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State of the Union: SBTech-DraftKings, Nevada, Tennessee and more

Insight | Analysis

This week’s state of the union, in partnership with Segev LLP, covers approval from Diamond Eagle Acquisition Corp. for the acquisition of DraftKings and SBTech, the effects of the novel coronavirus (Covid-19) on Nevada’s gambling revenue and the licence application process for sports betting in Tennessee.

DEAC shareholders approve SBTech-DraftKings merger

Shareholders of Diamond Eagle Acquisition Corp. have approved the acquisitions of DraftKings and SBTech and the public listing of the new entity.

At a shareholders’ meeting yesterday (23 April), investors holding 99.7% of Diamond Eagle shares voted in favor of the combination, with less than 0.04% voting against and the remaining shareholders abstaining.

Through the merger, Diamond Eagle will acquire DraftKings for $2.10bn and SBTech for €590m ($634.1m). The new business will then be renamed DraftKings Inc and continue to be listed on the Nasdaq exchange.

Covid-19 cuts into Nevada gaming revenue in March

The closure of Nevada’s casinos from 17 March as a result of the novel coronavirus (Covid-19) pandemic has resulted in gaming revenue falling 39.6% year-on-year, with the state’s sportsbooks hit especially hard.

Total revenue fell to $618.1m, down from $1.02bn in March 2019, and bringing to an end a run of three consecutive months in which revenue has topped $1bn.

The state’s sports betting market was hit especially hard, after the National Basketball Association, Major League Baseball and Major League Soccer suspended fixtures from 12 March, with the National Hockey League following a day later.

Tennessee opens applications for sports betting licenses

The Tennessee Education Lottery is now accepting applications for new mobile sports betting licenses in the state, with all documentation now available on its website.

Application documents are split into four categories: sports gaming operator, supplier, vendor, and operator and supplier, depending on the type of license an applicant requires.

Karen Lenoir will serve as contract compliance coordinator for the sports betting licensing process.

VA governor’s sports betting amendments adopted

Virginia is set to pass a bill legalizing sports betting after state lawmakers amended the proposal to factor in changes requested by Governor Ralph Northam.

House Bill 896, which set out plans to permit online and mobile sports betting, passed the House last month by a vote of 59-35 after also clearing the Senate on March 7 by a vote of 33-5.

However, rather than signing the bill, Governor Northam requested changes.

Boyd slips to loss in Q1 after Covid-19 closures

Boyd Gaming slipped to a loss for the first quarter in 2019, as the closure of all its venues due to the novel coronavirus (Covid-19) resulted in revenue falling 17.7% year-on-year to $680.5m.

The operator’s casinos in the Midwest and South brought in $445.6m in revenue for the three months to March 31, down 17.7% from Q1 2019.

Boyd’s Las Vegas local casinos brought in $180.8m, down 18.9%, while its Downtown Las Vegas properties brought in $54.1m, down 14.1%.

GAN aims to raise $34.5m from IPO

Gambling software provider GAN has set out plans for its initial public offering (IPO), through which it aims to raise up to $34.5m.

Pursuant to a registration statement filed with the Securities and Exchange Commission, GAN will place 4,055,000 ordinary shares at a price of between $6.50 and $8.50 per share.

GAN also said it expects to grant the underwriters a 30-day option to purchase up to an additional 608,250 ordinary shares at the IPO price, less underwriting discounts and commissions.

Rhode Island betting revenue down 45.6% in March

The Rhode Island Lottery has reported a 45.6% year-on-year decline in sports betting revenue for March, following the suspension of sporting action and closure of the state’s casinos during the month.

Revenue declined to $841,767, which in turn represented a 63.8% drop from the $2.3m reported for February. Amounts wagered across casinos and via mobile fell 62.1% year-over-year to $8.9m.

This followed all major US sports, including the National Collegiate Athletics Association Men’s Division I Basketball Tournament, known as March Madness, being postponed or cancelled from March 11 as a result of the novel coronavirus (Covid-19) pandemic.

Oklahoma AG casts doubt on legality of tribal compacts

The Attorney General of Oklahoma has thrown the future of two new tribal compacts into doubt by arguing that Governor Kevin Stitt didn’t have the authority to negotiate agreements for products not covered by the state’s tribal gaming regulations.

Earlier this week Stitt announced that he had agreed new compacts with the the Otoe-Missouria Tribe and the Comanche Nation, allowing each to offer Class III gaming – including sports betting – at their casinos in the state.

However AG Mike Hunter told iGB North America that the agreements were not authorized by Title 3A, Section 261 of the Oklahoma Tribal Gaming Act.

PointsBet Q3 revenue more than doubles due to US, Aus growth

PointsBet took in net win revenue of USD$12.2m in the third quarter of its fiscal year, up 139.7%, as its business in both Australia and the US grew, but costs continued to outpace revenue as the operator made a $15.5m loss for the year.

The business’s net win of $18.7m for the quarter ending 31 March came on a gross win – which is revenue before accounting for bonus costs – of $26.8m, up 21.2% and turnover of $268.7m, up 97.3%.

AGA claims victory after PPP eligibility amendment

The eligibility requirements for the Paycheck Protection Program (PPP) have been amended to allow small gambling businesses to benefit from the fund, following an intense lobbying effort from the American Gaming Association (AGA).

The PPP is a series of loans for small businesses, which are forgiven if all employees are kept on the payroll for eight weeks and the money is used for payroll, rent, mortgage interest, or utilities. The total value of the scheme is $349bn.

Caesars launches assistance fund for staff and communities

Caesars Entertainment has launched a new assistance fund to support staff and local communities across the US negatively impacted by the outbreak of novel coronavirus (Covid-19).

The Caesars Cares imitative will be funded by donations from the operator’s board of directors and executives, collected while the operator’s properties have been closed due to the coronavirus.

Twin River to acquire trio of Caesars and Eldorado casinos

Twin River Worldwide has struck an agreement to acquire Eldorado Resorts properties in Louisiana and Nevada, and Caesars Entertainment’s Bally’s Atlantic City.

The agreement with Eldorado sees it take over the Eldorado Shreveport Resort and Casino in Louisiana and the Mont Bleu Casino Resort & Spa in Lake Tahoe, Nevada for a purchase price of $155m.

Boom Sports to roll out sports betting via PNG deal

New York-based free-to-play and fantasy sports developer and technology provider Boom Sports its to move into B2C sports betting after striking a market access agreement with Penn National Gaming (PNG).

The agreement will allow Boom Sports to operate mobile sportsbooks and online casino products in up to five US states. It gains first skins in Mississippi and Louisiana, both of which are yet to legalize mobile betting and gaming, and a second skin in Ohio, where a sports betting bill is being considered in the legislature.

Net loss reaches $14.6m for theScore in H1

Canadian media business theScore has revealed that an increase in spending, mainly related due to its expansion efforts in North America, led to it posting a net loss of $14.6m in the first half of its financial year.

Revenue in the six months to February 29, 2020 amounted to $15.9m, a decline of 2.5% on the corresponding period in the previous year.

Peer-to-peer golf betting app launches for US customers

Golf Bettor, a new app entirely focused on betting on golf, has launched in the Apple App Store, with an Android version to follow later this year.

Developed by brothers Graham and Emmett McGee, Golf Bettor is available with 12 distinct game formats, each with up to 10 options to customise bets between players on the course.