Claude Solnik
Long Island Business News
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Home > LI Confidential > Stop scratching on holidays
Stop scratching on holidays
Published: June 1, 2012
Off Track Betting in New York State has been racing into a crisis called shrinking revenue. Some people have spitballed a solution: Don’t close on holidays.
New York State Racing Law bars racing on Christmas, Easter and Palm Sunday, and the state has ruled OTBs can’t handle action on those days, even though they could easily broadcast races from out of state.
“You should be able to bet whenever you want,” said Jackson Leeds, a Nassau OTB employee who makes an occasional bet. He added some irrefutable logic: “How is the business going to make money if you’re not open to take people’s bets?”
Elias Tsekerides, president of the Federation of Hellenic Societies of Greater New York, said OTB is open on Greek Orthodox Easter and Palm Sunday.
“I don’t want discrimination,” Tsekerides said. “They close for the Catholics, but open for the Greek Orthodox? It’s either open for all or not open.”
OTB officials have said they lose millions by closing on Palm Sunday alone, with tracks such as Gulfstream, Santa Anita, Turf Paradise and Hawthorne running.
One option: OTBs could just stay open and face the consequences. New York City OTB did just that back in 2003. The handle was about $1.5 million – and OTB was fined $5,000.
Easy money.
FanDuel Owner Buys PokerStars in $6 Billion Deal
Deal connects FanDuel with Fox Corp., which owns a minority stake in Stars and recently launched its own betting app
FanDuel owner Flutter Entertainment FLTR -2.33% PLC agreed to buy PokerStars owner Stars Group Inc. TSG 1.91% for about $6 billion, creating an online gambling giant as internet and app-based betting is taking hold in the U.S.
The deal also connects FanDuel with Fox Corp. , which owns a minority stake in Stars and recently launched its own betting app, Fox Bet.
Flutter, based in Dublin and listed in London, owns bookie brands in the U.K. including Paddy Power and Betfair, which operate walk-in betting parlors in shopping districts of many of Britain’s cities and towns. They offer bets on everything from horse racing and boxing to the fate of prime ministers and the outcomes of U.S. elections.
As foot traffic in these outlets has waned, they and rivals have branched out to offer a host of online betting portals and apps.
The industry has consolidated heavily in the U.K. and the rest of Europe as regulation has tightened. The creation of online markets elsewhere, particularly the U.S., has added to that pressure. Flutter’s FanDuel, in addition to its fantasy sports site, offers online and retail betting in New Jersey and Pennsylvania.
A Supreme Court decision last year opened the U.S. sport’s-betting market. Individual states, however, typically have regulatory responsibility for gambling oversight.
Stars Group, based in Toronto and listed on the Nasdaq, owns popular online poker brands such as PokerStars and Sky Betting & Gaming, a U.K.-focused gambling operator. Both Flutter and Stars have expanded tentatively in the U.S. as that market cracks open. A merger could give them the combined firepower to more closely focus on American betters, online poker players and sports fans.
Stars signed a deal in May with Fox Sports, a unit of Fox Corp., to offer sports betting options in the U.S. Fox also agreed at the time to take a roughly 5% stake in Stars. Fox and News Corp, the owner of The Wall Street Journal, both count Rupert Murdoch and his family as significant shareholders.
Last month, Stars and Fox rolled out Fox Bet in New Jersey and Pennsylvania, offering bets on a range of live sports and events.
The FanDuel and Fox Bet brands and apps will continue to operate separately and compete for bettors as the U.S. sports wagering market expands into new states, said FanDuel Chief Executive Matt King and Fox Sports Chief Executive Eric Shanks. Both brands will focus on different segments of the market: Fox Bet on more casual bettors and FanDuel on more hard-core sports fans and gamblers, the CEOs said.
The combined company has secured access to sports-betting markets in 24 states through licensed gambling partners, including states where sports betting hasn’t yet launched. Mobile sports-betting apps can only accept wagers from bettors located in states that have legalized it.
FanDuel brings more than 200,000 sports-betting customers and a total of more than 8 million customers across 41 states, according to an investors presentation on the deal. Fox has the right to acquire about 18.5% equity interest in FanDuel Group, structured as a 10-year option from 2021.
“What you have is the full complement of resources and assets as part of that combination,” Mr. King said, going “after what we believe will be a material opportunity in the U.S. to play out over the next few years.”
The U.S. market will represent 5% of the combined company’s revenue at the start. How Fox Sports’ media and talent will be fully integrated with Fox Bet and FanDuel is still to be determined, Mr. Shanks said.
“I think we’ll make those decisions as time goes on as to what is the best thing for the group in total, keeping in mind we both believe the dual-brand strategy works,” Mr. Shanks said.
The deal between Flutter and Stars could face significant regulatory scrutiny. Equity analysts at Jefferies, in a note Wednesday, said that could be especially significant in the U.K., where the combined groups, they figure, would have a roughly 40% share of the market.
Gary McGann, Flutter’s chairman, said the combined group would be a “strong voice in the promotion of responsible gaming worldwide” and promised to be a leader in “industry standards on the protection of customers.”
Flutter and its precursor companies have taken a leading role in the consolidation of the gambling industry. Paddy Power was created in 1988 in Ireland, emerging from the combination of three smaller bookmaking chains. It merged with Betfair, a competing chain, in 2016.
Under the all-stock merger deal, Flutter shareholders will end up owning 54.64% of the combined company. Stars shareholders will get 0.2253 new Flutter shares for each Stars share held.
The deal creates a company worth more than $11 billion. Flutter shares closed at 7634 pence in London on Tuesday, implying a market value of £5.97 billion ($6.95 billion). Stars Group shares closed at 20.25 Canadian dollars, implying a value of C$5.83 billion ($4.41 billion.)
On Wednesday, Flutter shares rose 6.9% in London trading, while Stars shares jumped 30% in Toronto.
The companies said Mr. McGann will become chair of the combined group. Peter Jackson, currently the chief executive of Flutter, will assume the role of CEO.
The merger is conditional upon approval of both Flutter and Stars Group shareholders, which is expected during the second quarter of next year. The deal is expected to be completed by the third quarter.
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