As bettors gear up for a big wagering weekend, Joe Asher, president of sports betting for IGT, said the proliferation of legal sports betting in states is likely to slow and that the industry will be closely watching the launch of ESPN Bet by Penn Entertainment.
Asher appeared on a sports-gaming law-conference panel discussion last week hosted by the State Bar of Nevada.
Some 36 states and the District of Columbia currently offer sports wagering in some form and it’s pending in Vermont. During this year’s legislative sessions, Georgia and Texas were among the states that rebuffed it. In 2022, California voters repudiated competing referendums from tribal and commercial interests, even as the latter spent hundreds of millions of dollars on their failed campaign. Renewed efforts to get sports wagering on the 2024 California ballot have garnered further opposition by the tribes.
“There’s no clear path in California,” Asher said. “You can’t beat the tribes there. Those who think otherwise are learning an expensive lesson.”
Asher remained pessimistic about Texas getting sports betting through in 2026 while Dan Patrick is lieutenant governor, given his opposition to gambling. The Texas lieutenant governor has the ability to block legislation in the state.
“Nothing is brewing in Texas,” Asher said. “Missouri is kicking it around. Smaller states are in play that are good for operators and suppliers, but the ones that move the needle appear to be a little ways away.”
In Florida, the Seminole Tribe just reopened sports betting after fighting the case in the courts. The issue could be considered by the U.S. Supreme Court, brought by opponents of the tribal monopoly on mobile wagering.
“Florida is fascinating,” said Asher, an attorney, “and we can spend all day discussing that. I expect a lot of continuing litigation on the topic.” Asher mentioned the skepticism of Supreme Court Justice Brett Kavanaugh of a tribe offering mobile sports wagering off its reservation.
The competition for sports-betting market share continues to be interesting to follow, Asher said. FanDuel and DraftKings lead the way over BetMGM in third place, and Caesars Entertainment/William Hill in fourth. ESPN Bet went live last week, operated by Penn Entertainment following a deal with The Walt Disney Company that saw Penn unload Barstool Sports back to founder David Portnoy and rebrand its Barstool Sportsbook to ESPN.
“You shouldn’t underestimate the ESPN brand, but it remains to be seen how they do,” Asher said.
Bank of America Global Research upgraded Penn Entertainment to a buy rating on Monday. The initial traction with the app’s launch “has exceeded our expectations and demonstrates ESPN’s dominant sports reach,” the note said.
“ESPN Bet is dominating initial download activity and charts, proving it is cutting through to customers,” the note added. “ESPN Bet has been #1 or #2 of all free apps on the iOS store since last Tuesday, with 865,000 cumulative downloads and a 4.8 app store rating, even without data from NFL Sunday. While skepticism centered on ESPN’s support of the launch versus co-marketing deals with Caesars and DraftKings, we see encouraging signs with full-screen takeovers on the app/web and early content mentions.”
The note said Penn has to prove or improve its retention capability, its tech and depth of markets, including in-game stability, alternative player props, and dark mode. It also needs to improve its presence in states, including New York, “but it’s an encouraging start. We estimate 6% to 7% online sports betting share with Penn’s initial spending commensurate with up to about 10% share. Every 1% market share is worth about $2 a share to Penn’s stock.”
Asher also talked about the launch of the Fanatics sports- betting operation, saying that it hasn’t gotten a significant share yet. Bet365 launched in Ohio, but it also remains to be seen what happens, Asher said. Bet365 has a large worldwide operation.
Smaller operators have yet to gain traction or are focusing on niche operations. Circa Sports, for one, stands to benefit by visitation to Las Vegas, Asher said.
“Circa Sports, independent of what it will accomplish in sports betting, provides great publicity for the downtown Las Vegas resort,” Asher said. “It’s a great marketing tool for the property.”
Asher said Caesars/William Hill has 50% market share in Nevada, while FanDuel and DraftKings don’t have a presence in Nevada (FanDuel runs the physical sportsbook at the Fremont, also in downtown Las Vegas).
“All of that is from the requirement of in-person registration to open accounts, which is still required in Nevada, unlike other states,” Asher said. “It’s a public-policy choice to encourage investment in brick-and-mortar casinos. William Hill has more than 100 retail locations across the state where you can sign up for your mobile account. That has led to a big mobile business.”
Asher said he’s not expecting a U.S. expansion of igaming anytime soon, not until states face budgetary pressure. Federal funding helped alleviate a loss of revenue from the pandemic and has kept igaming limited.
“At some point when states get back to needing money to fill a hole in the budget, they may take another look at it,” Asher said. “But it doesn’t have the natural momentum or constituency that sports betting has.”
