7 minute read
MATTRESS MACK, MASSACHUSETTS AND MARCH MADNESS
MATTRESS MACK, MARCH MADNESS AND MASSACHUSETTS
Covers.com's Geoff Zochodne speaks to Gaming America about the state of the US sportsbook market – and where it is heading as more states open their doors to sports betting.
Could you give us your general take on the state of the US sportsbook market at this moment?
The general overview would be that we’ve reached a point where a majority of US states have legalized some form of sports betting. It’s reached a tipping point from that perspective in that you now have more than 30 states having legalized some form of sports betting. There are a few notable holdouts, like Texas. California, for example, just had two ballot measures that were defeated in the midterms. There’s a bit of a legal kerfuffle going on in Florida right now, which is holding back sports betting there. Other than that, you have seen again the majority of the states do it. We also have some notable states that have come online – including Maryland. On January 1st, Ohio went live, right when the clock strikes midnight. And then later in January, you’ll have Massachusetts with retail sports betting. They’re targeting the Super Bowl.
Then there’s the launch of mobile sports betting in early March, which has definitely just become much more normalized, I would say. Some states are always going to be a tough sell, in the South and more socially conservative states, for example. But you’ve seen a lot of momentum pick up in certain spots, like Massachusetts. It took them a while to really figure out what they were going to do. But they were coming under such pressure from nearby states such as New York and other New England states having it; that really put lawmakers on the spot. Eventually, they managed to hammer out a compromise. But the general overview is that it’s really gained a lot of traction.
So, it’s definitely good – but there is equally room for improvement.
The dates you just gave for Massachusetts, are they nailed-on dates?
Yes. The Massachusetts Gaming Commission had a very lengthy meeting and they ultimately set a broad-strokes timeline for that. But they’re shooting for late January with casinos and early March for online sports betting. So they will miss the Super Bowl with the online launch, but they’re going to still try to capture March Madness, which they wanted.
The Massachusetts regulators, having watched a lot of their meetings, they’re very thorough and careful in how they go about their business, including how they interpret the law that was passed. They’re not going to let themselves be rushed too much. I think it took them all a while just to settle on that timeline. Now that that is there, I think they don’t want to revisit it. They actually got asked by DraftKings, which is based out of Boston, to look at potentially revisiting it and they shot that down because the state didn’t want to. They took so long just to settle on it the first time, they didn’t really want to go back over it.
GEOFF ZOCHODNE
Covers.com
What about opportunities in new states? Obviously, we were talking about Massachusetts, which looks like it will be a huge new market when that opens up.
Yeah, population wise, it’s significant, but it’s not the biggest market. Ohio is bigger in terms of population, but you’re
exactly right, they have legendary teams like the Boston Celtics, the Patriots and this really robust culture of loving sports. As I noted earlier, you have one of the biggest online sports betting operators in the entire country that’s based in Boston. So, it’s kind of funny that they’ve expanded into all these other states, but not in their own backyard. That has actually been a point that they’ve brought up during some of the debates around legalizing sports betting in Massachusetts – DraftKings argued that if they had it, it would create more jobs and maybe give the economy a shot in the arm.
Maryland’s an interesting one, too. We’ll see how that plays out. The usual suspects are all involved but the state’s law really has a lot of room for others to join in because it was written in a way to try and ensure the participation of women and minorities in the sport. That’s actually why it took them a while to get to the launch, because in Maryland they had a referendum in November 2020, which is how the state decided to proceed with sports betting. It has taken them more than two years to launch online sports betting, in part, because they had to look into the state of the industry and ensure there would be diversity.
That is why it’ll be interesting to see how it matures. It looks like up front it’ll be the likes of DraftKings, FanDuel and BetMGM. But down the road, you might see some interesting partnerships, because there is room for it under the law. You do wonder about the future of smaller sportsbooks and how they’re going to survive against the might of brands like DraftKings, FanDuel and Caesars. Just recently, we saw MaximBet pull out of the market – they were only live in Colorado and Indiana, and they eventually just shut it down. They decided the economic conditions and difficulty of the industry right now wasn’t worth it. Frankly, DraftKings is still a year away at least from profitability. There’s a lot of pressure on the small operators...
How do smaller sportsbooks compete against that and keep customers, when obviously the odds are so stacked against them?
It’s really tough. We had New York launch online sports betting in January and a lot of the operators went all out, pulled out all the stops to grab as much market share as they could, right off the top. There were some really lucrative sign-up offers that operators were throwing towards people, to the point where I think they all had to pump the brakes. After that, they might have decided they have overdone this one. It’s tough to match some of these bigger books on their financial resources.
FanDuel has the backing of Flutter behind it and they’ve put a lot of money into FanDuel, which has responded by grabbing a tonne of market share. One thing that’s interesting is that there are some companies hoping to launch sports betting who’re not traditional gambling companies. The one I’m of thinking off the top of my head is Fanatics. They are a big sports merchandise company, known for selling products like shirts and hats to people for their favourite teams, who are dead set on entering the sports betting business. They’ve been getting licences all over the place. But having that merchandise side to it, they're sort of making a joke where instead of signing up and you get $50 in free bets, the customer gets a free hat. So, something like that’s really interesting.
What about customers that hit the sportsbooks for a lot of money, like Mattress Mack?
That was a hell of a thing to be thrown up for if you’re a small sportsbook! The good thing is he spread his bets around, and some of the bets were smaller for the US – I think Unibet got in on it, they took a $1m hit. But the biggest was the one he placed with Caesars for $3m. It’s funny because Caesars is a publicly traded company and they have their quarterly calls; so, depending on how it went with Mattress Mack, the online gaming division could either be profitable next quarter or it could be unprofitable because it was going to swing to a loss. Also, it’s worth saying that Mattress Mack has been doing this for a long time and he doesn’t always win. He lost a bunch on the Super Bowl. I think he lost the Kentucky Derby. He’s not clairvoyant or anything like that. He’s returning business for them.
The last thing I really want to ask you about is in relation to the recent FIFA World Cup, how big is the sport in the US now?
This is the first one where you’ve had widespread legal sports betting across the US, and I think the American Gaming Association just came out saying they were expecting a huge sum. But they have a few things that went against them, including the timing of the games. It was on Qatar time, so it was a bit tricky that way.
But soccer has really gained a lot of attraction itself in the US. The MLS league continues to do pretty brisk business, and there’s now this availability that hasn’t been seen before in the US for any previous World Cups.
