State of the Union: CEOs downplay tariff concerns; Sporttrade petitions CFTC, more
MGM, Caesars brush aside spillover effects from tariffs
Two of the nation’s most prominent gaming CEOs addressed Wall Street analysts this week for the first time since US President Donald Trump unveiled a series of unprecedented tariffs.
Trump rankled global markets last month by imposing double-digit tariffs on the vast majority of the nation’s top trading partners. A sell-off on the major indices seeped into the gambling industry on 3 April when top names fell as much as 15%.
Since then, some investors have expressed trepidation that the trade policies will lead to a recession, thereby negatively impacting the consumer’s wallet. A prolonged downturn could slow tourism activity in Las Vegas, adversely hampering foot traffic at leading sportsbooks on the Strip.
Caesars Entertainment CEO Tom Reeg fielded numerous questions on tariffs 29 April during the company’s 2025 first-quarter earnings call. Reeg appears to have a viable plan in the face of intense macroeconomic pressures.
“If we were to start to see softness, we have levers that we can pull that you saw as we came out of the pandemic, where we were able to outperform peers in the market by tapping into our database,” he said. Reeg added that Caesars does “not see any of the consumer softness investors seem to be worried about”.
Encouraging signs on digital side
A day later, MGM Resorts CEO Bill Hornbuckle also downplayed concerns regarding the global trade environment. As it relates to tariffs, MGM is focusing on the near-term effects of sales and operational considerations, CFO Jonathan Halkyard explained. Thus far, he indicated that the impact has been quite small.
Both companies are flourishing with online sports betting operations. Caesars Digital saw a 19% increase in net revenue ($335 million), while adjusted EBITDA jumped considerably to $45 million. BetMGM generated net revenue of $443 million, up 34% from the previous year’s quarter. Within the results, BetMGM increased online sports betting revenue 68% from the same period in 2024.
For the quarter, BetMGM’s active player days went up 20% year-on-year while handle per active customer increased 37% over the same time frame. The venture is targeting full-year profitability this year and long-term annual profitability of $500+ million.
Sporttrade requests for relief from CFTC
Sporttrade became the first operator overseen by a state gaming regulator to request approval by the Commodity Futures Trading Commission to offer a federally-regulated sports prediction market.
Dated 25 April, Sporttrade made the request in a six-page letter to the CFTC. The CFTC is the nation’s regulator for the US derivatives market, including futures, swaps and other kinds of options. The agency is in the process of reviewing a balanced approach to the regulation of designated contract markets involving sports-event contracts.
At the moment, prediction markets such as Kalshi and Robinhood are not expressly prohibited from listing and trading sports event contracts on the federal level. The CFTC, however, does not expressly allow the contracts either. The agency released the letter to the public on 30 April.
Kalshi granted preliminary injunction by NJ judge
Earlier this week, Kalshi notched a win in New Jersey when a US District Judge granted the exchange a preliminary injunction that will enable it to continue operations in the Garden State.
In a 16-page opinion, Judge Edward Kiel wrote that he was persuaded that Kalshi’s sports-related event contracts fall within the CFTC’s exclusive jurisdiction.
Sporttrade, which is live in five states, is in a unique position in that it launched state operations that far predated the debut of Kalshi’s sports contracts. The exchange bills itself as a prediction market that aims to be the catalyst toward the “financialisation” of sports betting.
One of its most unique features is that Sporttrade allows a participant to trade in and out of a position, just as a financial trader does with a security. In the final round of The Masters, Justin Rose had a 2% probability to win the year’s opening major, before Rory McIlroy chunked his approach into a stream on the 13th hole. An astute trader could have bought Rose low, then sold the contract when it moved near 45 cents on a dollar to lock in a massive profit.
A market ‘devoid of monopolistic forces’
Kane argued that a CFTC-led regulatory approach for exchanges could foster a healthy and competitive environment across the landscape. The approach, he contends, is devoid of the “monopolistic forces” that dominate the market structure for sports betting on the state level.
Given its track record as a “compliant event contract exchange” under the regulatory scrutiny of numerous state regulatory agencies, Sporttrade is asking for relief from the CFTC.
Based on the unique circumstances, Sporttrade requests that the CFTC apply discretion to provide “no action” relief to the exchange.
There is precedence in granting relief, Sporttrade wrote, as the agency has acted in a similar fashion with two others that offered event contracts in the past – Iowa Electronic Markets and Victoria University of Wellington. The timing for when the CFTC may rule on the decision remains unclear.
Portion of Louisiana tax increase to fund college sports
A proposed measure that would more than double the sports betting tax in Louisiana advanced through the state legislature on Monday.
The proposed bill, HB 639, passed through the House Appropriations Committee with little opposition. Sponsored by Rep. Neil Riser, the bill seeks to increase the tax on sports wagering revenues from a current rate of 15% to 32.5%. The measure advanced despite concerns from industry lobbyists, which note that the rate is already higher than the nationwide average of 14%.
Approximately 25% of tax proceeds will be allocated to a fund that will benefit student-athletes at the state’s Division I public universities. Under the proposed bill, the pool is expected to receive approximately $31 million in funding annually. The funding will be critical for small Division I schools such as University of Louisiana-Monroe and Southern University.
There is pending legislation in a bevy of states that seek to dramatically increase tax rates on sportsbook revenue. On Monday, BetMGM CEO Adam Greenblatt pointed to New Jersey as one of the states that may negatively impact the venture if the tax hikes are approved.
Riser’s bill advanced to third reading. The bill is tied to a larger one from Rep. Chance Henry that will establish a flat tax on certain insurance premiums. More details of the bundled bill are expected to be released before it is debated on the House floor.
Separately, the Louisiana Senate unanimously approved a bill prohibiting sweepstakes casinos by a vote of 39-0. The legislation, SB 181, expands certain digital crimes to include sweepstakes sportsbooks that employ a dual-currency model.
IC360 signs agreement with Brazil’s gaming ministry
IC360 signed a technical cooperation agreement with Brazil’s gambling ministry under which the prominent integrity monitor will assist the government in identifying patterns on suspicious sports betting activity.
Formerly US Integrity, IC360 signed a five-year deal with the Secretariat of Prizes and Bets (SPA), Brazil’s gambling regulator. The nation’s online sports betting market launched on 1 January with great fanfare.
With the launch, the SPA awarded 14 full sports wagering licences while it granted dozens of others with provisional ones.
The multi-year deal grants the ministry with IC360’s specialised knowledge in identifying anomalous betting activity, thereby aiding in the detection and containment of efforts to manipulate outcomes.
“Integrity entities such as IC360 play a fundamental role in supporting SPA’s activities, especially in identifying signs of manipulation of results, in addition to the structured exchange of information,” said Regis Dudena of the SPA.
2023 match fixing scandal lingers
The Brazil market is still reeling from a sweeping match fixing scandal in 2023. Major League Soccer suspended former Colorado Rapids midfielder Max Alves amid an investigation that Alves allegedly accepted $12,000 from a match-fixing gang to receive a yellow card in a match against the LA Galaxy. In total, the Goias investigation in Brazil led to charges against 16 individuals, including seven pro soccer players. Amid the investigation, the Rapids transferred Alves to Brazilian club Cuiabá Esporte Clube.
“The mission is to foster a culture of responsibility and provide a detection alert system for all stakeholders, to ensure that integrity is respected and sustainable for the Brazilian community,” said Scott Sadin, co-CEO of IC360.
At this week’s MGM Resorts’ earnings call, the company identified a total addressable market of $7 billion in Brazil. The company plans to ramp up marketing spend for its Brazilian online gaming division over the next six months.
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