Many states have fantasy sports laws in place that are intended to create regulatory bodies within their borders for the purpose of overseeing and regulating fantasy sports operators. The big fantasy sports companies that come to mind are FanDuel and DraftKings, but many other corporate entities are doing business and thinking about launching gaming products for consumers to engage in different types of fantasy sports offerings.
The United States Supreme Court has agreed to hear New Jersey’s appeal that would potentially allow the state to provide sports betting within its borders.
In NYC on Tuesday night, Roger Goodell (NFL commissioner), Adam Silver (NBA commissioner), Rob Manfred (MLB commissioner), and Gary Bettman (NHL commissioner) gathered together for a panel titled “GameChangers: Creating the Future of Sports” at the Paley Center for Media. How New Jersey’s case is decided could have implications on not just New Jersey, but the rest of the United States, as well.
When asked about sports gambling issue, Adam Silver said “my sense is the law will change in the next few years in the United States.” Silver also added that “people want to bet throughout the game … It results in enormous additional engagement with the fans.”
The world of gaming law can be quite complex and Heitner Legal can help guide through the many possible legal questions that might arise. Heitner Legal has a great deal of experience in gaming that includes various advisory opinions and memos that are well respected in the industry.
Professional sports leagues in the United States have been opposed to legal sports betting since Congress passed the Professional and Amateur Sports Protection Act (PASPA) in 1992. PASPA is a general federal prohibition against sports betting, aside from activities within the state of Nevada, which has been grandfathered in.
Adam Silver made his support for a federal approach to legalized sports betting well-known in his 2014 New York Times op-ed. In his editorial opinion, Silver said “times have changed since PASPA was enacted. Gambling has increasingly become a popular and accepted form of entertainment in the United States. Most states offer lotteries. Over half of them have legal casinos. Three have approved some form of Internet gambling, with others poised to follow.”
MLB Commissioner Rob Manfred has also shown his increasing support for the legalization of sports betting. Manfred told reporters “[i]f there’s going to be a change in the regulatory structure with respects to sports gambling, we needed to be in a position to meaningfully engage and shape, try to shape what the new regulatory scheme looks like.” Manfred also said, “[t]here’s a difference between someone betting on whether the next ball is a strike or betting on the outcome of a game.”
Even though in the past, the NHL has been pretty quiet on the sports betting issue, NHL Commissioner Gary Bettman has stated that he is not worried with the Las Vegas Golden Knights slated to begin games this year. He said “[w]e’re a small part of betting compared to football and basketball. I don’t worry about fixing games.”
Lastly, the NFL has been publicly against the legalization of sports wagering for quite some time. NFL Commissioner Roger Goodell chose not to update the NFL stance at Tuesday night’s panel. However, a clearer stance will be required from the NFL with the Las Vegas Raiders arriving in a few seasons.
Unfortunately, everyone is still going to have to wait quite some time as oral arguments in the New Jersey betting case are expected to be heard by the United States Supreme Court between late Fall 2017 and early 2018. Those in support of legalization will argue that times have changed, as Adam Silver has noted, and those opposed will likely rely on the strict language within PASPA to keep the federal prohibition alive.
These days, it’s nearly impossible to watch any sporting event or program without seeing an advertisement for daily fantasy sports. The fantasy and gaming industry has seen enormous growth, and that trend looks to continue as one of the leading DFS providers moves into the new realm of eSports.
DraftKings announced that it will be adding eSports to its list of offerings, which includes NFL, MLB, NBA, NHL, MLS, NASCAR, PGA, and MMA. DraftKings will begin offering fantasy eSports contests on October 1, 2015 with the start of the League of Legends World Championship. Participants will be able to play for free or compete against others in cash prize leagues, including a $3 entry fee contest featuring $25,000 in prizes.
The expansion to fantasy eSports should be a huge boon to DraftKings, as League of Legends alone sees more than 27 million gamers playing per day. In addition, the eSports audience is estimated to be about 134 million people worldwide, generating more than $600 million in annual revenue. It’s easy to see why DraftKings would want to expand into this market.
DraftKings is certainly not the first to notice the immense popularity of eSports, as last year’s League of Legends World Championship in Seoul, South Korea was broadcast in the United States via ESPN3, and the final round was watched by 27 million people worldwide. In contrast, Game 7 of the 2014 World Series between the San Francisco Giants and Kansas City Royals was watched by 23.5 million people.
One major point of consideration for DraftKings is that it will also need to expand its geographical boundaries; more than 60 percent of the eSports industry’s revenue comes from Asia, while DraftKings currently only operates in North America. This means that the majority of eSports fans won’t be able to take part. At least, not initially.
“We certainly have global ambitions here and want to be operating in as many countries as possible and as quickly as possible,” said DraftKings Chief Revenue Officer Matt Kalish, “The long game here is really tied in more with our international strategy.”
DraftKings also signed deals with six different eSports teams to form partnerships that are similar to the paid deals the company signed with major sports franchises from the NFL and MLB. Sports management company IMG brokered all the deals.
DraftKings has the money for these deals due in part to the fact that it recently raised $300 from various investors, including Fox Sports. At the time, CEO Jason Robins indicated that his top priority for the money was acquiring new users. By expanding into eSports, DraftKings aims to accomplish just that.
In November 2014, Bwin.party announced it was in talks with several parties, which could result in an offer for the online gaming company. On September 4, 2015, Bwin agreed to a buyout offer from GVC Holdings for $1.7 billion. However, Bwin’s acceptance of GVC’s offer is subject to scrutiny as it withdrew an accepted an offer from 888 Holdings for $1.4 billion in July 2015 despite being preferred by some of its investors. The deal with GVC is projected to have savings of about $139 million per year by the end of 2017, while the deal with 888 had projected savings of $70 million. The merger will have repercussions for employees as both companies had a combined 3,100 employees at the end of last year. The merging of these companies will create a sports betting heavyweight in an industry where companies are consolidating due to the rise of online betting as well as increased regulation and taxation.
Bwin has some of the world’s biggest online gaming brands including Partypoker, Foxy Bingo, and partycasino while GVC has enjoyed success with brands such as Sportingbet and Casino Club. GVC hopes the merger with Bwin will result in technology which will result in a large increase of mobile subscribers with the rise of online betting. Furthermore, GVC could expand into parts of Asia and Africa where Bwin has gained notoriety with internationally recognized football brands. “According to PwC’s projections, the global casino gaming revenue across the U.S., Europe, the Middle East, Africa, Asia Pacific, Latin America, and Canada will grow at a 9.2% compound annual rate during the next five years, rising to $182.8 billion in 2015 from $117.6 billion in 2010.”
Mulier, Thomas & Jarvis, Paul, GVC trumps 888 to buy Bwin.party for about $1.7 billion, Bloomberg Business (Sept. 4, 2015, 4:54am CDT), http://www.bloomberg.com/news/articles/2015-09-04/gvc-agrees-to-buy-bwin-party-for-about-1-7-billion-beating-888
Maidment, Neil & Agnihotri, Aastha, GVC trumps 888 to clinch deal for Bwin, Reuters (Sept. 4, 2015, 11:35am EDT), http://www.reuters.com/article/2015/09/04/us-bwin-party-m-a-gvc-shareholders-idUSKCN0R40KC20150904
Baba, Razak Musah, GVC wins race to acquire Bwin.party, Wall Street Journal (Sept. 4, 2015, 12:18pm EDT), http://www.wsj.com/articles/gvc-wins-race-to-acquire-bwin-party-1441355489