Sports Finance Report: West Virginia Set to Become 5th State to Offer Legalized Sports Betting
Editor’s Note: Welcome to a daily column breaking down the day’s biggest stories in sports finance. It comes to us via our friends at JohnWallStreet, publisher of a free e-mail newsletter (you can sign up here). It’s sports business with a financial spin. Howie Long-Short and Fan Marino will be providing their expert opinions on each story. They have slightly different areas of expertise. Fan Marino is a firm believer that the SEC is the premier football conference. Howie Long-Short knows it as the Securities & Exchange Commission. Fan Marino lives and dies with the college selection of 5 star , blue chip recruits. Howie Long-Short spends his days analyzing blue chip stocks. Howie Long-Short knows that Black Monday occurred on October 19th, 1987. Fan Marino swears it happens every January after Week 17. You get the point.
West Virginia Set to Become 5th State to Offer Legalized Sports Betting
West Virginia will become the 5th state (NV, DE, NJ, MS) to offer legalized sports betting when the sportsbook at Hollywood Casino at Charles Town Races open on September 1st. It appears as if Hollywood Casino at Charles Town Races will be the only sportsbook in operation for the start of college football season (Sept. 1); The Greenbrier, Mardi Gras Casino and Wheeling Island Casino have yet to announce when their sportsbooks will open. Interestingly, the WV sports betting bill became law without the Governor’s signature; Jim Justice insisted the law include an integrity fee for the leagues, 2 of which hold training camps at his family’s The Greenbrier property.
Howie Long-Short: Hollywood Casino is owned and operated by Penn National (PENN), William Hill (WIMHY) will set to run the sportsbook there. As noted, The Greenbrier is family owned; FanDuel (PDYPY) will run their sportsbook operations. Those 2 venues expect to do well with fans from “Virginia, Maryland and Washington D.C.” all likely to make the short drive without legalized sports betting closer to home.
Mardi Gras Casino (Charleston) and Wheeling Island Casino (Wheeling) are under the control of privately-held Delaware North. Wheeling’s location puts it in position to pull out of state clientele from Pennsylvania and Ohio.
Fan Marino: The Action Network CEO Noah Szubski made headlines late last week for proclaiming his company was sitting on a billion-dollar business model, saying, “if I have 8 million qualified users spread around the country and each one can legally bet through a book and there’s an affiliate fee and a percentage of lifetime money, that’s the billion-dollar business.” Sure, except The Action Network’s value proposition is providing content that, in theory, makes bettors more likely to cash in. Why would a casino pay an affiliate fee to acquire a +$ bettor? Szubski may also want to “see the international online gambling market for a clearer sense of how operators define [lifetime] when it comes to affiliate revenue share (spoiler: it’s not lifetime).” - Chris Grove - gambling industry analyst, Eilers & Krejcik Gaming.
There’s another issue with Szubski’s theory. Sportsbooks in Europe have been refusing to take bets from intelligent bettors and are placing betting limits on others. Once a gambler starts winning, the sportsbook shuts them down; that practice won’t help The Action Network subscriber retention rates and if U.S. sportsbooks are going to use betting limits on heavily restrict sharp money, The Action Network is going to be taking its percentage from a much smaller pie.
Wondering which book has the worst reputation among sports bettors for refusing to take bets? William Hill. One pro sports bettor interviewed by ESPN (among 20 U.S. gamblers banned by the company) said, “they’re by far the worst”. That would be music to my ears, if I’m a William Hill shareholder. It’s worth mentioning that most states do not have laws preventing a casino from turning away a skilled bettor.