrote. He added that the state Senate would be the decisive battleground for the issue, which Missouri has debated “longer than any other state in the Union.”
In a subplot reminiscent of the TV series “Ozark,” debate has flared up over adding an Ozarks-based casino riverboat deep in Hoskins’s territory. This would require a constitutional amendment: “While the market could likely support such facility, it is yet to be determined if the voters will approve.”
Missouri appears a slam-dunk compared to Georgia. “The Devil has gone down to Georgia,” Bussmann despaired, “as the state faced crossover day earlier this week and discovered that nothing was going to cross over, leaving sports betting on their respective house floors.” Not only was a straight-to-the-electorate constitutional amendment rejected, a proposal to integrate sports betting into the state lottery failed even to receive a state Senate vote.
“Both sports betting and casino gaming will continue to be debated for many years to come, but the likely path forward in this purple state seems slim in the short term,” wrote Bussmann, holding out hope for a change in leadership in the state House as the only means for issue to be resolved favorably before 2030.
Things, however, are looking up in Kentucky, a state that has wrangled with sports betting as long as Missouri has, according to Bussmann. The issue “is starting to make further traction in the state, [bringing] some level of hope that it may make it through both houses and finally allow a gaming state, largely dominated by Historic Horse Racing machines and pari-mutuel wagering, to offer another form of legal gaming.” As in Missouri, the fate of sports wagering lies with the state Senate.
Minnesota lawmakers are taking another run at the sports-betting issue, although Bussmann cautioned that the legislation was currently undergoing “committee onslaught.” Not only do the state’s two horse tracks want a piece of the action, proponents must try to keep all 11 of the Minnesota-based Native American tribes on one page, although only nine are enrolled in the Minnesota Indian Gaming Association.
Bussmann thinks the key to getting the bill passed is finding bipartisan agreement in a schismatic legislature. He worries that it will become “a Christmas tree bill to appease all sides,” including strictures on promotions, limits on wagering, and other add-ons that could ultimately drag it down to defeat.
Swiftly summarizing the remaining states in play, Bussmann described the North Carolina legislature as “a waiting game,” but noted that survey data shows citizens heavily in favor of expanded sports betting. Virginia is said to be turning a blind eye to gray-market slot routes and leaving the possibility of a fifth casino — whether in Richmond, Petersburg, or elsewhere — “on the cutting floor.”
Thanks to regulatory uncertainty, sports-wagering constraints in Nebraska are likely to continue, while a Nevada lottery faces “an uphill battle, but will they make the same challenges that other [states] have done in the past of taking this to ballot to then find a loophole to pull it back?” Bussmann left his question unanswered.