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00:00Welcome back to Newswire here on SportsGrid. We've got Sam McQuillan with us from Legal
00:09Sports Report. Really some big news in the Southeastern Conference and the way that they
00:13report some of their injuries. We'll get to that in just a minute, but first let's start
00:17off with some earnings reports news. And Sam, Penn is one of those companies that we've
00:22been following pretty closely from the days at Barstool to the new days at ESPN. It's
00:27one of those sports betting companies that I think people have an eye on because they
00:31want to know if they're going to be able to succeed in the industry. So thanks again for
00:34coming on the show and let's get right to it. Yeah, of course, Craig. Happy earning season
00:40to you. It's been a really interesting one on this end, like you said, covering Penn,
00:44which has been just one of the most interesting companies over the last couple of years as
00:47it went from Barstool and then paid, I think, $2 billion almost for the ESPN brand. So investors
00:54have really been clamoring for when that investment is going to pay off. They bought it last
00:59summer, so it's almost a year that they have under their belts. But essentially what CEO
01:04Jay Snowden said on the earnings call today is that we'll just wait a little bit longer,
01:08wait until football season. That's when we're going to have all these big product
01:11enhancements, these integrations with ESPN. We're going to have it where if you bet a
01:16same game parlay on the ESPN bet app, it'll automatically get tracked into ESPN's regular
01:22scores app that so many people use. It's going to use its fantasy football database
01:27that hosts so many different leagues and give customers personalized offers based off of
01:33maybe who's on their fantasy team. There's this whole kind of pie in the sky. Big change
01:38is coming for ESPN bet, but it's really a crucial time because you have a large portion
01:44of investors calling for Penn to sell the entire company, mainly because of its poor
01:49performance with sports betting, with online sports betting. So it's pretty tough for Penn
01:54to tell them to kind of keep waiting. You know, it's a long term investment when you
01:58pay all that money for something and it takes a long time to get these product changes going.
02:02But they're kind of telling everyone just keep waiting. So in a couple of months, actually
02:07in less than a month, we'll really know whether they're on track to complete a lot of those
02:10things. College football season is right around the corner when ESPN bet is going to launch
02:15in New York. Snowden came out and said today that they won't have a surcharge like
02:20DraftKings recently announced, which has been a really hot topic. The thing that's coming
02:25to high tax states like New York. But he wants to wait and see how it works out for
02:29DraftKings and didn't commit to having no surcharge in the future. So pretty interesting
02:34comments there. You've had other companies like Bet Rivers come out and say we won't
02:37have a surcharge and we're still waiting on the rest of the industry. But the financials
02:42were a little bit better for ESPN this quarter, which was kind of to be expected after a really
02:46rough first quarter. So we'll have to see kind of what happens going into football season.
02:50We should have some more answers in just a few weeks. All right. Now, the other big story
02:55that we've been talking about here all week long on Newswire, Sam, is DraftKings making
03:00the first big step among the sports betting operators to basically say we don't like how
03:06much money we're being taxed in some states. And so therefore, we want a bigger piece of
03:11the pie. Now, they didn't say that. I'm saying that, Sam. What they're saying is that we
03:16don't want a bigger piece of the pie and we don't even want to slice. We just want a sliver.
03:21Is that fair to sports bettors to have to lose a sliver of their earnings?
03:26Well, the good news for sports bettors is that this change is only coming in four states
03:33and they'll actually get to decide whether or not it's fair. You know, if you don't like
03:37the small, maybe 25 cent addition, you're going to have to pay on some winnings in a few states.
03:43You can go over to another app like BetRivers, go to another app like FanDuel, ESPNBet.
03:49So DraftKings is really kind of going to be the test case for whether passing the tax,
03:54so to speak, down to the customer will work out. Now, Wall Street is pretty mixed on whether
03:59it worked out. Some investors are saying they could see a large portion of DraftKings'
04:04market share getting impacted by this with the big fish customers, the ones that bet a lot of money.
04:10Going over to other apps, because obviously if you have a fee and you're betting a lot more money,
04:15you're going to see the impact bigger there. Other investors think that maybe they can build up
04:20customer loyalty with the smaller, less price sensitive customer that DraftKings has grown
04:27so accustomed to and has really grown to love and push parlays kind of down their throat.
04:31So DraftKings thinks that they can win on the product in this case.
04:35But you have some other investors coming out. One group, Regulus Partners in the UK,
04:40called it economically illiterate and published a review on it saying how to lose market share
04:46and undermine brand credibility all in one step.
04:50So you have the reaction from Wall Street really mixed as to whether or not this is going to be
04:55something that bettors ignore or if they move on to other apps.
04:58So we'll know if it spreads to other apps probably when FanDuel releases their earnings next week.
05:04A lot of people think whatever they say, the rest of the industry will follow.
05:07Obviously, FanDuel and DraftKings are two of the biggest players in the state.
05:11So it's another wait and see here, but really interesting development.
05:15And it's going to come in 2025. So that's when we'll know whether or not bettors think it's fair or not.
05:20Now, college football is just a couple of weeks away. SEC football, I don't believe, is on the 24th of August.
05:27I believe it's the following week, Labor Day weekend, when they get started.
05:30And their sort of view of college football is going to be a lot different this year, Sam.
05:35You know, they've added teams to the conference and what they've also added is an injury report.
05:40And people may be confused with this because, again, during the week when coaches talk,
05:45you sort of get an idea for who could be in or who could be out.
05:48But we've seen so many players, Sam, an hour or two before games being declared either ineligible to play
05:55for injuries or other reasons. And the Southeastern Conference is diving in and saying,
05:59hey, look, we're going to give you some updates and more detailed updates on this.
06:03Is it just for sports bettors?
06:07Yeah, I don't think it's entirely for sports bettors, but it was really interesting in the reporting that CBS Sports did earlier this week,
06:14saying that mandatory injury reporting was going to come to the SEC,
06:18which would bring it in line with the Big Ten, which kind of started to do this last year.
06:22It was really interesting. They said that the changes revolved around betting concerns.
06:26You know, in sports like the NFL and the NBA, you have these injury reports that go beyond what the coaches say in the middle of the week.
06:33And bettors know who's going to play, who's not going to play.
06:36But in college football, a lot of that is really a mystery.
06:39And that's put a lot of the pressure on the student athletes.
06:43According to the NCAA, 15 to 25 percent of high profile college athletes receive some sort of abusive message related to gambling.
06:52So that's been a big priority for the NCAA.
06:54They actually considered adding injury reporting in 2018 after the Supreme Court allowed states to legalize sports betting in lieu of that decision,
07:02adding injury reporting to create further transparency, especially because they make so much money off of the game as well.
07:09So, you know, obviously you want to be consistent with what you're putting out there and what you're getting from the sports books.
07:14But they actually declined to do it sort of at the last minute.
07:16It was a really weird situation. The Big Ten had really pushed for it.
07:19But then the NCAA seemingly at the last minute came out and said, you know what, we have concerns over sharing player data, player health, all this stuff when they're amateurs.
07:29That certainly didn't stop them from sharing that data with the sports books.
07:32They have a deal with Genius Sports that gets all the player tracking data.
07:36So now in this situation, if the SEC comes out, adds injury reporting, that would seem to add the kind of extra layer of protection between the athletes and the sports bettors out there.
07:46Because this information is really invaluable when you don't have it publicly.
07:51And if the SEC does it, the Big Ten is already doing it. I'm sure the rest of the Power Five would likely follow.
07:56So it's nice to see this kind of no brainer thing finally get done or close to be done from this standpoint.
08:02And it definitely has some big, big ramifications with sports betting.
08:07Yeah, people would be paying more attention to that going into a game than they ever have been.
08:12Real quick, Sam, what did you make of the big fine given to Bet365?
08:15$500,000.
08:19I thought it was just an example that you have to follow the rules.
08:21A lot of the time, sports books can adjust the payouts if there's an obvious error on odds.
08:26They do that in so many states, but New Jersey is one of the few where you have to get the permission first.
08:30So I think it's an example that, you know, when you launch a new sports book, you have to follow every state's rules.
08:35Not just kind of, you know, there's a blanket protection for all states.
08:39Yeah. In addition, got to be careful.
08:41You're placing the right odds, not overjuicing things to get caught.
08:45Doing that as well.
08:46All right, Sam, great to catch up with you.
08:47Thanks again for coming on Newswire.
08:49We'll catch up with you again next week.
08:50Thanks again.
08:51Yeah, thanks so much, Greg.
08:52Have a good one.