Democracy Wave Changes Where Gaming Companies Find Risks and Benefits

Gaming industry executives say the results of the midterm elections open new avenues for the expansion of gambling in the United States, but also raise the possibility of further political and legal pressure on prediction markets.

“The whole landscape has changed,” CEO Craig Billings said. Wynn Resortsduring the company’s earnings call on Thursday.

Wynn aims to open the first legal casino in the United Arab Emirates in 2027, and has been closely monitoring developments in the Middle East. Billings said he doubted the election would have an impact on “the projected trajectory of conflict in the region.”

Closer to home, Billings sees opportunity in Texas. And he’s not alone. After hitting a record high in third-quarter sales and raising its outlook for its brick-and-mortar business, pen entertainment CEO Jay Snowden called for concrete opportunities made possible by a change in state leadership.

Snowden said during Thursday’s earnings call that Election Day was “a very good day for the entire industry and certainly for Penn.”

Texas in particular could be a bonanza for the casino industry. In a huge upset, Democrat Vicki Goodwin defeated Lt. Gov. Dan Patrick, who had long been adamant about preventing the expansion of gambling in the Lone Star State.

“Texas is an attractive market,” Billings said, explaining how many consumers travel to Oklahoma for tribal gaming. “So this is like a huge stealth market.”

Mr. Snowden said Mr. Penn had a long history of establishing himself in Texas. It operates two of the state’s three Class 1 Thoroughbred racetracks and has established relationships with local leaders.

“We are ready to attack,” he said.

Penn plans to spend more time in Texas and expects the company to be “in a similar position, if not better, than other companies in this space” if lawmakers move toward legalization, Snowden said.

las vegas sands We have also invested heavily over the years to legalize casino gambling in Texas.

“When Las Vegas Sands thinks about Texas and the metroplex, it’s really about an asset that serves both business and the future of tourism,” Sands Chairman and CEO Patrick Dumont told CNBC in an October interview in Macau.

Dumont recently acquired control of the Dallas Mavericks from his mother-in-law, Miriam Adelson. He said the new Mavericks Arena could include a casino in the future.

“Whatever Las Vegas Sands does in the future, it’s going to be its own location, its own site, its own timeline,” he said.

Tilman Fertitta, owner of the Houston Rockets, currently serves as the U.S. ambassador to Italy and owns the Golden Nugget Casino. Wynn ResortsIt is the largest investor in Caesars and is trying to take it private. After an interview with CNBC in Italy, he said, “Of course I want to play the game in Texas!”

The new market could include national sportsbook operators such as: draft kings, flutterOwned FanDuel, caesarsFanatics, and BetMGM. MGM and entertainamong others.

Although the Texas election removed a major political hurdle, no deal was reached. Legalizing casino gambling and sports betting would require a constitutional amendment approved by two-thirds of both chambers and subsequent voters.

The administration of Texas is currently divided. While Democrats overran the state Assembly, Republicans retained control of the Senate. Democrat Gina Hinojosa won the governor’s race.

Las Vegas Sands spokesman Ron Reese told CNBC that it’s too early to speculate on what will happen in the Texas gaming industry, but the company will closely monitor developments.

Barry Jonas, a gaming analyst at Trust, wrote in a note Wednesday that he sees a mixed impact on interim results.

“Ohio Governor-elect Amy Acton’s support for regulated online casinos could increase the chances of legalizing iGaming,” Jonas said. Meanwhile, voters in Nebraska rejected a ballot measure that would have legalized online gambling.

Georgia, where Democrat Keisha Lance Bottoms won the gubernatorial race, could also be an opportunity. She is calling for voters to decide whether to legalize casino gambling, with the proceeds expected to go to education funds. Sports betting and casinos remain illegal in the state, and a previous sports betting bill failed in the House.

Mr. Snowden said Mr. Penn could also benefit if lawmakers push for tighter regulation of so-called skill-based gaming machines that compete with casinos and licensed video gaming terminals. He said candidates who support skill-based gaming machines have lost seats and influence in several states.

In addition to operating four casinos in Pennsylvania, Penn operates video gaming terminals in that state and other jurisdictions and has three casinos in Missouri.

Snowden linked the recent strong year-over-year growth in gaming revenue to the shutdown of skill games in Pennsylvania in mid-October. He cautioned that it’s too early to know whether Pennsylvania’s growth will continue, but noted that Missouri has also seen significant revenue increases as the state’s attorney general pushed for the machines in Missouri.

In Indiana, voters in three counties rejected casino approvals, which Penn sees as an advantage in limiting new competition for existing casinos in Indiana and neighboring states of Illinois and Ohio. Some gaming insiders have speculated that a wave of left-wing progressives coming to power could restrict gambling businesses.

Joe Maloney, president of the Sports Betting Alliance, said: “There’s a lot of noise about where this industry is going, and this election will definitely make that voice louder.” “What hasn’t changed with the election is that it works: state-regulated sports betting and iGaming built on accountability, consumer protection, and state tax revenue. That’s our path, and we’ll make that case to every new legislator who will listen.”

A Democratic victory is likely to increase pressure on prediction markets, even as industry proponents shout about their predictive value in predicting election results.

“All eligible customers should have access to these federally regulated markets through CFTC-registered Futures Commission merchants.” robin hood a spokesperson said.

Democrats control Congress, giving them subpoena power and committee resources to investigate the president’s family and business dealings. That could put Donald Trump Jr., Carsi’s paid strategic adviser and Polymarket advisory board member, back in the spotlight.

Congress could also consider legislation that would limit the scope of the market. The bipartisan Prediction Markets Gambling Act would prohibit exchanges regulated by the Commodity Futures Trading Commission from offering contracts based on sports or casino-style games. However, the bill had just been referred to committee at the time of the election. Non-vetoable legislation requires two-thirds support in both houses. No such vote is currently scheduled.

The American Gaming Association has been fighting prediction markets as unlicensed gambling.

“Prediction markets are facing a tsunami of criminal charges, massive civil investigations, and significant court defeats,” Bill Miller, the industry group’s CEO, told CNBC. “We expect to see even more bipartisan scrutiny of these platforms in the aftermath of the election.”

“Our platform is an institutional-grade exchange with strong market integrity and customer protection programs,” Polymarket told CNBC. A spokesperson said the company welcomes the opportunity to work with lawmakers on both sides of the aisle.

Kalsi did not respond to repeated requests for comment.

Jeff Lelish, a partner at law firm Husch Blackwell, said he expected more scrutiny.

“Companies with strong compliance and oversight infrastructure will be better positioned to weather the increased attention,” said Lerich, who spent more than 20 years in the CFTC’s enforcement division.

A state-level legal battle has already begun. Utah has filed criminal charges against Calci and its founders, and the 9th U.S. Circuit Court of Appeals denied Calci’s request for a retrial in the Nevada case, leaving the company exposed to state enforcement.

New Democratic attorneys general in Ohio, Michigan and Nevada will also decide how inheritance disputes will be handled.

Ohio’s outgoing AG Andy Wilson helped lead a multi-state effort to defend state gambling laws, Michigan’s Dana Nessel sued Carsi and won a preliminary injunction, and Nevada’s Aaron Ford secured an injunction against a prediction market operator.

The new governor could also decide to follow Utah’s lead and pursue criminal charges, along with Arizona, where criminal charges are pending.

Disclosure: CNBC and Kalsi have a commercial relationship that includes customer acquisition and minority ownership.