Roughly 25% of Americans are fully vaccinated and we’re doing approximately 3 million vaccines a day. We have to get 650m vaccines as we have 330m citizens but we’re approaching the half-way mark, now at around 40%, and I think when you get to around 60 or 70% you start to get the herd immunity. So once the travel ban gets lifted, there will certainly be plenty of movement within the industry.
Once the vaccine continues to roll out and restrictions get lifted, I believe 2021 is going to end up being another strong year for the online gaming and the US sports betting market. Michigan and Virginia recently launching is all good stuff to continue the expansion country-wide as well.
Out of New York, Texas, Florida, Ohio and California, I think Ohio is the ripest to pop in terms of legalizing sports betting very soon. Second, Governor Andrew Cuomo is ready to move in New York but he’s having a few issues politically with nursing home deaths and sexual harassment claims threatening his tenure. The Attorney General in New York is also going to start an independent investigation. He’s not in as strong a position as he was a couple of months ago but he’s still a very clever politician and I think he’s moving away from having lottery control online gaming in the state. He definitely wants online gaming with one of the motivations being that 25% of New Jersey’s gross gaming revenue (GGR) comes from New York. Customers come across the bridges and through tunnels, and he wants to capture that back, considering it’s the fourth largest state in the nation.
New York is a Mecca when you consider the sports teams, population and financial markets. Cuomo has also made it clear he wants to get it done before the budget, which needs to be completed by May 15. It’s in the budget and it will move away from a monopolistic regulatory regime where the lottery runs online gaming in New York. I think it’s close and the legislatures are in a much stronger position than they were four or five months ago. Ultimately in the next 75 days, there’s a budget and I’m 90% sure legalizing online sports betting will be in the budget. But recapture isn’t going to be straightforward as I foresee New Jersey continuing to innovate in the market. We’re very close to sorting out legislating esports. The state is well positioned even if legislation goes through in New York to keep hold of the majority of its gaming revenue. New Jersey has had consecutive months of passing $900m in sports wagering handle, just missing out on the $1bn mark but we’re so far ahead of everyone else in the US, and New Jersey is now the third largest jurisdiction for online gaming worldwide, third to only Germany and the UK.
The power of the New York media, the pent-up interest of sports betting and the fact that on Super Bowl Sunday in February, thousands of New Yorkers made it across the border just to get into New Jersey to place a bet, it sounds a little silly that the state hasn’t regulated online sports betting yet. When New York pops, and you could have a real opportunity to bet on sports online by year-end, that’s
big for the whole industry in the US.
On the way to being number one
In Texas, Governor Greg Abbott is very keen to legalize sports betting this year since their legislative sessions occur biannually, so if nothing is sorted in the next four months, then they’re not going to be able to come back until 2023. I’m optimistic that Ohio Governor Mike DeWine is working to do something immediately based on the discussions I’ve had with him.
Speaking about California, that state is nowhere, and it doesn’t look like it’s coming on board anytime soon. In Florida, the session there ends in the first week in April as they have a 60-day session. Governor Ron DeSantis wants to do something but in order for anything to happen, the state has to renegotiate the compact with the Seminole tribe. I was just with the chairman of the tribe and the CEO of Hard Rock International and they’re not pushing hard, but they’re collaborating with the Governor. There is a chance that something could happen with pushing through sports betting, but I think it’s more likely to happen this time next year.
Nobody believed me when I said that New Jersey is going to be one of the strongest online markets in the world many years ago, and a lot of states are starting to replicate what they did. We see states continuously coming online, reinforcing my confidence that the US will be the most important online market worldwide in the coming years. It’s all coming together nicely, and I believe the sky’s the limit for the US and I think we’ve got it right so far, while continuously looking at how to improve responsible gaming so we don’t have what’s happened in the UK, where operators and regulators go in opposite directions. If you’re a publicly traded company with a licence in the US, you’re going to have a great four- or five-year progression, if not longer.
European acquisitions to take off
I think the bigger public companies will continue to do mergers and acquisitions. I’m hopeful it doesn’t quash a lot of start-ups because such businesses are crucial to innovation. It’s becoming increasingly more difficult financially for start-ups to get into the US market and you’ve got to have a lot of resources.
There have been many US companies trying to acquire publicly-traded online operators from Europe and other parts of the world. I think you’re going to start seeing the reverse happening, where some of these online companies will acquire US-based online casino operations and, personally, I see that being a better fit. MGM Resorts is a great company and a great US brand but they don’t have a great deal of experience online. If you acquire a company like Entain, are you going to be able to understand the importance of being nimble and innovative? I also think you’re going to start seeing a lot of European companies and perhaps companies in Australia, New Zealand and Israel acquire US assets.
It's a huge compliment to Entain that MGM Resorts made an offer for it. I do think that MGM’s offer was undervalued but they made a play and the Entain board has pressed the pause button on it for now. When a company makes an offer such as that, they may come back in a few months with another one. Entain and MGM have a very strong and positive relationship and I think those discussions informally will continue but both companies right now have their own interests, and in order for the coalition to move forward, they’ve got to focus on that before we start talking about M&A stuff.
European acquisitions to take off
One of the most rewarding professional opportunities outside of financial compensation is Entain’s leadership on responsible gambling. It’s the first operator, and I represent more than 30 across the globe, to come out with a socially responsible communal approach to responsible gaming, both in the educational and practical side when it comes to software-blocking tools. Entain set off the mark and now you have others such as bet365 and Golden Nugget who now realise they too have got to get ahead of the curve on safer gambling so we can have sustainable gaming environment and not let what happened in the UK take place in the US. It’s so unfortunate because the UK has such as robust industry but now the regulators have gone in another direction, and we want to learn from that experience.
