Call my bluff
Sector has no response to tax threats, another MLB scandal, match-fixing in Australia +More
Fears over tax hikes contagion grips the US online sector.
In +More: Michigan moves on Bovada.
Lifetime ban threat for MLB player who bet on his own team.
Australian match-fixing scandal widens.
Hard times are coming to your town.
Taxing times
Tax take and take and take: The sector should be worried about Massachusetts and Michigan following the path set by first Ohio and now Illinois in revisiting the tax rates applicable to sports betting and iCasino, according to analysts.
Empty threat: The warnings come after Illinois stared down the threat from market leaders FanDuel and DraftKings that they would exit the market if the state passed its new graduated tax system.
The new tiers will see the pair hit by a top rate of 40% for operators that generate over $200m a year.
No good deed goes unpunished: “The adjustment to the tax rate in Illinois highlights a broader issue within the gaming industry,” said the team at JMP. Lawmakers and operators have, the team suggested, created a “seemingly generous” tax structure to date, but the “adjustments upward” first in Ohio and now in Illinois “only fuel” concern over further moves.
“Politicians will never leave money on the table,” they added.
Illinois demonstrates legislators will make decisions that can sway a bill “even until the last minute.”
“With that in mind, discussions about tax changes now might not necessarily translate into action in future legislative sessions.”
Four to the floor: If there are to be more tax discussions, the team at EKG cited four factors they believe increase the likelihood of a given state moving to increase the burden on operators. These are:
The championing of a tax increase by either the governor or the legislative leadership.
An existing fiscal need such as a budget deficit.
Below average existing tax rates or average tax rates with unlimited promo deductions.
And finally, previous legislative attempts to increase the tax take.
Looking at the current legislative term, the team suggested Pennsylvania has “multiple paths” to amend its own tax structure.
Any changes to the online gambling rates would require the legislature’s approval.
But the current policy on promo credit deductions could be vulnerable to repeal by the regulator.
Similarly, in Michigan EKG noted the iCasino tax is already graduated, with rates pitched at between 20% and 28%. That, they believe, is not at risk of being revisited.
However, the OSB tax structure is below average and allows for unlimited promo deductions and is “more likely” to be looked at once more.
Sanguine: Seemingly empty threats aside, the response from operators has been muted on the tax issue. After recently meeting with DraftKings management, Jefferies suggested that, while “for sure” the company is watching other states closely, it remains “circumspect” over the prospects for increases elsewhere over time.
But they added it is “not bracing for any near-term events.”
Read across: JMP suggested a factor that could move tax rates is the lack of alignment between OSB and iCasino rates and B&M gaming. See today’s Earnings+More.
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Not welcome: The Michigan Gaming Control Board (MGCB) has ordered the Curaçao-based operator behind Bovada.com and Bovada.lv to cease operations in the state. The MGCB sent Bovada’s parent company, Harp Media, a cease-and-desist on May 29.
In another strongly worded letter, the regulator’s executive director Henry Williams published a statement noting the state’s “stern warning” to unlicensed operators that “flouting local regulations will not be tolerated.”
Not our first rodeo: As unregulated as they come, Bovada has a history of quitting US states when requested.
On this occasion, Harp Media was accused of breaching three state gaming laws: the Lawful Internet Gaming Act; the Michigan Gaming Control and Revenue Act, which is a felony offense; and the Michigan Penal Code.
Looking for a soft place to land: UK gambling minister Stuart Andrew has quit parliament and stood down as an MP ahead of the July 4 general election. Andrew was given the ministerial brief in March 2023, prior to the release of the Gambling Act review white paper.
He was the sixth and final MP to be appointed to oversee the transformation of the UK’s gambling laws.
Texas no-go: Efforts to legalize casino gaming in the state’s legislative session schedule for next year are doomed, according to state Rep. Jeff Leach.
“It’s generally understood that unless and until there is real movement and momentum in the Senate next session – meaning the Senate actually taking up and considering the issue – there is likely not going to be any meaningful action on it in the Texas House,” Leach told the Dallas Morning News.
That’s your lot: The Netherlands authorities have imposed deposit limits of €300 on those aged 18-24 while anyone over 24 has a deposit limit of €700. The Dutch regulator said the new limits were a “major step” in creating a safer gambling environment for younger players.
EGBA has welcomed the EU’s new package of AML rules, saying they will benefit multi-state operators.
Sports integrity
I don’t like cricket: English fast bowler Brydon Carse will serve a three-month ban from playing cricket after breaching betting rules. The player has been charged with placing over 300 bets between 2017 and 2019.
Commercial
Evolution is reported to have launched legal proceedings against Light & Wonder (L&W), alleging misappropriation of trade secrets relating to its Lightning Roulette game.
According to Next.io, in a partially redacted Nevada District Court complaint filed last week the live casino giant accused L&W of using Evolution’s confidential Lightning Roulette math files and payout structures for its RouletteX and PowerX games.
MLB life ban
Take me out of the ball game: Another Major League Baseball scandal is erupting, with San Diego Padres infielder Tucupita Marcano facing a potential lifetime ban for gambling on his own team last year.
Marcano is accused by the league of breaching gambling policy by wagering on Pittsburgh Pirates games last year, while he was on the team but out injured. If found guilty, he can be banned for life.
The Padres told ESPN it was “aware of an active investigation” by MLB “regarding a matter that occurred when the player in question was a member of another organization and not affiliated with the San Diego Padres.”
Four unnamed minor-league players have also been accused of gambling on MLB games, according to the report.
Another lifetime: ESPN’s Jeff Passan is fairly certain the Venezuelan is done:
If you wanna squeal, said the FBI: A series of high-profile gambling scandals have plagued US sports this season, which critics have linked to the further legalization of sportsbooks and used to call for curbs on advertising, promotions and prop bets.
In April, Toronto Raptors basketball player Jontay Porter copped a lifetime ban for disclosing confidential playing information to gamblers and for betting on NBA games.
And as the MLB season got underway, the former interpreter to LA Dodgers star Shohei Ohtani was charged with stealing more than $16m from the player to cover gambling debts.
Ippei Mizuhara faces deportation and jail time and is currently negotiating with the feds.
Braves minor-leaguer (and former teammate of Ohtani) David Fletcher is also under investigation, after being linked to the same illegal bookmaker frequented by Mizuhara, California-based Mathew Bowyer.
Bowyer himself is facing federal charges of serving as a bookmaker for an Orange County criminal gang.
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Sportsbet’s AML pledge
Angels with dirty faces: Online operator Sportsbet has promised to improve its regulatory compliance processes following charges by Australia’s money laundering watchdog. Sportsbet presented an Enforceable Undertaking to AUSTRAC, which the regulator accepted, concerning the strengthening of dirty money controls inside Australia’s largest sportsbook.
AUSTRAC previously ordered Sportsbet to install an external auditor to monitor its compliance operations.
The auditor’s findings have been considered alongside Sportbet’s promise to cooperate and proactively work to meet its obligations.
The long and binding road: The agreement binds Sportsbet to an ongoing remedial action plan to improve its anti-money laundering and counter-terrorism financing program (AML/CTF). Other obligations include sending frequent reports to AUSTRAC from a monitor appointed to review Sportsbet’s progress.
“Corporate bookmakers must have robust systems in place to ensure they comply with their AML/CTF obligations,” said AUSTRAC CEO Brendan Thomas. “Sportsbet’s undertaking binds it to a programme of work. This will help ensure Sportsbet manages and mitigates the risks associated with money laundering and terrorism financing.”
“We will be monitoring Sportsbet throughout this process to ensure it meets these obligations, and there will be consequences if it does not,” he added.
Thomas said betting agencies have “a significant role to play in combating financial crime.”
“This undertaking will ensure that Sportsbet commits sufficient resources to adequately implement its remediation program promptly, or risk further enforcement action,” he said.
In November 2022, AUSTRAC ordered the appointment of external auditors to assess compliance of Sportsbet and Hillside, owner of bet365, following a major regulatory probe into the online sector.
Oz match-fixing scandal deepens
A team game: An emerging match-fixing probe in Australia has ensnared two more soccer players. The case has already resulted in charges for three players at Macarthur FC, who play in Australia’s highest professional division.
A-League midfielder Kearyn Baccus appeared in court on Thursday accused of offering to deliberately receive a warning from officials during a game in return for gambling syndicate cash.
Baccus was arrested and bailed in May with team captain Ulises Davila and teammate Clayton Lewis; the trio have been suspended by the league.
Court documents revealed that two other players are believed to have been part of a criminal group.
Last December, New South Wales state police joined forces with British officials to investigate suspicious spot-fixing betting patterns following incidents in November and December, with unsuccessful attempts made to do the same during matches in April and May.
Police said a “South American person offshore” was the “controller” of the fixing.
Calendar
Jun 6: Gaming in Holland, Amsterdam
Jun 18-20: Canadian Gaming Summit
Jul 17-20: National Council of Legislators from Gaming States, Pittsburgh
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