Fanatics gets into N.C. through Hurricanes

With the year drawing to a close, I leave you with three things to keep an eye on as we enter 2024, starting with a heaping helping of news from here in the north of Cackalacky (if etymology is your thing — there’s this bonus gift).

Happiest of holidays to you all! SBJ Betting will return on Jan. 5.

The dance cards are about to be filled in North Carolina, where sportsbooks had to go through the state’s five pro teams, two speedways, NASCAR, the PGA Tour and two Tour event hosts for access to licenses.

Three of those have been announced. The Hornets landed what sources say almost certainly will be the most lucrative access/sponsor deal in the state, locking down global giant Bet365. Quail Hollow hooked up with Penn Entertainment-owned ESPN Bet in a deal that also included an exclusive sponsorship. And the PGA Tour aligned with FanDuel in a deal that only includes market access.

Thursday, Fanatics confirmed that it will enter through an access agreement with the Hurricanes. Fanatics would not discuss specifics of any sponsor components, though industry insiders said one was likely.

The three motorsports properties also have agreed to market access pairings, according to industry sources, with DraftKings entering through NASCAR, while BetMGM and Betway go in via deals with Speedway Motorsports’ tracks (Charlotte Motor Speedway and North Wilkesboro, respectively). All either declined comment or did not respond to questions.

That accounts for licenses tied to all but four properties — the Panthers, Charlotte FC, the NWSL’s N.C. Courage and Sedgefield Country Club (site of Greensboro’s PGA Tour event) — and all but two of the eight leading sportsbooks, Caesars and BetRivers.

The expectation is that Caesars, which operates casinos for the Eastern Band of Cherokee Indians and has cut back on its sponsorships considerably in the last year, will get its license through the tribe.

So which sportsbooks might hold one of those four as yet undisclosed access slots? Based on what we’ve seen in other states of late, my money is on BetRivers, Hard Rock and Tipico for three of them. I won’t hazard a guess on the fourth.

Tepper Sports & Entertainment has decisions to make

The more intriguing question is on the property side, where Panthers and Charlotte FC owner Tepper Sports has two licenses, neither of which will go to one of the six market leaders. Tepper execs have declined interview requests on the matter. But multiple sources outside the organization said the team went to market expecting a higher market access fee than the leaders were willing to pay. That, coupled with an expressed desire to open a retail sportsbook at the stadium, led operators who might otherwise want a deal with an NFL team to move on.

The Panthers are the only NFL team in the state. Their stadium, which also is home to Charlotte FC, sits at the edge of the uptown business district. So maybe there’s a shot that one of the remaining sportsbooks wants a deal badly enough to pay for market access and commit to retail. Hard Rock — just as an interesting example, not because I’m hearing a connection from sources — could be in a spending mood now that it’s up and running in Florida.

Perhaps the Panthers and Charlotte FC can cobble together two or three of the leading sportsbooks as sponsors and sign access-only deals with two lower-tier sportsbooks. Some in the industry say the Panthers have a strong enough menu of sponsorship assets to end up generating more money that way — at least annually, and especially at the beginning — than they would through a 10-year deal that tied market access to an exclusive sponsorship.

But without tying sponsorship and market access, they’re not going to get a 10-year sponsor deal like the Hornets did with Bet365 or Quail Hollow did with ESPN Bet, which means they’ll face the uncertainty of what could be a declining market through two cycles of renewals, since sportsbooks spend heavily on marketing in the year that a state launches and far less after that.

And they’ll also be assuming risk on both of their market access deals, since they’ll likely be with unproven entities in what has been a volatile space.

Just ask the Cavaliers, who saw now-defunct Fubo Sportsbook default on a 10-year market access deal that included sponsorship of an arena lounge. Market access isn’t selling for nearly as much in North Carolina as it did in Arizona. And it’s going to be worth even less for anyone faced with trying to sell it a second time.

Deadline for applications in North Carolina is Dec. 27. The state hasn’t set a target date for launch yet.

The pecking order in all the states has looked pretty much the same, kind of like the American League standings in the 1950s.

FanDuel and DraftKings.

Then there is a big gap back to BetMGM and Caesars. And then Barstool, BetRivers and Fanatics, each flitting around at 2% to 4% of handle share, sneaking into the top four in a state here or there.

This was supposed to be the year that could alter that, with ESPN Bet entering through a re-brand of Barstool, Fanatics acquiring PointsBet as part of a nationwide (at least in legal states) launch and Bet365 finally at the starting line in a few states.

Well, it’s still too early to say how that will play out. But state regulator filings from November, which included the first 17 days after ESPN Bet’s launch, indicate that we may finally be in for some disruption.

In Indiana, ESPN Bet posted $27.4 million in handle, up from Barstool’s $7.7 million the prior month, increasing handle share from 1.9% to 5.5%. In Iowa, results were almost identical, with ESPN Bet handling $15.3 million, up from Barstool’s $4.7 million, raising share from 2% to 5.8%. The showing in Maryland was even stronger, with handle at $34.5 million, up from $10.8 million, increasing share from 2.1% to 6.2%.

Again, that’s for a hair more than half of the month.

Certainly, ESPN Bet’s generous offer of $200+ in bonus bets for new signups goosed handle in that first month — and likely will continue to do so as those promo dollars wash through the system in the coming months. But other sportsbooks have entered with similar bonusing tactics, and none shook up the market the way ESPN Bet did in those states.

The Worldwide Leader is here, and it looks like it’s going to matter.

Fanatics has work to do, while Bet365 may still be a disruptor

In contrast, Fanatics’ arrival hasn’t had much of an impact thus far, though it’s important to note that its acquisition of PointsBet — which accounts for the lion’s share of its entry — is not quite the same as Penn’s rebrand of Barstool.

In November, Fanatics held a 2% share in Indiana, where it is branded “PointsBet, a Fanatics Experience.” That’s about where it stood in prior months. In Iowa, where it operates as Fanatics, its share rose slightly in November, from 1.3% to 1.6%.

In Maryland, where Fanatics has a highly visible sponsorship of the Commanders that includes stadium retail, growth has been markedly better, with share rising from 2.8% in September to 3% in October and 3.6% in November.

Bet365 is another potentially disruptive entrant. Though still only playing in spots, its performance in a couple of them is eye-catching.

Though it has fallen off a bit in the last two months after a heavy promo spend at launch, Bet365 came out of November with 6% handle share in Ohio, putting it in a dead heat with BetMGM as the No. 3 sportsbook, with both slightly ahead of Caesars. It was at 4% in Iowa, declining from the 6% it had at launch.

It was in Kentucky, which launched online betting in the last few days of September, that Bet365 made the most noise. Not surprisingly, FanDuel opened as the market leader there, with 40% of the $323.6 million wagered in the state in October, a shade ahead of DraftKings, which was at 38%. Bet365 was third, at 10%. More importantly, it more than doubled the handle of BetMGM or Caesars, which each were at 4%. Fanatics was at 2%. Barstool had 1%.

Based on what we’ve seen so far elsewhere, I suspect ESPN will build on that 1% significantly when Kentucky posts November results.

After seeing large and impactful batches of states open at the start of each year, or in some cases football season, we are at the point now where the states that remain bring a more complex calculus.

You can set Texas aside for 2024, since Texas legislators only sit in regular session in odd years.

The other massive market still on the table, California, appeared to be at least a year away from any movement until last month, when two little-known online gaming entrepreneurs filed a pair of ballot initiatives meant to bring online sports betting to California under the jurisdiction of the state’s native tribes.

The rub here — along with the lingering echoes of Californians rejecting a pair of competing ballot proposals by about 30 points last November — is that neither Kasey Thompson nor Reeve Collins consulted with leaders of the most influential tribes before filing with the state.

Politico had this interesting look at the proposal, and the reaction of a few blind-sided tribal leaders, that will help catch you up.

Once you get past Texas and California, there are only five states left that we would consider major pro sports markets (I’m setting that bar at two or more teams across MLB, the NFL, NBA or NHL) that have not yet legalized sports betting.

We’ll take a closer look at the prospects for each of them after bills are filed next month, but for now, here’s a quick catch-up on each to get you through the holidays.

Missouri (four teams, 4.57 million over-21 adults)

Still, Missouri? Really?

I was about ready to cut and paste the scouting report I’ve written for the last three years — been at this from the beginning; strong, broad legislative support; gummed up yet again by one congressional leader’s affinity for gray-market gaming machines — until the owners of the Cardinals, Blues, Chiefs and Royals made good on a promise to fund a ballot initiative if the legislature couldn’t at least give the matter a fair hearing and a vote.

Considering the proximity of Kansas City to the Kansas border and St. Louis to the Illinois border, it shouldn’t be too hard for the pro teams in those cities to wrangle the 180,000 signatures they will need to collect by May.

That would put it in the hands of the voters.

Minnesota (four teams, 4.21 million over-21 adults)

A bill that would have approved online sports betting and put it in the hands of the tribes passed the Minnesota House earlier this year, but stalled in the Senate, where Republicans attempted to add licenses for the state’s two horse tracks to the mix. That led to a compromise bill that would have funneled a slice of the tax revenue from sports betting to the tracks, but it failed to garner the bipartisan support necessary to get over the finish line.

The good news for sports betting proponents is that Minnesota legislative sessions run for two years, allowing bills introduced this year to pick up where they left off when lawmakers return in February.

Georgia (three teams, 7.96 million over-21 adults)

Georgia legislators took swings at four variations of a sports betting bill this year and whiffed on all of them, even with support from the governor, lieutenant governor and house speaker, all of whom are in the Republican majority.

It feels like Georgia legislators now have voted on as many sports betting bill variations as Baskin-Robbins has flavors, rejecting all of them.

Washington (four teams, 5.87 million over-21 adults)

Tribal casinos have operated sportsbooks in Washington since the start of the 2021 football season, with 15 tribes now participating. In February, a federal court quashed an attempt by commercial card room operators to join them. The card room operators said they will appeal.

Sports betting proponents say it is unlikely that there will be movement on the online side until the dispute is resolved.

Wisconsin (three teams, 4.41 million over-21 adults)

It was a quiet 2023 and will be a quiet 2024 for The Badger State. The constitutional amendment required to clear the way for online sports betting in the state can’t hit the ballot until late 2025.

• Ohio’s legal sports gambling industry is almost a year old, and while Ohioans have bet just under $6 billion through October, “many companies that hold sports-betting licenses have yet to fully get in the game,” writes the Cleveland Plain Dealer. The Cavaliers, Browns and Hall of Fame Village in Canton each have separate licenses for both in-person and mobile betting, “but each is only offering one or the other.” Actively using the licenses “is important because Ohio’s rule for sports betting licenses is ‘use it or lose it.'”