In the course of a Friday investor note on DraftKings, igaming, and online sports betting (OSB), Deutsche Bank senior analyst Carlo Santarelli took a look at the political landscape for digital expansion and didn’t like what he saw.
“Efforts to pass sports betting are active and could result in some incremental states of size legalizing,” he opined, “but the prospects, when looked at individually, are not ideal for the OSB operators. Further, on the icasino front, we see little to no real momentum for incremental state legalizations in 2023.”
Santarelli began by observing that the hoped-for reduction in New York State’s 51 percent OSB tax rate hadn’t passed “and does not look likely to take place in 2023.” Ditto the New York City brick-and-mortar casinos, which failed to make it onto the 2023 budget agenda.
The analyst was more hopeful about the Bluegrass State, where the Kentucky Legislature has voted a sports-betting bill out of the lower house and into the state Senate. There, it achieved first-ever passage out of committee. The bill in question would invite three OSB operators into the state, provided that they partnered with horse tracks. The latter, meanwhile, would be allowed retail wagering. While Santarelli noted that legalization could face adversity in the state Senate, which adjourns March 30, “Kentucky has shown some progress.”
Missouri has until May 12 to legitimize sports betting and no fewer than three bills have been introduced. Momentum appears to be with HB 556, preferred by casino operators and “overwhelmingly” approved in the lower house on Thursday. It would provide for 39 online licenses and walk-up sportsbooks at the Show-Me State’s 13 casinos, taxed at 10 percent. However, HB 556 “now heads over to the Senate, where we believe it faces a more uncertain reception.”
As for sports betting in Georgia, “After being left for dead, efforts were revived after a Senate committee pounced on a soapbox-derby bill (HB 237) and inserted sports-betting language.” Details of this hybrid legislation are so far unknown and it must pass by March 29. Predicted Santarelli, “We believe the efforts are likely to not only fail, but to also set sports betting back in the state of Georgia, given the political backlash to this effort.” Three previous sports-betting bills died during the current Legislature, including one that would have permitted it via constitutional amendment.
In nearby North Carolina, a replication of last year’s unsuccessful legislation is circulating in the state capital and have cleared no fewer than three House committees. It would provide for 10 to 12 operators, licensed at $1 million each and taxed at 14 percent. Promotional giveaways would be tax-deductible, a provision that would be phased out over time. The bill, HB 347, is currently headed for the House floor, although the Legislature has until August 31 to act.
Regarding the biggest prize of them all, Texas, Santarelli wrote, “There is no shortage of lobbying going on … to legalize sports betting and/or casino gaming at large.” Testimony on the issues was heard earlier this week, including from most of the Lone Star State’s professional sports teams. HB 1942 legalizes OSB, but via a constitutional amendment, which would have to go through the electorate.
Also, Lt. Gov. Dan Patrick (R) has let it be known that he doesn’t think sports betting has the votes to pass in the state Senate, whose calendar he controls, and that it has what Santarelli describes as “very little support.” Advocates have until May 29 to prove him wrong. Santarelli concluded, “We viewed and continue to view Texas as a long shot in 2023, with the prospects for 2025 far more realistic.”