Digitally native: Is this the end for in-person registration?

A recent contribution to the ongoing debate regarding the legislation of sports betting in Massachusetts laid bare the motivations of land-based casino interests in many states and helps in understanding the cross currents that affect the debate surrounding remote registration versus in-person.

Despite a sports-betting bill having been passed by the Massachusetts state House of Representatives in the summer, the state Senate ensured the proposal was stripped out of an economic development package in August.

Instead, the issue was put before a panel consisting of three senators and three House representatives for further discussion. And it was in a letter to this panel from executives representing two of the three casinos in Massachusetts that offered a glimpse of how gaming interests exert influence in any given state.

Putting the case for the casinos to be granted a license to run their own sportsbooks and to be given the right to dole out three skin licenses each, the representatives from the Plainridge Park Casino and Encore Boston Harbor, operated respectively by Penn National Gaming and Wynn Resorts, said previous heavy investment in the state should be the clincher.

“Those that make actual investments in Massachusetts, assume legitimate risk, and incur costs to provide a service or benefit in the Commonwealth should be enfranchised under this legislation,” wrote Plainridge general manager Lance George and Encore’s Brian Gullbrants.

“Conversely, automatic windfalls to industries or interests which assume no new costs, risks or obligations as a result of this type of expansion are not only harmful to the industry’s interests but even more so to overall public interest.”

The investment in the state is certainly substantial. It was reported in the Massachusetts media that Penn National Gaming has invested over $250m on the Plainridge slots facility while Wynn Resorts has pumped over $2.5bn into the Encore at Boston Harbor, which opened in July 2019. Many thousands are employed at both facilities as well as at the third property in the state, MGM Resorts International’s Springfield casino.

The pandemic effect

As is clear from the example of Massachusetts, land-based casinos jealously guard their customer bases. This fact helps explain the politics of sports betting regulation in many gaming states and, in turn, why the issue of in-person registration has come to the fore in a handful of states including Iowa and Nevada.

But the big question now is how the ramifications from the Covid-19 lockdowns will change the nature of the debate in the short and long term. That list of in-person registration states (Iowa and Nevada) did – and still might yet again – include Illinois but here the consequences of the pandemic and its resulting lockdowns have played havoc with the plans of those casinos in favour of in-person registration.

With the casinos shuttered in the spring, an initial suspension of the in-person requirement was originally instated by Governor JB Pritzker in June. Though the casinos subsequently reopened, the suspension was renewed in July and then once more in September.

This chopping and changing illustrates how the pandemic is altering the calculations across the gaming states. With in-person registration at best problematic – and at worst impossible – it makes remote registration look like the only sensible solution, even in Nevada.

“The pandemic will likely change minds away from requiring an in-person component to registration,” says Sean McGuinness, partner at global law firm Butler Snow in Colorado. “Remote online registration clearly is a safer way for patrons to open accounts for mobile sports betting.”

The evidence for what remote registration means to operators over in-person registration is compelling. During DraftKings’ recent third-quarter earnings call, chief executive Jason Robins noted the company had benefitted from the emergency extensions on remote registration.

Such is the extent of the uplift that, according to Robins, Illinois went from being a state which “barely registered” with DraftKings to become the fastest-growing state and the second largest by handle behind New Jersey. “So I think [it is a] pretty big deal whether [remote registration] continues to be extended for several months, and that could have a significant impact on our customer acquisition, and therefore, on our revenue for next year,” he told analysts.

Will in-person registration become a thing of the past in a post-Covid-19 world?

Remote ascendency

Jake Williams, VP of legal and regulatory affairs at Sportradar, says the point is that in-person registration “doesn’t necessarily go well with a pandemic.” “It switched the viewpoint in Illinois,” he adds. “I guarantee the discussion is different right now in Illinois – this is the gaming market that has been the most impacted on this policy topic by the pandemic.”

With the current situation, no state can afford to ignore the lack of appetite on the part of a lot of land-based casino patrons to be forced to visit a facility just to register for sports betting. This will ultimately only benefit the offshore market.

“If the option is legalized but with in-person registration, then maybe the bettor remains with their current betting choice,” says Williams. “If you stick to in-person registration during a pandemic, you run the risk of the market being substantially held back.”

It is a risk that other regulating states have avoided. McGuinness points to Colorado as one where the experience since opening has shown why having remote registration can be such a boon to operators in the early months.

The state only opened up to sports betting in May and has sped to achieving more than $200m in handle in September. “Colorado’s successful launch is the latest and best example of a successful launch of mobile sports betting with no in-person registration requirement,” he says.

“The companies that can provide age and ID verification are licensed in the vendor category in Colorado. The fact that this has gone remarkably well in Colorado should be something other gaming regulators and legislators should take notice of.”

The biggest scalp as far as in-person registration is concerned is Nevada, and the latest news suggests there is movement at gaming board level to at least reconsider remote registration. The last time the issue was debated was in 2018, but now, with the pandemic, an initiative to have the Nevada Gaming Control Board (NGCB) discuss remote registration has surfaced once again. It is due to be discussed at a forthcoming workshop, although the date is yet to be set.

But Greg Gemignani, a partner with law firm Dickinson Wright in Las Vegas, says the obstacles to adoption of remote registration remain formidable, despite the issues that have been raised with in-person registration by the pandemic. “There are reasons why certain companies didn’t want remote registrations,” he points out. In Nevada the breakdown in 2018 saw Station Casinos (now part of Red Rock Resorts) and William Hill oppose the idea, while those in favor included the major Strip casino owners, in particular MGM Resorts International and Caesars Entertainment.

Gemignani says the opposition to remote registration boils down to a handful of clear impulses. First, William Hill in Nevada has built up a relatively widespread and diverse retail sportsbook estate of 113 outlets across the state, which he points out are “small sportsbooks; they aren’t destinations.”

The company’s investment would be “diminished,” he says, if remote registration were possible. “They have all these leases in Henderson, Sparks and many other places across the state,” he adds. “That advantage diminishes if they have remote registration.”

When contacted for this article, Michael Grodsky, vice-president of marketing and public relations for William Hill US, suggested nothing had changed in the bookmaker’s viewpoint. “We continue to be opposed to remote registration in Nevada,” he added.

Of course, that may all change as and when Caesars Entertainment takes control. Back in 2018, the last time the issue was debated, Caesars, along with its Strip rivals MGM, was in favor of remote registration.

Since then, of course, Caesars has been subject to a reverse takeover by Eldorado and now is set to take over the William Hill US business. Unfortunately, the company did not respond to enquiries for this article, so we don’t know which side of the fence it now sits. A spokesperson for BetMGM offered no comment.

“It is now a completely different company,” Gemignani says of Caesars and adds that his “best guess” is that the company’s omni-channel ambitions might outweigh the previous arguments put by William Hill.

Nice to have

However, the opposition from Station/ Red Rock is likely to be more implacable. Here, nothing has changed. “For Station Casinos, wagering is an amenity – it represents a very small percentage of revenue and it’s not that big for them,” says Gemignani. But their slots and baccarat players “love it” so they have to have it.  “So, for those with that mindset, you want an opportunity to show your players what you have to offer,” he adds. “But if you have all remote, you are not necessarily going to get the customer to come to the show.”

Such was the case before the pandemic but as Gemignani says: “There’s no denying we currently have an issue. When you have the current restrictions in place, online looks like a powerful tool to continue to nurture the customer relationship between your business and your customers.”

Yet, as he admits, many might see the current pandemic conditions as a “blip.” McGuinness says: “This issue is one that clearly needs more discussion in Nevada, among casinos, sportsbook operators, and the Nevada Gaming Control Board, given the Covid-19 implications.”

For opinions to change, he adds, a consensus will need to develop among the various gaming groups. “It’s a tough call in a lot of states right now,” says Sportradar’s Williams. “It’s not clear cut and you have to balance the short and the longer term. At the moment, everything is set up in Nevada for in-person registration and if you just flick the switch tomorrow, you would shift the dynamics in that state, which must be considered. If, all else being equal, it would sustainably grow the market while making it safer to bet, it is a better outcome.”

But the world is changing around the casinos and as Williams says: “It’s tough to imagine in-person registration even in Nevada in five years’ time.” Indeed, if the argument is broadened out, it is perhaps also impossible to see in-person registration holding sway in any state in five years’ time.