DraftKings takes a stock hit after announcing a consumer tax initiative. … Diamond Sports Group may leave five NBA teams without a regional broadcast partner. … Bears president Kevin Warren is optimistic about a new downtown stadium. … Plus: More on Jaylen Brown, Utah Hockey Club, Union Cycliste Internationale, and the NFL.
—Margaret Fleming and Colin Salao
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DraftKings announced several big changes at the end of the week on the coattails of its first profitable quarter as a public company.
The sportsbook will become the first to tax U.S. bettors on their winnings in states that have a tax rate for betting operators above 20%. Illinois, New York, Pennsylvania, and Vermont are among the states impacted, with users getting charged a fee around 3% to 5% on winning bets starting next year.
“If you made a $10 bet to win $20, you would pay like 30 cents,” CEO Jason Robins told CNBC. “We decided that the best course of action is to do what really every other industry [does]—whether it’s hotels, taxis—whatever else you buy generally has some kind of tax.”
The decision comes not long after Illinois hiked up its rate to 40%, which followed New York, New Hampshire, and Rhode Island moving their rates to 51%. DraftKings is making it clear to other states with bills in the works that their legislatures’ decisions will impact consumers.
“I do think that if states start to realize that above a certain level, we can’t invest in our product and customer experience in the way that we need to … it might make them think differently about it,” Robins told CNBC.
Illinois, for its part, felt like it was just catching up to other major betting states with its increase, according to the Chicago Sun-Times, which reported that FanDuel and DraftKings combined for more than $729 million in state revenue last year while paying a combined $110 million in taxes.
More Change: Stock Buyback
After reporting $1.1 billion in revenue for the second quarter that fell behind estimates, DraftKings’s stock dropped 5% Friday morning.
The company also announced a stock buyback plan, repurchasing up to $1 billion of its Class A common stock. CFO Alan Ellingson said the plan “reflects our confidence in the company’s attractive long-term outlook and healthy balance sheet.”
DraftKings has been busy over the last few weeks, selling the gambling media hub VSiN back to Musburger Media and closing down its non-fungible token business soon afterward.
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Jerome Miron-USA TODAY Sports
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Diamond Sports Group, the regional sports network that filed for bankruptcy last year, could leave up to five NBA teams without a local broadcasting partner if it’s able to complete its reorganization and continue operation.
The company could terminate its RSN deals with the Mavericks, Pelicans, Thunder, Pistons, and Grizzlies, according to Sports Business Journal, though DSG could limit it to only three of those teams.
The other 10 teams that DSG has deals with—the Bucks, Cavaliers, Clippers, Hawks, Heat, Hornets, Magic, Pacers, Spurs, and Timberwolves—should expect their contracts to remain intact. However, their fees are expected to be cut by about 30% to 40% for the 2024–2025 season, which could mean as much as $16 million in lost revenue for the franchises.
The five franchises in danger of losing their deals with DSG are already in the process of finding alternative methods to air their games locally. Four of the teams, excluding the Grizzlies, aired at least five games through local, over-the-air channels last season. Moving games to over-the-air networks would emulate the Suns and the Jazz, who also have direct-to-consumer packages available for their fan bases.
While the Jazz reportedly nearly tripled their viewership because of the move to free, over-the-air television, they did not come close to hitting previous revenue marks. But given the revenue cut that the franchises tied to DSG will likely receive, it’s still unclear whether the better long-term play is through free or paid distribution.
Here Comes Amazon
Amazon is the newest player in the NBA’s national media-rights deal, as the league partnered with incumbent Disney and old friend NBCUniversal.
The streaming giant has now emerged as an option to create a national regional network, especially as it has already agreed to a $115 million deal with DSG for 15% of the company once it exits bankruptcy.
Amazon has wide distribution with Prime Video, but it has also shown a commitment to sports, from acquiring the rights to major playoff games to smaller regular-season contests across several sports.
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“The goal is still to be in the ground moving dirt in 2025, hopefully open in 2028, and have a great new home for the Chicago Bears.”
—Bears president Kevin Warren (above), on the team’s proposed new stadium during an interview with ESPN’s Joe Buck and Troy Aikman at the Pro Football Hall of Fame Game on Thursday. Warren added that while the team still owns 326 acres of property in the Chicago suburb of Arlington Heights, the “focus” is staying downtown and by the lakefront, the same area of its current home, Soldier Field.
Warren’s optimism comes just days after Illinois Gov. J.B. Pritzker said it would be “near impossible” for the team to reach an agreement with the state by this fall. The Bears are projecting a $4.7 billion cost for the total project, over half of which they’d like to be publicly funded, which Pritzker has pushed back on.
“There isn’t a proposal on the table right now that would be acceptable to anyone that I know in the legislature,” Pritzker said.
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Front Office Sports tees up every weekend sporting slate with a ledger of the purses and prize pools at stake. With the Paris Olympics in full swing, here’s what else is up for grabs this weekend:
LPGA, Portland Classic, Oregon
- When: Thursday to Sunday
- Purse: $1.75 million
- First place (individual): $262,500
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Jaylen Brown ⬆ The 2024 NBA Finals MVP (above) is launching a nonprofit aimed at generating $5 billion to create generational wealth for people of color, according to The Boston Globe. The Celtics star, together with his teammate Jrue Holiday and Holiday’s wife, Lauren, is partnering with MIT and the city of Boston to support entrepreneurs in several fields including design, arts, and fashion. The organization will be called Boston XChange. Brown said last year, after he signed an extension that was then the largest contract in NBA history, that he wanted to create a “Black Wall Street,” and this initiative is a step forward in achieving that goal. It’s been a busy summer for Brown, who has been embroiled in a back-and-forth with USA Basketball after he wasn’t selected as Kawhi Leonard’s replacement on the Olympics roster last month.
Utah Hockey Club ⬆ The NHL’s newest franchise has acquired a space where it can build a permanent practice facility. The Smith Entertainment Group, which also owns the NBA’s Jazz, has purchased The Shops at South Town, a 111-acre site where it plans to build two ice sheets and house the team’s official offices, according to Deseret News. The site is about 15 miles from the Delta Center, which the team is renovating so it can accommodate the Jazz as well as the Hockey Club.
Union Cycliste Internationale ⬆⬇ David Lappartient, president of the world cycling governing body, made it clear in an interview during the Paris Olympics that Saudi Arabian investors are welcome to invest in the sport, as long as they don’t create their own league. He said the financial benefits could be helpful for the sport, but that the two sides would need to “work together” and that the UCI would “never support a clone league.” Back in February, Reuters reported the Saudis had finalized a deal to fund a rival cycling league that would increase overall pay among athletes and teams, similar to LIV Golf, but nothing has been finalized at this point. Lappartient said he doesn’t think there will be a Saudi breakaway league.
NFL ⬆⬇ The NFL tentatively scheduled a meeting later this month where owners could approve a policy allowing teams to take up to a 10% investment from private equity firms, a source confirmed to Front Office Sports. Before a potential vote at the Aug. 27 meeting, a committee tasked with creating that policy has to agree on the language. The NFL is currently the only major U.S. sport that doesn’t accept PE investment, and it appears ready to, even as the league avoided a $4.7 billion judgment after a federal judge vacated a jury verdict Thursday night in the NFL Sunday Ticket antitrust case.
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- The Big Ten finally quelled fans’ fears by unveiling its updated “Maps” commercial with its four new member schools. Washington, Oregon, USC, and UCLA officially joined the conference Friday. Watch it here.
- Former Eagles star Jason Kelce made his ESPN debut on NFL Countdown on Thursday night. Check it out.
- Nike just dropped a new ad for U.S. track star Sha’Carri Richardson.
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 | The Bison have won back-to-back conference tournament titles. |
 | Bayless’s exit could lead to significant changes to the network’s lineup. |
 | USA Basketball’s men’s team is winless so far in the Olympics.
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