USA
Kambi provided a glimpse into sportsbook Q2 reports in July, with strong results following favorable results in the Euros and Copa America. NIGC released reports of record years for tribal gaming operations in 2023. WNBA isn’t just attracting audiences but also major partnerships worth billions of dollars, which can help elevate not just women’s basketball, but women’s sports as a whole. Less positive was the increased gambling tax in Illinois, which will likely have unwanted side effects.
TLDR: a Bite-sized Overview:
- Favorable Results in the Euros and Copa America generate higher profits for sportsbooks. Sports bettors tend to back favorites, wager on over rather than under, and prefer seeing a team win instead of a tie. There were many upsets, low-scoring games, and ties in the Euros and Copa America. Results favoured sportsbooks, where we can expect strong Q2 reports.
- Despite technological advances and increased competition, tribal gaming stays resilient, and posts record GGR results for 2023. NIGC’s GGR reached record highs of $41.9 billion in 2023, providing much-needed tax revenue for tribal communities, job opportunities and improved means for financial independence.
- DraftKings becomes an official sports betting partner of the WNBA alongside FanDuel. The WNBA has seen record growth in 2024 thanks to Caitlin Clarke’s fandom, and companies are lining up behind the league, which is set to receive around $2.2 billion over the next 11 years.
- In an unfortunate turn of events, Illinois has raised gambling taxes for sports betting companies from 15% to a top rate of 40%. Increased taxes will lead to worse products and services and increase the risks of consumers choosing illegal offshore options where consumer protection is low and American dollars are taxed abroad.
Sportsbooks Expected to Report Strong Q2 Results Off of Favorable Euros and Copa America Results
The Copa America and Euros will likely push record Q2 growth for many sportsbooks after favourable tournament results. While soccer isn’t the most popular sport in the US, these tournaments, along with the Olympics and other less popular sports, keep odds lists populated during quiet periods of the year.
Kambi indicated this on July 24 when it presented its Q2 report for 2024, posting a 6.5% year-on-year growth of around $49.6 million. One part of the positive results is that Kambi delivers high-end features for player props, bet builder for parlays, and improved profitability through its AI trading division. The other is the positive outcomes from major tournaments in June and July, where the Euros and Copa America had many low-scoring bouts, many tied games, and plenty of upsets, all factors that favor sportsbooks considering that bettors on aggregate bet on favorites, higher scores, and outright team wins over ties.
Kambi’s list of United States customers includes Draftkings, Penn National Gaming, Rust Street Interactive, Bally's, and tribal gaming operators such as the Choctaw Nation of Oklahoma.
Tribal Gaming Stay Resilient in an Increasingly Competitive Market Per Latest GGR Reports
The National Indian Gaming Commission (NIGC) released its Gross Gaming Revenue (GGR) report for 2023 last month. The GGR reached a historic high of $41.9 billion, representing a year-on-year increase of 2.4%, or around $1 billion. Revenue data was collected from the audited financial statements of 527 gaming operations, comprised of 245 Tribes across 29 states.
It’s interesting to see that tribal gaming continues to grow amidst a near-nationwide expansion of legal gambling. This is likely because casino gaming still lags behind other verticals already adopted in most states, such as sports betting, horse racing, and lotteries. However, it’s positive that tribal gaming has adapted to technological advances and increased competition from mainstream gambling brands.
Tribal gaming is vital to Indian communities, as the tax monies and revenue generated are allocated to them. It also provides job opportunities, ways of remaining sovereign, and improved economic independence.
DraftKings Ride the Wave of Caitlin Clark and the WNBA
Last month, DraftKings signed an agreement with the Women’s National Basketball Association (WNBA) to become an official daily fantasy sports (DFS) and sports betting partner alongside FanDuel.
Unless interest in the WNBA wanes following the hype around Caitlin Clarke, DraftKings's move can be highly profitable. DK receive rights to the league and team IPs and access to marketing, activation, and hospitality opportunities. More importantly, from a sports betting perspective, they’ll have access to WNBA data feeds and increased media exposure across the league’s media channels. The strong spotlight that’s currently shone on the WNBA has the potential to reach across to other women’s sports and bring more interest to an oft-overlooked part of the world of sports and betting.
Besides DraftKings and Fanduel, the WNBA has signed several new partnership deals with companies like Disney, NBC, and Amazon, with deals running through 2036 for a total value of around $2.2 billion. Already during its first summer of WNBA coverage on FanDuel, the sportsbook managed to increase its bet count by 270% and total WNBA handle by 101% compared to its previous year. Considering the surge in WNBA popularity, it’s that DraftKings can see similar growth this summer.
Risks of Unwanted Side-effects Relating to Increased Gambling Taxes in Illinois
Beginning in July, Illinois sportsbook operators no longer have to pay a 15% revenue tax. Through a state budget proposal, sportsbooks are now taxed at a new “progressive” tax rate of 20% and 40%.
The new tax regime for sportsbooks is expected to bring in over $200 million in additional revenue for Illinois. As a reference, the state earned around $1.5 billion in tax revenue from online gambling operators during 2023.
The new tax rate makes Illinois the second highest in the nation, behind New York, which has a top rate of 51%. Many other states are pondering increased taxes because it’s an easy option to boost tax revenues, along with the argument that tax monies can be allocated to balance the negative impact of gambling in the form of problem gambling and other social issues.
However, an often overlooked aspect of increased taxes is that they only apply to local and regulated online gambling operators. These companies are left with lower profits, which impacts the level of service they can render: worse products, promotions, and odds. All of these have undesirable consequences as they increase the risk of consumers looking elsewhere for more attractive gambling options.
Elsewhere will always be offshore gambling sites not bound by local laws and tax requirements. International sites will always have lower safety standards, and US authorities cannot offer consumer protection in terms of fraud, which is prevalent with overseas gambling sites. Ultimately, pushing taxes higher can often make the situation worse in terms of problem gambling and social issues. Every dollar spent offshore goes untaxed and eats away at the “additional” revenues generated by “progressive” tax rates.