EKG: Are more tax rises on the way and who leads on in-play trading?

Is 2025 the year of the feds?

Legal sports betting has thus far been exclusively under state jurisdiction, but multiple angles of federal interest in the activity lead us to suspect that may not always be the case. Last year, we saw proposals for the federal government to (1) oversee state sports betting programs, (2) be more directly involved in problem gambling research and treatment, (3) police sportsbook business practices, and (4) clarify rules on what is (and is not) sports betting.

The Senate Judiciary Committee hearing gave us a little more information about lawmakers’ intentions on a few of the above items. While we don’t expect much to come of this specific hearing – highest priority items are generally not undertaken in the final days of a lame duck legislative session – we’ve undeniably reached a high-water mark of risk for federal intervention of some form. Plainly put, risk for disruption to the status quo has never been higher. More to come.

Are more tax rises on the way?

A recently introduced bill would increase the tax rate for Michigan sports betting operators tethered to the state’s three commercial casinos from 9.65% NGR to 9.75% NGR. In principle, the bill differs from other, recent tax rise proposals in multiple ways that all work to increase the seriousness with which it might be considered.

First, the ask itself is so… tame. Even at 9.75% NGR, Michigan’s tax rate would still be less than half the ~20% national average. Second, it’s backed by leadership, rather than rank-and-file, very new, or otherwise less prominent lawmakers. Third, passage requires a simple majority, rather than the supermajority (⅔, ⅗) some states require to amend tax policy.

Nonetheless, we think the bill is more signal than noise. To begin with, the amount of the increase feels more conversation starter than final ask. After all, why expend political capital and gin up the industry for a measly 0.1%? Additionally, the timing couldn’t have been worse, with the legislature having adjourned on December 31 and resumed on January 8, meaning the bill will not carry over any progress to 2025 – not exactly the setup for success.

Finally, Democrats, set to lose their trifecta in January, are spending their remaining days in power pushing big agenda items, which may crowd out a niche issue like sports betting tax reform. We expect the proposal to be reintroduced and seriously considered this year, however.

Don’t hold out hope for Georgia OSB in 2025

As a refresher, last year was the most promising yet for Georgia sports betting legalization efforts. Operational details like who should operate (sports teams/facilities, all-comers online operators, and one skin for the lottery) and who should regulate (the lottery) were finalized. A two-bill package containing enabling legislation and a constitutional amendment (with a supermajority ⅔ approval requirement) passed the Senate. The bills died in the House, however, after discussions stalled over an often-overlooked piece of negotiations: how to allocate tax revenue.

For 2025, two momentum-slowing factors cause us to maintain our projection that legalization will wait until at least 2026. While operational OSB in border states Florida and North Carolina puts some pressure on Georgia to legalize, other major border states Alabama and South Carolina are a long way from being a competitive threat.

Furthermore, Georgia votes on statewide ballot measures in even years, so lawmakers may feel less pressure to finalize legislation this year, knowing they have that extra time. The 2025 legislative session convened on January 13.

Who leads on in-play trading?

The charts, (above) courtesy of trading consultancy firm Bettormetrics, show live betting uptime and overround for leading US operators across 70 NFL games in November. The chart is the first in a planned series over the coming months focusing on an undercovered aspect of US online sports betting: trading. Our key takeaway? DraftKings has been vocal about its investment in live betting in recent investor calls – and that focus appears to be paying dividends.

DraftKings leads the way across all the key markets in uptime, which is perhaps unsurprising given the amount of focus it has put on in-play betting.

Anecdotally, we see points in games where other operators might suspend around key events like challenges/­injuries, whereas DraftKings is willing to let the trader override the model and keep prices live. That may lower hold slightly but it undoubtedly leads to more seamless user experience.

Caesars is perhaps a surprise second place given its relative scale and casino-first DNA, ahead of FanDuel in third. At the bottom end, ESPN Bet stands out, although we did see improvement in the latter half of the month when ESPN Bet trended closer to the 75% uptime on moneylines rather than the 68% listed.

While Hard Rock was near the bottom of the pack in terms of uptime, it tied for the most competitive overround in the US market with bet365 at 5.3%.

BetRivers takes a slightly different approach on live – perhaps a nod to its casino-first customer base – with a 7.3% average overround. Also interesting is the fact no book gets close to the benchmark -110 pricing for pre-game (equivalent to 4.8% overround), ­perhaps suggesting less confidence in live pricing accuracy.

Though not captured by Bettormetrics research, there may be some trade-off between uptime and bet processing times. In other words, books may have lower uptime but accept bets quicker. In our in-play product research in 2023, we found bet365 had the best bet acceptance times in the industry at 3.35 seconds, with Hard Rock third at 4.22 seconds.

Eilers & Krejcik Gaming is an independent research and consulting firm with branches in Orange County, California and Las Vegas, Nevada. The firm’s focus is on product, market and policy analysis related to the global regulated gambling market. Clients include operators, suppliers, private equity and venture capital firms, institutional investors and state governments. To learn more about the firm, visit http://www.ekgamingllc.com.