Top casino CEOs downplay tariff concerns

Welcome to iGB’s State of the Union, your authoritative source for the most significant developments in North American sports betting over the past week, including pivotal insights into evolving trends in the industry.

MGM and Caesars Minimize Tariff Concerns

This week, two of the largest figures in the gaming world, Caesars Entertainment CEO Tom Reeg and MGM Resorts CEO Bill Hornbuckle, addressed Wall Street analysts in their first public statements since the introduction of unprecedented tariffs by President Donald Trump. These tariffs, imposed on a majority of the nation’s key trading partners, sparked significant volatility in global markets, causing a sharp decline in major indices and affecting the gambling sector.

Investor anxiety about the tariffs has raised fears of a potential recession, which might impact consumer spending and reduce tourism in Las Vegas—a critical market for sportsbooks along the Strip. In a recent earnings call, Reeg reassured investors, stating that Caesars has strategies in place to maintain performance, drawing on their extensive consumer database. “If we were to start to see softness, we can adjust our approach as we did post-pandemic, successfully outpacing our competitors,” he noted. Despite investors’ concerns, Reeg affirmed that they do not currently observe any downturn in consumer spending.

Optimistic Outlook on Digital Operations

MGM’s Hornbuckle echoed Reeg’s sentiments, indicating that the impact of tariffs on their operations has been minimal so far. Both companies are thriving in the online sports betting arena—Caesars Digital reported a remarkable 19% increase in net revenue, reaching $335 million, with adjusted EBITDA soaring to $45 million. Meanwhile, BetMGM reported net revenues of $443 million, up 34% year-over-year, highlighting a significant 68% surge in online sports betting revenue.

BetMGM’s performance metrics showcase a 20% increase in active player days and a 37% increase in handle per active customer, as the venture aims for annual profitability exceeding $500 million by year-end.

Sporttrade Seeks Regulatory Relief from CFTC

In a groundbreaking move, Sporttrade has become the first sports betting operator under state regulation to petition the Commodity Futures Trading Commission (CFTC) for permission to facilitate federally-regulated sports prediction markets. In a detailed letter submitted on April 25, Sporttrade expressed its intent to engage with the CFTC on regulatory frameworks supporting such markets.

Currently, prediction markets like Kalshi and Robinhood face ambiguous regulations regarding sports event contracts. While not explicitly banned, the CFTC has yet to provide clear permissions. Sporttrade’s request aims to facilitate a structured regulatory environment for the trading of sports-event contracts.

Kalshi Secures Preliminary Injunction in New Jersey

In a favorable ruling for the prediction market, Kalshi has been granted a preliminary injunction allowing it to continue operations in New Jersey. U.S. District Judge Edward Kiel affirmed that Kalshi’s sports-related event contracts notably fit within the CFTC’s jurisdiction. This legal victory underscores the ongoing evolution in regulated sports trading, as the CFTC reviews how to approach these emerging markets.

Sporttrade, which has been operational in five states before Kalshi’s advent, continues to position itself as a pioneer in the financialization of sports betting, offering features such as trading positions reminiscent of stock market tactics.

A Competitive Market Without Monopolies

Advocating for a CFTC-led regulatory strategy, Sporttrade’s representatives argue that this approach could eradicate monopolistic tendencies prevalent in state-level sports betting. By highlighting their compliant operational history, Sporttrade is requesting the CFTC’s discretion for “no action” relief, citing precedents from similar cases in the past.

Louisiana’s Tax Increase Initiative for College Sports

A significant legislative proposal in Louisiana aims to more than double the current tax on sports betting revenues from 15% to 32.5%. Sponsored by Rep. Neil Riser, the bill is seen as a means to fund initiatives for student-athletes at Division I public universities, potentially generating around $31 million annually. While industry lobbyists voice concerns, the bill’s advancement through the House Appropriations Committee suggests strong bipartisan support.

This move reflects a broader trend where states are exploring higher taxation on sports betting revenues, with industry leaders noting potential ramifications on their operations in regions like New Jersey if similar tax hikes pass.

IC360 Partners with Brazil’s Gaming Ministry

IC360 has forged a technical cooperation agreement with Brazil’s gambling ministry, marking a significant step in enhancing integrity in the nation’s burgeoning online sports betting market. This five-year partnership will leverage IC360’s specialized expertise to identify and address suspicious betting patterns, bolstering efforts to prevent match-fixing and maintain the integrity of sports betting activities.

As Brazil’s online sports market gains momentum, the SPA awarded 14 full licenses and several provisional licenses to various operators, aiming to strengthen regulatory oversight in a rapidly expanding landscape.

Lingering Effects of the 2023 Match-Fixing Scandal

Brazil continues to grapple with the fallout from a match-fixing scandal that emerged in 2023, leading to significant disciplinary actions, including the suspension of Major League Soccer players involved in unethical practices. The investigation’s impacts emphasize the critical need for robust regulatory frameworks to sustain market integrity and reassure users.

At MGM Resorts’ recent earnings call, the company identified Brazil as a prospective $7 billion market, highlighting its commitment to invest in its online gaming division in the region.