Hello and welcome to this week’s Igaming Focus newsletter.
We have a(nother) stacked newsletter this week:
- Scandal: Shohei Ohtani’s interpreter in plea negotiations, while Toronto Raptors’ Jontay Porter also in eye of the storm.
- Q1 data points: Margins started out strong in January but were hit by Super Bowl and March Madness results.
- GeoComply under scrutiny in Iowa over links to state authorities and athletes’ arrests.
- Games Global set for New York float.
- Adverse sporting results impact BetMGM in Q1.
Los Angeles – April 12, 2024: Press conference following the arrest of interpreter for Los Angeles Dodgers star Shohei Ohtani. © Shutterstock/Elliott Cowand Jr
Ohtani interpreter hands himself in to feds
LA Dodgers star Ohtani’s translator accused of abusing access to the baseball star’s bank account to fuel gambling habit.
Lost in translation? Ippei Mizuhara, until recently Los Angeles Dodgers star Shohei Ohtani’s translator, has handed himself in to federal authorities for allegedly stealing $16m from the baseball player and using the funds to place bets with illegal bookmakers.
- Mizuhara is alleged to have wracked up losses of $40m since he started betting in 2021. His arraignment hearing is scheduled for May 9 and he is expected to enter a plea. The New York Times reported earlier that he was negotiating a guilty plea.
- Mizuhara, who is a close friend of Ohtani’s and has acted as his translator and fixer since his arrival in the U.S. in 2018, is accused of making unauthorized transfers from Ohtani’s bank account from November 2021 to January 2024 and using the funds to place huge bets with unlicensed bookmakers. If found guilty, he could face up to 30 years in prison.
- News of the scandal first appeared in March when the Dodgers were on a pre-season tour of Korea.
- Commenting on the scandal, industry investor Chris Grove told CNN that the case was another in “an unfortunately long line of trusted advisors taking advantage of well-compensated athletes”.
- Grove noted that the case could lead to pressure on the regulated industry to strengthen checks on source of funds (especially on large bets), the movement of funds and the potential involvement of agencies like FinCen.
- According to U.S. attorney Martin Estrada, Mizuhara did not place bets on Ohtani or on baseball matches, but the wagers became more frequent and “over time, Mr. Mizuhara’s bets became larger and larger in amounts”.
- In total, Mizuhara made winning bets of just over $142m and lost nearly $183m, “leaving a total net balance of negative $40,678,436.94,” the federal complaint against him reveals.
On social
Holy crap Ippei is bad at gambling pic.twitter.com/k9MxvM0QwO
— Dustin Gouker (@DustinGouker) April 11, 2024
© Toronto Raptors official website
Toronto Raptors center Jontay Porter receives lifetime ban from NBA
Industry watchers say Porter’s betting activity is a further example of a professional athlete getting caught up in a wagering scandal.
Rocky road: Toronto Raptors center Jontay Porter has been handed a lifetime ban from the NBA after a league investigation found he had violated rules around betting including: disclosing information to sports bettors, betting on NBA games himself and limiting his own participation in games for betting purposes.
- The news follows comments by NBA commissioner Adam Silver last week, in which he said Porter could be banned from the league if betting irregularities that were picked up in January and March link back to him.
- It’s a sin: Silver said if the accusations were true, they would be a “cardinal sin”.
- This week Sports Handle reported an anonymous source had said: “Porter did not wager on any NBA or college basketball games over the period”, but the league’s investigation found evidence of at least 13 bets using an associate’s betting account between January and March this year.
- In an NBA statement yesterday, Silver said Porter’s “blatant violations” had “met with the most severe punishment” because there was “nothing more important than protecting the integrity of NBA competition”.
- Silver acknowledged that legal sports betting brings a level of transparency that helps to identify suspicious activity, but he questioned the “sufficiency” of the current regulatory framework.
- Colorado gaming regulators had requested that sportsbooks in the state report any accounts that Porter may have operated. The operators had until the end of Monday this week to comply with the request.
Q1 data points: U.S. online sports betting and icasino
Margins suffer as March Madness results hit bookmakers
Strong start: Jefferies collated data from six states (IA, ME, MD, NY, OR, TN) that have published online sports betting statistics for Q1 2024 and found that handle had increased 17%, gross gaming revenue (GGR) was up 20% and margins were +0.2ppts on Q1 2023, with the “period broadly characterized by double-digit handle growth” and “margin strength in January (+2.4ppts to 11.6%) driving the highest monthly GGR growth (+44%)”.
- Mad finish: Bookmakers’ margins were lower month-on-month in February at 8.2% and drove GGR growth of 20%, but were “particularly weak” in March at -1.5ppts to 8.3%, which led to an annual GGR drop of -3%.
- FanDuel was market share leader with GGR share of 48%, DraftKings was second at 35% (+6ppts) and BetMGM was third with 7% (-3ppts). ESPN Bet recorded 1% of GGR share in Q1, said Jefferies.
- DraftKings increased its GGR by +42%, FanDuel by +16% while BetMGM’s dropped -17% during the period.
- Betting handle increased +14% year-on-year in March, GGR was -3% and margins were -1.5ppts lower at 8.5% due to unfavorable March Madness results, “particularly in the earlier rounds,” noted Jefferies.
© Jefferies and H2 Gambling Capital
- State data: In New York, the first week of March Madness led to weak margins of 5.8% vs nearly 8% long-term average. They recovered to 9.2% and 9% in weeks two and three. April data for the Empire State showed that handle was up 36% as March Madness ended on 8 April, said Jefferies.
- For the week ending 7 April, New York sportsbooks recorded nearly $466m in handle and $42m in GGR, with FanDuel accounting for close to $22m of the total.
- Across the Hudson river, New Jersey sportsbooks’ handle was up nearly 30% on March 2023 to $1.3bn, but GGR was down 3.6% to $89.7m. Mobile GGR accounted for $85.7m of the total, land-based GGR was down 28% to $4m, margins were down 240 bps to 6.7%.
- Online casino GGR was up 19% to $197m in March and up 22% during Q1 2024 to nearly $563m (see visual below).
© New Jersey Division of Gaming Enforcement and Deutsche Bank
© Geocomply
GeoComply under scrutiny in Iowa
Geolocation specialist stays quiet as its role in Iowa betting scandal comes to light
GeoComply has found itself at the center of a controversy in Iowa following an investigation by the Des Moines Register (DMR). It revealed that GeoComply had given the state’s Division of Criminal Investigation’s (DCI) sports wagering unit access to its monitoring services, enabling it to see where and by whom bets were being placed across the state.
- The DMR said GeoComply offered to help the Iowa DCI in March 2022 and “train its agents on how to track bets around the state as they happen”.
- This resulted in the DCI discovering that Iowa State University and University of Iowa athletes were using accounts registered to parents and friends to place bets, sometimes on their own games.
- However, those transactions were not reported by operators, leading to doubts over how sportsbooks view and flag suspicious bets and highlighting how dependent state investigators are on the goodwill of the industry to provide them with information, or access to it.
- Meanwhile, the DCI investigation led to 25 arrests and charges that have now been dropped, but it also attracted outrage and strong criticism from politicians, coaches and fans who accused the DCI of violating high-profile athletes’ constitutional rights as it carried out its investigation without warrants.
- GeoComply cut off the DCI’s access to its software in January and did not reply to requests for comment from DMR.
Games Global issues prospectus for New York float
Games Global, a provider of online casino solutions headquartered on the Isle of Man and led by executives such as Walter Bugno (ex-IGT) and Tim Mickley (ex-Playtech) has filed a prospectus to list on the New York Stock Exchange.
- The company emerged after it bought Microgaming’s B2B content portfolio and access to its client base in 2021 and, for the U.S. market, the B2B units of Digital Gaming Corporation, which trades as SuperGroup and operates the Betway and Spin Palace brands.
- Games Global said that from April to December 2023 its revenues rose 23% to €273m and adj. EBITDA was up 10% to €121m.
- In common with much of the online casino sector, the company has established a network of in-house and external games studios that provide it with content that it distributes to its 350 B2B customers.
- It plans to launch a live casino product in the U.S. by the end of this year and will be expanding into ilottery and crash games.
- Games Global acquired the games studio Mahi Gaming for $81m in 2022 and in partnership with the firm Velo Capital Partners it created Velo Studios in 2021 to carry out igaming acquisitions through that investment vehicle.
Adverse sporting results impact BetMGM in Q1
Entain, MGM Resorts’ joint venture partner in BetMGM, said revenues for the number three U.S. online gambling operator were up 2% and the brand enjoys 14% market share in online sports betting and casino, but that “continuing igaming strength [was] offset by customer-friendly win margins across online and retail sportsbooks” in Q1.
- The group added that adjusting for the impact of sporting results, “Q1 NGR would have been high single digit positive” as strong customer acquisition numbers were supported by “successful Super Bowl and March Madness engagement and improving app and product capabilities”.
- The UK group is still searching for a new CEO, and interim boss Stella David said there were no updates on either that situation or the potential sale of a number of its business units. David was appointed following the dismissal of Jette Nygaard-Andersen in December and chairman Barry Gibson will stand down in September as part of a corporate reshuffle.
- International brigades: In the UK, revenues were down -9% online and -7% in retail, but in Central and Eastern Europe, where the group operates Super Sport in Croatia and STS in Poland, revenues were up 11%. In the Netherlands it runs the BetCity brand but David said there was strong uncertainty in the market following a vote by Dutch MPs to ban online slots.
On social
FanDuel campaigning in Illinois gets the 👎
A good response would be:
“Stop cynically agreeing to 51% tax rates in other states to block competition from smaller operators. You’re the ones who gave IL license to ask for more taxes.” https://t.co/Aum1SZnuuv
— Joe Brennan Jr (@joebrennanjr) April 13, 2024
