So much has been argued, debated, said, and written about the legal saga sparked by an attempt to bring sports betting sites to the Sunshine State. And, when the dust settles in the courtroom, the best-case scenario for Florida bettors could be they get one legal sportsbook.
That’s right. At the end of this battle to bring legal online sports betting to Florida, there are, essentially, two outcomes: Hard Rock Bet or nothing.
This is not a shot at Hard Rock. It may be a perfectly fine sportsbook, and Florida residents are champing at the bit to regain access to its wagering markets. They enjoyed them, briefly, in 2021, before a federal judge spiked a gaming compact between the state and the Seminole Tribe, forcing the latter’s Hard Rock brand to shutter itself in Florida.
The compact is at the root of the legal dispute that has ground on for two years. The agreement, among other things, grants the Seminole control over Florida sports betting and allows them to offer craps and roulette at their casinos. Whether it oversteps federal gaming law or otherwise is what its friends and foes are fighting about in court. In the meantime, there is no legal sports betting in Florida.
So, again, all this litigating will do is enshrine Seminole control over sports betting in Florida or ensure there is no legal event wagering at all for the foreseeable future. That means Florida bettors and the state government could still miss out on the benefits a competitive market brings, such as increased competition, innovation, and revenue, even if the gaming compact survives the courts.
“States that have gone with [the] route of one to three licenses, including Oregon, Connecticut, and Rhode Island, have underperformed the average spend-per-adult across the United States with a core reason being less incentive to invest in players and the product with no competition,” JMP Securities analyst Jordan Bender wrote this week in a note to clients.
Oregon has one legal online sports betting provider: DraftKings. There, residents wagered approximately $44.5 million on sports during August, according to Vixio GamblingCompliance, generating $3.5 million in total revenue.
In Louisiana, meanwhile, a state with a similar-sized population as Oregon but multiple online sportsbook operators, $153.9 million was bet, and $18.1 million in revenue was generated during the same month.
Flashback Friday
Yet there are good reasons why Florida Gov. Ron DeSantis decided to grant the Seminole sports betting exclusivity in his state. It helped resolve a previous gaming-related spat with the tribe that caused the Seminole to stop paying the state. It was expected to create more than 2,000 jobs and provide the tribe (an experienced gaming operator) with a steady stream of income. It also guaranteed the Florida government a lot of money.
“This historic compact expands economic opportunity, tourism, and recreation, and bolsters the fiscal success of our state in one fell swoop for the benefit of all Floridians and Seminoles alike,” DeSantis said in a 2021 press release. “Our agreement establishes the framework to generate billions in new revenue and untold waves of positive economic impact.”
Florida’s 30-year gaming compact would lock in a baseline of revenue for the state, such as $2.5 billion in new money over the agreement’s first five years. However, according to JMP’s estimates, a “competitive” market could throw off around $2 billion in gaming revenue annually, compared to $1.3 billion to $1.5 billion with Seminole exclusivity.
Using those numbers (and assuming we're just talking sports betting-related receipts), if Florida were to adopt a tax regime similar to that of, say, New York (and operators may shudder at that) it could garner more revenue.
For example, a New Yorkian 51% tax rate applied to $2 billion in sports-betting revenue is more than $1 billion a year, or double the $500 million guaranteed under the compact. That $500 million minimum could also be earned by applying a 25% tax rate to a competitive market.
"New York, a market we model generating $2bn at maturity, is a comparable given the population, and income/capita," Bender wrote. “The NY tax rate at 51% is burdensome for operators, but companies have held ~10% since April, fundamentally creating higher levels of revenue that we would not expect to see in Florida."
Whither the bettors
So, in short, a competitive market could offer more financial upside to Florida. But sports bettors in the state probably care less about that than they do about betting. On that front, they, too, could be getting short-changed.
If the compact survives, that means one legal sportsbook, which means you can’t shop for the best odds and lines, because there’s only a single store to compare prices. If you don’t like the number Hard Rock is hanging for the Super Bowl, that’s tough, because that’s all you’ve got.
Also, let’s say you can no longer use the Seminole-powered sportsbooks in Florida. While the debate around limiting or banning winning bettors can be had another day, if you can’t use Hard Rock or its authorized affiliates, you are effectively done wagering on most sports in Florida — legally.
Legally is an important distinction because it’s likely there is technically illegal wagering happening in Florida via offshore sports betting sites or otherwise. In New Jersey, for instance, recently released findings from a survey suggested that almost 40% of sports bettors were wagering in some form before it was even legal, including 22.5% that said they were using "non-New Jersey" sites.
“Unless you are placing a wager through sportsbooks operated by or in conjunction with the Seminole Tribe of Florida, you are most likely placing an illegal wager,” the Florida Gaming Control Commission notes on its website.
The northern touch
And there are some early indications that a competitive market can help drive illegal betting activity into legal channels. In Ontario, Canada’s most populous province, it was estimated around 70% of online gambling was happening on unregulated sites before the government launched a regulated and competitive iGaming market in April 2022.
Before the launch of the market, there was just one government-owned provider of legal sports betting in Ontario. Now, though, there are around 30. A survey done in March 2023 found that 85.3% of online gamblers who responded were doing it on regulated sites.
“Since its launch in April 2022, Ontario’s igaming market has displaced the existing unregulated market and made Ontario an internationally recognized leader in this industry,” Ontario Attorney General Doug Downey said in an April press release.
Jordan Bender at JMP forecasts a massive hit to Florida sports betting TAM under a single-license model.
— Chris Grove (@OPReport) October 5, 2023
"We believe Florida will generate $1.3bn to $1.5bn of gaming revenue at maturity, compared to $2bn if the market was competitive"$DKNG $FLTR $MGM pic.twitter.com/Jt3CbAAHdJ
Again, there are good reasons why Florida went the route it did, and residents may be happy enough with a single legal sportsbook. It beats zero legal sportsbooks, and there are also opportunities for additional brick-and-mortar sportsbooks at the Seminole’s casinos in the state. Partnerships with pari-mutuel operators are possible as well, although those wagering opportunities will probably still rely on the Hard Rock tech.
Furthermore, an attempt to broaden Florida's approach to sports betting via the ballot box flopped, and there are legal and constitutional hurdles standing in the way of additional efforts. Of late, it doesn’t look like anyone in the state is pushing hard to tweak the model, even and especially while the gaming compact is being tested in the courts. Talk of a competitive market is just that, talk.
But with all that said, it’s worth reminding people: when it comes to legal sportsbooks in Florida, even after months and months of battling in the courts and millions and millions in billable hours, there can be only one.
