1. BIG YEAR FOR BET365 AMONG OUR FOUR PREDICTIONS FOR ‘23

• bet365 makes a splash. The European OSB giant has been slow-burning the U.S. market, but it’s on course to expand significantly its U.S. footprint in 2023 with multiple state launches, including in OH. In addition to that expansion, we think bet365 could surprise via M&A. At very least, though, we expect bet365—which, per our proprietary app testing, has the strongest product in the most competitive OSB market in the world (the UK)—to challenge for podium position in our U.S. OSB app rankings as it further localizes its U.S. product. 
• A major U.S. OSB company goes private. It’s expensive to be a public company. Not to mention the time that goes into quarterly reporting and the forced focus on short-term financial performance over long-term goals. With valuations continuing to be depressed and capital hard to come by, the benefits of being publicly listed are arguably outweighed by the costs—especially for smaller firms. 
• Sports betting legalization grinds to a near-halt. The remaining non-sports betting states are not there by accident. Those states are characterized by intense stakeholder fragmentation (e.g., CA, MO), strong cultural aversions to gambling (e.g., AL, SC), and highly polarized legislatures (e.g., KY, TX). All of that, combined with the increasingly negative mainstream media coverage of the U.S. OSB sector, means we rank just two states—NC and VT—as “more likely than not” to pass sports betting legislation this year.
  
  Seven-figure fines start flowing. Fines for U.S. sports betting firms have been relatively light to date: $10k for sending promotions to 11 self-excluded customers; $25k for taking bets on in-state colleges in NJ; and on the higher end, $150k for allowing proxy betting. However, newer state regulators seem to be taking a harder stance; indeed, OH has already dished out a $350k fine and a $250k fine to DraftKings and Barstool, respectively. With mainstream media scrutiny of the sector intensifying, with that scrutiny putting regulators under increasing pressure, and with operators likely to continue pushing the marketing envelope, we expect those fines to keep rising in 2023. 

3. MORE IMPACT FROM NEW YORK TIMES ARTICLES?

• However, in IN, checks indicate the negative media coverage is more likely to influence specific operational details of draft bills than materially dampen legalization odds. 
• For instance, the proposed IN bill reportedly permits each of the state’s 14 casinos and racinos to deploy three skins for a $500k initial license fee and with revenues to be taxed at 18%.
• But could that bill be amended to include a higher tax rate, with more limits on advertising and promotional credit deductions? MI’s online casino law—with its graduated 20-28% tax rate and tight limitations on promotional credit deductions—would be a natural starting point for any potential amendments, in our view.