Happy days are not here again for sports betting. Never mind the proliferating scandals in major league sports. An exponential hike in Illinois‘ sports betting tax was just signed into law by proponent Gov. J.B. Pritzker (D). That’s not Pritzker above but the great, irreplaceable Lee Marvin as Hickey in Eugene O’Neill‘s The Iceman Cometh. Like Hickey, Pritzker has come to deliver an unwelcome dose of truth to purveyors of OSB. They’re an inviting target and, having bellied up to New York State and its 51% tax rate, they’re now viewed as pigeons for ever-higher levies across the country. If they ever get into California, look out. Beware of what you wish more, OSB, because you just might get it.
Trust Securities analyst Barry Jonas rightly termed the fallout in the Land of Lincoln a “hullabaloo” portending worse to come. He also brought B Global founder Brendan Bussmann in to give analysts the lay of the land on whence cometh sports betting now. “As a proponent of lower tax operating environments, Mr. Bussmann believes the hike to be unfortunate as it punishes the operators already providing the state with sizable tax revenues,” wrote Jonas. The former believes the operators will take it out on the customer in the form of fewer promotions, worse odds and crummier products. We disagree. Despite paying through the nose in New York, operators haven’t beat up on the consumer to any notable extent. Also, DraftKings has indicated it is staying the course in Illinois, despite having made various baleful noises before the tax increase passed. Such benefits as are accrued by rival books, Bussmann continued, would redound to illegal, offshore operators, not DKNG’s lower-taxed rivals.
The buzzword of the day in gaming is “contagion,” as operators fear tax increases spreading to other states. Ohio had already doubled its rate (to 20%), albeit primarily on moral grounds, as Bussmann correctly observes. Thankfully, a tax hike already failed in Massachusetts. Bussmann doesn’t think a mooted on in New Jersey will go through either (we’re not so confident), largely because “how seasoned the state is with governing gaming policy combined with the Governor likely having other items to focus on before ending term in 2025.” Then there’s lucrative Pennsylvania, whose solons are preoccupied with black-market slots, for one thing. “Longer-term, Mr. Bussmann worries states yet to legalize will simply institute higher tax rates at conception … without taking a look under the hood and understanding industry dynamics.“
Illinois continues to be a promising venue for Internet casinos, but has to contend with prospective Chicago slot routes, the tax lift and keeping precarious Bally’s Chicago on track. Slot-route operators oppose iGaming but Bussmann thinks it’s only a matter of time before they lose that battle. (Considering that they were allowed to sap regular casinos, it would only be karma.) “The state has repeatedly turned to other forms of gaming for tax revenues, but it’s unclear when the domino falls,” wrote Jonas.
New York is even dicier, “as the land-based process remains delayed with no end in sight (possibly a 2026+ event now).” Instead, the Lege, in its impatience, may turn to iGaming for a speedy revenue fix. That’s “fix” as in a heroin junkie, as much as in a budgetary curative. “Speedy” is another operative word, as iGaming is perceived to be faster to bring on line than a lumbering, multi-billion-dollar megaresort.
Meanwhile, Michigan evidently got tired of waiting for Washington, D.C. to move against offshore casinos and sent a letter to Bovada telling it to get the hell out of the state. Bussmann “applauds the state’s gaming commission for taking on the illegal market, becoming the latest state to take some sort of action [and] believes it will take a coordinated effort between states and the federal government to make a dent in the gambling black market, which we and Mr. Bussmann believe is likely far bigger than governments realize.”
What about other states? Minnesota? Still unable to get off the legislative dime on OSB, possibly with higher taxes contemplated next year than were this time. Georgia? The same old, sad story: “nothing seems likely to pass for a few years.” (And that goes for casinos too.) Missouri? Still always one legislative session away, especially if the ballot initiative to legalize sports wagering fails this November, as currently appears likely. (Terrestrial casinos oppose it.) Washington, D.C.? FanDuel recently cleaned up the District’s act and may be perversely rewarded by having its quasi-monopoly dissolved. Florida? Waiting on the Supreme Court to adjudicate the legality of Seminole Tribe OSB. Dark horse Arkansas? It “came somewhat out of nowhere earlier this year considering iGaming – it was unsuccessful, and Mr. Bussmann doesn’t see legalization there as imminent.” And Maryland? Lawmakers “couldn’t get iGaming across the line last session, though continues to face budget constraints potentially driving the conversation.”
That leaves big enchiladas California and Texas. Bussmann says “their sheer size would have a significant impact on the gaming landscape” and that the Golden State is seeing some “productive conversations” on sports betting. California’s tribes aren’t on board with anything yet, pushing legalization at least as far out as 2028. Despite Lt. Gov. Dan Patrick‘s implacable opposition, Bussmann thinks the Texas Lege will eventually fold, probably in 2027, although a special session in 2026 is conceivable. But we’re not taking wagers on anything in the Lone Star State.
Gambling revenues rebounded in Maryland last month, up 2% to $173 million. An extra weekend day seems to have made all the difference. That wasn’t enough for Horseshoe Baltimore, which fell 16%, failing to achieve even its usual $15 million. MGM National Harbor (above) was flat but that was still sufficient to lead the Free State with $72 million. Mounting a charge was Maryland Live, up 10% to $65 million. Ocean Downs made $8.5 million (flat), while Hollywood Perryville rose 3% to $8 million. That left Rocky Gap Resort, where Century Casinos‘ tenure continues to be … well, rocky. Revenues were down 5% to $5 million.
Jottings: Ever wonder what became of decomissioned riverboat casino Majestic Star II (formerly Trump Casino, formerly Trump Princess as well)? It’s been sighted at Sarnia Harbor, Ontario, being refitted. It’s getting a $10 million makeover in hopes of reviving its glory era. The seen-better-days ship is slated to remain berthed in Canada … Plowing ahead of Las Vegas, another tribal casino has gone cashless. This time it’s Rolling Hills Casino & Resort in Corning, California, and Acres Manufacturing is the lucky vendor … The closings of The Mirage and the long-suffering Tropicana Las Vegas have subtracted 4,503 hotel rooms from the Las Vegas Strip. Will it make a difference for still-suffering newcomers Resorts World Las Vegas and Fontainebleau Las Vegas? Probably not, experts say. One unspoken reason is that F-blue and Sibella World have priced themselves out of the Mirage/Trop market … Casinos in Macao soared last month, shooting 29.5% higher to $2.5 billion. It’s the highest gambling tally since the Covid-19 pandemic struck … Still incapable of focusing, Bally’s Corp. is now branching out into social gambling. It’s this kind of hare-chasing that has activist investors tearing their hair out … In Iowa, tribal WinnaVegas casino is undergoing a major capex reinvestment. Almost all floorings will be replaced, the casino bar will be redone and a glossy, new office will be created for casino hosts. Sounds good to us.