Mobile Arkansas, but not without controversy.
The Arkansas Racing Commission FanDuel wants to partner with one of Arkansas’ three casinos that offer sports wagering, the casino will receive at least 51% of the mobile betting revenue from the partnership.
ARKANSAS: State gaming regulator is pushing language to authorize mobile sports betting (retail already legal), but they are seeking to mandate the revenue share agreement between the online sportsbook and the land based operator. 1/2
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Other states don’t implement that level of mandated revenue sharing between casinos and national operators, and it is leading to significant frustration from major operators. Other states, like Michigan, include tethering — sportsbook operators have to partner with casinos within the state — but those states allow the casinos and operators to privately negotiate deals.
Arkansas opted, however, for a revenue-sharing model.
“I’m proud that Arkansas is the place where revenue sharing became a topic of conversation,” Carlton Saffa, the chief marketing officer for Saracen Casino Resort, told Sports Handle.
It’s worth noting that Arkansas has allowed retail sports wagering since 2018, and the state has three casinos (Oaklawn Racing Casino Resort, Saracen Casino Resort, and Southland Casino Racing) currently offering it. Oaklawn and Saracen use their own sportsbooks, while Southland partners with Betly for its retail sportsbook. A fourth casino, Legends Resort & Casino, received a sports wagering license a few months ago, but the casino has yet to be built.
Mobile books displeased with revenue share 485k2k
DraftKings, and FanDuel were among the national operators upset at the 51% revenue-sharing rule. All three entities sent letters to the Arkansas Racing Commission asking for that policy to be removed from the state’s proposed rules.
That request was denied by the commission.
“This requirement makes it financially unfeasible for top national online sports wagering operators to partner with casinos in Arkansas,” a FanDuel representative wrote. “Even if a casino licensee found a sports pool operator intermediary willing to partner under these conditions, in order to control expenses, they would need to dramatically limit what they spend on marketing and promotions. As we have seen in other states, a significant amount of marketing and promotional spend has been necessary to activate the market and pull customers from the illegal, offshore market and convert them to the legal regulated market.”
Offshore sportsbooks were brought up frequently as a concern of national operators. Their argument was that while the 51% rule would keep some money in Arkansas by ensuring a steady revenue stream to the casinos, consumers may decide not to use legal sportsbooks because of the lack of marketing or promotions that could be offered by the legal mobile sportsbooks. Essentially, the national operators believe the revenue share will keep some Arkansas bettors using illegal options.
BetMGM, DraftKings, and FanDuel stressed that bettors would suffer as a result of the rule, which could prevent the national sportsbooks with proven offerings and promotions from launching a sportsbook in the state.
“If codified, this requirement will result in a significantly harmed player experience and poor conversion of players away from the existing illegal offshore market,” a DraftKings representative wrote.
Several of the major sportsbook operators argued that the rule would limit entrants into the Arkansas market. While mobile betting seems poised to come to Arkansas, the national operators argued the product won’t be quite the same for Arkansas bettors as bettors in other states.
a bill aimed at legalizing mobile betting.
“In addition to the unprecedented nature of the proposed regulation, imposing such an artificial cap on vendors’ revenue share, in this case not more than 50%, is not based on any market considerations and would only serve to impede competition,” a BetMGM representative wrote to the commission. “In short, the cap would make it impossible for sports betting platform providers to enter the Arkansas market and serve the state’s residents.”
National operators stressed that entering a market includes significant costs to acquire a customer base and meet requirements. It’s unclear if the rule will completely impede national operators from entering the Arkansas market, but the casinos seem excited about the potential influx of revenue coming their way through mobile sports wagering, even if national operators are perturbed.
A far-reaching impact? 1hyo
Saffa told Sports Handle he’s glad the commission approved the rules. Saracen Casino plans to create its own sports betting app, as it’s been planning for a potential mobile launch in the state for over a year. As far as Saffa is concerned, this move helps the state’s casinos.
Arkansas’ casinos employ thousands. And represent over a billion dollars in investment here. And have paid $70M+ in Arkansas gaming taxes in ‘21. And are, by the Constitution, the only entities allowed to take sports wagers. Of course casinos should have majority stake in sports
— 𝐂𝐚𝐫𝐥𝐭𝐨𝐧 𝐒𝐚𝐟𝐟𝐚 (@carltontsaffa) December 29, 2021
Saffa said he’s heard from casino operators in states such as Illinois and Rhode Island, saying they wish their state had a similar rule to benefit the state’s casinos.
“I’m hopeful that this is a wake-up call to the industry,” Saffa said. “I’m hopeful that this is a wake-up call to legislators in other states.”
As far as the pushback from the national operators, Saffa called attention to the commission’s margin of vote, which was unanimous.
“The folks who are closest to this, who heard the testimony, who received the hundreds of letters, there was not a single one who said, ‘No, these rules don’t make sense,’” Saffa said.
In Saffa’s opinion, the move makes business sense for his casino and others in the state. Saracen Casino wouldn’t want to give up 90% of revenue to a national operator, so Saffa likes the rule and feels confident about the casino’s future mobile offering. He doesn’t believe Saracen’s in-house mobile offering will dramatically differ in quality from the options provided by national operators.
While Saffa believes Arkansas’ decision could have far-reaching implications for the future of the industry, Fantasy Sports & Gaming Association Chairperson Stacie Stern isn’t so sure. Stern also serves as the government affairs director for FanDuel, but she spoke to Sports Handle on behalf of the FSGA.
“Frankly, I think most lawmakers would recognize this as bad policy to get in the way of, or interfere with, local business,” Stern said. “It’s not allowing for the local casinos to go out and strike their own deal with this 51% [revenue] share staying in state or with the in-state operator, so I don’t think we’re going to see a lot of this. I do believe that — whether it’s a year or two down the road or sometime down the road –people in Arkansas are going to recognize this as bad policy.”
When will mobile sports betting launch? 22e4e
The revenue-sharing rule created significant disagreement between operators and casinos, but mobile sports betting seems on its way to Arkansas in the near future regardless of the quarrels.
The Arkansas Legislative Council is scheduled to meet on Jan. 28, and that meeting may bring with it final approval for mobile sports wagering. Mobile sports betting could launch in Arkansas prior to Super Bowl Sunday, assuming final approval is given, as Saffa expects Saracen’s app to be ready by mid-February.
