Month: March 2024

Michael Hermalyn worked at DraftKings as senior vice president of both its business development and growth departments, spending three-and-a-half years with the company. Hermalyn then departed for Fanatics in February 2024, joining as president of VIP and head of its Los Angeles office.

DraftKings has since accused Hermalyn of stealing company secrets and soliciting customers and former colleagues.

In early February, at the request of DraftKings for a preliminary injunction, a federal judge placed a temporary order barring Hermalyn from utilising trade secrets, as well as soliciting customers or employees, in his new role.

However, Judge Julia Kobick of the United State District Court in the District of Massachusetts rejected DraftKings’ request to completely bar Hermalyn from working for Fanatics.

In response, Hermalyn alleges that DraftKings is limiting most of his duties with Fanatics, while claiming the company has history of “aggressively smearing” the reputation of employees who have left.

The defendant’s filing states that since Fanatics launched its online sportsbook in 2021, 186 former DraftKings workers applied to move across to the rival sports betting business. In response to this, Hermalyn believes his ex-employer is trying to make an example of him in an attempt to intimidate current employees into staying and rejecting lawful recruiting activity by Fanatics.

“Rather than develop credible evidence, DraftKings liberally distorts reality and resorts to unnecessary character assassination of its former employee,” the filing reads.

“They are fabrications designed to malign and destroy the reputation of a senior employee who had the audacity to seek out a better opportunity.”

DraftKings’ accusations of Hermalyn wrongdoing

Among the allegations made against Hermalyn is that he solicited two employees to follow him to Fanatics. Hermalyn refutes that, instead stating that his former colleagues instead reached out to him and maintaining he was simply responding to their questions, while claiming that one of the DraftKings employees involved had already applied for a role with Fanatics in 2022.

DraftKings is also accusing Hermalyn of solicitation of customers. One incident highlighted was Hermalyn introducing a customer to a Fanatics VIP employee at the Super Bowl. However, the filing states the customer was already a long-term Fanatics bettor who had met Michael Rubin, the company’s chairman and chief executive, at a dinner months prior.

Despite its perception of Hermalyn making attempts to solicit customers and employees, DraftKings is not claiming to have lost any of either sector to Fanatics. In respects of the VIP programs, the filing notes that these often overlap between companies the size of Fanatics and DraftKings.

Filing: Claims of Hermalyn sharing secrets ‘outrageous’

DraftKings also accused Hermalyn of downloading company documents onto a non-DraftKings device. Hermalyn disputes this, arguing he was only viewing the documents on his personal phone, as he had done since the start of his employment.

The filing notes that DraftKings doesn’t offer employees a company phone, with the business’ chief information security officer allegedly stating he uses his personal phone for work.

In response to claims that Hermalyn stole data from his former employer, the filing outlines that Hermalyn had only migrated files across DraftKings-issued devices, working alongside the company’s IT department.

The filing states that Hermalyn went “above and beyond” to return all DraftKings property, documents and information to the company before starting his new role at Fanatics.

Hermalyn at risk of ‘irreparable harm’

The filing calls for the preliminary investigation to be denied, with Hermalyn’s career at risk of being “irreparably” harmed.

Currently, Hermalyn is one of just seven Fanatics employees of a 16,000-strong team to report directly to the chief executive. Hermalyn fears that a “once in a lifetime” career opportunity could slip from his grasp should the preliminary injunction be granted.

The filing also requests the preliminary investigation to be denied due to its overly tight restrictions on Hermalyn’s activity. Hermalyn argues he would essentially have to leave the sports, betting and gaming industry for a year, limitations which “go far beyond” what is necessary for DraftKings to protect its business interests.

The launch of Draw the Line coincides with week one of the 2024 Division I Men’s and Women’s Basketball Championships. This, the NCAA said, is one of the busiest times of the year for betting in the US.

Draw the Line will run across social media channels, raising awareness of the dangers related to sports betting. NCAA member schools and conferences will also have access to a toolkit and supporting resources. 

Underage betting and integrity issues for NCAA

Sports betting is now legal in over 30 states and, according to the NCAA, more than half of college-age students have bet on sports at least once in the previous year. 

Further research by the NCAA founded 67% of 18- to 22-year-olds on college campuses have taken part in sports wagering. This is of some concern, given that in all states where betting is regulated, the minimum age to legally wager is 21. 

Also of concern for the NCAA is the lack of protection and integrity provisions for student-athletes in some states. Last autumn, the NCAA began advocating for states to update sports betting laws to protect student-athletes from harassment or coercion, address the negative impacts of problem gambling and protect the integrity of its competitions.

These efforts have had some impact. In Ohio, student-athletes, campus leaders and the national office worked with gaming regulators to prohibit player-specific prop bets. West Virginia, New Mexico and Maryland have also taken steps to protect student-athletes from betting-related harassment.

“Sports betting is everywhere, especially on college campuses, so it’s critical student-athletes get the real story about how it can impact them and their ability to play,” NCAA president Charlie Baker said. 

“We know some bettors are harassing student-athletes and officials. That’s why we are advocating for policy changes at the state level and launching monitoring tools around championships to refer serious threats to law enforcement. 

“The NCAA is doing more than ever to protect the integrity of the game and arm student-athletes with the truth about sports betting.”

Ongoing education 

The new campaign is the latest initiative from the NCAA to address issues related to sports betting.

In October last year, the NCAA also launched its first sports wagering e-learning module to educate student-athletes about gambling-related harm.

The free module features information, scenarios, Q&As and resources on the risks sports wagering poses to student-athletes. It covers key topics on problem gambling and sporting integrity, in addition to NCAA rules and social media harassment.

The NCAA collaborated with current and former college athletes, as well as campus leaders, to develop the interactive module.

What he didn’t highlight is that the bill would also “establish a general prohibition on sports betting” and require states to get permission from the federal government in order to offer legal sports betting.

Since the US Supreme Court (SCOTUS) overturned the Professional and Amateur Sports Protection Act (PASPA) in May 2018, more than 35 US jurisdictions now offer some form of legal sports betting.

Tonko’s proposal would ultimately require US jurisdictions to get approval from the Department of Justice in order to offer sports betting, according to an outline of the proposed bill. Those wishing to offer sports betting would have to file an application with the US attorney general and prove that they meet a list of requirements. Applications would be valid for three years. No application fee appears in the outline.

Sources say there may be some question as to the legality of the proposal, given that SCOTUS ruled that sports betting is a states’ rights issue nearly six years ago.

Should Tonko – a New York Democrat – file, it would mark the second time in two years that he has proposed legislation around sports betting advertising. In 2023, Tonko filed a bill that would have banned sports betting advertising completely. The new proposal would effectively replace that bill.

In January, another federal bill around legal sports betting – the GRIT Act – was introduced in congress. That bill would take 50% of the current federal excise tax and earmark it for problem and responsible gaming programmes.

Advertising, affordability, AI at heart of requirements

Billed as the SAFE Act (Supporting Affordability and Fairness with Every Bet), Tonko is aiming to implement federal oversight for sports betting advertising, affordability and artificial intelligence, according to a fact sheet.

Besides banning certain words in advertising, Tonko proposes a prohibition on sports betting advertising during live sporting events and a ban on sports betting “broadcast advertising” between 8am and 10pm daily.

The proposal would also limit bettors to five deposits per day and require operators to do “affordability checks” before accepting large wagers. The bill will propose banning the use of AI to track gamblers’ habits – which can then be used to create personalised promotions – and create betting markets.

The outline goes beyond Tonko’s three A’s. At the end are two lines that would ban betting on amateur sports “with some exceptions” for Olympics, Paralympics and college sports, and would prohibit prop bets on college and amateur athletes. Some states currently offer such wagering markets.

Billing the proposal as a public-health initiative, the fact sheet says that the bill would also require the creation of a nationwide self-exclusion-list clearinghouse and a surgeon general’s report about “public health challenges associated with sports betting”.

Finally, it would authorise the Substance Abuse and Mental Health Services Administration to gather data “on the incidence and outcomes of sports betting nationwide”.

Revenue was up by 20.2% year-on-year to €877.6m, with Sportradar’s annual outlook for 2023 initially setting a revenue target of €870m to €880m. Revenue growth was powered by increases of 30.0% in the US and 20.0% in Sportradar’s rest of world category.

Significant revenue growth led Sportradar to a total profit from continuing operations of €34.6m, up 229.5% from 2022’s total profit of €10.5m. Adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) increased by 32.6% year-on-year to €166.8m, close to exceeding Sportradar’s outlook range of €162m-€167m.

Adjusted EBITDA margin jumped 177 basis points from 2022 to 19.0%, with Sportradar attributing this to strong operating leverage from sports rights and personnel costs.

As of 31 December 2023, Sportradar had €497.2m in available liquidity, including undrawn credit facilities. Cash and cash equivalents also stood at €277.2m.

Sportradar’s positive outlook has led them to authorise a share buyback programme worth €200m.

Carsten Koerl, Sportradar’s chief executive lauded the company’s performance last year.

“2023 was another dynamic and successful year for the company delivering our third consecutive year of more than 20% revenue growth, improved profitability and margin expansion,” he said. “We are pleased with our growth momentum, fuelled by our best-in-class content portfolio, innovative product roadmap and technology capabilities.”

Despite the rise in FY2023 revenue, Sportradar couldn’t quite match its FY2022 success, which saw the company beat its annual outlook range of €718m-€723m in revenue by generating €730.2m.

Sportradar’s Q4 profit a strong end to 2023

Sportradar’s ability to meet its FY2023 revenue and adjusted EBITDA guidance was in large part down to a Q4 that saw the company record double-digit growth in both of those financial measures, as well as a turn to profitability compared to the same quarter last year.

Revenue was up 22.4% year-on-year in Q4, reaching €252.6m thanks to growth across all segments. Adjusted EBITDA, meanwhile, hiked by 12.5% to €39.5m.

That success allowed Sportradar to make a profit from continuing operations of €23.2m, a significant improvement on the €33.3m recorded in loss during the same quarter last year, as well as a large increase on Q3’s disappointing profit of €4.6m.

Adjusted EBITDA margin dropped from 17% last year to 16% in 2023, although Sportradar stated its customer net retention rate of 111% in Q4 showed the company’s ability to both cross-sell and up-sell to its client base.

US investment leads to growth

US success was a key factor in Sportradar’s full-year 2022 results with 78% in revenue growth in the country.

Although the company couldn’t quite match that growth in 2023, continued rises in US revenue have left Sportradar well-placed to continue to make its mark there.

US revenue in Q4 was up by 28.2% year-on-year to €52.7m, with Sportradar crediting strong market performance aided by the sale of additional services to clients as well as contributions from the company’s increasingly tight relationship with the National Basketball Association (NBA). In October, Sportradar agreed a deal with BetMGM to give the operator access to NBA tracking data.

Earlier this week, Sportradar announced it would further its NBA partnership by implementing its betting features directly into the NBA’s League Pass streaming service.

Despite the US revenue rises, the costs from enhancing its NBA deal meant that Sportradar’s adjusted EBITDA in the country for Q4 was a loss of €1.5m, having recorded a €4.3m profit in the same quarter last year. However, that investment should set the business up to return to profitability in the US in the near future.

Rest of the world also performing well

In its rest of world sector, Sportradar also saw Q4 increases in its betting and audiovisual segments.

Rest of world betting revenue shot up by 24.6% year-on-year to €132m, with growth driven by a 48.0% increase in sales of Sportradar’s managed betting services (MBS) solution, as well as a 21.0% growth in the company’s live odds services sector. Rest of world betting’s adjusted EBITDA rose by 19% to €55m.

In terms of rest of world audiovisual, segment revenue jumped by 19.8% to €50m, with Sportradar pointing to the addition of NBA and the South American Football Confederation (CONMEBOL) rights as the reason for the rise. The division’s adjusted EBITDA was €11.2m, down from the €11.9m recorded in Q4 2022.

Costs and expenses included €57.8m in purchased services and licences, consisting of set-up costs stemming from the October deal with the Taiwan Lottery as well as other rights deals. A total of €88.8m was paid in personnel expenses, while total sports right costs and other operating expenses accounted for €75.1m and €24.4m respectively.

A busy year for Sportradar in 2023

Sportradar’s expansion of its relationship with the NBA earlier this week follows a 2023 in which the company made a number of deals looking to grow its presence.

Hoping to boost its US growth, Sportradar penned a four-year extension to its media data rights partnership with the National Association for Stock Car Auto Racing (NASCAR) in August, as well as renewing its deal with Caesars Sportsbook to supply official betting data.

In December, Sportradar agreed a global data and streaming rights deal with Tennis Data Innovations, which is a joint venture vehicle of the Association of Tennis Professionals (ATP) and ATP Media.

Revenue growth of 20% and adjusted EBITDA the 2024 target

After a solid 2023, Sportradar has set its sights on 20.0% year-on-year growth in both revenue and adjusted EBITDA for its 2024 financial year.

That would take revenue up to at least €1.05bn, while 20.0% growth in adjusted EBITDA would mean a figure of at least €200m, with guidance assuming a euro to US dollar exchange of 1.07.

Sportradar is also eyeing a stable adjusted EBITDA margin of 19.0%, the same as in the entirety of FY2023 but up from the 16.0% seen in Q4.

“For 2024, we plan to continue to scale our business globally, targeting at least 20% growth in revenue and adjusted EBITDA,” Koerl continued. “We remain laser focused on disciplined execution of our growth strategy and delivering tremendous value for our clients and our shareholders.”

The bill would create a new Class C licence, under which operators could offer online sports betting citywide.

Currently, the only platform available throughout the district is GambetDC, which has been under fire almost since it was launched. Operated by Intralot on behalf of the Office of Lottery and Gaming (OLG), the platform has a reputation for uncompetitive odds, limited markets, and difficult usability.

It is common knowledge among stakeholders that consumers cross the border to Maryland and Virginia – both of which offer at least 10 online sportsbooks – for a bigger selection. BetMGM and Caesars Sportsbook also offer digital sports betting in the district, but are limited to doing so at their partners’ sports stadiums and within a two-block radius.

GambetDC has brought in $4.3m in tax revenue to the district since its May 2020 launch, despite studies ahead of launch showing that it could bring in as much as $84m. For comparison, according to the Sports Handle revenue, handle, and tax database, Delaware, which also has a single operator, has raised $65.5m in tax revenue since launching in June 2018.

New Hampshire, another monopoly state, has reaped $101.8m in tax dollars since a December 2019 launch.

Dating back to 2019 when the DC Council legalised online sports betting, McDuffie has been a proponent of a more competitive market. At that time, the OLG and the DC Council agreed to allow lottery vendor Intralot to expand its contract and offer sports betting, giving it a virtual monopoly.

Why did OLG wait so long for change?

Intralot’s sports betting contract is set to expire this summer, and in January, lottery chief Frank Suarez shared with the DC Council during a roundtable discussion that Intralot had proposed subcontracting the digital sports betting platform. In early March, OLG sent the DC Council a letter saying that it had approved Intralot’s proposal to replace GambetDC with a platform run by FanDuel.

At that January roundtable, McDuffie questioned the timing of the announcement.

“With approximately six months left on the contract, you figured out a better way to do things?” McDuffie asked Suarez during the roundtable. “And we should just trust that you’ve got it figured out? I’m incredulous.”

McDuffie’s new bill comes as no surprise. It was filed 20 March and his staff says it will be introduced 22 March.

Besides creating a new class of licences, the bill would require operators currently partnered with sports franchises or venues to apply for a new licence in order to offer betting across the district. This would affect BetMGM (Washington Nationals/Nationals Park), Caesars Sportsbook (Washington Wizards/Capital One Arena), and FanDuel (DC United/Audi Field).

BetMGM and Caesars currently offer digital sports betting at the sports venues and within a two-block zone, and each has a brick-and-mortar sportsbook. Under the new bill, there would be no geofencing around the sports venues, but the geofencing around federal lands across the city would remain in place.

New online sports betting licence application fee $2m

The new Class C licencee would come with a $2m application fee, good for five years. Licences could be renewed for five years at a $1m fee. The tax for digital sports betting would be 30%, if there is no cap on the number of Class C licences, or “through contract with a limited number of partners operating an Office of Lottery and Gaming mobile and web-based sports wagering operation, whichever can be shown to return the most revenue to the District of Columbia.”

McDuffie is also looking at reinstating funds for problem and responsible gambling funds. Last summer, DC Mayor Muriel Bowser removed a $200,000 allocation to the Dept. of Behaviour Health (DBH) from the city’s budget, after the agency failed to spend the funds.

In the new proposal, “the first $300,000 of revenue” would be funneled to the DBH for problem and responsible gambling initiatives. The next $1m would go to the Washington Convention Center and Sports Authority to be used for “out-of-school time” sports and extracurricular activities for public-school students.

The Los Angeles Times broke the story today (20 March) claiming baseball superstar Ohtani’s lawyers are accusing the ballplayer’s interpreter Ippei Mizuhara of “massive theft” for illegal sports betting.

According to the Times report, learning of the theft was incidental after Ohtani’s name turned up during an investigation into Michael Bowyer.

“Millions” of dollars involved in illegal sports betting investigation

Two sources told the newspaper that “millions of dollars” were involved. Federal agents “raided” Bowyer’s Orange County, California. home last year as part of an illegal sports betting investigation, and the Times discovered Ohtani’s name came up in that investigation.

According to an ESPN report, $4.5m was wired out of Ohtani’s account to an illegal bookmaker’s account. And Ohtani spokesman initially told ESPN the wire transfers were to cover the interpreter’s gambling debts, but later said that Ohtani was the victim of a “massive theft.”

Bowyer’s lawyer told the Times her client, who has not been charged with a crime, never had any contact with Ohtani.

The investigation into Bowyer may be related to a larger investigation around a larger illegal bookmaking ring based in Orange County and involving former minor league baseball player Wayne Nix.

Ex-Los Angeles Dodger Yasiel Puig was charged in that investigation, but has pleaded not guilty to illegal sports betting. Two sources told the Times that Ippei Mizuhara, the interpreter, placed bets with Boyer. It’s not clear what sports Mizuhara wagered on, how much he bet, how often, or when.

Illegal sports betting beginning to permeate pro sports

Ohtani is currently in Korea for a season-opening series against the San Diego Padres in Seoul. He signed the richest contract in baseball during the offseason, when he agreed to a 10-year, $700m deal with the Dodgers after six seasons with the Los Angeles Angels. The Dodgers fired Mizuhara, a spokesman told the Times.

Sports betting is illegal in California, and violates Major League Baseball’s rules, which prohibit players, officials, and team or MLB officials or employees from betting on baseball where wagering is legal, or placing illegal sports bets.

Since the US Supreme Court in 2018 make sports betting a states rights issue and 35+ U.S. jurisdictions now offer it, illegal sports betting has begun to permeate pro sports.

Last year, the NFL suspended 10 players and the NHL suspended one for illegal wagering. In December 2023, a former Jacksonville Jaguars employee was accused of embezzling $22m from the team to support a gambling habit.

Dowding takes up the position following the merger of the organisation’s domestic and international betting teams. He was previously director of betting at Racecourse Media Group.

RMG took the decision to combine its teams as more bookmakers are approaching rights acquisition on a global basis. Dowding will now oversee the enlarged team, taking on the new role with immediate effect.

Dowding is a long-serving member of the RMG team having joined the business in March 2013 as head of partnerships. He went on to become head of B2B and then director of betting, holding the latter role for more than six years.

Prior to his time with RMG, Dowding worked for The Jockey Club. Here, he spent time as sponsorship manager and regional sponsorship manager.

In addition, for the past three years, he has combined his duties at RMG with serving as a non-executive director at BocaSports.

Racecourse Media Group eyes international opportunities 

“Ben has a huge amount of expertise in the sector,” RMG chief commercial officer Nick Mills said. “I wish him every success leading the team to capture new international opportunities.”

Dowding added: “I am delighted to have been asked to expand my responsibilities internationally. There are significant and exciting opportunities to enhance further both revenues and awareness for British and Irish racing via this new collaborative approach to the domestic and global betting markets.”

RMG is the umbrella organisation for the 35 shareholder racecourses that hold an interest in Racing TV, GBI Racing and Racecourse Data Company. Content from these racecourses is broadcast in approximately 7,000 licensed betting offices across the UK and Ireland. 

Racecourse Media Group member courses include Aintree, Cheltenham, Exeter, Kempton Park and York.

In the dynamic landscape of online gaming, ALEA has emerged as a prominent player with its sights set on expansion across the Spanish and Latin American markets. In this exclusive interview, we sit down with Lucas Lebleu, ALEA’s LatAm Sales Manager, to delve into the company’s current presence and its strategic objectives in these burgeoning regions.

Lucas offers valuable insights into the shifting regulatory environment over the past six months, shedding light on the emerging opportunities as regulations evolve. With a keen eye on market dynamics, he elaborates on the new prospects unfolding in both Spain and Latin America, presenting a compelling narrative of growth and adaptation in response to regulatory changes.

Furthermore, we explore ALEA’s expectations for the future, as it navigates the complexities of these diverse markets. Lucas shares the company’s vision for establishing a strong foothold, emphasising innovation, integrity, and a commitment to responsible gaming practices as integral components of ALEA’s strategy moving forward.

Join us as we embark on a journey through the evolving landscape of online gaming, guided by the insights and aspirations of Lucas Lebleu and the ALEA team.

Players spending on sports betting reached $31.4m (£24.6m/€28.7m) in February. This was 21.1% down from $39.8m in Mississippi last year and some 45.1% behind January’s $57.2m spend.

Inevitably, the sharp drop in revenue – both year-on-year and month-on-month – also led to a decline in revenue.

For February, revenue in Mississippi amounted to $2.3m. The Commission said this was 25.8% lower than the $3.1m reported in February 2023 and 65.7% less than $6.7m in January this year.

Coastal casinos remain popular with Mississippi players

Breaking down these figures by casino location, coastal venues remain the most popular with players when it comes to sports betting.

During February, consumers bet a total of $19.5m at coastal casinos, with a large portion of this – $10.1m – being on basketball. Casinos turned a monthly revenue of $1.0m.

Elsewhere, central casinos reported $833,042 in sports betting revenue from a total spend of $7.8m. Again, basketball proved the most popular sport to wager on, drawing $3.7m in bets.

Finally, casinos in the northern sector generated $435,989 in betting revenue from $4.1m in wagers during February. Players spent $2.1m betting in basketball at these casinos.  

Online betting bill hangs in the balance

Mississippi remains a retail-only market, with players only able to bet legally with licenced, land-based sportsbooks. However, there is still a chance the state could legalise online betting in some form in the not-too-distant future.  

House Bill 774 was introduced into the Mississippi House in January in the hope of doing just this. The bill would extend the current betting market to also allow for online wagering.

Stand-out features in the bill include permitting all 26 land-based casinos in Mississippi to launch online betting. Casinos would be able to partner with one licensed platform to offer wagering, in addition to any existing retail sportsbook.

However, the fate of the bill remains uncertain. It progressed through the House quickly but has been with the Senate gaming committee since late February, with no further movement.

HB774 is not the only bill aiming to legalise online betting. HB271 and HB635, which have similar end goals, have also been introduced in the current legislative session.