This week’s State of the Union, in partnership with Segev LLP, covers Penn National’s purchase of media company Barstool Sports, PokerStars founder Isai Scheinberg’s decision to surrender to US authorities and a bill to legalize mobile betting in Mississippi, as well as a sports betting bill in Missouri.
Penn National seals Barstool Sports partnership
Penn National Gaming (PNG) has entered into an exclusive sports wagering and online casino partnership with Barstool Sports, in a deal that will also see the operator acquire a 36% stake in the digital sports media company.
Under the arrangement, PNG will pay $163m for the stake, securing its position as Barstool’s exclusive gaming partner for up to 40 years.
PNG will fund the purchase with $135m in cash and $28m in share of non-voting convertible preferred stock. After three years, PNG will increase its ownership to approximately 50% with an incremental investment of approximately $62m.
The deal will also give PNG the sole rights to use the Barstool brand for all of its online and retail sports betting and online casino products. The operator has already begun taking over operation of its bricks-and-mortar sportsbooks, and is in the process of developing a mobile product, in partnership with Kambi. This is likely to launch in the third quarter of 2020.
PokerStars founder Scheinberg surrenders to US authorities
Isai Scheinberg, the founder of online poker giant PokerStars, has travelled to the US to face charges of gambling, bank fraud and money laundering first filed in 2011.
According to Forbes, Scheinberg flew to New York from Switzerland, where he is based, earlier in January after the US authorities began extradition proceedings against him. He has been released on $1m bail, and has agreed to remain in the US until the case is heard.
He is the last individual to be indicted in the crackdown against igaming sites targeting US customers in April 2011 to face the charges against him. All others have pleaded guilty to either misdemeanours or felonies.
The original indictments, which led to the shut-down of US-facing sites such as PokerStars, Full Tilt Poker and Absolute Poker and Ultimatebet operator Cereus, were unsealed on April 15 2011, a day that became known as Black Friday by the poker community.
Maryland Senators file competing sports betting bills
Two competing bills to authorize sports betting in Maryland have been introduced in the state senate.
While Senate Bill 58, introduced by senator Chris West, would only allow sports wagering licenses to be issued to video lottery or thoroughbred and harness horse racing licensees, the other bill – Craig Zucker’s Senate Bill 4 – would create an open application process.
Currently, six casinos hold video lottery licences in Maryland. These are MGM National Harbor, The Casino at Ocean Downs Racetrack, Live Casino & Hotel in Hanover, Rocky Gap Casino Resort, Horseshoe Baltimore Casino and Hollywood Casino Perryville.
A further five racetracks – Laurel Park, Pimlico Racetrack in Baltimore, Timonium Racecourse, Fair Hill Races in Elkton and Rosecroft raceway in Fort Washington – hold thoroughbred or harness racing licences alongside Ocean Downs.
Mississippi lawmaker makes new mobile betting push
Mississippi Representative Cedric Burnett has resurrected a bill to legalize mobile wagering in the state, having previously seen a similar proposal die without progressing to a committee hearing in 2019.
Burnett’s House Bill 172 aims to revise the state Gaming Control Act’s definition of a sports pool, and to define a platform as a person or entity that operates a sports pool or racebook over the internet.
While the Act currently states that wagers may only be placed by individuals present on a licensed vessel or cruise vessel, this would be changed to allow betting via approved platforms.
These platforms, provided they are licensed as a distributor by the Mississippi Gaming Commission, could be operated on behalf of a bricks-and-mortar sports betting licensee. The current $500 fee for a seller’s license would also apply to to distributors, with a further $500 payable to renew the certification.
Illinois launches second phase of sports betting rules
The Illinois Gaming Board has released the phase two rules for sports betting, setting out the technical regulations and operating requirements for wagering in the state.
The phase two rules cover every element required for licensees to launch sports betting in the state. These range from accounting measures and financial record requirements to authorized types of bets, internet wagering requirements and responsible gaming controls.
While these have not yet been filed with the Secretary of State, and are therefore subject to non-substantive changes, they state that official league data must be made available on commercially reasonable terms, and via a licensed data provider.
Operators must provide voluntary limit-setting controls for customers, covering the type of wager placed, the frequency of activity, the ability to cap spending, and the option to completely exclude themselves from gambling.
Missouri sports betting and VLT bill clears House committee
A new bill seeking to legalise sports wagering and video lottery terminals (VLTs) in Missouri has cleared the state’s House Special Committee (HCS).
Sponsored by State Representative Dan Shaul, the 31-page House Bill 2088 will now proceed to the House floor for further debate.
HB 2088 sets out proposals to legalise land-based, mobile and online sports betting in Missouri, with only licensed facilities permitted to offer wagering. Operators would need to pay an initial $25,000 to apply for a licence.
The bill said that licensed operators would be able to contract a third party to conduct sports wagering at their facility and interactive betting, but only if they were also to secure a licence.
H2: Super Bowl LIV betting set to reach $760m
Licensed US sports betting operators are expected to take a record $760m in wagers on the 54th edition of the Super Bowl, according to betting and gaming data specialist H2 Gambling Capital and its US strategic partner Princeton Public Affairs Group (PPAG).
The match on February 2, which will see the San Francisco 49ers taken on the Kansas City Chiefs at Miami’s Hard Rock Stadium, will see amounts wagered almost double from the $400m staked legally on last year’s match.
This, H2 and PPAG note, will represent almost 13% of total stakes placed on the game, a significant improvement on Super Bowl LIII, when legal US bets accounted for just 6% of total betting activity.
However, the pair added, this is dwarfed by offshore activity, with an estimated $5.4bn to be wagered via illegal operators.
Mississippi sportsbook revenue declines despite increased handle
Mississippi casinos made $3.5m in revenue from sports betting in December, its lowest figure since August and down 43.7% year-on-year, despite handle rising 17.5% to $49.1m.
The state’s coastal casinos were again the most popular venues to bet on sports, with a handle of $30.5m, up 11.7%. However, while the region was first in revenue with $1.6m, this figure represented a 56.7% decline from 2018.
While casinos in central Mississippi saw a handle of only $6.1m, a 13.1% year-on-year increase but the least of the state’s three regions, it was second in revenue with $1.2m, up 27.2% year-on-year.
Players staked $12.5m at Northern Mississippi casinos, 38.0% more than 2018. However, handle declined 52.9% to $696,638.
Washington state bill would protect social casinos from loss recovery
Lawmakers in the state of Washington have introduced a bill that would exempt social games, video game loot boxes and skin gambling from gambling loss recovery laws.
The bill – House Bill 2720 – is sponsored by Zack Hudgins, Brandon Vick, Bill Jenkin and Brian Blake and has been referred to the Civil Rights & Judiciary Committee.
Under Washington’s Recovery of Money Lost at Gambling Act, a person who loses money or anything of value in an illegal gambling game has a cause of action to recover the money or value of the items lost from the operator or winner of the game.
Whether this law applied to games played for virtual tokens that could not be exchanged for money – such as in social games or video game loot boxes – became a source of debate after a 2015 class action suit against Seattle-based and Aristocrat Leisure-owned Big Fish Gaming to recover losses.
theScore seals Colorado sportsbook access deal
Score Media and Gaming, a division of Canadian media business theScore, is to launch mobile sports betting in Colorado via a new partnership with gaming operator Jacobs Entertainment Inc. (JEI).
Under the deal, agreed with a subsidiary of JEI, Score Media and Gaming will roll out its theScore Bet mobile sports wagering application in the state later this year.
JEI will receive a percentage of revenue derived from theScore Bet’s operations in Colorado – subject to certain annual minimum guaranteed amounts – and an initial upfront fee.
The deal, which is subject to theScore receiving all of the relevant licenses and approvals from the Colorado Division of Gaming, will run for an initial term of 10 years, extendable for two successive five-year terms at theScore’s option.
Betfred moves into Pennsylvania with Wind Creek
Bookmaker Betfred is to roll out its services in Pennsylvania after agreeing a new deal with Wind Creek Casino & Resort Bethlehem to operate retail, mobile and online sports wagering.
Subject to regulatory approval, Betfred will operate a new sportsbook facility at the casino, as well as run mobile and online betting across the state.
Betfred, which agreed the deal through it Betfred USA Sports division, will also provide compliance, support, marketing and trading for the new partnership.
“We look forward to the opportunity to work with Betfred to offer sports betting at Wind Creek Bethlehem; their experience and leadership in the sports betting market gives us confidence that Betfred is an excellent partner as Wind Creek Bethlehem expands gaming offerings in Pennsylvania,” Wind Creek’s hospitality president James Dorris said.
IGT signs multi-state sports betting deal with Delaware North
International Game Technology (IGT) has agreed a deal with Delaware North Gaming & Entertainment to power sports betting at its venues in West Virginia and Arkansas.
Under the agreement, IGT will provide its retail and mobile betting PlaySports technology to Delaware North’s West Virginia casinos Mardi Gras Casino & Resort in Cross Lanes and Wheeling Island Casino-Hotel-Racetrack in Wheeling Island.
The deal also covers the supply of retail sports betting services at the Southland Casino Racing in West Memphis, Arkansas.
IGT’s PlaySports division already powers sports wagering across 11 US states, including Oregon, Arkansas, Indiana, Iowa, New York, Pennsylvania, Mississippi, West Virginia, Rhode Island, New Jersey, and Nevada.