iGaming Daily

Jessica Welman (00:02.609)
Call it consumer favorable results. Call it a bad attack of variance. Call it an absolute shellacking. Whatever you call it, the end result was this. Sportsbooks in the US had such a bad October that it made its way into a number of earnings calls. We've got the rundown on the latest round of state revenue reports, plus an update in the lawsuit between the players of the MLB and several operators on today's episode of iGaming Daily.

iGaming Daily is brought to you by Optimove, the number one CRM marketing solution for the iGaming market. I am Jessica Wellman, editor of SBC America, joined by Charlie Hoerter, media manager and former SBC America's reporter. We made you learn a lot of culture. I remember you watching your first football game though at G2E a couple of years ago, and it was like a real dull one, right? Where you were just like, this is the game that you guys like so much?

Charlie Horner (00:53.044)
Yeah,

Charlie Horner (00:57.206)
Yeah, yeah, I was a little bit confused. And then I think you and a couple of the guys mentioned that the team from Washington, the commanders, they're really rubbish. This is not a true reflection of NFL. We can do a lot better than this.

Jessica Welman (01:14.427)
Well, and then they got good this year for a minute and now they're bad again. But see, like, this is kind of the beauty of the NFL that I think is something that you just don't see in other sports like soccer as much, which is that just like wild stuff happens. Games that should be easy suddenly become incredibly difficult. Games where somebody's like a two touchdown favorite, you can go down in flames and...

And that kind of sets the stage a bit for what happened in October. I assume you've kind of missed this story, because this hasn't, it's not really like there was one big headline. It was just these reports kept coming in, the earnings calls kept coming in, and everybody was like, this month was rough.

Charlie Horner (02:01.216)
Yeah, I would have missed it. However, I'm an avid reader of SPC Americas and I was actually catching up with our colleague, a couple of weeks ago, and we were talking about this as well. But it does seem quite interesting that results have been so bad that they managed to get their way into the earnings calls. That's something that's not happened too much. So Jess, I just wanted to ask you really like...

How bad was it for Sportsbooks? What was the crazy things that will happen in these games?

Jessica Welman (02:36.881)
So it's a combination of a few different things. To give you like a lay of the land of how bad it was, I think we've talked on this podcast quite a bit about the fact that operators now double digit hold isn't just attainable, it's kind of the norm for especially like the bigger operators to be sitting on 12 % hold, like 11 in 10 in a rough month, you know.

We were seeing various reports that across the board, the average has gone to like 7%. So you're talking about basically a 33 % dip in your hold. Some operators impact a little more than others because in football, what people do is they'll parlay a bunch of things together. And usually you anchor like for those who don't bet a lot.

If you don't, when you have a big parlay, you pick very obvious winners to kind of anchor and tie down be legs in parlays so that you can get more legs in, get paid more, but be taking kind of less risk. You know what I mean? So the reason we have such high double digit hold usually is because parlays don't pan out. But in the case of this past month, in particular, week six of the NFL season,

favorites have just kind of been coming in. didn't, I'll be honest, I watch football every week and I didn't really think about it when it happened. But when I look at week six, I'm pretty sure every single team that was favored to win one with the exception of maybe one, Cardinals, Packers, it's possible Cardinals were favored in hindsight, I can't tell you. That one, it would have been close.

you know, like they're comparable teams, but everybody kind of did the job they were supposed to do. And that led to what operators were calling. Have you looked at my favorite part of this is all the different ways that the CEOs have described this. Have you seen the various phrases?

Charlie Horner (04:34.894)
Mm-hmm.

Charlie Horner (04:52.984)
No, no, no you have to point this out

Jessica Welman (04:54.685)
these are, this is, don't like earnings calls. never want to be like two negatives. So they try to be as positive as they can about it. And so I believe Jason Robbins said, were experienced stung by the most customer friendly stretch of sports outcomes we've seen.

in said industry wide hold has been negatively impacted by customer friendly outcomes. And then the only one that really just was like, listen, this sucks man was Caesar's. Tom Ridge was like, this was the single worst combination of sports betting outcomes we've seen since we started the business. And I was like, thank you, Tom, for just putting it the way that it is. It's just.

Charlie Horner (05:25.742)
Nah.

Jessica Welman (05:43.803)
To be like, well, you know, we were a little more customer friendly than we intended to be is a funny way to put things, right?

Charlie Horner (05:50.816)
Yeah, it's nice to see that someone's coming out with some forthright statements in these earnings calls. But I think the interesting point is that this sort of higher parlay mix that these operators have been looking to build over the last few years is the very thing that sort of destroyed them this month, well, during October anyway, because that's the risk that you take for the most part.

Lots of parlays means a really high hold, but this is just one of those unfortunate events. I know for our European listeners, recently Manchester City have been the accumulator or parlay buster over the last few weeks after they've lost a few games in a row. But yeah, usually we would pick all of the favourites or well, not all of us, but some of us do go with the favourites, get those safe bets in. Manchester City have been the

wants to break that for us. yeah, it's been an interesting one with the parlays this time around.

Jessica Welman (06:56.721)
Yeah, well, and it's such a wild turn of events compared to September. So I, the way I kind of am aware of when big upsets happen is that in the U.S. there's a popular type of contest called a survivor contest where once a week you pick a football team and you can only use each football team once that you believe is for sure going to win their game.

and you survive in advance. like, there's some tactics to it. You don't want to just pick the chiefs out the gate or something like, you don't want to waste the obvious ones. In most survivor pools, I think like in September, 80 % of the field was gone by the end of September. Like it was a particularly brutal month where not just like favorites were getting upset, prohibitive favorites.

Charlie Horner (07:44.91)
Wow.

Jessica Welman (07:53.763)
were losing left and right. So to go from that to then this October where all of sudden the winners just kind of, won, know, things settled out. And some of this is that it's in any sport when you start a season, you're really not exactly sure where a team's gonna land in terms of skill. Like nobody thought the commanders were going to be.

as successful early on as they were. And then now they're suddenly losing all the time again. You think that the Bengals are gonna pick up where they left off and then they lose to the Patriots, the opening game. And then they have had actually a pretty bad season for what it's worth. So some of it was that, some of it is though it's not entirely football. You've got the World Series where you had two banner teams, very popular.

with fan kind of teams too, the Yankees and the Dodgers that were favorites to begin with that end up, you know, getting down to the end. And so you have to pay out all of those wagers and that sort of thing that kind of hit handle as well, which is why I believe New York in particular had a rough month. Revenue fell month over month, about 14%. Hold was down to 7.6%.

Charlie Horner (08:54.03)
that were favors to begin with and end up getting down to the end. And so you have to play out all of those, and that sort of thing.

Jessica Welman (09:17.463)
Don't ask me why in Montana they lost money taking football bets in October. I can't tell you what team people in Montana root for to be perfectly honest. Like have no idea. I mean, maybe the Broncos, maybe Denver. I don't know, but

Charlie Horner (09:36.642)
But the interesting thing I've noticed as well is that in New York particularly, and I think in a whole bunch of other states as well, the amount of bets taken was at an all-time high as well, or close to all-time high. So usually the operators are of chomping at the bit for that. And obviously these results have gone the opposite way, but I guess this is why we love sport, Results don't always go the way that you want them to.

Jessica Welman (10:06.105)
This is the thing is like, I understand why Jason Robbins and Jay Snowden are careful with their words because like, when you're the sports book and you get to win scads of money 98 % of the time, it's tough to hear somebody whine about the 2 % that doesn't go your way, you know? It's a little, to be fair though, it is a bit anomalous.

Charlie Horner (10:30.008)
Yeah.

Jessica Welman (10:36.143)
Although getting down to a hold that we thought would be the norm is not exactly DEF CON 1 here. Although DraftKings did update their guidance down like 250 million off the back of how bad October has been. But yeah, it's tons of handle. October in particular is always going to be a very high handle month. think, you know, people get in their head like the Super Bowl and February and stuff. Yes, but that's one game.

So really when you're looking at record months, octobers are going to be up there in general because you have what's called the sports equinox. It's the rare time of the calendar where you've got hockey, baseball, basketball, and football all going at the same time. Sometimes you have them all going on the same day. So you've got those, you've got college football in the mix as well. So that's why like October is always going to be high handle.

Charlie Horner (11:24.206)
nice.

Jessica Welman (11:34.511)
I know people are excited about, and Tom wrote up the handle story for us, and it is good to see continued growth. That I'm less surprised by because most states, you're going to see growth year over year. The scope of the growth and the percentage is somewhat interesting, but I am not as surprised by that one. You know what I mean?

Charlie Horner (11:57.518)
Yeah, absolutely. think maybe if we sort of look forward, how do we think that sports books are going to react to particularly loss-making months like this? it they're going to tweak their pricing strategy? Are we going to see the difference of risk management strategies or is it just an anomaly and we just forget about it move on?

Jessica Welman (12:20.943)
I think it's just an anomaly you forget about and move on. There's a phrase in poker, you never want to be results oriented. You want to think about have I made the best decision for me to make money in the long term and offering multi-leg parlays that most people are going to lose is a winning strategy. if we put all the revenue on a big map, it's a little blip in the radar. I don't think

It's just, the NFL is weird. And that's what makes it amazing and why it's such a good product is they're a game anything can happen. And then every once in a while you have the boring week where like actually nothing did happen. Everything kind of went like we expected. But when you have a game where the ball's really weirdly shaped, one mistake can be like a huge point swing. It's very easy to create upsets compared to other things.

I doubt they'll change much unless this continues to be a recurring issue. Maybe they'll push more towards individuals than games themselves, but who knows. We've got that stuff, all sorts of revenue reports up on SPC Americas, and certainly we'll be curious to see how November goes. In the meantime, we're going to take a quick break and come back for a little bit of a baseball update and a court case involving player likeness.

Charlie Horner (13:28.142)
Mm-hmm.

Jessica Welman (13:57.027)
Welcome back to iGaming Daily. We are now shifting gears to a different sport. We're going to talk some baseball, although really we're going to talk some legalese because it's a lawsuit involving the MLB. We have not, have we mentioned this one at all on the pod, Charlie? I don't think so. But we talk about DraftKings so much, I don't know if it seeps in.

Charlie Horner (14:15.126)
Night.

Yeah, not quite yet. I was going to say we've been talking for about 15 minutes now and we haven't mentioned a lawsuit, so I was starting to get the shakes. don't worry, we're back on the court beat.

Jessica Welman (14:29.893)
So this one, there are two different players union lawsuits. We did talk about this NFL one regarding NFT marketplace, brain makers and DraftKings licensing NFL player image and likeness. This one, it's not just DraftKings. Initially the MLB, it's like the MLB players incorporated, which to my understanding is the subsidiary of the union, the players association has sued.

Initially they sued Fandle, Draft Kings, Underdog, and Bet365 because all of these guys in app, if you were to bet on like Shohei Otani, a little picture of Shohei Otani would appear beside that wager. Or as you're looking in the app, you might see his image prompting you to go look at a page of Dodger's Action. Additionally, they're saying on social media, these sports books are taking these player images.

and creating posts around them that are designed to motivate people to go use your product and spend money with you. So the Players Association is arguing that this is a violation of privacy and that they did not properly reach out to the union to license these photos. I'm gonna do what I always do and ask you kind of the difference between Britain and the US. Do you guys have a concept of like what we call here fair use?

in terms of photos where it's just like, you know, if Shohei Ohtani were to be embroiled in a giant betting scandal, perhaps, is it fair game for you to use a photo of him as the lead on that story?

Charlie Horner (16:08.558)
There is sort of fair use defenses, guess, in terms of copyright claims and that kind of thing. Editorial justification for using pictures is usually one of those that's fair use. One thing I would say though is that it's quite rare unless the operator has a commercial relationship with that player specifically or that person specifically.

They don't tend to have imagery of them within the app. That's not something that really happens here. So if we... Sorry, go ahead. I was, yeah. So if, for example, I was betting on Mo Salah to score first for Liverpool in the next game, there wouldn't be a photo of Mo Salah in the app. It would just be his name and then the odds next to it.

Jessica Welman (16:45.881)
Yeah, go ahead, sorry.

Jessica Welman (17:05.297)
Yeah, so my I've always kind of seen people avoid this unless they've signed some sort of specific deal with the league on likeness. Even like team marks like the logos, you need like an official authorized gaming partnership and an AGO. That would allow you to use those, otherwise you just kind of like.

If you don't have one of the NFL, you have a little helmet that's white and navy blue and it says DAL under it. And you kind of get that the colors and the name evoke the Cowboys, but you don't have like the logo or the star or whatever. But as you see on like ESPN and stuff, all of those are kind of incorporated into scores and highlights and that sort of thing. So with this lawsuit, FanDuel kind of put up its hands and was like,

Okay, listen, what do you want from us? They signed some sort of agreement with the Players Association and they have been dropped from the suit. Leaving underdog is the only person in the suit in New York. DraftKings filed a motion to dismiss arguing fair use.

Jessica Welman (18:25.607)
It seems like you have a question, so go right ahead.

Charlie Horner (18:27.946)
Yeah, it's just interesting because surely there's... Again, I'm not a lawyer. I'm not an expert on the US legal system, is fair use of the First Amendment just freedom of expression, override copyright rules and image rights?

Jessica Welman (18:48.465)
So here's what's, do I think that they licensed a photo from someone? Sure, I think they've paid someone for all of these photos. If that someone is the MLB or not is really the question. In terms of, sorry producers, let me put the big, not a lawyer, this is not legal advice or consulting.

So there's kind of two things at play here. I think the thing that they're saying about social media makes a lot more sense to me in terms of the fair use cases that I've seen, which is if they were using like this pitcher, Paul Skeens as an example, went on like a crazy hot run at the beginning of his rookie season and they created social media content around it, around his big run and his stats. And do you think like this line is right on whether or not he's gonna

know, pitch a winning game. That's kind of newsworthy in the sense of sports, someone going on a run like that, that you would use photos around it. I think I've seen other operators kind of fall into the parameters of that fair use. The image and stats, there's a lot of court cases around this actually dating back to way before.

the repeal of PASPA, including like fantasy sports back in the day that originally started with that like player statistics are not proprietary. know, if Patrick Mahomes throws for 300 yards, two touchdowns and an interception, you don't need to license that information from anybody. You don't need to pay for that to use it however you may.

We have official data feeds now for sports betting and stuff, but in terms of if you have a fantasy product, if you're writing about it, you don't have to pay people for that information. So the argument DraftKings is putting forth, and apparently there is a case involving fantasy with Vandal and DraftKings, previously in some college athletes who filed a similar suit, that is just saying this is just information that is out there.

Jessica Welman (21:07.665)
the photos kind of fall into that and that you don't have a right to privacy, even though it's you next to a betting product. So I'll be curious where it goes. It does seem like legally these fantasy sites have been on the winning side of this, but I'm very interested to see the outcome on the rest of these suits and kind of where this one goes. Bet365 is the defendant in that case.

They have not filed anything at the moment. That is a case in Pennsylvania. In the meantime, there's a second case in New York and I think they just split these up honestly, like probably to venue shop and find a court that would be favorable and have a couple of shots of getting this done. Underdog is the one left there and we'll see. They have yet to really file anything either DraftKings is the first one to come out the gate because

Good God, their legal team stays busy and makes a lot of money. So we'll see what the response is there and whether Bet365 kind of puts forth a similar argument or brings something different into it. We do have the full rundown of that on SBC Americas for anyone who would like to read more into the actual argument itself. Charlie, anything else in the network you think people should take a gander at?

Charlie Horner (22:26.973)
Yeah, we had a nice feature go out today on SPC News with Camby's Director of Risk, David Arnold, and he talks about five key areas that operators sort of need to take into account to be compliant and successful in Latin America. know, Brazil's at the top of mind for a lot of people ahead of January's launch. So, yeah, if you're interested in the Latin market and

how to be successful in that market, I want to point you in that direction.

Jessica Welman (22:58.393)
Is that on SBC News or SBC Noticias?

Charlie Horner (23:01.236)
SBC News and it will be live for our Spanish readers, SBC Noticias, later this week.

Jessica Welman (23:08.091)
Fantastic. All right, well, check those out. Check out the stories we've talked about. Next week is Thanksgiving for us Americans. So I will be down for the count. Charlie, I'm sure they'll find somewhere for you to fill in. For the rest of you, don't worry. iGamingDaily will go on American holiday or not. So tune in next week for another round of new episodes with all of the headlines from the gaming world.