Pre-Football Season Rush & DraftKings Tax Impact | Betting Update - video Dailymotion

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00:00Welcome back to Newswire here on SportsGrid.

00:05It seems like a very popular vacation week around the country.

00:08A lot of folks going out of town before school start again, people in our business do it

00:12before football begins, which is coming up soon.

00:15So we're going to get a double dose of Pat Evans this week as some of his colleagues

00:19have the week off.

00:20So we got him today.

00:21We got him on Wednesday.

00:22Pat, thanks again for coming here on Newswire.

00:26It does feel like that.

00:27It's interesting that a lot of people are sort of telling me that they're like looking

00:30to get a quick getaway before school starts or, you know, fantasy football or the NFL

00:36starts.

00:37I get it.

00:38I understand it.

00:39No, I mean, hey, I'm, I'm with you on Wednesday and then I take Thursday and Friday off.

00:42So you're totally right.

00:43I mean, it's, it's one of those times of the year, 4th of July, kind of too.

00:47And then near Christmas where everybody says, you know what, I'm just going to shut down

00:50for a couple of days or weeks.

00:52And then your left screen when you have to rely on other people like I do to write up

00:58stories and stuff.

00:59So it's, it's a tough time.

01:00Yeah.

01:01Well, it's also a fun time too, because here's what's fun.

01:04You're on your DraftKings app.

01:06You place a bet and in the future you win, but you don't win as much as you thought.

01:11What's going on here?

01:12DraftKings decides to step in and say, we're getting taxed too much.

01:16So now we're going to have to pull back a point or two, 1%, 2%.

01:21I mean, they're saying all the right things and it's not really going to affect you, but

01:24I mean, hello, it's my money.

01:26It is affecting me.

01:27Yeah.

01:28And to fully understand it, I mean, like you said, it's because of high tax rates.

01:32It's only in a couple of states that they would do this.

01:35New York being one, because they charge a 51% tax on gross sports betting revenue that

01:42these companies make.

01:43Illinois just, you know, recently upped their tax rate.

01:47So this is kind of a reactionary thing by them to say, hold on, we need to make sure

01:52we're not paying way too much in taxes that this isn't viable for us as a business.

01:58And on the earnings call on Friday, CEO Jason Robbins even kind of equated it to the fees

02:03you see at hotels, you know, the luxury or the whatever tax they call it to cover the

02:10basis of how much taxes they have to pay.

02:14I think there's a difference here a little bit because it is a vice industry kind of,

02:18and you know, they would only charge it on winning bets, which is kind of interesting.

02:24So you place a $10 bet and you win $20, but you're paying, I think the example they were

02:31using was 32 cents.

02:33And so that's not nothing.

02:34I mean, it doesn't seem big by the scheme of things, but you know, it effectively shifts

02:41the odds from, I think it was plus 100, I don't, again, not great at math, but plus

02:45100 to minus 104.

02:48Will a bunch of bettors care?

02:50I mean, right now it seems like it's a big deal in the sports betting, Twitter ecosystem

02:54and all that.

02:55But if you're just an everyday better, who's just playing a few bets here and there on

02:59the games you're watching, is that really going to deter you from going to DraftKings

03:03if you're already an avid DraftKings bettor in New York or Illinois or Pennsylvania?

03:09That'll be interesting to see, it seems like it'll roll out in January.

03:13The biggest thing to watch I think will be, and Jason Robbins even kind of alluded that,

03:18hey, this makes sense to us, so I think it'll probably make sense to the other companies.

03:22Will other big sports books follow suit?

03:26Today BetRivers came out and said they will not, that they like that their customers come

03:30first and they will not be charging any sort of extra fee to cover taxes.

03:37Here we'll see, which owns FanDuel, we'll be next week, we'll see what they do.

03:43Of course, that's the biggest competitor.

03:46It's really an interesting situation and it'll be fun to watch kind of how this shakes out.

03:51Will DraftKings say, whoa, this doesn't make sense?

03:53Again, Robbins said last week on Friday that it'll take a lot to make them drop this fee.

04:00So yeah, again, it'll be interesting to see if they are the only ones that do this or

04:05if other companies see it and say, oh, they're doing it, we might as well do it.

04:10And then of course, how the betters react if there's not a huge pushback ultimately.

04:15You have to wonder, because again, going back to kind of that hotel example, even though

04:19they're completely different industries, how often do you look at a hotel bill and complain

04:23about those extra couple of dollars on the receipt that they charged you that were not

04:28in the initial room fee?

04:30So I don't ever do that, but that's me, maybe I should, but yeah, a lot of things to kind

04:37of keep in mind moving forward.

04:40Robbins kind of also thinks that this might cause some public cries to the lawmakers to

04:48shift taxes back, but I'm not sure that's a shoo-in either because the lawmakers already

04:54set these taxes and said, this is your industry, this is what we're taxing you, figure it out.

04:59So yeah, lots of things up in the air, but certainly a very newsy subject that has taken

05:06the industry by storm.

05:08Yeah.

05:09And we'll see if FanDuel, MGM, Caesar, some of these other companies follow suit.

05:13If they don't, Pat, I would guess that bonuses aside, people may shift their money in the

05:19long-term over to other sites that aren't charging the surtax, but I guess we'll see.

05:23All right, Arizona, we got some news updated this morning, two new sports books opening

05:27up in that state.

05:28Tell us more about that.

05:29Yeah, so we talk about Arizona every once in a while, and it's a very kind of revolving

05:36door in that state, honestly.

05:38They opened in September, 2021 with 18 sports books, 10 were partnered with tribes, eight

05:43were partnered with professional sports books.

05:46We've had a bunch of sports books fall off and pull out of Arizona, including FUBO Sports

05:53Book, Twin Spires, Betway, Unibet, Sahara Bets, which was partnered with the Coyotes.

06:01That was their only state.

06:03So there's been a lot of companies that have come and gone in Arizona.

06:07There's currently about 15 licenses, including the two that were issued on Friday.

06:12That was Panatec, which is partnered with, I'm going to switch them up because of course

06:17I don't remember my story.

06:18I think Panatec was with San Marcos Apache Tribe, or San Carlos Apache Tribe, I'm sorry.

06:26And then what was the other, yeah, so Sport Trade with Fort Quinchan Tribe.

06:33Sport Trade is an exchange company that also has a sports book, their exchange is not really

06:39accepted by regulators anyway, so it is just a straight sports book, I think, in New Jersey

06:43and Colorado, and now they'll be in Arizona.

06:47And then Panatec is just a B2B supplier, so you might see, it will be a white label

06:53sports book down there in Arizona.

06:56So we've seen a couple successful white labels, especially in Arizona, where you've got a

07:01Desert Diamond branded sports book that gets a couple percentages in market share, which

07:06nothing to sneeze at.

07:08Arizona's a tough market.

07:10Four companies control 85% of the handle, of course, Vanduul and DraftKings, but also

07:17Caesars and MGM, and then Bet365, which just entered the market recently, because again,

07:23it's just a revolving door, they've had people come and go.

07:27They've kind of picked up about 6%, they're ahead of ESPN, Bet, and Fanatics.

07:31So just a really fun kind of market to keep tabs on because it's new coming and going

07:37sports books and kind of an interesting setup with the professional sports teams and tribes

07:43controlling the licenses and how those all shake out with who's coming and going.

07:50Let's wrap it up with some potential for placing limits on sports bettors.

07:55This is a hot topic right now in Massachusetts, Pat, do you think this ends up happening?

08:01That's why they're talking about it.

08:02I think we kind of joke internally, Massachusetts is by far the most active regulatory agency.

08:09They have meetings galore, they talk about everything, and they've had a limit conversation

08:15before because they hear the public outcry of, hey, we're being limited, we don't want

08:19to be limited, but no sports books took part.

08:23Sports books now say, hey, we'll take part in a roundtable.

08:26So they'll be having a meeting soon and kind of talking about it and talking about it with

08:30the operators on how and why they limit people and how maybe to stop it.

08:35Again, who knows?

08:36There's just a big discussion, but Massachusetts is always a regulatory market to watch because

08:41they're so on top of kind of the issues in the market.

08:45All right.

08:46Well, Pat, great stuff as always.

08:47I'll see you back here on Wednesday as you join us once again this week.

08:50Thanks for coming on.

08:51Thanks as always, Craig.

08:52See you in a few days.

Pre-Football Season Rush & DraftKings Tax Impact | Betting Update

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