Research Library

Sports Betting Across America: A 2019 Legislative Preview

As 2019 begins, states across the country are looking at their legislative agendas. Every state’s legislature will meet in 2019 and there will be several issues that will be discussed,some of which will revolve around gaming and lottery. One thing that will likely be discussed in every state is the potential for sports betting. This is an important opportunity for state lotteries to expand their portfolio of games and connect with the next generation of players.

Many states are assessing the expansion opportunities for the lottery. This may include the use of video lottery terminals, iLottery, or other forms to sell their existing products through the internet, kiosks, or other means. The potential for sports betting to enhance funding for good causes is another option that many Lottery Directors across the country are hoping their state legislators are considering. Commercial casino and online gaming operators also recognize the economic potential of sports betting, and are lobbying state legislators to implement a license-and-regulate model that would enable them to offer sports betting.

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Lessons from the Casino Industry

The casino gaming industry has long been perceived as a competitor to state lotteries. While it can be argued that the country’s adult population has a limited budget for all kinds of wagering, lotteries and casinos have, in fact, long operated in harmony. Casino expansion across the United States has not impeded growth of lotteries and lotteries did not affect the growth of casino gaming. The reality is that lotteries and casinos do not so much compete as share gamers. People buy scratch cards and draw tickets from budgets that are exclusive of casino gaming budgets. This is most evident during periodic events of lottery frenzy, when mega-jackpots attract widespread consumer and media interest. In those states that offer both casino gaming and lotteries, casino gambling does not decline during mega-jackpot events.

Both industries have grown but for different reasons. State and provincial lotteries continue to introduce new games and improve merchandising at the point of purchase. Lotteries also continue to expand their channels of distribution, signing up new retailers, and increasing the number of vending machine locations. Casino operators also continue to introduce new games, primarily electronic, and enhance their gaming environments. They also employ a variety of marketing strategies that are mostly unavailable to, or have never been considered by, state lotteries. Nonetheless, there are valuable lessons that lottery operators can learn from the casino gaming industry – in particular, customer engagement and customer relationship management.

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Research Brief: Reversal of the 2011 Wire Act Memo

Late in the afternoon of January 14, 2019, the U.S. Department of Justice (“DOJ”) issued a new
memo reversing its stance on the Interstate Wire Act of 1961 (“Wire Act”). This 23-page memo
issued by the DOJ’s Office of the Legal Counsel (“OLC”) dated November 2, 2018, stressed that
all forms of gaming apply to the Wire Act. It reversed an earlier DOJ memo issued in 2011 that
stated that the Wire Act only applied to sports betting.

The action, which at best can be described as reversing a reversal, raises several concerns for the
gaming industry, especially for online gaming that occurs in the states of Nevada, New Jersey,
and Delaware, with active startups underway in Pennsylvania. The decision also may have
serious implications for mobile gaming, sports betting, daily fantasy sports (“DFS”), lottery, and
potentially even internet/social media marketing programs. Global Market Advisors (“GMA”)
had predicted for some time that the reversal of the 2011 Memo would occur during the Trump
Administration through the efforts of the Committee to Stop Internet Gaming (“CSIG”).

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10 Trends – ROI from the IRs

With competition increasing in casino markets across the world, many of the more astute casino operators are expanding and/or repositioning their facilities to differentiate themselves from their competition to better meet the needs of their customers. These operators have realized that they must create compelling environments and engaging experiences to fully penetrate their marketplaces and improve property performance.

Globally, casino operators have utilized the phrase “integrated resort” as a catalyst to redefine the casino experience. This strategy is not new, as it has been employed in markets like Las Vegas, Singapore and Macau. However, recent developments in these markets have truly reimagined the concept.

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10 Trends – Play On

With the recent repeal of the Professional and Amateur Sports Protection Act in the United States, sports betting has become one of the most talked-about topics in the industry. In the coming year, as states and U.S. territories examine how to address PASPA’s repeal, operators will be faced with a significant challenge: creating a suite of products that can effectively compete with the illegal market in a variety of regulatory environments.

To accomplish this task, operators will attempt to do several things, including but not limited to securing access to data, developing in-play/in-game wagering products, and identifying other unique products that can help them enhance fan engagement and viewership, and subsequently help them satisfy all stakeholders.

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10 Trends – Rating the Rising Sun

Japan may look like it will be a sleeping giant in 2019, but the upcoming year may prove to be the most critical year in Japan’s march toward integrated resort development. Japan took a major step forward this year with the passage of the IR Implementation Bill and the Basic Bill on Gambling Addictions Countermeasures.

Next year will be one of the more critical years in the process as Japan contemplates the largest land-based gaming opportunity since Singapore in the mid-2000s. While outside observers may not see significant progress, a regulatory framework will be established in 2019 that will likely include more than 300 regulations. These regulations will determine the true market potential and scope of Japan’s three integrated resorts.

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New York State of Mind: What happened to the state’s casinos?

For decades, casino operators viewed the potential for casinos in the Catskills region of New York as the mother lode of gaming development.

The region’s proximity to the New York City metropolitan area and its history as a vacation destination made it a near ideal location for casino development. State legislators also saw casinos in upstate New York, a region that has had difficulty recovering from the loss of a host of manufacturing industries, not only as a tool for economic development, but tax revenue.

In 2013, the New York state legislature passed the Upstate New York Economic Development Act, which provided the legal framework for commercial casinos in the state. The act went into effect on January 1, 2014. When signing the bill, Governor Andrew Cuomo stated, “This new law will bring the state one step closer to establishing world-class destination gaming resorts that will attract tourists to upstate New York and support thousands of good-paying jobs as well as new revenue for local businesses. For too many years, gaming revenue has left New York for our neighboring states.”

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Research Brief: U.S. House Hearing on Sports Betting

Today, The United States House of Representatives Judiciary Committee held a hearing entitled “Post-PASPA: An Examination of Sports Betting in America.” The subcommittee on Crime, Terrorism, Homeland Security, and Investigations, chaired by Representative Jim Sensenbrenner (WI-5), heard testimony from five stakeholders related to sports betting. This included, in the
order presented:

• Jocelyn Moore, Executive Vice President, Communication and Public Affairs with the
National Football League
• John Warren Kindt, Professor with the University of Illinois
• Sara Slane, Senior Vice President of Public Affairs with the American Gaming Association
• Jon Bruning, Former Nebraska Attorney General and Counselor to the Coalition to Stop
Online Gambling
• Becky Harris, Chairwoman of the Nevada Gaming Control Board

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Vietnam’s Strip: The central coast of Vietnam is likely to become the next region with multiple destination casinos and integrated resorts

The Strip” has long been a popular term in the casino industry. Originally used to describe Las Vegas Boulevard from Sahara Avenue south to Russell Road, the term was adopted to describe clusters of casinos and hotels in other jurisdictions including the Cotai Strip in Macau and, most recently, for a proposed multi-property development called the Osaka Strip in Osaka, Japan.

While the latter development remains a possibility, a new strip of hotels, resorts and casinos is quickly emerging on the central coast of Vietnam, in and around Da Nang: the Central Coast Strip, stretching from Hoi An to Hue.

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Cambodia Rising

Major casino operators have long perceived Cambodia as a tertiary gaming market – a collective mix of border casinos that catered to residents of adjacent countries seeking a convenient place to gamble. The absence of robust gaming regulations further discouraged larger operators from considering acquisitions or developments in the Kingdom. That perception is changing.

Anticipated changes in the regulatory environment coupled with dramatic growth in casino markets throughout the country has caused casino developers to take a closer look at Cambodia.

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