Sports Finance Report: Sports Betting In Las Vegas

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HBO Real Sports will be airing a segment tonight (10/24) on “Sports Betting in Las Vegas” at 10p EST/PST. The piece explores how for decades, professional sports leagues avoided Las Vegas; fearing fans would question the integrity of their games if too closely associated with gambling. It took nearly 20 years, but expansion fees ($500 million for Golden Knights) and public funding ($750 million for Raiders) convinced NHL and NFL owners to enter the market. Now there are indications that the leagues’ stance against gambling is softening; with NBA commissioner Adam Silver openly supported federally regulated legalized sports betting and MLB stating it is willing to re-examine its stance.

Howie Long-Short: The 4 major professional sports leagues and the NCAA have sued to prevent legalized gambling in the State of New Jersey, with the case set to be heard by the Supreme Court next month. The prevailing feeling is that the SCOTUS will vote in NJ’s favor (the NFL and NHL don’t have much of a leg to stand on) and declare that the federal government cannot prohibit its states from authorizing legalized sports gambling. Should that happen, expect several other states to follow NJ’s lead and immediately draft legislation permitting sports betting. As for the leagues, legalized gambling is a golden ticket (estimated $150 billion/year gambled illegally) akin to the dawn of exploding television broadcast rights in the 1990s; it will only increase fan engagement and ultimately the value of their franchises.

Fan Marino: The daily fantasy sports industry generated $327 million in revenue ($3.2 billion in entry fees) between September ’16 and August ’17, down from $350 million the year prior. The novelty of DFS has worn off. That’s not good news for an industry that’s going to be forced to compete with legalized gambling soon. The fall of 2015 seems so long ago.


StubHub (eBay) and the NFL have announced a multi-year partnership that will make the world’s largest ticketing marketplace, the NFL’s “authorized ticket resale marketplace”, beginning in 2018. As part of a new 5-year deal with Ticketmaster (LYV), the NFL will be introducing the first open architecture, fully digital ticketing system in sports; meaning StubHub will be able to directly integrate with the league’s primary ticketing system for the first time. The NFL will allow competing marketplaces to integrate with the platform as well, but StubHub will retain exclusive marketing rights and other benefits.

Howie Long-Short: eBay Inc. (EBAY) reported earnings of $514 million ($.48/share) for the quarter ending September 30th. EBAY did $2.4 billion in revenue, up 9% YOY; with $1.9 billion (up 8% YOY) coming from their marketplace platforms. StubHub contributed $275 million in revenue (up 5% YOY), with the growth driven by international sales. The company is currently investing heavily in the redevelopment of their platforms amid stiff competition from AMZN.

Fan Marino: The Province of Ontario is working on consumer protection legislation that would ban ticket scalping “bots” and cap the markup on resold tickets to $.50, on resale sites like StubHub. Banning bots makes sense because it creates an even playing field. Capping resale prices does not. Why would a fan buy a season ticket if they could always get a seat for no more than $.50 above the face value of the ticket? The Raptors & Blue Jays should be lobbying against this bill.

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The Drone Racing League (DRL) has announced it will hold its 2018 Allianz World Championship in Saudi Arabia, next September. The 7th and final event of the DRL season will consist of 8 FPV (first person view) pilots racing custom-built drones, that travel more than 90 MPH, through a complex 3D racecourse; with the winner earning the title of “World’s Greatest Drone Pilot”. The race will be televised in 87 countries, on cable networks including; ESPN, OSN, Sky Sports and Fox Sports Asia.

Howie Long-Short: The DRL holds several dozen patents on the core technology that enables drone racing. They use the league to showcase the technology. The company is privately held, but has raised more than $32 million to date; including a $20 million series B round in June. Looking to play the DRL? SKYAY lead their Series B round and participated in both their seed and Series A rounds. Liberty Media Corporation (LMCA), Allianz (OTC: AZSEY), World Wrestling Entertainment (WWE) and MGM Television (OTC: MGMB) are all also invested in the company.

Fan Marino: The DRL consists of 16 professional pilots competing in 6 regular season races before a short postseason whittles it down to 8 qualifiers, competing for the World Championship. Think you can compete in the DRL? The league is holding annual open tryouts, beginning on November 15th, using their Steam simulator. All you need is a computer and an Xbox or drone controller to participate.  The Top 24 competitors will advance to a live racing simulator tournament with a chance to compete for $75,000 and 1 of 16 spots in the 2018 season.

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JohnWallStreet is not a person or location, but a destination for the educated sports fan.

While we won’t be publishing “hot takes” on LeBron’s relative greatness to Jordan, we will be offering up the most relevant sports related finance news, in easily digestible bites, with commentary from both the equities analyst and sports fanatic perspectives.

We’ll cover publicly traded professional teams & stadiums, television networks, apparel & footwear companies, equipment companies, ticketing companies, content and facilities providers. If it trades on Wall Street, and has a sports angle, it’s in our wheel house.

Howie Long-Short and Fan Marino will be providing their expert opinions on each story. They have slightly different areas of expertise. Fan Marino is a firm believer that the SEC is the premier football conference. Howie Long-Short knows it as the Security & Exchange Commission. Fan Marino lives and dies with the college selection of 5 star, blue chip recruits. Howie Long-Short spends his days analyzing blue chip stocks. Howie Long-Short knows that Black Monday occurred on October 19th, 1987. Fan Marino swears it happens every January after Week 17. You get the point.

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