Despite uncertainty about the macroeconomic picture, casino-industry leaders believe the business is “well-positioned” in the near term. That was among the conclusions of Truist Securities analyst Barry Jonas, reflecting on the East Coast Gaming Congress held this week at Hard Rock Atlantic City. He published his views in an April 16 investor note.
Jonas was unsurprised that prediction markets dominated much of the discussion on the Boardwalk. Industry executives were concerned about a lack of regulation of event contracts. They also worried about how event contracts might evolve and felt the issue was headed for the Supreme Court, “which could provide more clarity.”
PCI Gaming CEO Jay Dorris opined that prediction markets “are taking advantage of players’ trust of the regulated gaming market.” He cited $143 million worth of suspicious transactions, at least 200,000 in number, over the past two years.
Event contracts were also seen as a threat to lotteries, with one panelist, unidentified by Jonas, citing a statistic that 34 percent of lottery players were less likely to increase their play in favor of prediction-market action instead. “Another thinks [prediction markets] are a threat to all forms of legalized gaming, risking players trust of all forms of gaming,” Jonas reported.
Similarly, Penn Entertainment CEO Jay Snowden predicted that event contracts would soon morph into online slots. He noted that, unlike a Kalshi or Polymarket, Penn “has to maintain its licenses and any poor behavior/illegal activity would likely result in some negative impact to Penn as a licensee in any state.”
By way of pushback, Snowden suggested the industry should advocate for consistent enforcement of the law nationwide. He also felt gaming should support states’ attorneys general in their fight against event contracts and engage with Congress on the issue, in hopes of forcing a Supreme Court case.
Jonas noted, “Unsurprisingly, most panelists maintained that regardless of the mechanism, [prediction markets] are gambling.” One dissenter was Sporttrade CEO Alex Kane, who said, “’Exchanges are fundamentally different,’ but he conceded that people are risking their money on sports events when trading” in event contracts.
He contended that gaming regulators never contemplated this business model, which calls for a different form of oversight. “Over time, Mr. Kane thinks the industries will be able to coexist and expects OSB handle to level off as sharps head more toward prediction markets, thus causing hold rates for OSB operators to rise,” Jonas recorded.
All other panelists were of the opinion that “it’s unfair to compete against prediction platforms that don’t really play by any rules (i.e., no taxes, licenses).” One person of this persuasion was Nevada Gaming Control Board Chairman Mike Dreitzer, who took the view that prediction markets offer neither the transparency nor the responsible-gambling measures that licensed gaming operators provide.
Dreitzer also “pointed to insider-trading risks that are a unique issue for exchange platforms.” Kane disagreed vehemently, but had to concede that responsible-gambling measures needed to be improved.
Both Dreitzer and American Gaming Association President Bill Miller voiced fears that prediction markets would evolve into outright igaming, with slot-like offerings. Dreitzer cited the examples of historical racing machines and other Class II gambling devices that have encroached on Class III gaming.
Another hot topic was the future of Atlantic City itself. Panelists were of the opinion that Class III casinos in New York City would be operational by 2030 — at which point, Hard Rock International CEO James Allen expects Atlantic City to lose as much as 30 percent of its business.
Representatives of Resorts World New York City reported that they would be adding table games to their existing casino soon, but were looking four years out for a full megaresort offering. Also, they said that Resorts World is “not directly targeting Atlantic City, as the company remains focused on the people living in its market and a deeper penetration into Manhattan.”
Continuing the issue of cannibalization, David Cordish, CEO of Cordish Gaming, again criticized igaming. His concerns partly involved the addictive prospect of holding “a casino on the phone.” But he also felt igaming to be a threat to billions of dollars in tax payments and thousands of jobs.
“Most panelists agreed that there isn’t cannibalization of land-based casinos from lottery, as lottery offers a different type of player experience and large jackpot sizes, while casinos offer more of a social experience,” chronicled Jonas. One unidentified panelist felt that Nevada was missing a significant economic opportunity by eschewing a lottery.
All panelists were said to be of the opinion that “casinos, lotteries, and OSB operators should work together in order to leverage each other’s player databases,” with one seeing hopeful signs in that respect in emerging markets. The DraftKings purchase of Jackpocket was cited as evidence that lotteries and other forms of gambling could live together successfully.
