Yesterday on LinkedIn, The Innovation Group (TIG) Partner Brian Wyman offered some topline analysis on this week’s PENN Entertainment/ESPN deal. Read an excerpt below and the full article here.

The Penn/Barstool deal was always about a prime database and a low customer acquisition cost (CAC). There were concerns (at least outside of Penn) that Barstool could be too edgy for Penn’s brand – Dave Portnoy himself has called the brand a combination of sports and smut – but by and large Barstool was a reasonable brand partner. And while the low CAC and solid operating team at Penn produced good flowthrough on the revenue they got, there just wasn’t a ton of revenue to work with. Barstool Sportsbook was clearly a cut below Caesars and BetMGM, who are a clear cut below FanDuel and DraftKings in terms of nationwide market share. Together those four competitors to Barstool own more than 90% of the US market. And for the remaining less than 10%, competition is fierce: RSI is holding steady, worldwide powerhouses like Bet365 are making a push for market entry and growth, emerging player Fanatics is jumping feet first into the fray with its acquisition of PointsBet US, celebrities like Jake Paul are launching alternative platforms like betr, and industry veterans like Joe Brennan are bringing niche platforms like Prime Sports to the market. Prime Sports, likely launching in September and kicking off in Ohio and New Jersey, aims to peel off sharps and big bettors with transparent pricing and limits and a commitment to not limit or kick out winning players. Other niche players are testing the water elsewhere, like BETTY, an Ontario-based app that caters specifically to women’s preferences. In other words, the market is becoming crowded, and to become a top 4 player, or even just to grow market share, Penn certainly has its work cut out for itself…

Click here for Wyman’s full analysis, breaking down how Penn ensures that its deal grabs the addressable market.

The Maryland Lottery landed on The Innovation Group as the third-party entity to conduct a report related to the potential expansion of gambling in Maryland. 

The state legislature requested the report, which must be completed by Nov. 15, after efforts to legalize online casino gaming stalled during the 2023 legislative session. Some stakeholders are hopeful that more information related to online gambling will allow for more thorough discussions surrounding expanded gambling during the 2024 legislative session.

The Innovation Group, a consulting group with decades of gaming expertise, was one of five entities to submit a request for proposal to the Maryland Lottery to conduct the iGaming study. 

“We felt that The Innovation Group’s proposal seems very strong. They have a good team put together, they’ve done this kind of work before, and we’re just very comfortable with them as an organization,” Jim Nielsen, the deputy director and chief operating officer of the lottery’s gaming and regulatory oversight division, said during last week’s lottery meeting. 

Read the complete article by Bennett Conlin for US Bets here.

For the August issue of Global Gaming Business magazine, TIG Senior Vice President of Tribal Services Chris Irwin broke down the continued diversification of tribal economies. Read an excerpt below and the full article here.

Over the past several decades, Native American tribes in the United States have made incredible economic strides, in no small part due to the operation of casinos on their lands. These ventures have infused tribal economies with much-needed resources to invest in critical infrastructure, education, health care, and other vital community services to support their people. However, despite overall growth in gaming revenues, tribes are beginning to feel the squeeze of new competition. Markets are increasingly saturated, with fewer opportunities for profitable development, particularly within the confines of reservation boundaries.

Ongoing gaming expansion in Illinois will threaten tribal operations in nearby Wisconsin, like Milwaukee’s Potawatomi Hotel & Casino. The potential introduction of multibillion-dollar integrated resorts in Texas looms over tribes in southern Oklahoma who have enjoyed near exclusivity over the massive Dallas gaming market. In Minnesota, electronic pull-tabs, which have proliferated under the umbrella of charitable gaming despite effectively being a mobile slot machine, are projected to close $2.3 billion in sales this year (or more than $340 million in revenue at a 15 percent hold) despite tribal exclusivity over casino gaming in the market.

And these are only the land-based threats, to say nothing of the emerging online casino landscape likely to be dominated by large commercial operators. With this growing threat to their sustainability, tribes are increasingly focused on economic diversification. It would be impossible to share all the ways tribes are working to diversify their cash flows in a short article, but here we discuss several examples of tribes working across varying lines of business that we think are illustrative.

Continue reading about the opportunities some tribal enterprises have pursued in the tourism, renewable energy, and cannabis sectors here.