To secure a sportsbook license in New York, FanDuel had to cooperate with several direct competitors — and chief legal officer Christian Genetski was more than happy to do it.
FanDuel Sportsbook is one of the brands that got a New York mobile gambling license. But to do so, it had to partner with industry rivals DraftKings , Bally Bet, and BetMGM to form one of the two consortiums now authorized to operate under a law pushed through the state legislature and signed by former Gov. Andrew Cuomo.
Had to be uncomfortable, no?
Actually, it wasn’t, according to Christian Genetski, the chief legal officer at FanDuel, one of the players primarily responsible for that company having such a cozy relationship with the NBA and its broadcasting partners at TNT, along with a new deal with the National Basketball Players Association.
Genetski works out of Washington, DC and New York but grew up in Alabama, where he learned at an early age that the Crimson Tide are the most important team in the world and the Auburn Tigers are the football equivalent of Beelzebub. He began his legal career in the computer crime division of the US Justice Department in 1999 when Y2K fears were a national obsession Among his cases was that of a 15-year-old Canadian kid who had hacked and shut down eBay and CNN.com.
He expected his career to remain tied to the legal profession, including intellectual property issues and emerging industries like esports (Blizzard, the company behindWorld of Warcraft and Overwatch, was one of his clients). Then, a former colleague passed along info that FanDuel had received $70 million in private capital seed money toward the end of 2014, which is when Genetski made the move to what was then a daily fantasy sports site.
FanDuel remains a DFS operator, but is one of the United States’ biggest operators in the legalized sports gambling market, a huge growth industry that will be operating in New York by early next year following nearly four years during which New Yorkers have been traveling across state lines to New Jersey to place wagers.
But because Cuomo’s betting law allowed for only two gaming licenses to be issued, a number of rival gambling companies were forced to team up to bid for those licenses. The second one went to a consortium of Caesar’s, WynnBET, Rush Street Interactive, and Resorts World, while one of the entities that lost out involved Barstool Sports owner Penn National Gaming and Fanatics, the latter of whom recruited Jay-Z to boost the effort.
“We work very closely with many of these other gambling companies on the legislative side and through lobbyists, and we have several strong, long-lasting relationships,” Genetski said. “The fact of the matter is that we’ve worked with DraftKings for six years and MGM for one and a half years, so there was a comfort level there. It was cordial.”
New York’s gambling infrastructure could be up and running by Super Bowl Sunday if all goes smoothly, but critically, that’s still three months behind what was projected earlier this year when the legislation was passed in Albany. When it does goFanDuel and the other gaming companies will be taxed at a rate of 51%, the highest in the nation among states with multiple licensed operators, and New York residents (who already pay the highest average state and local income taxes in the US) will have to declare their winnings to the Internal Revenue Service.
Still, New York represented one of the three largest states where gambling had not yet been legalized since the U.S. Supreme Court overturned PASPA (Professional and Amateur Sports Protection Act), and it will be going live primarily with mobile betting. Genetski said he saw little hope for New York having numerous retail establishments where sports fans would be able to gather together and bet, which is a product of the process and not necessarily something that Genetski is pleased about.
“There’s nothing quite like being in a retail sportsbook when a game is ending and half of the crowd is cheering for one thing to happen and half the crowd is rooting for the opposite. Mobile still drives most of our revenue, but we believe in the power of retail because sports are communal,” said Genetski, whose company has been able to open retail sportsbooks in New Jersey (at the Meadowlands) and in Arizona (at the Footprint Center, home of the NBA’s Suns and WNBA’s Mercury).
Plans are currently in place for FanDuel to have a big role in a new retail sportsbook at the Mohegan Sun casino in Uncasville, Connecticut, a state where legalized sports gambling debuted just last month.
Genetski, whom Boardroom interviewed at FanDuel’s Manhattan headquarters on Park Avenue, said about half of daily fantasy sports customers are also gamblers. The company strives to accommodate both groups, but fantasy players tend to be much more studious — especially in terms of time invested — than sports gamblers, who theoretically have a 50-50 chance of winning any regular wager (parlays and round-robins are excluded) and also have a broader range of wagering options to choose from.
Another of Genetski’s recent accomplishments is the negotiation of an extension of FanDuel’s deal with the NBA, allowing the company to use actual game footage in their advertising. So while you will hear Curb Your Enthusiasm star JB Smoove screaming at you on radio and TV about salads and apps while wearing a toga for Caesars, you will also see footage of Joel Embiid and DeAndre Ayton going up for a jump ball with FanDuel signage in the background.
This is the first time that the NBA is allowing its video footage to be used in gambling advertisements — that’s a big deal in the industry, and it enhances a relationship with basketball that is particularly strong at FanDuel, which already has Charles Barkley and Kenny Smith making over/under picks during Turner Sports’ NBA on TNT pre-game studio show.
“This new deal differentiates us and gives us added authenticity,” he said. “We were already part and parcel of the TNT show, and to be a part of that is very special for our brand. We want to be America’s sportsbook.”
FanDuel now operates DFS in every state except Hawaii, Idaho, Washington, Nevada, and Montana, while the entire gambling industry has now turned its attention to Texas and California — the two most populous states in the country — where gambling remains illegal. And because legislative and regulatory rules vary from state to state, navigating the legal ins and outs of different jurisdictions requires a legal professional who also knows the proclivities of fans of different sports, including soccer, hockey, boxing, and pretty much anything else under the sun that could be wagered upon.
But of course, so much of this momentum started with the NBA. And the trick to FanDuel getting in the door with the league back in 2015 as a fantasy sports partner was allowing them to hold an equity stake in FanDuel itself, which has proven to be quite lucrative.
Shares of FanDuel’s parent company, Flutter Entertainment, were trading at $38.19 on March 20, 2020, when the COVID-19 pandemic first shut down the NBA; and a year later they had risen to $117.75. Other gaming companies have seen similar growth, but analysts expect the industry to contract in the months and years ahead because of the sheer amount of competition; in Colorado, for example, 15 different companies are licensed to accept wagers.
Staying ahead of the competition is what drives Genetski and his team, and seeing how things play out in the New York market will be especially interesting because of the size of the state and the amount of money the average household earns.
FanDuel’s first deal with an individual NBA team came in 2015 through an agreement with the Orlando Magic, who permitted the company’s logo to appear on its website and social media channels.
“But we had to do a deal with the NBA to unlock that door,” Genetski said.
That door has now been unlocked even further, and the deal with the NBPA’s revenue-generation arm, THINK450, gives FanDuel a direct line to both the league office and the players’ union. Those types of partnerships (and the relationships that come along with building them) are differentiating FanDuel when it comes to basketball gambling, giving the company additional staying power before the industry inevitably consolidates.
And the guy engineering the legal end of those deals seemed like a pretty happy fellow in his Manhattan office, which happens to be within walking distance of the NBA’s and NBPA’s headquarters, as well as Madison Square Garden.
(The only downside, one might say, is that gambling parlors won’t be taking up any of the empty storefronts whose previous tenants were crushed by the pandemic.)
All told, New York has a new governor and the gambling law will almost certainly be amended as the Year One bugs are worked out. As Genetski said, sports are communal experiences, and as anyone who has ever been to a Nevada sportsbook during March Madness can attest, there is nothing quite like the adrenaline rush produced by watching a ballgame with hundreds of other like-minded folks.
Here’s hoping that New York eventually goes down that road.