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A Florida bettor is considering pursuing legal action after DraftKings froze $3m worth of parlay bets because he used a proxy to place the wagers. View the latest odds and bet online legally, securely, and easily with the top rated sportsbook. Place a bet now!
Florida legislators have long fought efforts to expand gambling. But apparently, their steadfast morals vanish when it comes to daily fantasy sports websites such as the controversial FanDuel and DraftKings.
Once again, a lawmaker has filed a bill to make daily fantasy sports sites – in which people bet real money on real athletes in real time – fully exempt from state gambling regulations. Sanford Rep. Jason Brodeur filed the bill Wednesday, but no companion bill has been filed so far in the Florida Senate.
The state’s Department of Business and Professional Regulation, which oversees racetrack gambling, poker, slots, and other gambling, would not regulate the websites, according to the proposed bill.
Sites such as FanDuel and DraftKings let users pick temporary teams and place daily bets on single-match fantasy sports games. The sites operate in legally murky territory: In most states, games of 'skill,' like old-school fantasy sports, are not subject to gambling laws, while games of pure 'chance' like roulette are. Daily fantasy sites have long claimed to offer contestants a game of 'skill' — but state governments have increasingly disagreed. Daily fantasy betting is legal in 13 states, illegal in five, and unregulated in the rest.
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Though daily fantasy betting is likely illegal in the Sunshine State (both 'skill' and 'chance' games are considered gambling under state law), Floridians are able to bet on games as they please without fear of law enforcement cracking down on them.
If that sounds familiar, Republican state Sens. Joe Negron, of Stuart, and Rep. Matt Gaetz, of Fort Walton Beach, filed similar bills last year. Nationwide, the American Gaming Association has been pushing legalizing sports betting, an industry much larger than daily fantasy sports. (More people bet on teams than study the nuances required to fill out a DFS lineup, position-by-position.) They haven’t gotten very far in their campaign for U.S. Congress to repeal a 1992 law that prohibits sports gambling, known as the Professional and Amateur Sports Protection Act (PAPSA).
So why would Florida, which is mired in gambling challenges — ranging from a current suit that might bring slots to any county that approves a referendum to a recent ruling that voided the Seminole Tribe’s contract with the state — go down this rabbit hole?
Florida gaming lawyer Daniel Wallach tells New Times the law could come at a cost to consumers, calling it 'a straight-up decriminalization measure that, while not running afoul of PASPA, comes at a potentially heavy cost for consumers — no regulatory oversight, and, even worse, no regulations, unlike in other states.”
The bill, he adds, “just simply removes [daily fantasy sports] from the ambit of the state’s gambling laws without providing any consumer protections.'
Wallach also adds that it seems a bit odd to even attempt to regulate sites such as
'No fantasy sports player has ever been prosecuted in Florida, or nationally for that matter, simply for competing in a fantasy sports contest,' he says, 'and it is unlikely that any federal or state law enforcement agency would target players for prosecution even if the law were to remain unchanged.'
As recently as 2014, ads for DraftKings and FanDuel flooded local TV airwaves. But those promotions have since vanished, especially after TV-news-comedian John Oliver punched a hole in the industry's marketing strategy on his HBO show Last Week Tonight.
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DraftKings (NASDAQ:DKNG) is in the right place at the right time. And let me tell you, investors seem to have noticed. DraftKings stock has tripled from its March lows and obtained a massive $12 billion market value. That figure could climb even higher as DraftKings finishes converting warrants and tidying up its capital structure following its April initial public offering.
© Provided by InvestorPlace DraftKings Stock Will Get a Draft From Its Secondary OfferingDraftkings Florida Reddit
As such, based on near-term earnings projections, this lavish valuation may be a bit excessive. But longer term, DraftKings is a tremendous opportunity, as it’s on the ground floor of an emerging gold mine.
Online sports betting was already booming before the COVID-19 pandemic hit. Now in the wake of this epidemic, the online sports betting boom could kick into hyper-growth mode.
In-Person Gaming Faces Continuing Coronavirus Headwinds
First, even the most avid of sports bettors may be slow to return to in-person casinos due to lingering fears about the virus. Just look at the most recent case counts. The coronavirus has spread quickly in many regions that have reopened their economies.
In Las Vegas, for example, hospitality workers unions are suing the casino companies for exposing their employees to unnecessary danger. Guests weren’t forced to wear masks, and — unions allege — the casinos failed to notify employees when coworkers turned up sick. One worker has died already, and Nevada’s overall Covid-19 fatality count topped 500 last week.
Against that backdrop, it’s hardly surprising that recent data show online gambling is gaining market share from in-casino wagering. Gaming is a form of entertainment and escape, after all, and the current headlines are a huge negative for traditional casinos.
States Must Legalize Online Gaming to Offset Deficits
Draftkings Florida
While in-person gaming is struggling, online betting is receiving a huge boost. The deal is that cash-strapped states are starting to rush pro-gambling legislation into law.
Gallery: 9 Florida Stocks to Avoid as Coronavirus Rates Spike (InvestorPlace)
States are facing a problem on both sides of the ledger. Their revenues are dropping sharply, particularly in states that rely on high sales taxes. Brick-and-mortar retail sales have plummeted and taken states’ finances along for the ride. On top of that, many states are spending heavily to try offset the effects of the COVID-19 pandemic. With states spending more and bringing in fewer tax dollars, they are facing deep budgetary holes that must urgently be filled.
With that in mind, legalized gambling is low-hanging fruit. And states are turning to it as a quick solution to their mounting financial problems.
Online Gaming: A Rapidly Growing Market
So where do things stand now? The Associated Press reported: “So far, 18 U.S. states plus the District of Columbia offer sports betting, and four offer internet gambling, which can include online casino games, slots and poker. In addition, Virginia and Tennessee have approved sports betting but have yet to launch.”
Also, a few states allow gaming through tribal organizations. And other states including Louisiana, Massachusetts, and Ohio could legalize online gaming in coming months. In all, around half of states should offer online gaming in one form or another within the next year.
DraftKings Stock Is Ahead of the Competition
DraftKings is well-positioned to pick up a large percentage of this business. It is already taking advantage of the rising interest in online gaming. It recently launched its standalone casino application for users in the state of New Jersey.
The app features DraftKings’ exclusive games along with casino favorites such as roulette and blackjack. These casino features were available within DraftKings’ sports-betting app previously; however, the standalone app should attract many gamers who have no interest in live sports.
Of course, the company faces daunting competition in this rough-and-tumble sector. Companies like GameAccount Network (NASDAQ:GAN), International Game Technology (NYSE:IGT), and Scientific Games (NASDAQ:SGMS) are all vying for a piece of the same pie that DraftKings is going after.
Then there’s Penn National Gaming (NASDAQ:PENN). The traditional casino operator is making a play for the online gaming space as well. With its acquisition of Barstool Sports and its spokesperson Dave Portnoy, it could siphon off a lot of customers as well. However, at the rate the overall market is expanding, DraftKings has an excellent shot at success despite the rivals.
DKNG Stock Verdict
DraftKings stock still has a fight ahead of it. The competition I outlined above will all win portions of the business. This is a vast new market, and the turf war for market share will be intense. High marketing and customer acquisition costs could hit profits in the near-term. That’s to be expected in a newly emerging industry with an outstanding growth rate.
That said, DraftKings already has excellent name recognition within the sports betting market. It won the first big branding battle against FanDuel, and it remains at the top of consumers’ minds now. This should give DraftKings stock a leg up on the competition. With the return of live professional sports just weeks away now, it will be DraftKings’ time to shine.
Eric Fry is an award-winning stock picker with numerous “10-bagger” calls — in good markets AND bad. How? By finding potent global megatrends… before they take off. And when it comes to bear markets, you’ll want to have his “blueprint” in hand before stocks go south. Eric does not own the aforementioned securities.