JustGamblers Industry News March 2024

Besides March Madness, last month contained several newsworthy items. In this reflection of the past four weeks, we’ve written about five interesting news items relevant to players, bettors, and industry professionals.

TLDR: a Bite-sized Overview:

  1. The National Basketball Association (NBA) introduced betting lines in the NBA League Pass streaming service together with Sportradar, FanDuel, and DraftKings. The move caused a stir because betting content is readily available in a product intended for enjoyment by people of all ages. The new feature is at odds with an upcoming bill aimed at limiting online gambling ads during live sports broadcasts.
  2. Seven US iGaming companies pledged $20 million as part of founding the Responsible Online Gaming Association (ROGA). The organisation aims to foster better responsible gambling practices by funding research on RG tool effectiveness, promoting best practices, raising awareness about irresponsible gambling, establishing a data clearinghouse, and implementing a certification program. While this is a good initiative, conflicts of interest must be addressed early on to provide legitimacy to ROGA as a responsible gambling organization.
  3. Proposal to raise taxes to 30% on gross gaming revenue (GGR) in New Jersey. While maximizing tax rates to increase revenue for the state based on online gambling activities is important, there needs to be a balance to ensure that legal operators can stay competitive and minimize the risks of residents opting for illegal offshore casinos where they effectively have less protection and the country lose out on tax revenue that ends up in foreign pockets.
  4. DraftKings is elevating the user experience primarily for bettors by introducing “My Stat Sheet,” which includes features for tracking and analysis typically only available in third-party software and tools. The new product from DK doubles as a responsible gambling tool, as it helps players and bettors visualize how much money and time they spend on the platform. My Stat Sheet is available across DraftKings and Golden Nugget platforms.
  5. This highlights an innovative sportsbar with a true omnichannel scope that provides sports fans and bettors a unique betting experience with FanDuel.

The NBA Taking Betting to Heart Together With Sportradar, FanDuel, and DraftKings

Last month, the NBA rolled out a new feature in its live streaming product, the NBA League Pass. With Sportradar’s emBET service and select partners FanDuel and DraftKings, betting odds are integrated with live games, allowing viewers to click through and wager on the game. This feature is only available in states where mobile sports betting is legalized.

This new NBA League Pass feature demonstrates how online sports betting has shifted from illegal to the heart of the American sports establishment in only six years.

At the same time, US Representative Paul Tonko revealed the plan to introduce legislation to limit marketing practices for online sportsbooks dubbed the SAFE Bet Act. Among its key provisions, the aim is to limit advertising during live sporting events. Tonko is on a solitary crusade against sportsbooks, frequently likening the online gambling landscape in the US to the “Wild West”. His central argument is that an addictive product should be regulated like any other addictive product, which means stricter regulations in how online sports betting is advertised.

As a performance marketing company in the online betting space, we understand the commercial implications of this deal for the involved parties. The NBA has shared details about the significant growth of League Pass and other digital platforms, meaning that this new feature has the potential to reach millions of viewers across the United States, including minors watching the game with their parents or accessing it themselves on linked devices. It’s easy to envision potentially harmful scenarios playing out. We’d argue that there should be a level of inconvenience involved in accessing sports betting sites, not that it’s a default when average sports fans tune in to watch their favorite sport.

Formation of The Responsible Online Gaming Association

Seven of the largest iGaming companies in the US have created a new organization to promote responsible online gaming. The Responsible Online Gaming Association (ROGA) consists of BetMGM, Bet365, DraftKings, Fanatics, FanDuel, Hard Rock Digital, and Penn Entertainment, where all companies have pledged $20 million to:

  • Funding independent research on RG tool effectiveness.
  • Promoting best practices for RG among companies.
  • Raising awareness about irresponsible gambling.
  • Establishing an independent data clearinghouse for information sharing.
  • Implementing an independent certification program to evaluate member companies' RG efforts objectively.

This move is significant because these companies represent over 80% of the legal iGaming market in the United States.

Most importantly, the involved companies have pledged to share data to establish an independent database that can be leveraged to develop better responsible gambling tools and support. Considering that problem gambling should be proactively combated, data coupled with machine learning and AI can automate the detection of patterns suggesting problematic gambling behaviors. This way, operators and regulators can reduce the negative impact online gambling has on our society by providing users with adequate support before they develop a problem.

Historically, responsible gambling is something that NGOs and government-funded organizations have worked with. ROGA is a significant step, and setting up a certification program can help all operators provide adequate tooling and resources. At the same time, it’s questionable that FanDuel and DraftKings have infused their lines and prices with the official streaming package of a national sports league available to fans and families across the US, where there are no restrictions outside local and national broadcasting rights. One would assume that a responsible gambling organization would advocate against this business practice. In other words, from the onset of ROGA, some conflicts of interest concerning responsibility versus profitability need to be addressed.

New Jersey Senator Proposing 30% Tax Rates on Gross Gaming Revenues — Potential Implications

In March, State Senator John McKeon introduced a new bill proposing to increase the tax rates on New Jersey's online casinos and sportsbooks by 30%. Currently, online casino revenue in New Jersey has a tax rate of 15%, with an additional 2.5% directed towards the Casino Reinvestment Development Authority, resulting in a total % tax rate of 17.5%. Meanwhile, online sports betting has an effective tax rate of 14.25%.

Since New Jersey allowed online casinos in November 2013 and mobile sports betting in the summer of 2018, the state has collected over $1.798 billion in taxes. Raising and streamlining the tax rates would significantly boost tax revenues in New Jersey. Other states have similar proposals, while others have already raised taxes to maximize state revenues. New York, for example, has one of the highest tax rates in the country, with 51% on gross gaming revenues (GGR). Another neighboring state is Pennsylvania which imposes a 16% tax on online table games, 54% on online slots and 36% on internet sports wagering.

While raising tax revenues is essential, it could have unwanted second- and third-order effects, as increased tax rates decrease the rate at which operators can compete. While all operators within the state would compete on the same terms, offshore casinos are not held to the same standards and tax rates, which could lead to a behavior where US residents start gambling offshore because these companies can offer more lucrative promotions, higher payout rates, and other advantages thanks to having significantly lower tax obligations. In a scenario like this, we’re talking about channelization, where the traffic ends up abroad instead of local gambling sites.

Channelization Can Become a Bigger Problem

So far, channelization has not been a frequent topic in the United States. However, in other parts of the world where iGaming is more mature, channelization is a significant problem. Take another Western country, Sweden, as an example. In Sweden, online gambling has been part of daily life for the past two decades. In 2019, the Swedish authorities introduced a new framework, issuing Swedish online gambling licenses and limiting foreign operators from operating on the market. With these new regulations, there were many restrictions on how companies could operate, leading to national operators offering inferior products compared to offshore operators. Offshore operators are often taxed at rates of 5% and lower compared to Sweden’s 18% (on track to be raised to 22% in 2024), which allows foreign operators to offer better promotions and higher payout rates, effectively giving users a more lucrative option.

The problem with offshore gambling companies is that they can legally offer their services online, and US residents are not restricted from accessing, registering, depositing, and gambling on these sites. As a result, every dollar spent on an offshore site is spent abroad and taxed outside the United States. Effectively, the higher tax rates aimed at bolstering domestic tax revenues are offset by lost revenue taxed abroad. In Sweden, the government seeks a channelization rate of 90%+ for Swedish gambling companies. However, reports from online gambling organizations have this number at around 70% for online casinos, meaning that 30% of all casino gaming in Sweden is conducted offshore. If the same scenario were to play out in the United States, we expect more players to opt for offshore casinos.

If this happens, in the case of New Jersey, the proposed tax rates from State Senator John McKeon could lead to lower channelization to NJ operators while incentivizing residents to seek out offshore gambling sites where tax revenues are lost to foreign nations. Another aspect of this is that the safety net for consumers is much worse when they use offshore sites because US authorities have little to no mandates to offer protection or force operators to comply with US laws and regulations.

DraftKings Release My Stat Sheet Promoting RG and Offering New Levels of Personalization

Gamification and personalization have been hot topics in product development over the past few years, and DraftKings is hitting the nail on the head with its new feature, “My Stat Sheet.”

Best of all, it’s a clever, responsible gambling feature highlighting details such as win/loss and timers, helping users visualize how much money and time they spend on the DraftKings platform. The feature is also available on all Golden Nugget products.

Besides the RG aspects of My Stat Sheet, the user experience is improved since users get a better overview of wagers placed and general activity with intuitive charts and filtering options. Typically, sportsbooks only offer a dashboard for betting history, where all bets are listed, and any chart and statistics functionality needs to be set up in third-party applications, like a bet tracking software, a diary, or a spreadsheet. They are integrating these features inside the DraftKings platform, especially for sports bettors where statistics is the name of the game.

It would be amazing if DraftKings took this to the next level, offering total ROI (Return on Investment) visibility, incorporating aspects of bankroll management and using units when staking. All in all, this is an excellent feature from a punter’s perspective. We hope other operators roll out similar features to improve the user experience across online gambling platforms in the future.

FanDuel Affiliate “Over/Under” Sports Bar Sets the Bar for Omnichannel Betting

The Over/Under sports bar in Chicago's Lakeview neighborhood already stands out as one of the premiere locations for sports bettors. Ed Berry, the bar's owner and operating manager, recently rolled out new offline features to improve the betting experience.

One feature is the addition of so-called “Betting Ambassadors”, where patrons can call over an ambassador to their table and discuss upcoming games, relevant statistics, and other information that can help them make informed wagers. The tables come complete with screens that allow the ambassadors to visualize information on-screen to create a more compelling and convincing experience backed up by actual data. The actual betting takes place online, and while Over/Under is a FanDuel affiliate, customers are not limited to wagering through the FanDuel app.

Another feature Berry introduced at Over/Under was raffles for bettors exclusive to FanDuel users. These competitions include gamification and “prizeification,” where the bettor receives a raffle ticket for their initial $20 bet at Fanduel and an additional raffle ticket for every $10 bet. Once every two hours, a winner is announced, and the person wins either $50 or $100.

Overall, Over/Under in Chicago offers a unique betting experience that mixes social interaction, gamification, and technology to create a true omnichannel experience comprising offline and online sports betting.