• Early days of horse racing “betting” to the late 90’s; mob sanctioned “bookies” and all that entails;
• Last part of the 20th century and changes in public attitude, i.e. “Super Bowl”, “March Madness”;
• Proliferation of weekly college and NFL football cards, and the major influence of state lotteries, fantasy football growth;
• How courts, law enforcement react  – light sentences, etc.
• Dramatic shift in public support for sports gambling between 2010 and 2014 – four states had already been “grandfathered in” and were exempt from Federal anti-gambling laws (Nevada, Montana, Delaware and Oregon).
• Finally, the State of New Jersey passing a law allowing sports gambling which triggered a case that ultimately was decided by the Supreme Court - Murphy v. NCAA.

Legislation highlights:

1. In 2020, we are seeing legislation and regulation moving quickly, where it can, especially when facing a deadline
   1. Virginia
   2. Maryland
   3. Michigan
2. Most states enacting new legislation are allowing mobile sports wagering
   1. NJ, PA, Iowa, Indiana, Illinois, Colorado, Michigan, VA, Maryland, West VA, Tennessee – and single-operators states New Hampshire, Oregon (lottery/SB Tech), Rhode Island – even when not allowing online casino gaming (except NJ and PA)
   2. But not Mississippi, Montana, New Mexico.
   3. The reason is simple:  sports wagering is a lower-margin business than casino gaming and operators have successfully argued in these states that broadly-available sports wagering is the most economically viable (and most lucrative tax source). and that mobile sports wagering should be broadly-available to combat the black-market sites.
   4. Competing interests:
      1. Online vs. In-Person sign-up requirements – ease expansion/increase revenue vs. supporting brick & mortar establishments
         1. Horse racing example
      2. Mobile-only licensees vs. Only casino licensees
3. Wagering on college sports?  To allow or not allow?
4. New York, California, Florida, Texas have not really moved
   1. New York – 4 upstate casinos see retail gaming; little progress on expanding availability throughout the state; tied to down-state casino expansion; some legislators trying to put into budget; Gov Cuomo not supportive; will likely require referendum to amend NY constitution
   2. California – Political quagmire; a group of tribes, led by Pechanga band of Luiseno Indians (Temecula, CA) have proposed a ballot initiative (which would allow sports wagering at 5 physical tribal locations and racetracks, but not card clubs, and would allow tribes to expand to offer craps and roulette games), and are reportedly about ½ of the way to getting required number of signatures – deadline in mid-June; if not passed this year, another initiative could not be proposed to voters until 2022.  Support is hardly universal – only 18 of 65 CA tribes support it, competing legislative constitutional amendment (ACA 16, SCA 6) could blunt it, card rooms (which have a local community political base) and pro stadiums are excluded, and would not allow statewide mobile gaming, and would bar wagering on college sports.
   3. Florida – Negotiations ongoing with Seminole Tribe to give it exclusivity over sports betting in Florida, as part of trying to solve a quagmire created by (1) a 2016 US District Court ruling that Florida breached tribal exclusivity on banked card games by allowing pari-mutuel facilities to use a designated player system as a workaround, and (2) a 2018 ballot initiative passed by voters that requires any expansion of gambling outside tribes and the lottery to be initiated by voters, not the legislature.
   4. Texas – Efforts in the 86th Legislative Session died in 2019.  The Texas Legislature does not meet in 2020, and Texas lawmakers have repeatedly shown hesitancy to support any kind of casino expansion (see fantasy sports)
5. Data control
   1. Official league statistics
      1. More legislatures recently are tending to give some primacy to official league data, but see NJ, PA
   2. Ownership of wagering data
      1. Integrity
      2. Commercial benefit
   3. Ownership of customer data (particularly in contracted operator states)
6. Impact of COVID-19

• Key Issues re: State Legislation
  • Online v. in-person registration for mobile wagering
    • In general, most stakeholders support mobile wagering
    • NY/PA (as examples) show that majority of wagering is online/mobile
    • A key issue in most states debating/passing sports wagering legislation is whether to allow residents to register for internet/mobile wagering online, or require in-person registration at tracks/casino
    • Discuss policy objectives/arguments behind both approaches
      • Online: drive revenue for state; covert bettors from offshore accounts
      • In-persons: drive casino patronage, local investment and employment; measured approach to new form of (internet) gambling
    • Use data from NJ/PA (which allow online registration) v. Iowa (which requires in-person registration) and recent surveys about bettor attitudes regarding in-person registration
    • Look at conversion rate of DFS players to mobile sports betters as reasons to support/object to online registration
  • Market access: Pure online licenses v. contract with casinos/tracks
    • Most states require online operators to have contract with brick and mortar casinos/track to gain market assess
    • Some states allow/will allow co-branding and/or online licensees to operate independently
  • Other potential issues:
    • Licensee fees (high/potentially prohibitive in some states)
    • Use of official league data
• Key Trends: Customer Acquisition Strategies
  • Significant DFS-sports betting crossover
  • Potential cross-selling with Casino gaming (where allowed)
  • Increasing agreements with media outlets (e.g., Penn National and Barstool Sports) to increase market reach and advertising base