Florida’s mobile sports wagering market can become one of the largest in the United States. However, JMP Securities analyst Jordan Bender predicts limited competition could present unique challenges, damaging the sector’s profitability. Hard Rock International, the gaming arm of the Seminole Tribe, will have exclusive control over the state’s mobile sports wagering offerings, presenting substantial revenue implications.
Ongoing Legal Disputes Still Disrupt the Fledgling Sector
The Seminole Tribe holds exclusive rights to sports wagering in Florida, as stipulated in the Class III Tribal-State Gaming Compact signed into law in 2021. This agreement, endorsed by Governor Ron DeSantis, designates the tribe as the sole operator of sports betting in the state. In return, the Seminole Tribe must contribute $500 million annually to the state’s revenue.
Despite legalizing and launching sports betting for a brief period, the activity remains on hold in Florida due to the ongoing legal battle between the state’s casinos and the Seminole Tribe. Casinos alleged that the gambling compact granting Hard Rock total exclusivity violated federal law on several points, resulting in the current drawn-out proceedings.
However, even a resolution in favor of Hard Rock might not resolve the state’s sports wagering woes, as Jordan Bender predicts yearly revenues can reach $1.3 billion to $1.5 billion, significantly below the potential $2 billion in revenue if the market were open to competition beyond the Seminole Tribe.
Healthy Competition Can Foster Higher Revenues
The potential exclusivity of Hard Rock International in Florida’s mobile sports betting market could limit the sector’s profitability. Such a scenario has occurred in other states, including Connecticut, Oregon, and Rhode Island, where a lack of competition has affected revenue growth. States like New Hampshire, where a single operator enjoys a monopoly, have faced similar challenges.
States that have gone the route of one to three licenses… have underperformed… with a core reason being less incentive to invest in players and the product with no competition.
Jordan Bender, JMP Securities analyst
Bender highlights that competition often benefits states seeking to maximize sports betting revenue. For example, New York should see sports wagering revenue of $2 billion at maturity despite having a population and per capita income statistics similar to Florida. Arizona and Colorado have thriving sports wagering markets because they allow multiple competitors to participate alongside tribal casinos.
While Hard Rock International operates the Hard Rock Bet sports betting app in several states outside Florida, technology constraints have limited its ability to secure a market share and compete with industry leaders. An undisputed monopoly in its home state could mitigate these limitations despite its potential long-term negative impact.