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Can Mobile Sports Betting Help Rebuild The New York Economy? BonusSeeker Speaks To Senator Addabbo
The following is an interview with Senator Addabbo, by BonusSeeker.com.
When the state of New York was facing a budget hole eclipsing $6 billion at the close of 2019, it was hard to imagine a scenario in which things could be much worse.
Fast forward a few months and the financial situation has gone downhill exponentially as the Empire State remains one of the most affected states by COVID-19 in every conceivable way.
Monetarily, the state is in absolute disarray for the foreseeable future because of the massive toll the pandemic has taken. But do you know what would help ease that burden? Legalizing mobile sports betting.
New York Desperately Needs New Revenue Streams
The truth is that New York needs new ways of generating revenue now more than ever before, and the millions that could be made by regulating online sports betting and allowing residents to play via mobile devices would undoubtedly assist in closing a still-growing gap in the state budget.
Perhaps nobody knows this better than Senator Joseph Addabbo, who is chairman of the New York Racing, Gaming and Wagering Committee and author of the legislation to legalize mobile wagering in the Empire state (Bill S17D).
“In light of this coronavirus, which has crippled us financially, we need the revenue now and we need the revenue next year when there is no federal stimulus money coming in,” the Senator said to BonusSeeker‘s Brian Sausa, in reference to the multiple packages that congress has passed to help states amid the pandemic. “The market calls for the mobile device, that’s when you maximize your revenue and your activity.”
New York’s financial woes are nothing new, and Addabbo has been the most vocal proponent of online sports betting in New York long before COVID-19 hit.
But whatever tough times were ahead as 2019 came to an end, the situation quickly got worse than anyone could have expected, and much faster.
According to budget documents, New York’s $6 billion deficit was on track to pass $8 billion by 2023, which would signal the deepest financial crisis since 2010 when the state was dealing with a $10 budget gap during the recession.
But as a result of the pandemic further ravaging the state economy, a report released in April from Governor Andrew Cuomo’s budget office finds that the gap could reach a staggering $13 billion in 2020 alone, shattering the mark from a decade ago.
These figures aren’t any fun to face, but they are important because they help paint a picture of the seriousness of the financial desperation that the state is facing.
As is the case with most aspects of our society, the sports landscape currently looks nothing like the one we’re accustomed to. At some point, however, leagues will come back and sports betting will go back to being the lucrative industry it has proven itself to be over the past two years.
Raising taxes and handing out more traffic tickets, two things New York is already looking into, may always be popular ways to fill a massive budget gap, but they can’t be the only courses of action.
New York Already Allows Sports Betting, But It’s Not Mobile
It needs to be noted that sports betting in New York is legal, just not in its ideal form. The state legalized wagering on athletic events in 2013, and following the repeal of PASPA in May 2018, operations launched some 14 months later.
The issue is that it was and still is limited to land-based casinos (which are mostly in the northern part of the state) with no provisions for online betting, which is the game-changer in terms of revenue creation.
Addabbo, whose 15th District covers parts of South Queens in New York City, is one of many legislators whose constituents aren’t in a position to take part in sports betting in the state as the law currently allows.
“I love Resorts World-Catskills, I think they did a phenomenal job at the site, but my people are not driving two hours north to go place a bet. They’re driving 20 minutes to Jersey. There lies the problem.”
The Senator is touching on a much larger issue at hand in the Empire State. Without any downstate casinos and so much of the population and betting demographic located in and around New York City, can the state really afford to continue losing out on revenue to New Jersey?
Making the betting experience exponentially easier for bettors by including the mobile component could wind up going an extremely long way because as the Senator notes, the public prefers simplicity.
“People look for convenience. They look for what’s safe for them, what’s legal, but they look for convenience…they go across the border to [New] Jersey because it’s simple.”
How Is New Jersey Mobile Sports Betting Working Out?
If any state out there is looking for a blueprint on how to roll out mobile sports betting, look no further than neighboring New Jersey for an example of the impact it can have.
In 2019, the first full year of regulated sports betting in New Jersey, the state took in nearly $4.6 billion in wagers, which resulted in around $300 million in total revenue. Once factoring in tax rates, that’s $36 million that went straight to the state and local governments.
Considering the fact that well over 80 percent of the wagers in the Garden State are placed on a mobile device, New Jersey is evidence of how vital the online component is to the overall earning capability of sports betting.
The potential in New York can be actually seen in the figures coming from its neighbor, and it only makes the case for online wagering in the Empire State even stronger.
A study from research firm Eilers & Krejcik Gaming reported that in 2019, New Yorkers placed an estimated $837 million total in sports bets in New Jersey.
That was about one-fifth of the total amount wagered in the Garden State throughout the year, a direct result of New York residents crossing the border to wager or calling friends and relatives in New Jersey to place wagers.
Factoring in taxes, that amount bears out to nearly $60 million in total revenue and about $6 million in taxes for the state. That number may not sound very high but consider the fact that part of the tax revenue generated from sports betting goes straight to job creation and funding educational programs in the state.
In total, over 38 million Americans applied for unemployment in a span of just over two months with over 1.5 million claims coming from New Yorkers as of the first week in May. Is any amount of money or number of jobs too small to help the residents of New York?
Besides, once you add in all the factors that come with enacting mobile wagering in New York, that number explodes. The study estimated that the Empire State is missing out on over $200 million per year by leaving online sports betting off the table.
For comparison, sports betting at land-based venues produced a grand total of $6.8 million in revenue from the time it launched in July through the second half of the year.
It’s also worth noting that the state has unused gaming licenses, which according to Addabbo’s bill, could be sold for $12 million apiece in initial fees.
“They [the licenses] are sitting on a shelf, doing nothing for us. Making no revenue, creating no jobs, no educational funding. They’re sitting there until the year 2023,” said Addabbo.
Will Cuomo Get On Board With NY Mobile Sports Betting?
The biggest hurdle that comes with attempting to pass this legislation is getting Governor Cuomo to change his mind.
Seemingly, part of what has given the governor pause is the issue of addiction and the possible negative impact that wide-ranging legal sports betting could have on the public. Even that, however, is something Addabbo’s bill has covered.
“I understand the governor may have apprehension about the pitfalls of gaming. Well, we took care of that,” the Senator points out. “Our gaming commission has been given accolades nationally for the programs that deal with addiction issues. The idea here is that we cannot move forward in terms of gaming in our state without addressing simultaneously the critical issue of the addiction part. So, I’m confident we will.”
The governor has already left mobile sports betting off the budget for the fiscal year 2021 and seemingly categorized these types of gaming as “creative although irresponsible revenue sources” in his address back in January.
Since the most important issues have been addressed and New York has now felt the wrath of COVID-19, the question needs asking: just how responsible would it be to continue leaving upwards of $200 million per year on the table when the state is in dire need of budget relief?
“What we have tried to do was convince the governor that certainly, the numbers are there,” Addabbo points out. “Whether it’s money lost to New Jersey, whether it’s money lost to an illegal activity that doesn’t appear on tax returns, it’s money that’s not there to gain for our state.”
It’s a simple fact that New York needs the revenue and it’s quite incomprehensible at this point to see sports betting as a perfectly viable option for revenue generation, especially considering what state residents are already allowed to wager on.
New York Has Legal Gaming, Just No Online Sports Betting
The benefits that the state can reap from sports betting are the same ones it always enjoys from other resources, and Senate Bill 17D is merely attempting to add to the ways in which New York generates tax revenue.
“It’s not like we’re re-creating the wheel, we have it here already,” Addabbo explained. “We have it in terms of Mega, Powerball, Lotto, we already have it. We already have casinos, we already have sports betting. We already have all the elements of gaming in our state.”
The governor has attempted to camp himself on the moral high ground but it exposes the contradictory nature of the logic being applied to this issue.
We are all free to wager our hard-earned dollars on the state lottery with hopes of walking away with more money than we had before, and we can even track the results online. On its most basic level, that process doesn’t really differ from placing a sports bet.
Anybody can drive upstate to one of the several New York casinos with legal sports betting and place a wager, but doing it from the comfort of your own living room is an irresponsible way for the state to make money?
The case for legal sports betting in New York is clear-cut and convincing, but obviously the job is not done. The last hope for Addabbo and other proponents of getting this done in 2020 is a study to be done by the state gaming commission, which should have its final report released sometime in June.
“That may be a telltale sign of where we go forward with this issue,” Addabbo says. “I am pushing to do it this year. Mobile sports betting, the three licenses, this year. Until December 31st, that’s my push.”
The governor’s approach to the difficult times the state has faced in recent months has been very matter-of-fact. If that same pragmatism gets applied to mobile sports betting, it will become obvious that it has all the tenants of becoming a vehicle in which the state can use to help drive itself out of the financial ditch it currently lies.
The question now becomes whether New York is finally ready to take advantage of the opportunity.
SOURCE BonusSeeker.com
Bragg Gaming Group Inc., a global B2B gaming technology and content provider, announced that Chief Financial Officer (CFO), Ronen Kannor, has notified Bragg’s board of directors (Board) that he will resign from his position to pursue other career opportunities, effective June 3, 2024. The Company confirms that the search for a replacement CFO has commenced.
Matevž Mazij, Chief Executive Officer and Chair of the Board, commented: “We thank Ronen for his dedication and commitment to Bragg over the past four years and for his unwavering service as a pivotal member of the leadership team.
“During his tenure as CFO, the Company has undergone huge positive transformation including being uplisted to the Toronto Stock Exchange, dual listed on the NASDAQ and successfully completing two acquisitions, all while reporting consecutive years of revenue, gross profit and adjusted EBITDA growth. We wish Ronen all the very best in his future endeavors.”
Ronen Kannor commented: “It has been an honor to be part of the Bragg team which has successfully navigated many challenges and continued to deliver consistent growth over the past four years. I thank the Board for their support throughout my time with Bragg, and I am now fully focused on ensuring a smooth handover to my successor.
“Special thanks goes to my finance team, who work tirelessly to deliver the positive change and financial growth that the Company continues to achieve. I wish them and all of my colleagues continued success with Bragg now and in the future.”
- Betting handle of $423.2 million in FY 20231 increased 82% year-over-year, while reducing marketing spend 15%.
- Revenue of $35.7 million in FY 2023 increased 34%.
- Gross profit of $16.2 million in FY 2023, up 66% year-over-year.
- FY23 sets all-time records for average handle per customer, up nearly 30% year-over-year, average revenue per customer up 38% year-over-year, and record low cost of customer acquisition, down 15% year-over-year.
- Total player registrations eclipsed 2 million in FY23 while extending Gen Z market leadership.
- FY24 off to a strong start as the capital raised late Q4 is being effectively deployed – delivering strong KPIs, supported by betting margin trending toward a more than 20% increase over the average of FY23.
- To meet growing consumer demand the Company is adding greater support for cryptocurrency and exploring implementation of adjacent crypto-enabled technologies.
- Rivalry is seeing a rise in demand to license its in-house casino games, accelerating the advancement of its B2B vertical.
- Company re-affirms guidance, anticipates achieving profitability in H1 2024.
Rivalry Corp. (the “Company” or “Rivalry”) (TSXV: RVLY) (OTCQX: RVLCF) (FSE: 9VK), the leading sportsbook and iGaming operator for Gen Z, today announced preliminary and unaudited financial results for the three and 12-month periods ended December 31, 2023. All dollar figures are quoted in Canadian dollars.
“Rivalry exited 2023 as an increasingly diversified company – both geographically and across our product suite,” said Steven Salz, Co-Founder and CEO of Rivalry. “Last year we gained meaningful traction in new segments such as traditional sports, casino, and fantasy, which is widening our opportunity set and positioning us for sustainable growth in the medium- to long-term. We’re happy to have finished the year with all-time high customer economics, diversified revenue streams, and a reinforced competitive moat around Gen Z betting entertainment and experiences.”
“During Q1 we have been strategically deploying capital from our fourth quarter investment in areas that are driving customer acquisition and revenue – such as amplifying proven marketing strategies, releasing higher margin products, and developing proprietary betting experiences – that we expect will begin materializing in our results throughout the first half of 2024 and beyond,” added Salz.
“Our operational excellence across product and brand marketing last year are seen across positive KPI trends and continued year-over-year growth. Ultimately, we are proving that we can acquire and retain a coveted Gen Z demographic through an entertainment-led product set, culturally relevant brand, and a team unafraid of pushing past a long-standing industry status quo.”
Preliminary Full-Year 2023 Highlights2
- Betting handle was $423.2 million in the year ended December 31, 2023, an increase of $190.4 million or 82% from $232.8 million in 2022.
- Revenue was $35.7 million in 2023, an increase of $9.0 million or 34% compared to $26.6 million in the previous year.
- Gross profit was $16.2 million in 2023, an increase of $6.4 million or 66% from $9.8 million of gross profit in 2022.
- The Casino segment was a significant driver of growth in 2023, with revenues of $6.4 million up 92% from 2022, and representing 52% of betting handle in the year.
- The Company expanded its casino offering significantly during 2023, including the release of a new original game Cash & Dash in September, entry into the slots category in October, and the launch of its iOS mobile app in Ontario, enhancing the mobile casino experience and its accessibility.
- Diversified revenue streams through new segments including traditional sports, which has grown by 60% since FY22, and fantasy, highlighting the elasticity of Rivalry’s brand among Gen Z and broadening TAM.
- Total operating expenses of $38.9 million in 2023 decreased by $1.0 million year-over-year. The decrease was driven by a reduction in marketing expense, offsetting increases in general & administration and technology & content expense incurred to support the growth of the business.
- Net loss was $24.3 million for 2023, a reduction of 22% or $6.9 million from the net loss of $31.1 million in 2022.
Fourth Quarter 2023 Highlights
- Betting handle for the three-month period ended December 31, 2023 was $85.2 million, an increase of $1.2 million or 1.5% from $83.9 million in the fourth quarter of 2022 while marketing spend decreased by 32%.
- Revenue was $6.5 million in the Q4 2023, representing a decrease of $3.0 million or 32% from $9.4 million of revenue in Q4 2022 due to less favorable sportsbook outcomes compared against an abnormally favorable result experienced in Q4 2022. The Company notes that revenue as a percentage of betting handle was near the average achieved throughout FY23, highlighting the abnormally favorable margin outcome in the comparable quarter, Q4 2022.
- Gross profit was $3.0 million in Q4 2023, a decrease of $2.0 million or 40% from $5.0 million of gross profit in Q4 2022. The year-over-year decline follows the relative margin impact noted previously. Gross profit as a percentage of betting handle in Q4 2023 was equal to the average in FY23. Rivalry is also pleased to note that its ongoing efforts to stabilize and improve margin are yielding results, with Q1 2024 trending toward a more than 20% improvement over the average in FY23.
- Net loss was $9.0 million in Q4 2023, a reduction of $3.3 million compared to a net loss of $12.3 million in Q4 2022. Net loss adjusting for accruals, other non-cash items, and one-time expenses, would have been approximately $7.0 million.
- On November 15, 2023, Rivalry strengthened its balance sheet with the announcement of a private placement offering of $14 million principal amount senior secured convertible debentures to scale several strategic verticals across marketing, product development, and geographic expansion.
- Released Rivalry Ultimate Fan, a free-to-play NBA fantasy app, to acquire new users and engage existing customers within the product suite.
- First-party game ‘Cash & Dash’ released in September demonstrated next generation appeal as it became the fifth most-played casino game on our platform and among the top ten highest-grossing by revenue with momentum carrying into Q1, creating downstream licensing opportunities for Rivalry’s IP.
Outlook
“The year ahead is rife with new, innovative product releases arriving in Q2 and continuing throughout 2024,” Salz added. “In addition to the strength of our core roadmap, we are in the process of unlocking what we believe to be two of the most material developments to our business model since launching Rivalry in 2018. The first is a B2B vertical to license our in-house developed games, and the second is exploration and development within the crypto ecosystem – each representing an impactful growth catalyst on our path to profitability this year.”
“I have never had more confidence in our product roadmap and what Rivalry is building this year. Apart from new products, original games, and proprietary features, we have been working to dial-up the overall feel and entertainment value of our core product to provide a tech-savvy, next generation customer with a tailored experience that is well-differentiated within the larger sports betting marketplace.”
Investor Conference Call
Management will host a conference call at 10:00 a.m. EDT on Friday, April 5, 2024 to discuss the Company’s preliminary unaudited year-end and fourth quarter 2023 financial results.
| Dial-in: | 800-717-1738 (toll free) or (+1) 289-514-5100 (local or international calls) | |
| Webcast: A live webcast can be accessed from the Events section of the Company’s website | ||
| A replay of the webcast will be archived on the Company’s website for one year. | ||
Rivalry expects to file its audited financial statements and management discussion and analysis for the period ended December 31, 2023 by the end of April 2024. The documents will be available on SEDAR+ at sedarplus.ca, and on the Company’s website.
Related Party Transaction
On April 17, 2022 the Company entered into a secured demand loan (the “Loan”) with Kevin Wimer, the Chief Operating Officer and a Director of the Company. Pursuant to the terms of the Loan, the Company loaned Mr. Wimer US$385,000 which amount bears interest at 3.2% per annum and was repayable on demand by the Company and in any event by April 17, 2024 (the “Maturity Date”). The Loan was entered into to assist Mr. Wimer with the funding of certain tax obligations and is secured by a pledge of Mr. Wimer’s subordinate voting shares of the Company. The Company announces today that it has entered into an amendment to the Loan (the “Loan Amendment”) to extend the Maturity Date to April 17, 2026. The Loan Amendment was approved by the non-interested directors of the Company.
Mr. Wimer is a “related party” of the Company within the meaning of Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions (“MI 61-101“). As a result, the Loan Amendment is considered to be a “related party transaction” as such term is defined by MI 61-101. The Company is relying on an exemption from the minority shareholder approval requirement set out in MI 61-101 as the fair market value of the transaction does not exceed 25% of the market capitalization of the Company, as determined in accordance with MI 61-101. The Company did not file a material change report more than 21 days before entering into the closing of the Loan Amendment as the details of the Loan Amendment were not settled until shortly prior to the entering into thereof.
Arthur Paikowsky
Playtech Supports ICRG’s Research on the Impact of Gambling on Under-served Groups in the US and Canada
Playtech has provided support for the International Center for Responsible Gaming’s (ICRG) research program. The ICRG, a global pioneer and leader in gambling disorder research and education, has been conducting stringent competitions for research grants since 1996.
The ICRG, overseen by an independent Scientific Advisory Board comprising leading addiction specialists, has recently invited applicants to participate in research focused on the impact of gambling on under-served groups in the US or Canada. The strategic initiative aims to ensure funding for high-quality research in this critical area.
Playtech has actively supported this effort by funding research to better understand the impact of gambling on under-served groups in the US and Canada. This research will also help researchers, policymakers, regulators and the industry better understand how best to strengthen and enhance player protection amongst the groups in scope for the study.
Arthur Paikowsky, President of ICRG, said: “We are immensely grateful for Playtech’s donation, which marks a significant step towards improving our understanding of gambling-related health issues among indigenous communities in the US and Canada. This contribution will greatly enhance the effectiveness of responsible gambling measures and Playtech’s commitment to this cause is commendable and will undoubtedly make a substantial impact in the field of gambling research.”
Jonathan Doubilet, VP of US Business Operations at Playtech, said: “Playtech is committed to creating a safer gambling environment and is a strong supporter of research that helps reduce gambling related harm and enhance player protection measures. We are delighted to be able to support the ICRG’s research that will help advance player protection for vulnerable groups in the US and Canada.”
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