Josh Andrews

DraftKings and Resorts Casino Strike Sports Betting Deal

Reading Time: 2 minutes

Boston-based daily fantasy sports leader DraftKings has recently announced a new partnership deal with Atlantic City’s Resorts Casino Hotel to offer sports betting services in New Jersey. The partnership agreement will see DraftKing enter the New Jersey market under Resorts Casino Hotel’s license.

The move marks the first of the likely string of state-level ventures that DraftKings has is reported to be considering in a bid to get a foothold in the brand new legal market that is set to grow rapidly after the recent Supreme Court ruling that struck down the federal ban on sports betting.

As for New Jersey, the daily fantasy sports operator has hinted its entry into that particular market for quite some time – the company had already begun hiring sportsbook staff even before the United States Supreme Court ruling was made. In addition to that, the company opened an office in Hoboken that currently houses the sportsbook staff as well as other employees who were hired in the past couple of weeks.

“Everybody knows there’s a big opportunity out there. It’s a new thing, so people are trying to see how they want to go about it, who they want to partner with. Anytime you’ve got a big market about to be created, there’s so much opportunity out there that everyone should benefit, as long as you do it the right way,” said Jason Robins, the DraftKings chief executive. “We are excited to work with Resorts Hotel Casino to bring our new DraftKings sportsbook to New Jersey. As a tech savvy and a long-term growth-oriented organization, Resorts Hotel Casino aligns perfectly with our customer-focused, innovation culture.”

This pairing reflects the scramble that is beginning to materialize among gambling operators, bookmakers, and technology companies as they try to position themselves well enough to get a share of the nascent sports betting market. A similar deal was made a few weeks ago when Paddy Power Betfair, a European bookmaker merged with FanDuel, one of the other popular United States-based daily fantasy sports providers and DraftKings’ biggest rival.

During the press release where the announcement was made, Drafkings mentioned that it be offering both mobile and web-based sports betting services. However, there was no mention of the technology that the company will be using to achieve this.

Still, Resorts Casino Hotel has welcomed the partnership as it presents a new revenue stream and will probably give the casino a foothold in the sports betting market as well.

“We are at a pivotal moment in the development of sports betting in the U.S.,” said Morris Bailey, the owner of Resorts Casino Hotel in the press release. “We are delighted to be able to have DraftKings utilize our gaming license in New Jersey. DraftKings continues to be at the forefront of sports entertainment innovation, and today’s announcement is the first step in being able to offer customers in New Jersey the most dynamic sports betting platform.”

Esports Betting Already Enticing Criminal Fixers

Reading Time: 2 minutes

Esports just like any other sports is unanimous with betting and as always, where there is gambling money, vices are not far behind. Putting into consideration the approximately 380 million people who will watch Esports games and tournaments this year, it is very likely that Esports fixers are already looking devising ways to get the best out of what is now the fastest growing sports in the world.

According to iNews, Esports bets will inevitably go over the $45 billion mark this year, a sum that is bound to attract the attention of fixers. Already, a number of Esports players and fixers have already, been banned and, in some cases, even imprisoned for cases of match-fixing. Similarly, last year, the Esports Integrity Coalition is reported to have received 39 suspicious betting reports with at least 13 of them being genuine fixes.

Apparently, no game is harder to detect fixing in than Esports since it is a product of geography, technology as well as its relative newness. About 15 percent of traditional sports betting in the world is fully legal and this makes it rather easy for anti-fraud and anti-fixing bodies to trace and follow betting patterns in order to identify game fixing. On the other hand, only 4 percent of Esports betting in the world is fully legal.

According to Ian Smith, the head of the Esports Integrity Coalition, the low numbers are partially due to the fact that Esports is most popular in East Asian countries like South Korea and China, where, as it turns out, traditional sports betting is illegal. Even in the United States where Esports has been going nowhere but up, 99 percent of Esports betting is illegal, even though with the recent Supreme Court ruling that revoked a federal ban on sports betting. Still, all these factors make match-fixing in Esports very hard to detect and even when detected, just as impossible to track.

Is Regulation the Answer?

New Esports games are constantly being invented and popularizes and this makes it harder to ascertain what should and what should not be regulated. This is unlike the cases with traditional sports where there is an abundance of history and data that can be used to inform anti-fixing bodies about criminal activities of this kind.

“If you get an alert in say cricket you can be reasonably certain – 80 or 90 percent – that there is something wrong,” explained Ian Smith. “In eSports, it’s kind of the opposite – because it’s all a little bit chaotic and new and changeable, about 90 percent of alerts don’t mean anything and only 10 percent do.”

The main takeaway here is that the institutional weakness of Esports makes it particularly susceptible to match-fixing simply because we still do not have a universally accepted governing body for the activity. The formation of such a body is perhaps the only way to keep the rapidly growing Esports ecosystem from being a serious criminal enterprise.

IMF Official Urges Central Banks to Compete With Crypto

Reading Time: 2 minutes

International Monetary Fund (IMF) deputy director, Dong He, on Thursday published an article that is meant to nudge the central banks to work on measures geared towards making fiat currencies “more attractive in the digital age.” Dong He believes that crypto may someday reduce the demand for central bank money and, therefore, these banks should consider adopting concepts to obstruct the competitive pressure that cryptocurrencies are already exerting on fiat currencies.

IMF’s stance when it comes to cryptocurrencies has not been particularly reassuring especially when it comes to the future of these digital assets. In an event in March, IMF Chief Christine Lagarde advised supervisors to prepare technical elements that would assist them in “fighting fire with fire.”

The deputy director reiterated this thought and outline his view that, at the moment, cryptocurrencies and other crypto assets have more adoption. Consequentially, the central banks are bound to eventually lose their command and influence on the economy, which is usually through strategies like interest rate charges.

“Second, government authorities should regulate the use of crypto assets to prevent regulatory arbitrage and any unfair competitive advantage crypto assets may derive from tighter regulation,” he pointed out. “That means rigorously applying measures to prevent money laundering and the financing of terrorism, strengthening consumer protection, and effectively taxing crypto transactions.”

Dong He further pointed out some of the viable alternatives that the banks could adopt. These include the idea of the central banks moving to create their own digitized assets or digital currencies that could be exchanged in a peer-to-peer fashion, just like it is done for other cryptocurrencies.

“For example, they could make central bank money user-friendly in the digital world by issuing digital tokens of their own to supplement physical cash and bank reserves. Such central bank digital currency could be exchanged, peer to peer in a decentralized manner, much as crypto assets are,” a related excerpt from the article reads.

Already, a number of banks have been researching ways to implement such a move but there have been a number of setbacks, one of the most prominent being divergent opinions on whether such a move would pay off or not.

According to the deputy director, the central banks can actually profit from the underlying technology of cryptocurrencies – monetary policymaking will, without a doubt, benefit from such kind of technology by improving the banks’ forecasts using big data, machine learning, and, of course, artificial intelligence.

“Central banks should continue to strive to make fiat currencies better and more stable units of account. The best response by central banks to crypto is to continue running effective monetary policy while being open to fresh ideas and new demands, as economies evolve,” he noted. “That means rigorously applying measures to prevent money laundering and the financing of terrorism, strengthening consumer protection, and effectively taxing crypto transactions.”

Russian’s Minister of Sports Acknowledges Growth of Esports

Reading Time: 2 minutes

For the first time since it was launched in 1997, the St. Petersburgh International Economic Forum, an annual business event, included a dedicated Esports panel session. The session gathered a number of representatives of the state, sports, business and infrastructure organizations among other stakeholders in the development of Russian Esports.

Titled ‘Cybersport: Global Trends in Sports and Business’, the session involved discussions from a number of big industry names including:

Emin Antonyan, Secretary General, Chairman of the Executive Board, Russian Esports Federation
Ilya Galaev, President, VFSO Trudovye Rezervy
Roman Dvoryankin, General Manager, Virtus.pro
Nail Izmailov, Vice President, FC Spartak Moscow
Aleksandr Prokopyev, Deputy of the State Duma of the Federal Assembly of the Russian Federation, Member of the Committee on Physical Culture, Sport, Tourism, and Youth Affairs
Neil Sturrock, President of Russia, Belarus, Ukraine, Caucasus and Central Asia, PepsiCo
Anton Cherepennikov, Director, Member of the Board of Directors, ESforce Holding

The moderator, in this case, was Match TV general producer Tinatin Kendalaki. Also present was the Minister of Sport of the Russian Federation, Pavel Kolobkov though he spoke at a separate session. During the said session, the minister pointed out that he believes that Esports is a legitimate sports discipline, especially because like traditional sports, it involves rules, training methodology and tournament systems. He, however, made it clear that he was of the opinion that Esports will not be replacing sports but instead flourish alongside them.

According to the Esports observer, the government of Russia has expressed a lot of keenness to work with the Esports industry to regulate Esports development in Russian. Pavel Kolobkov acknowledged that the Russian Esports sphere is developing quickly and thus the government needs to work on implementing some legal boundaries to regulate it.

“We had a long discussion, and I believe that we made the right choice because it does not matter whether the government or somebody else recognizes Esports as a sport,” Kolobkov said. “It was recognized by the society. By people who are making it. Our task is to regulate it and put in some legal boundaries, allow it to develop under our control, along with the government, along with us. That is why I am sure that at this moment one can say that Esports is quite an established sphere.”

Russia was the first country to officially recognize Esports way back in 2001 – in fact, Esports was included in the list of sports that were officially recognized and existed in the country. This was, however, followed by a period of complication that saw the activity scraped from the list twice after the restructuring of the Ministry of Sports. Everything eventually went back to normal towards the end of 2017 with Esports players now being able to earn official sporting grades just like other players of traditional sports.

MGM Resorts to Acquire New York-Based Casino and Race Track

Reading Time: 2 minutes

MGM Resorts International has announced that it has entered into an agreement to buy the real estate property and the operations associated with the Empire City Casino’s casino and racetrack for about $850 million. The acquisition is part of MGM Resorts International’s plans to penetrate the high-density New York City market, enhance the company’s free cash flow profile while at the same time opening doors for some attractive opportunities in the future.

“We are excited to announce the addition of Empire City to the MGM Resorts portfolio,” said Jim Murren, the Chairman, and CEO of MGM Resorts International. “This acquisition represents an excellent opportunity to further solidify our presence on the East Coast, and in particular, expand our reach into the high-density New York City region. We believe this transaction enhances our free cash flow profile and presents attractive future opportunities for the Company, and we look forward to welcoming the Empire City team and guests to the MGM Resorts family.”

The Empire City Casino is known for being the sixth largest gaming floor in the United States with about 8 million visitors every year. It also boasts of a workforce of over 1,200 people employed to tend to its over 5,200 slots machines and electronic games, numerous dining outlets as well both its live and simulcast horse racing.

“With Empire City’s approximately 40 percent share of gross gaming revenues in the market, we believe there are significant opportunities for MGM Resorts to further drive growth,” commented Dan D’Arrigo, Executive Vice President and Chief Financial Officer of MGM Resorts International. “We believe the transaction will be value-accretive within its first year of closing, with incremental revenue synergies expected to support growth in 2020 and beyond.”

The property that is to be acquired by MGM Resorts has been under the ownership of the Rooney family for the past 46 years. In 2017, the family made an announcement that it had hired JP Morgan Securities LLC in a bid to “explore strategic alternatives, including the possible sale of the property.” As it turns out, the sale was a culmination of the study that was carried out by JP Morgan.

“Our vision for this property has always been to develop it into one of the world’s greatest entertainment destinations,” Tim Rooney, Sr., president, and CEO of Empire City said. “We have been a partner of New York State and its communities for 46 years, and it was important to us that we identify an entity that could build on the strong foundation we have established and bring our vision to fruition.”

MGM Resorts Still Has Sights on Bridgeport

Despite the lucrative nature of this acquisition, MGM Resorts has confirmed that it will also keep pursuing the development of a casino in Bridgeport. The operator proposes the establishment of a casino in Bridgeport last year and even went as far as announcing plans to push the state legislature to establish a competitive bidding process for a commercial casino license. The legislature did no such thing by the time it adjourned but MGM remains hopeful that it will eventually go through at some point this year.

Bitcoin’s Lightning Network Could Soon Receive Major Update

Reading Time: 2 minutes

The Lightning Network is perhaps one of the biggest advancements in the Bitcoin ecosystem. As we have witnessed over the past few months, the network has facilitated thousands of new payment channels which points to the fact that it is indeed a significant step forward towards the mass adoption and mainstream use of cryptocurrencies.

A couple of months ago, the Lightning Network did not seem to be as promising as it is now – only 89 channels existed as of January 19th. This, to some people, was an indication of the unfeasibility if the scaling solution while a few others considered it be the lack of adoption due to the unfinished state of the technology at the time. However, as of May 24, the number of channels in the Lightning Network had grown to over 6,600 direct connections. Though in comparison to the mainstream financial sector this is rather small, it certainly proves that there is genuine interest in the initiative.

Even though the lightning network is just beginning to make waves in the bitcoin ecosystem, its developers are already planning to re-architect the technology. But why? Well, while the network has been touted as a significant boost to bitcoin’s capacity, it requires its users to store a significant amount of data that makes it rather difficult to download and run. To solve this problem, the lightning developers, including ‘Lightning Labs co-founder ‘Laolu’ Osuntokun and Blockstream’s Christian Decker and Rusty Russell, have recently published a new proposal which imagines a simplified alternative way of making off-chain transactions – this will be known as eltoo.

The new proposal is also intended not only to condense the amount of data that the network’s users are required to store but to also keep the users’ digital currencies safe – all the data that is currently stored poses a series problem, in that, in case a user accidentally broadcasts older data, they might end up losing money.

Eltoo, the proposed upgrade, on the other hand, only stores the most recent off-chain transaction data. This solves the well-known “information asymmetry” problem. Decker has been very keen on pursuing the project since he has been affected by the problem himself.

“This actually happened to me,” he said. “I had an old lightning node on my laptop. I restored it. I didn’t know I didn’t have the newest state. The guy closed the connection because they knew it was an old state! Because he could steal it. Which he did, by the way.”
“With eltoo, we reduce the risk of funds being swept away. We remove this toxic information,” he added.

He also pointed out that the proposal’s name is a joke of sorts – ‘eltoo’ is the phonetic spelling of “L2” that stands for “layer-two”, which is what people call technologies like the Lighting Network which take transactions off-chain.

Integrity Fee Included in New N.J. Sports Betting Bill

Reading Time: 2 minutes

Just a few days ago, a top lawmaker in New Jersey called for all governors to reject the efforts by pro sports leagues to have an “integrity fee” on sports betting revenue included in the various states’ sports wagering laws. State Senate President Steve Sweeney, the lawmaker who also happens to have championed the state’s efforts to have the federal ban on sports betting overturned, said that the demands by the leagues are tantamount to “extortion.”

“Essentially, the leagues are asking to be paid to allow games to be played fairly,” Sweeney wrote. “Ironically, they are calling this extortion attempt an `integrity fee,’ even while fully aware that providing participants a stake in the volume of betting would amount to what could more accurately be called an ‘anti-integrity fee.’”

Sweeney expressed concern that the leagues had blatantly shifted their focus on getting a piece of the sports betting pie instead of concentrating on the integrity of their games. The lawmaker’s sentiments are quite justifiable especially considering the fact that, prior to realizing the inevitability of the abolishment of the Professional and Amateur Sports Protection Act (PASPA), the leagues had spent millions of dollars fighting against the sports betting laws in New Jersey.

“The Leagues fought with all of their resources to stop states from allowing their citizens to legally wager on sports,” Sweeney wrote in a letter that was addressed to the governors and lawmakers in all 50 states. “Now that their efforts have been ultimately unsuccessful they wish themselves to make ‘the fast buck’ and to ‘get something for nothing.’ Essentially, the Leagues are asking to be paid to allow games to be played fairly…. Taking the Leagues at their word, giving them a ‘piece of the action,’ would make suspicions grow whenever turning-point calls in close games go in favor of the more popular team — whose presence in the ‘big game’ would drive ratings and betting.”

New Jersey, however, chose to take a different approach – the state introduced a new bill with a proposed integrity fee, only that its version of the integrity fee is completely different from the ones in other bills and the one that the professional sports leagues have been lobbying for.

What It Entails

The proposed integrity fee, called the Sports Wagering Integrity Fund, diverges from the other bills mostly because it will be controlled by the state instead of the leagues. The idea is to bypass the pro sports leagues’ push for the 1 percent integrity fee on handles while at the same time offering them an alternative to ensure that do not miss out entirely on the fund’s coffers.

The draft bill states that all the money deposited into the Sports Wagering Integrity Fund will be channeled towards the recovery of any costs and expenses incurred during investigations that will be carried out in order to maintain the integrity of sports betting.

Push for Lower Online Gambling Tax Rate Succeeds in Victoria

Reading Time: 2 minutes

Following massive concerted lobbying efforts by corporate bookmakers led by the executive director of Responsible Wagering Australia, Victoria has made a decision to introduce its own tax on digital betting that is nearly half the rate of other states. Last year, South Australia levied a 15 percent consumption tax on online gambling that has been rumored to be also appealing to Queensland and Western Australia.

The Australian state of Victoria, however, chose to take a different path that was made public on Monday when state officials announced that it was planning to implement an 8 percent tax rate for online betting entities. This directive, according to Victoria’s state Cabinet Minister in charge of finance, will be implemented as from January 1st next year.

After years of tax evasion, targeted online gambling operators will be required to pay the rates which, as indicated in the announcement, will only apply to the bets that are placed in the state of Victoria. As such, said online gambling operators will be required to effectively put in place measures that are geared towards determining the locations of their customers.

Tim Pallas, the states finance Cabinet Minister, the move to introduce the move to lower the tax rate is long overdue and it will be implemented primarily to ensure that Victorians get their fair share of the highly lucrative multibillion-dollar online gambling industry. In addition to this, the state government projects revenues of up to a whopping AUS $30 million every year.

The Mixed Reactions

Even though the Conroy-led Responsible Wagering Australia (RWA) expressed that they were a bit disappointed by the announcement made by the state of Victoria, they did acknowledge what they termed as “consultative approach” by the government – the RWA is the body mandated to ensure that responsible betting practices are adhered to in Australia.

“The online wagering industry already pays a significant amount of consumption tax through the GST, as well as corporate income tax to the federal government,” Stephen Conroy said. “An 8% tax does not adequately account for these significant contributions and will result in Victoria having one of the highest effective wagering tax rates in the world.”

The organization argued that by setting the Point of Commission tax rates at half of what is offered by other states such as South Australia, Victoria will undermine the betting companies that are currently operating in other states where the tax rate is set at 15 percent.

Conroy further pointed out that online gamblers and online betting operators are currently being charged significant amounts through Goods and Services Tax (GST) and the federal government tax scheme. His concern is that the consequence would be the likely occurrence of a double taxation which will, in turn, make Victoria’s tax burden is actually higher than what it seems.

Nevertheless, Victoria’s tax course is intact and has already been finalized so as to guarantee the legislation is rolled out in full by January 2019.

Ireland-based Paddy Power Betfair Acquires FanDuel

Reading Time: 2 minutes

In a move aimed at capitalizing on the United States online sports betting market, Paddy Power Betfair Plc has agreed to merge with closely held New York-based daily fantasy sports site FanDuel. The Dublin-based Paddy Powe Betfair made the announcement that the acquisition had been completed and that the two parties were only waiting for final regulatory approval which – this deal is expected to close by the third quarter of this year.

While both companies were already in talks for a possible merger, the United States Supreme Court ruling that struck down the federal ban on sports betting seems to have escalated the process. As such we might see Paddy Power Betfair participating in U.S. sports betting very soon.

“We are excited to add FanDuel to the Group’s portfolio of leading sports brands,” said Peter Jackson, Paddy Power Betfair chief executive officer. “This combination creates the industry’s largest online business in the US, with a large sports-focused customer base and an extensive nationwide footprint.
The Group has leading sports betting operating capabilities globally and strong operations on the ground in the US. Together with our substantial financial firepower, we believe we are now well placed to target the prospective US sports betting opportunity.”

Paddy Power will own 61 percent of the Paddy Power-FanDuel merger business since it will contribute its U.S. assets and $158 million for the combined business. The agreement further gives the Dublin-based company the option of increasing its ownership to 80 percent after three years and 100 percent after five years.

FanDuel has over 7 million registered users in the United States. This, in addition, the over 40 percent share of the U.S. daily fantasy sports market makes it a great partner for Paddy Power which has been on an expansion course in the United States for the past few years. For instance, Paddy Power merged with Betfair three years ago and acquired Draft last year.

Given the growing demand for sports betting offerings in the United States following the Supreme Court ruling that struck down PASPA, more of this type of mergers and acquisitions are on their way – that is, mergers between parties that already handle legal sports gambling in the U.S. and other parties with big digital footprints in the United Sports market.

While the ruling did not automatically legalize sports betting in all the states, a number of states are moving towards a future where sports betting is legal. This is enough to give the interested parties enough incentives to start preparing.

U.S. Lottery Industry Wants In on Regulated Sports Betting

Reading Time: 2 minutes

A decent number of states have either already legalized sports betting or are on exploring similar legislation that will lead the United States to a new era that will be defined by a regulated multibillion-dollar industry. This presents a plethora of new opportunities that have attracted a number of new interested parties including the gaming operators, the professional sports leagues, and most recently, the lottery industry.

The $80 billion United States lottery industry through the North American Association and Provincial Lotteries (NASPL) said in a statement that the lotteries are prepared to “help establish the real-world network that would be involved if called upon to do so.” The state lotteries have always supported the idea of state governments being given back the ability to decide on gambling laws for their respective states.

Thanks to last week’s Supreme Court ruling that lifted the federal ban on sports betting, all states can now legally draft their own sports betting laws and regulations and this opens up the field for interested parties to begin offering sports betting services. The NASPL believes that they are well positioned and sufficiently equipped to join and offer sports betting services if given the opportunity to do so, their main advantage being, their strong relationship with pubs, bars, and clubs.

“In addition, some American lotteries already sell their products on the internet, a potential avenue for sports betting if a state allows that option,” the group’s officials said. “The court’s ruling on PASPA will help preserve the founding principles and integrity of American lotteries. The ruling will also potentially provide the freedom necessary to enhance the more than $22 billion that American lotteries returned to their states in FY2017.”

The Next Big Growth Category

Among the aggressive proponents of the Supreme Court ruling and subsequently the involvement of the lottery industry is the founder and chief executive of EquiLottery, Brad Cummings. He believes that industry should take advantage of the opportunity to ensure the legislation is benefits all the relevant gaming verticals. He pointed out that both state and national lotteries should look into creating new categories tailored specifically for sports gambling. This will give them a fighting chance and allow them to compete with all the other gaming entities that stand to benefit from a regulated sports betting market.

“Some states allow at least live horse racing to be a basis for a lottery game, some states prohibit any live sports integration with lottery and most are silent on the issue,” he said. “We advise that regardless of their situation, state lotteries should fight to be included and expand their product offerings into the sports gaming market. While these will be games of chance that don’t directly compete with the skill versions that are sure to be offered by others, the lotteries have some unique advantages that allow them to solve problems that traditional sports gaming cannot; a big one being the licensing fee leagues are demanding for their product to be utilized. Since the margins are much larger on lottery games, especially draw games which I think are the most analogous to a live sports lottery category, the fee won’t be cost prohibitive like it can be if taken out of a vig.”