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A Huge Growth Opportunity

Attorneys Marc Lopez and Zac Bailey recently discussed the enduring appeal of sports in the age of coronavirus, the benefits of bubbles, and why sports betting apps remain optimistic about their prospects. What follows is a lightly edited transcript of their conversation.

Marc Lopez
With me today is my associate, Zac Bailey. Zac is the person at this law firm in charge of anything involving sports, casinos, gambling—all those laws, and all the little ways you can get in trouble. So, Zac—give us an update. What is going on in the world of sports?

Zac Bailey
Sports are back. We’re seeing some sports—basketball, hockey, and soccer—they’ve created their own bubble. All the players come to one spot, and they live in a bubble and just play each other. 

So they came in and had a series of tests to make sure that everybody’s safe and healthy. Nobody enters, nobody leaves, and they’ve been able to get basketball, hockey, and soccer back on track. It’s sort of a modified way that they’re ending the season out there.

Marc Lopez
And what’s going on with baseball? You keep hearing about all these players getting sick. I think the Marlins got their whole team taken out, or something. What’s going on with that?

Zac Bailey
Baseball is not quite as good. They didn’t do a bubble, so they’ve got players moving city-to-city, traveling with their teams, and it seems like if one player on a team gets sick, it spreads through the entire team. 

I think the Marlins had 17 of the 30 players on their roster test positive, and we’re seeing something similar with the St. Louis Cardinals. They’re still playing, but they’re postponing a lot of games, and they’re being flexible with the schedule. So teams that are healthy are playing each other.

Marc Lopez
And what’s going on with the Toronto team? They’re not letting American teams go into Canada, but they’re letting the Canadian teams come into America? What is going on with this?

Zac Bailey
Correct. Canada’s got pretty tight restrictions right now for Americans entering Canada, so they wouldn’t clear people coming in for baseball. They saw it as recreational and not necessary. So the Toronto Blue Jays have had to come to the United States this year, and they’re playing all their games here. Right now, they’re traveling—playing every game on the road until they can get a home stadium figured out.

Marc Lopez
You talk about this bubble—what’s going on with football and basketball? Are they being bubbled, too?

Zac Bailey
Basketball is bubbled. Football’s not, but they’re coming to training camp right now to get started for the season. As they come in, they test the first day they appear to camp, then they come back a few days later and test again. 

So it takes a couple of negative tests to be cleared and to begin practicing with the team, and there’s gonna be consistent testing throughout the season, as well, to make sure everybody’s staying healthy.

Marc Lopez
What are these teams doing for fans? Are they letting fans come in at 25% capacity?

Zac Bailey
So each state has different rules, but right now, no fans are allowed at any baseball games, and it looks like that’s how the NFL season’s going to start, as well. The Indianapolis 500 just announced that they’re not going to have anybody in the stands this year, either.

Marc Lopez
Yeah, they were looking at 50%, then 25%—and now they’ve officially said, no fans. That’s just going to be sad. 

Based on what you know, what percentage of revenue is from fans attending these games—buying tickets, buying concessions, buying merchandise—versus the money made purely from broadcasting it on TV?

Zac Bailey
Broadcasting is a huge portion of what they make. It’s interesting, because baseball—they didn’t get started for a long time, because the players and owners were arguing about this. Players said, you can still pay us more money than you’re offering, and the owners said, no, we can’t afford it

The players wanted to take a look at the books, and the owners wouldn’t allow it. It’s kind of a mystery how the revenue is distributed, especially in baseball.

Marc Lopez
It’s almost like the owners are trying to hide something. 

Okay, Zac—since you’ve been the go-to person for sports gambling in Indiana, this was absolutely huge. We checked in about six months after Indiana started legalized sports betting, and it was just making money non-stop for everyone that started these companies. 

How has the lack of sports in the last few months affected online gambling?

Zac Bailey
It was still available. If you wanted to bet on sports during all this, you could. They were running promos on Russian ping pong during the day, so whatever you wanted to bet on, they were trying to find a way to give you a market for it. 

But even through all this, companies keep coming to Indiana for the sports gambling. We’ve got five apps now that people use to bet on their phone, and it’s still growing. I’ve actually been looking into the stock prices of companies like DraftKings, and they’re on the rise, especially with sports coming back. They still see this as a huge growth opportunity.

Marc Lopez
Back when sports gambling first became legal—there are how many apps? Remind me.

Zac Bailey
Well, when it first became legal, there were no apps. You had to go to a brick and mortar establishment. About a month after that, DraftKings rolled out—that was the first app. So they were sort of the leader in the marketplace right away. 

FanDuel came shortly thereafter, and you could see FanDuel and DraftKings jockeying for that market position. It’s been about a year-and-a-half now, and we’re up to five apps. So there’s a lot of money to be made for these companies, and they see the opportunity.

Marc Lopez
At lunch, Zac is always showing me these companies—they want you to download their apps so bad, they’re offering you free money—and this causes the other apps to try to match it. And then there are these crazy, idiot-proof bets—are you still seeing that with these five apps competing?

Zac Bailey
We’re still seeing that, especially when golf started up. With the NBA picking up again, and with everybody coming back to these apps, these companies are fighting again to try to get your business.

Marc Lopez
Zac, how much money have you bet on Russian ping pong? You know what? Don’t answer that.

Zac Bailey
. . . It’s more than zero.

Marc Lopez
Well, this has definitely been something to do while people have been stuck at home during these crazy times. And, if you’re having fun—why not? 

As long as you can take care of your bills and family and stuff like that, have as much fun as you want. 

Zac, we’ll check in with you again on sports and sports gambling here shortly. Thanks for talking with us today.

Zac Bailey
Absolutely! Thank you.