Thursday, August 29, 2013

New Jersey Casinos Not Yet Offering Fantasy Sports Contests

Although New Jersey published regulations authorizing pay-to-play fantasy sports contests back in March, not one Atlantic City casino has of yet moved forward with an offering.  The reasons for this are discussed in the story, which can be found here.  The were two primary reasons discussed detailing why no fantasy games are yet offered.  One is that the casinos didn't see a successful path forward competing with larger, national entities such as ESPN.  The other is that this is summer and allegedly sports betting only revolves around the NCAA basketball tournament and the Super Bowl.

I'll quibble with both of these reasons, but first I do need to quibble with the article ever equating the concept of fantasy sports contests and betting.  Playing fantasy sports games is not betting.  Fantasy sports games are a game of skill and by legal definition not gambling, provided the games, gameplay and prize structures fit within the statutory safe harbors.  It is just journalistic laziness to refer to such contests as betting.

With regard to the reason that the casinos don't see an easy path to compete with a similar game to the ESPNs of the world, valid point.  The key is to find a fantasy sports game that would be attractive to players that the ESPNs of the world can't emulate.  Does such a fantasy sports game of that nature exist?  Yes.  We will discuss that later.  Not having a compelling game to draw patrons that would provide sufficient direct and indirect revenue to offset the cost of offering is a very valid point.  In my view, none of the existing fantasy games that have been considered have the hope of meeting that hurdle.

The reason for that varies on the type of game.  For the league-based season-long contests, the contests are just too long and the casinos rightly have figured out that they may be able to draw customers a few times during the year, but not on a weekly basis for an extended period.  For the short-term contests, the prize structures are such that the gross margins of these games are just too thin to satisfy the profit needs of the game operator and the casino.

Regarding the reason that the casinos aren't offering the games because this is summertime and there's no interest in sports contests for money is a crock.  Fantasy baseball is going on now and it is indeed quite popular and indeed people are playing for money.

So what kind of fantasy sports contest would have a hope of being viable for Atlantic City casinos?  Again, it would have to be something that would be attractive to fantasy sports players and perhaps even sports bettors (even though sports betting is not yet legal in New Jersey).  By attractive, that means a game that has a good prize to entry fee ratio (odds if we were talking about betting).  Also, attractive means that the margin of the games would be sufficient to satisfy the needs of the game operator and the casino with regard to profit.  No sense offering a game that costs more to offer than revenue generated, right?  The final nuance of attractive would be a fantasy game that offered some level of exclusivity, something the current large fantasy sports operators can't match.

Is there such a fantasy sport game available that can do this?  Yes.  YouGaming's pari-mutuel fantasy sports game is such a game.  Here's why:

First, the pari-mutuel fantasy sports game concept is protected by no less than 3 US Patents.  That takes care of the exclusivity element.

Second, the games can have gross margins that will satisfy the profit needs of the casinos and game operator.  For typical "daily" fantasy sports games, gross margins may vary from 5% to 10%.  Given the costs of operation, it will be practically impossible to have profitable games.  The pari-mutuel fantasy sports games can easily have gross margins in the 20% to 30% range, and can be offered in the "daily" format.  Now if you compare that to the theoretical margin on a straight sports bet, which is 4.54%, this advantage is substantial.

Third, the pari-mutuel fantasy sports games can also offer games with high gross margins while offering superior prize to entry fee ratios (odds if we were talking betting), allowing the game operator and casino to meet their profit objectives.

So given a game where one out of every five entries can win a prize, where the top prize is 100 times the entry fee, the gross margin of such a game is greater than 20%, and having a level of exclusivity for the casino(s) that offer it, one can see that this kind of game would have a level of attractiveness to Atlantic City properties.

Also, this kind of game would be attractive to offer in an online format to the casino(s)' customers.  Unlike some of the free play casino games used as a marketing tool, this game format can be offered online in a pay-to-play format, generating revenue and awarding cash prizes.  This offering of course done in a branded format.  The casino will be able to extend its brick and mortar presence with a revenue-generating game.

There is another potential advantage to such a game, but it will have to wait until New Jersey is officially allowed to offer sports wagering.  Such a game can also be offered in a wagering game format, which current fantasy sports games will have great difficulty doing, and even if they did, would not result in a superior wagering game to conventional sports betting.

Friday, August 23, 2013

Late Legislation To Legalize Online Gambling in California

A couple of bills in the California legislature are still hanging around even though there are only a few weeks left in this year's legislative session.  Stranger things have happened than having bills that haven't gone through the full legislative review process get passed in the mad rush to get the end of session work completed.

In this case, although it is possible one or both of these bills are approved, I am not overly enthusiastic about their chances.  Personally, I am in favor of online gambling, but I much prefer the bills to be fully vetted and edited, with all stakeholders and opinion-holders having their full say in the matter.

Here's an editorial from a local newspaper that shares the same sentiment.  I agree.  In California, the tribes have huge leverage and influence.  And the tribes are not monolithic in their perspectives.  The tribes do compete against each other, which extends to the political arena.  In general, if all the tribes are not in consensus, the likely and easiest answer is no.

Tuesday, August 13, 2013

Gambling Superstitions

Gambling, like sports, easily is compatible with superstitious activity.  Certain outfits, such as a "lucky hat," are required before a person heads to the casino, racetrack or sports arena.  But in terms of gambling play, many other superstitions can be seen.  We're not even delving here into betting systems or schemes.

What superstitions have you run into?  Feel free, if desired, to add them to the discussion by commenting.

Here are some:

For slot play:
  • press the spin reels button as quickly as possible
  • count to 3 (or 7) after the previous result before pressing the spin reels button
  • only use your right hand to play the machine (even including inserting money/tickets)
For scratch lottery tickets:
  • scratch off the tickets in a straight-line fashion like tic-tac-toe (Tic-Tac-Toe gets me the dough)
  • scratch off the tickets slowly (slow and win, fast and lose)
 For card games:
  • Cutting the cards "thin to win"
For craps:
  • Tapping the dice on the felt before shooting
  • Setting the dice with the desired roll before shooting
What others have you seen?