Eilers & Krejcik Gaming: What's happening in US sports and gaming?  

Whose US online casino app is best?

We recently published our H1 2024 US Online Casino App Testing report. The report saw our national tester group test, score, and rank 34 casino apps. Here are three key takeaways:

• DraftKings has long been in the running for the top ranking in our casino report, and in H1 2024 the operator achieved it. The DraftKings Casino app beat the field by mere decimal points, but its platform — anchored by an immense volume of table games, a wealth of jackpots, and one of the best home screens and layouts on the market — received plenty of praise. There are still areas to improve, such as slots content and the account page. But midway through 2024, DraftKings presents users with an exceptional casino app.

• Some of the weakest categories of this round — and the ones that saw the most vociferous tester commentary — were game stability and loading. Our testers ran across long load times, game crashes, and generally unstable performance when entering or exiting a game far too frequently during this round. Unstable technical performance is a major issue on its own, but the long load times may be the bigger problem as users don’t have patience for a game that takes one minute to load.

• There is only a 0.3-point gap between the top seven casino apps, and fewer than two points separates the top 15. There is remarkable gravity among the best apps at the moment — each has its unique traits and quirks, but across the board they’re meeting tester expectations. What we’re seeing is a user group that is noticing the growing quantity of games offered to them on these apps and the overall quality of the live casinos they engage with, and sentiment toward casino apps is improving as a result.

Hard Rock Florida online casino monopoly could be game changing

• Background: A recent US Supreme Court decision, keeping intact a 2021 gaming compact between the Seminole Tribe and the state of Florida, opens the door for tribes in other states to consider online sports betting (OSB) via compact, rather than or in addition to commercial licensure. In our view, the decision also opens the door for tribes to consider online casino via compact, rather than, or in addition to, securing spots in a state’s commercial online casino market. 

• Michigan and Florida candidates for online casino by compact: While we project that online casino via compact will be very sparingly adopted, Michigan and Florida strike us as two realistic candidates. Both states have tribes with demonstrated appetites for online gambling, limited non-­tribal market-access points for existing online gambling, and a good working relationship with the state governor. Indeed, in Florida, the aforementioned 2021 compact provides for the Seminole Tribe and the governor to consider further amending the compact to add online casino.

• Florida a potentially massive prize — but just for Hard Rock: Assuming the Seminole Tribe, owner of the Hard Rock online gambling brand, obtains an online casino monopoly in Florida, we estimate it would be worth around $2.5bn in GGR at maturity. To put that in context, if we compare our ~$2.5bn Florida monopoly forecast to our estimates of trailing 12-month (T12M) US online casino GGR at leading brands (through May 2024), Hard Rock Digital would be the number one US online casino operator by market share (see Fig. 1, below).

Missouri sports betting ballot measure bucks recent policy trends

The Missouri Secretary of State recently certified Measure 2024-160, authorizing retail and online sports betting, for this November’s ballot. The measure is citizen-initiated (not drafted by lawmakers). Indeed, sponsor Winning for Missouri Education reportedly comprises a coalition of Missouri professional sports teams and major OSB operators. Its proposed regulatory structure, perhaps unsurprisingly, eschews some of the policy trends we have seen of late. Here, we highlight three such departures and offer notes and color:

• Proposes very low taxes and fees: The national average sports betting tax rate is currently around 22%, having crept slowly but surely upward from the mid-teens since the first wave of states legalized in 2018-19. Measure 2024-160 harks back to those halcyon days by proposing a 10% NGR tax. A nearly unlimited promotional credit deduction (capped at 25% of handle) pushes the effective GGR rate even lower. Furthermore, the initial license fees top out at $500,000, or about $0.11 per adult — well below the national average of $0.45. In short, the proposed tax and fee structure is a major outlier.

• Limits incumbent gambling operators’ market access: The Missouri ballot measure awards single skin online licenses to sports stadia and casinos but limits each casino parent company to a single license, a first-of-its-kind provision. As an example, PENN Entertainment has three casinos in the state but could deploy just one skin. Furthermore, there would be two online-only licenses. With just six sports stadia and 13 casinos, both of the above parameters shift market-access power in the direction of sports stadia and online operators in a policy climate that still generally favors gambling incumbents. 

• Restrains the regulator: Policymakers have become increasingly bold and creative with marketing/advertising and responsible gambling rules. Measure 2024-160, in contrast, could dampen any inclination the Missouri regulator has toward boldness. The measure foregoes commonly used language, giving the regulator broad discretion to promulgate rules it views “necessary” or “appropriate,” instead awarding the Missouri Gaming Commission (MGC) the power to adopt “commercially reasonable” rules. Further, the measure specifically instructs the MGC to “adopt a similar framework” as other legal sports betting states, appearing to discourage anything precedential.

North of the border: A closer look at Alberta

At this summer’s Canadian Gaming Summit, Dale Nally, Alberta’s minister of service and red tape reduction, told conference attendees that the province of Alberta — with a population of 4.9 million — would follow Ontario in opening its online gambling market to commercial operators. Specific details of the planned opening, including a timeline, were not provided.

Below, however, we offer some initial thoughts on the market, including its potential size and competitive landscape:

• An $863m opportunity: We forecast the Alberta online gambling market (OSB, casino, and poker) would generate almost $900m in GGR at maturity — with nearly three-quarters of that coming from the casino vertical.

• What does the market look like now? The regulated Alberta market is served exclusively by PlayAlberta, a provincial lottery monopoly. There is also a very competitive gray market contested by operators including Stake, Super Group, and bet365.

• What might the regulated market look like? As in Ontario, we expect gray market operators currently serving Alberta will have the opportunity to onshore their operations and so command significant market share from launch.

• Any ideas about potential winners? Generally speaking, we believe Super Group and bet365 would likely capture double-digit GGR share immediately. BetMGM — which we estimate is leading the Ontario market — also bears close watching.

• What about Stake? We estimate the crypto gambling specialist has 20%-25% GGR share of Canada’s gray market. If it enters Alberta’s regulated market (it has not done so in Ontario), we believe it could challenge for podium position.

• Canada a growing prize for US-first operators: The combined at-maturity online gambling total addressable market of Alberta and Ontario is $3.5bn — an increasingly attractive expansionary opportunity for US-first operators like FanDuel, DraftKings, PENN, Caesars, and Rush Street Interactive.