B Global with Brendan Bussmann

Howdy Dan and happy New Year. How'd the holidays treat you?

Well, it's been great. I know we skipped December. It's great to be back. Happy New Year. New year, new start, right?

Yeah, for sure, for sure. And let's see. So, here we are in mid-January, Dan and industry media and a very sizable chunk of media generally are absolutely rammed with stories about prediction markets. Also, a topic that several listeners have asked us to tackle. So, again, we're going to combine this episode's news segment with listener questions. So, now our guest today is going to do a deep dive in this topic, so I don't want to steal that thunder, but as our podcast tends to be very slot focused, I thought it'd be a good idea to set the table a bit for those who aren't tracking the story and their surrounding controversy.

So, without going too far into the technical details, these prediction markets are basically platforms where anonymous users can create so-called event contracts. So, typically they're binary propositions such as, let's say, the outcome of an election or a sporting event, then they can bet on it with other anonymous users. Now, these platforms are structured, positioned, and regulated by the Commodity Futures Trading Commission as financial services products. So, individual propositions are treated like swaps or, let's say, like a binary option where the users trade them and the volume and value of these trades determines probabilities and payouts.

So, in short, it's bets masquerading as commodity trades, basically. Now, two big issues here, legality and integrity. So, first on the legality point, really the core criticism is that most of the trades on these platforms are sports related. So, it was actually 90% of Kalshi's volume in December. So, the argument is basically these companies are nothing more than illegal bookmakers that are circumventing state laws and taxes. And on the integrity front, there's been a lot of what appears to be insider activity on these platforms. So, perfect example is this so called Maduro whale scandal, huge story right now.

But in short, just after the US military apprehended Nicolás Maduro down in Venezuela, it was revealed that someone who appeared to have highly detailed insider knowledge of the operation opened an account on December 27th, created bets that included the operation specific date and then escalated an initial position of about 1,500 up to 35,000 just a few hours prior to the capture. So, even in our casino universe, 35,000, a decent bet, for sure, big fat bet. And when the apprehension occurred, the user walked away with 436 grand and then immediately deleted the account.

And Dan, you sent me also a fascinating Substack article about what appeared to be a Google Insider. You want to summarize that one just quickly?

Yeah. I mean, just at a high level, I mean, the article talked about this idea that these are being pitched as "truth finding" platforms and that there's this benefit, and these actually create a positive community benefit because they're helping regular Joe's like you and me get at the truth and that both Kalshi and Polymarket have actually been pretty vocal in creating these platforms and saying they're not calling it insider trading, but it's called insider something that basically you should, this should be encouraged, which is obviously the complete polar opposite to expectations around either traditional trading or sports betting that by allowing insiders to place, I'll call them bets, but place bets on things that they're familiar with, that that helps the public get at the truth, which has a positive economic benefit.

And that's obviously becoming a huge deal now that no one knows who this Maduro whale was, but the idea that anybody in their industry that they're an expert at can now has an advantage over the public seems completely contradictory to how we think about sports betting and regulations and fair and responsible gaming. At the end of the day, this is not just an opportunity for insiders to make money at the expense of the retail trade.

Yeah, for sure. And that case in that Substack article, I know it was to your point there, it was what appeared to be a Google Insider. They had highly specific bets about the biggest search term on a given day, specific release dates of applications and all that, and the person walked away with two million bucks. And in that Substack article, it just said, in a trading universe, there's a possibility this would raise a flag, SEC would go out and probably somebody would go to prison. This is the way it goes. But in this one, it's completely opaque. And well, anyway.

So, as I mentioned, our guest today is going to walk us through this in a lot more detail, but I just wanted to get some of this out there so our listeners have some context. Also, I think it's important for industry people to follow this topic closely. And as I was doing homework on it, the implications of it for our industry became clear and clear to me. But not only is it truly challenging state and tribal sovereignty, but also I would argue the entire regulated gaming model in many ways. And the other thing is it's growing. So, the markets are seeing weekly volumes now of around $3 billion.

And in November last year, of course, both DraftKings and FanDuel left the American Gaming Association with each of them launching a prediction market product fewer than 30 days later. So, if it's not already a factor in your market, it may be soon. I think the Reach of DraftKings right now is what? 38 states, something like that. I don't know if these will be permitted, but whatever. But Dan, with that, I think we move on to today's guest here. He's going to tackle this, another important legislative topics relative to hospitality and gaming today. So, this gentleman is a graduate of the University of Nebraska where he also served for seven years as its assistant director of football operations.

So, in Cornhusker country, I think that makes you a bit of a deity, not entirely sure.

But the N is for knowledge.

The N is indeed for knowledge, yes. As a Hawkeye, I truly support that statement. But he left football late 2003, moving into the political realm, first directing the campaign of a congressional candidate for Nebraska's first district, then onto government relations roles, including a seven-year tenure as director of government relations and community development at Las Vegas Sands. These days, he serves as managing partner of B Global Advisors, a US-based consulting firm specializing in strategic advisory services, government and public affairs, crisis communications, legislative and regulatory affairs, business planning, new market entry, and market feasibility. B Global has a worldwide reach.

He works a lot both domestically and internationally as clients across industry, government, tribal organizations, sports organizations, and more. I'm speaking, of course, about Mr. Brendan Bussmann. Brendan, how are things with you this morning?

Very, very good. Pleasure to join you guys and pleasure to be on the show today. It's a privilege.

Yeah, great to have you. So, let's start with an overview of B Global. So, can you give us a quick rundown of the firm and what you're up to there?

Absolutely. So, it's a firm that I founded. I've been in the gaming space now roughly a little over 20 years, 21, 22-ish. I guess we're on at this point, and really focusing and helping clients solve problems in a host of different ways. And I say that either from the standpoint of new market entry, what do I need to do? What are the things I need to go about? How do we maybe in some cases need to figure out how to legalize this, whether path or regulatory path to be able to get something done. But then also sitting there going, "Okay, I've got an operational sense here. I need to expand. I need to do something else along the way."

And being able to figure out the best path forward and being able to do that, using the tools of sometimes the political realm, as which you so highlighted and my background, but also what other amenities can I add into it along the way? And as much as I love the gaming space, and that takes up a good share of my time. I love the sports space just as much and like working with them, not just in the interaction that's now occurred on sports betting and what everybody does or doesn't want to say as we get ready to talk about predictive markets, and that's a "contract."

And I put that in quotes along the way, not a wager, but to looking at that of how do we strategically plan our organizations, what do we need to do about some of these entertainment districts that a lot of these groups are now working with, and how can we start to use other tools along the way to help advance the ball from a revenue perspective to make it happen? So, whether that be a hotel or meeting space or whatever else. So, it's the perfect blend of gaming sports and hospitality, which cover those two main sectors, but hospitality being the overarching across all of them.

Gotcha. Okay, cool. So, yeah, well, we gabbed a bit here in our intro today about the story of the day, prediction markets. So, now in December, Kalshi's monthly trading volume hit a record of $6.4 billion, and I was stunned to see that 90% of that was sports related. So, we know now that Nevada and New Jersey have issued cease and desist orders to Kalshi. A number of tribes have entered the fight, and now we have politicians just a couple weeks ago, Chris Christie love him or hate him. He does know the domain. He was out there stating these guys are simply bookmakers who are circumventing state laws and tax regimes. And like many in the industry, I find it a little hard to refute that.

So, in your eyes, what can we expect here with prediction markets over the relative short term here?

The best word I can describe it in is chaos. I want to put one word to it. And it's one of these things that over the course of time, this has evolved and where the turning point initially was related to the election back in 2024, when shortly before the election, Kalshi won a lawsuit against the CFTC to start wagering, I'm going to use that term purposely, on the election of who's going to win? How's it going to work? And I remember sitting here in Nevada and seeing things of Kalshi literally put, and this was their verbiage, "Where should we put our next betting billboard along the way?"

And they'd show a picture of Planet Hollywood with their little metrics that showed the, "Hey, here's where Harris is at and here's where Trump's at accordingly as it related to the election in real time as they were going." And that then spun up as things progressed on this, taking us into 2025 that said, "Hey, we're going to go into sports." And the way this has worked with the CFTC is if they don't come back to you, it's basically a self-regulated thing, like you guys have talked about the Maduro thing, like you guys have talked about some of these other things.

And we can get into the Venezuela thing because I know one of the other things that out there isn't just the capture and removal of him as the self-proclaimed leader of Venezuela, but also of was it an invasion? Does this classify along the way to be something that triggers X event along the way as well? But obviously, as you so highlighted, it is very much about sports, and that's the tremendous volume they do. Back to your question of where does this lead? And obviously, we can go down several of these paths, but you've talked about the legal route and what that has happened.

And in some cases, you have most of these cases that are in federal courts along the way, Tennessee being the latest and most recent off of that, where literally I think there was a, "Hey, we're sending recent desists and you're sending your lawsuit." And whether it be through mail or electronic communication along the way, I think it crossed in midair on how that happened. But you have several states that are looking at legal ramifications off of this and what that may entail. You've got three federal circuits that have cases being the third, the fourth, and the ninth right now that have active rolling cases and being able to do this in addition to the cease and desist that are just ramping up along the way.

And arguably, I will say I've semi-lost track of all the states that have done this because you have the Ohios, you have the Michigans, you have all these along the way. We have the legal route that's one thing. You have the regulatory aspect that semi crosses over into there, but you've seen state gaming regulators, whether that be Nevada or Louisiana or Massachusetts or a host in between that have sent notices out in different forms and fashions to their existing licensees saying either one, don't do this in our state and don't think about it.

Or even as you saw back in Nevada at the end of last year where you had FanDuel/Flutter and DraftKings basically say, "Hey, we're out, we're removing our applications and our existing licenses and we're not going in here and we're doing that other way." So, you have that parameter in there. The third bucket I think that I would see is the legislative route. And that has what may or may not happen at the federal government as they continually look at the reauthorization of the CFTC, the crypto bill that exists out there and the markup that will happen later on this month on that to what's happening at the state level, which is you have bills like what's coming in California, what has happened in New York, what has happened in some of these other states that have pre-filed bills.

And we're obviously seeing a lot of bills introduced as legislatures are coming back into session this week that are basically saying, "Hey guys, don't go down this predictive market route and what route they take because we don't want that along the way to be able to do that." And as you so eloquently stated of what Governor Christie has said, and this was off of a recent CNP interview, and obviously he's joined back in forces with the AGA on this effort of, "Hey guys, you're circumventing state law in a lot of these areas."

And I give case in point in some of these states, my home state in Nebraska where yes, as I so eloquently said, the N stands for knowledge on the side of our helmets, that you have entities out there that are offering prediction markets, not just the Kalshis and crypto.coms of the world, but fanatics and DraftKings and Underdog and those, some of which now are trying to lead a ballot initiative to do online sports betting where you can sit there today and bet on a Nebraska basketball game, which is illegal as long as it happens in the state to be able to do that, as well as other NBA or NFL or NHL contest out there today.

And as I jokingly say, and I say this half jokingly, being the kid from Nebraska, "Hey guys, I've been on your apps. I'm still waiting for when I can bet on the corn report." Yet if I lived in Florida, Randolph and Mortimer and I are waiting on the Orange Report dating back to where they all started in the same premise with Trading Places back in the '80s, great movie.

For sure. Yeah, it's great. And I guess one of the things we are curious about on this is, do you see then licensing risk for these other guys that have jumped into this that were, let's say, sports betting providers previously, but now really jumped in headfirst into prediction?

I do see some potential headwinds. And I say that saying twofold. There's one you've seen where states like Nevada have very much said, "Hey guys, if you do this in other states, you're going to have to come back and explain yourselves in a suitability situation because you've entered into a market that we don't believe is at our same standard." And that's what I always find challenging, and I was explaining this earlier this week to somebody, is gaming is a privilege. It's not a right along the way. And people that don't understand that start getting into the, "Well, we can just do this because we wanted to." No, if you have a license, you don't have a right to that license.

It's a privilege in which you were able to do that. And where you go through this and what's happened with sports betting accordingly, what's happened with land-based as you go through all this is, "Hey, I got to be found suitable as a company and I got to be found suitable as an individual. I need to make sure my internal controls match up with the minimum internal control standards in which you said in which I can operate, whether that be slots or tables or anything else of what this industry is very much used to, not just, Hey, you guys didn't get back to me and I'm going to put in transfer portal kids to see when they're going to get into the portal and where the heck they may end up."

And it's one of those going, well, there's no check and balance along the way. And I know I'm putting a lot of connections in here, but it's like the Maduro thing going, okay, what counts as an invasion? What doesn't? Is there, whether it be insider trading or insider information that says, "Hey, I'm able to do X and I was able to generate Y because I had Intel over everything," versus a, "Hey guys, if you're a ref and you throw a game, we have plenty of cases out there that show that what happens with that along the way and where those wagers go." But there's intent in the process to be able to do that.

And that's where if you go back to the predictive markets, I don't see how you get the word integrity mixed in with predictive markets at all because it's a free for all. In one word, it's chaos.

Yep. And even when they're doing a lot of this, a lot of the betting and stuff is going through blockchain and proxy wallets and things that mean just so many ways to obscure the punter from the contract. I'm sorry, Dan, didn't mean to interrupt you there, please.

No, no, it's great. So, polymarketing call share one thing, but if I'm DraftKings, FanDuel, Fanatics, it gets even more complicated, doesn't it? So, not in all states, but in a lot of states, the online sports betting licenses and casino licenses are tethered to brick and mortar operator, where it's a skin situation that you have to tie yourself to a licensee and that's how you operate. And in many states, that's how DraftKings and FanDuel are active. I mean, I assume that presents even more complicated conversations for some existing operators that are getting considerable fees from DraftKings and FanDuel today through those skins, correct?

It absolutely is it's a mess if you just want to put it in the simplest of terms because you're sitting there going, "Okay, I've got to deal with DK or FanDuel or Fanatics or whatever else, but these guys are doing X in South Dakota, for example, and offering online sports bidding, which online sports bidding in South Dakota is not allowed." It right now says you have to go everything through Deadwood. And if you guys have been to Deadwood, I don't know if you have, you've got a very robust casino gaming market there where those guys jumped in, guys being metaphoric, into sports betting at some of the facilities, some of them didn't. They added the amenity they didn't along the way.

And arguably, at some point there were previous discussions of whether mobile would be allowed statewide, but right now it's not. But I think all three have said that's a market in which they're entered into. I will fully admit I haven't been to December and since then, but it's one of those going, "Hey guys, if they're doing this here, how does that affect me if I'm say in Louisiana or I'm in Illinois or I'm in one of these other states where I've partnered with one of these guys to say, "Hey, I'm getting revenue, but does that go away if you get...If all the chips fall where they may and the regulator comes down and says, "Hey guys, you got to make a choice to be able to do this saying, you're either in my state and you got to stay in my state as a state like Nevada did, or it's one of those, it's put regulators in a very difficult position to say, okay guys, we're going to have to. And I think once you see some of these other court decisions start rolling out, I mean, ultimately, and I think Governor Christie said this as well, ultimately this goes up to the Supreme Court. I don't have a situation where it doesn't.

Now the question is, how long does that take to play out over the course of time and at what point does it get triggered to say, "Okay, we're doing this and we're going about it." I think the best the way the cases are going is 18 months, but you could be three years plus down the road depending on when the court may or may not take up this issue. And depending on what those circuits, whether they're aligned or not say along the way to say, "Hey, here's the law of the land of what needs to happen," that you could be in this abyss, if you want to call it that, for another three, four years of saying what works and what doesn't, the problem knowledge.

Yeah. I haven't opened up Polymarket this morning to see what the expected outcome at the Supreme Court is yet, but it used to be the conventional wisdom was Republican appointed judges equal conservative equal state rights and therefore, that's good news for states that are trying to regulate it. I'm assuming that conventional wisdom is no longer the case and all bets are off or are their thoughts on what a potential Supreme Court likely outcome is down the road.

Well, I mean, obviously, and having been in the courtroom when the case was heard, the PASPA case back in 2017 with the ruling coming out in 2018, I felt very fortunate to be in that courtroom to hear the dialogue and the debate. And yes, everybody can listen to when that actually does because all of those are now streamed, but the back and forth between justices along the way of the questions they ask, sometimes they ask questions purposely to debate the other side along the way. So, just because you hear one side or the other, they may go down a path to say, "Do you have an argument or not?"

But this is where one of those going, if it's based off of a state's rights thing and the way the court sits today, you can do that. But as I've always said, this is up to the nine individuals on the Supreme Court to make that decision. And everybody else say, "Well, I did this and I did that with this." No, it's up to the nine that are on the other side that are hearing the argument to make that call. It's just the way our system government's founded. I know some people like to think otherwise, but how they rule on things is going to all be dependent on where all of these court cases go over the course of time on this.

And obviously, you still have some of the states as it relates to that, but then what's actually presented along the way to be able to do that when it actually goes before the court and do they have a good argument or not a good argument? And paper versus presentation also matter in that because I've read some of these briefs over the course of time and I'm like, "Why didn't you bring that up in the hearing?" And it's because it's rapid fire and sometimes you just don't get to bring that up in your argument because they never give you a chance to go back to it.

So, it's a fascinating thing, by the way, if anybody that's a geek of politics is just to listen to see and hear some of the arguments before the court and how it works. I know obviously there's a number of cases outside of where this one may go, but it's fascinating just from a political standpoint off that is. And for me that sits here mostly and here's legislators argue over that, and that would all be spent in my next three, six months focused on a lot of it. It's interesting on how the courts look at it in a much more different light.

Yeah. So, if we want to switch gears and maybe focus on something a lot less controversial, next topic, sweepstakes. So, for the listeners, many are familiar, but there's a lot of terms out there. So, I'll try to very high level explain and you can certainly do it much better than I can. My understanding is as opposed to traditional social casinos, which can be free to play, but are not free to play in the sense that you can buy credits, but those credits are essentially fully for fun that you cannot cash out.

The difference with sweepstakes casinos is they operate with this essentially two-tier coin system where there are traditional free to play coins that are non-cashable that you can purchase, but you can't cash out. There are also a second tier of coins that you can either win through promotions or through bonuses, et cetera, that at the end of the day, have cashable value in terms of either cash or gift cards or other mechanisms. And so, similar to social, but are another way in states that either do not have iCasino, and I believe it's only seven states at this point that do or as a competition.

As of today, I think as of January 1st, there's officially legislation in California that has banned sweepstakes casinos, and several other states have issued cease and desist orders, including Michigan, Connecticut, Delaware, Idaho, Montana, and Washington. There may be others that I'm not aware of. So, similar question, what's the current state and what's on the horizon in terms of what will happen with sweepstakes casinos?

It's one of those that I would call sweepstakes about a year ahead where predictive markets are today, in that California was obviously the first and New York's been in there too, that have said, "Hey guys, we're done. We're not dealing with this."

Probably the second-biggest thing that you're starting to see introduced in legislatures this year and this cycle is anti-sweep spills for that same reason and all those things going, "Hey guys, this looks a lot and feels like, and it is a casino on that reel to play stuff." So, as I always like to say, if it looks like a duck and quacks like a duck, it's probably a duck. It's just a matter of what type of duck is it along the way.

And so, I think you're seeing continual movements. Indiana had a bill because the sweepstakes guys came in and said, "Hey, we'd love to be regulated. Give us the chance. We're here to give you tax money in that."

And it's like, "Okay, that's great guys, but you've already jumped into this and you're already doing it. So, does this lead to an iGaming conversation?" Which you're right that you have seven live today. Maine obviously just went through and had the governor sign the bill, which obviously that isn't up and going, but Maine looks like the eighth state out there that'll go down this path, but it leads to the, okay, did I jump in and now I get to pull back and regulate eye gaming in this?

Or do I create a new category that's eye gaming light, if you want to call it that, under a sweepstakes type model of where these guys have come into it? It's a little bit like, and obviously I know you guys have focused a lot on the slot side of this over the course of time, but the skill-based machines that sit in these casinos and gas stations that put skill in quotes because there's not a lot of skill to them, it's a lot. As I always jokingly say, if I took a Buffalo looking machine along the way and I put a class three, a skill based, a BGT and a class two next to each other, the average consumer's not going to know the difference along the way.

Now, we all know the backside of it and how it works and everything else, but you've gotten a lot of these jurisdictions between people that put machines in gas stations and then said, "Okay, sorry, I didn't know this wasn't." Or, "Hey, I'm just trying to advance based off of where I see the existing law. Let me come at it and I'll figure out a way." You're getting a lot of pushback though from people that have said, "Hey," and I credit a lot to the California tribes on the sweepstakes issue. They really, over the course of time, and I'll even give a shout-out to my good friend, Victor Rocha, who literally brought this to the discussion going, "Hey guys, I didn't realize this existed until I sat in a room and everybody explained it and I was like, hold on, time out.

You're operating iGaming in California and from the tribal perspective, we're not in charge of it, so we need to do that."

And the tribes did an exceptional job in California of basically rolling those guys out very effectively in a very good legislative push that it was, "Hey, you're moving on and doing other things and you're starting to see these sweepstakes companies pull out of all these states because they see this happening." Now, whether they get back into the iGaming and we get back into that and we see a push, I think that's a different conversation because it's a longer argument.

We can talk about what that looks like from a path perspective because obviously there are going to be states that look at iGaming this year, whether that be Indiana, Virginia, or anywhere else in between of what that is, but I think that's a different conversation than, "Hey, you guys have been operating X sweepstakes casino and we're just going to crush you and then we'll come back to the drawing board when that happens later."

Yeah. So, thinking about iCasino, I remember back a few years ago when sports spitting was first legalized, people were thinking, "Hey, online sports is the door opening and ultimately, the money's going to come from my casino." And that proof play out in several states where the market for iCasino is enormous. And the assumption was states that first legalized online sports would follow with iCasino.

I'm sure you're going to tell me there's no one answer, but is a huge part of the reason that it has stalled been because of the things you just talked about that A, existing operators realize, hey, if this is legalized, someone who isn't a brick and mortar operator such as a FanDuel or a DraftKings could come in and have a much bigger piece of the pie than I will, or I'm fearful of what comes with it, whether it's VGTs or VLTs or gray machines being legalized or skilled machines being folded in. Is it all of the above? What has caused this call? It's a huge tax opportunity, obviously.

And the short answer is, the political answer is it is all of the above. It's yes and no, it's everything else in between. I would hate giving that answer because everyone's like, "Well, you didn't answer it."

But I think there's different segments of where people fall in the spectrum of where this is. And I say that saying, "Let's look at land-based operators over the course of time on this, is you have some like an MGM or a Caesars that said, I'm committed to the brick and mortar and the digital business and we're going to go all in and we're going to figure this out and create the," and I hate the buzz term omnichannel experience where you sit there and go, "Hey, the slot you see on the floor is also the slot game you can get online and I'm giving you a whole thing.

It rolls into my rewards, it rolls into your entire experience and an MGM or a Caesars customer using those as an example to be able to do that and it works." I think you have other people that using those guys as two of the larger operators out there that have sat here and said, "Hey guys, we don't want any part of this. We like our brick and mortar business. We don't want anybody coming in. We want to still have that front facing consumer experience where you guys come in, we have a good time, you go have a state dinner, you play the slots, you play the blackjack, whatever else along the way. We just don't want it in our community."

And then you have others that have said, "Hey, we're online guys and we want to send money in," but they're running into the challenges in some of these states of going, "Well, what are you going to do for a live deal or studio? Are you going to create jobs here or are you not? Or are you merely coming in paying your taxes?" And I'm going to use Amazon as the example, but Amazon's gone much reverse off of this, but this was the early Amazon day is going, "Hey, Amazon, you got to pay your sales tax because you're delivering product in here." Now granted, Amazon today is building warehouses and doing all these other things along the way.

I mean, as I sit here in Las Vegas, there's at least two huge Amazon warehouses that fulfill so that I can get whatever badge that I don't need from Amazon today in four hours type thing. But back to gaming, you've got these different aspects and obviously as part of that online, whether that be the DraftKings and FanDuels of the world, but then you've sprinkled in these sweepstakes guys that have muddied up the water going, "Well, we're just doing this because nobody said we had to go ask for permission." And now you have them peeling back. So, from a legislative standpoint, you have several stakeholders that say, "Hey, I have different viewpoints."

And then you have them also pushing back going, "Hey, we've got a license. These guys don't, so get rid of them." And in the middle of it, you have other people that are just saying, "We don't want this period because in some cases, and you guys have seen this over the course of time because land-based gaming has gone through somewhat the similar path of we did slots, then we did tables, now we've added sports betting." But even off the slot side, it was where you're on a riverboat that's on a cruise, now you're a riverboat that's mortared to the shore, now you can be land-based, is it's been this, let me dip the toe in the water and work out to the deep end along the way, as opposed to those that just jump right into the deep end and say sink or swim.

Okay. And on that, because we're starting to move more and more into the terrestrial realm here. So, I did want to shift gears a second and just talk about those fully land-based operations and then the land-based legislative activity in the US. I take it that Utah and Hawaii are going to continue to sit out, but what about some of the states where we've seen some pretty heavy lobbying activities? So, a few that come to mind, Texas, Georgia, South Carolina. You see any material advancements there in the short term here?

I've always put Texas in, and I say this thing, I've tried to legalize gaming in Texas since 2006, some form or fashion, but I've put it as in, "Hey guys, I've listened to what the stakeholders there have said and it ain't happening anytime soon." Somebody as it related to sports betting and predictive markets, I said, "If I go open up a Sportsbook in downtown Fort Worth, Ken Paxton's throwing my butt in jail." Guys that are operating in the ether with prediction markets, back to our original topic, somehow are getting a pass right now in Texas.

And I know there's discussions on how legally that's going to... Not over the course of time, but as it relates to land-based and that sort of stuff, this is very much of a longer conversation of where this is and where this will go. I think you have to see how the current leaders within Texas when they decide to step down because the governor there is running again for election and will likely get another term. I just don't see things changing under Abbott off of this a course of time, as well as all the other people. And granted, there may be some shifting of the political chairs off of this, but Texas is one of those that I just don't see. Georgia becomes an interesting conundrum.

I've been at it there about as long over the course of time, but this is where one of those, like Texas, you got to take it to the voters because you got to make a change in the Constitution off of this, that I could see Georgia moving a heck of a lot quicker than a Texas. And I say a heck of a lot quicker going, this is very much the tortoise, not the hair and being able to do this as far as the race goes. But you could see something maybe in the late 2020s, but probably not.

I've always said, now granted, this has changed over how some people have looked at this from a redistricting and other perspective of do we have enough change within districts that you can get enough votes to make Georgia, which is obviously very purple, but leans red today to look still purple, but a little bit more blue that you could get people to say, "Okay, we're going to put it on the ballot along the way to be able to do this." I think both with Texas and with Georgia today, if you were to put gaming on the ballot, I think it passes able to do that.

It's getting it past that first step to get it on the ballot, where the current legislative structure and construct, the votes aren't there to get that done. Georgia, I see much more of a political shift in being able to do that versus Texas that's going to take a little bit longer. South Carolina, you bring up that. They flirted with it a little bit more than the other two over the years. So, you could see them moving. And obviously, North Carolina legalized sports betting. So, you've seen that push within that southern curtain, if you want to call it of, at first it was, well, Virginia would never do it and Tennessee would never do it, and North Carolina would never do it.

And now you sit there and go, "Okay, well, you've got sports betting in all three of those. You've got land-based casinos in Virginia. Some are temp facilities, some are permanent facilities." So, never say never, but I think you've seen that as gaming has become much more of a politically acceptable form of entertainment that you've seen, okay, this is okay along the way. That's not saying in some cases, and I go back to Georgia for this, I've always said one of the problems with Georgia in a ballot initiative is every Sunday, somebody in a church is going, "Don't go with the devil and vote for that initiative."

Able to do that because they have that ability with the pulpit to be able to say, "Hey, this is very much about our religious stance as much as anything else, and we don't want you going down that path accordingly."

Well, is there any other state that you see some great short-term probability of seeing a legalization effort, Brendan?

On the land-based or...

Yeah, land-based specifically, yeah.

I mean, I think you may see some sort of creep along the way, but I don't see anything big on the immediate horizon that says, "Hey, we're going to go license four casinos tomorrow in a very meaningful way." where you're at on the sports betting side too, you've got 40 states and that includes 40 states and jurisdictions with Puerto Rico and DC in there where you have that, but the states that haven't either because they're very complex, like a California or a Texas, but then you've got some states that just won't like a Utah that have said, "Hey, we're not because that's where we're at along the way." There could be ones along the way.

I mean, you look at a state like Alaska that has looked at a, "What do we do if we do a casino? Is there a population that's supported? What does that look like?" For a land-based side, the biggest expansion opportunity I see out there that exists along the way is what's happening with the VGTs and either the replacing of these "skill-based machines" or having the skilled product that a lot of these manufacturers have out there today that are able to meet those standards, but have a very good and great box that looks really good and actually hops onto a central system as opposed to what you're seeing.

I do a lot of work in Puerto Rico where you've got a lot of these mom and pop bars and other things that are like, "Well, my machines won't hook up to the system. How do you expect me to generate my revenue report for you?" You just always trusted me. Well, the days of trust and verify are over. It's, "Hey, log into the system. I want to see that your four machines or two machines or whatever you have are actually generate the revenue you're saying and there's not an issue along the way where you're either skimming or you're saying there's two machines and I've got four in there and you're taking two for profit."

Yeah. So, speaking of VGTs, one state where a lot is happening is Illinois, not without controversy. There's really two current topics. The first is the new, I don't know if we're calling it a tax or a surcharge, but the new city of Chicago sports betting surcharge being challenged on whether that's legal or not from a city perspective by the operators that...

Dan, can you describe that a little bit? Because I don't know this one. A surcharge in Chicago, what is this?

It's a 10 and a quarter percent-

Oh, God.

... that they do add. So, when the city of Chicago is passing their budget at the end of the year, they're like, "Dude, we're out of money." And a state like Illinois, one of their first answers is, "We'll just go to games and get a little bit more out of the golden goose along the way." And so, they came up with two concepts of, let's go tax those sports betting operators and then, oh, we may have this casino we're doing in downtown Chicago, but we're just going to open up the whole opportunity for VGTs and yes. Now, the challenge that happens with that is a couple things is they, one, don't have the regulatory structure in place to do some of these things because one of the things was, we got a license to do sports bank.

Well, there's only one licensing entity in the state of Illinois when it comes to sports bidding. It's the Illinois Gaming Control Board in being able to do that. So, the IGB is very much like, and they're trying to sort all this out, but it's, okay, who do I pay tax to and everything else? And the sports side of this is stuck in litigation at this point because the sports betting person said, "Time out, we're not doing this. We're going to see you off of the legitimacy of this." The VGTs though are a completely different route.

And I say that from the standpoint, no pun intended, when I say that I think those stick for the most part because there's an infrastructure there going, "Hey guys, it's all around every suburb around us. What does that look like and how do we do that?" And I think there's very much that is going to move forward in some form or fashion. It's just a matter of do some of these areas opt out? How do they do it and limit things? But you could see VGTs, I think at some point later this year in parts of Chicago, assuming that things continue to run in a normal fashion that generate revenue for the city because arguably the city's broke and doesn't want to cut anything.

One other topic that's really been front of mind, especially here in Nevada and the US is these two provisions from the big beautiful bill last year that impact gaming, right? The first was directing the IRS to provide guidance to operators on increasing the slot taxable threshold from $1,200 to 2,000. In December, the IRS did issue that guidance. And so, laying operators are not hard at work and updating their slot floor to lock up at the correct metric. And that's very positive for operators.

The second provision, which was more controversial, was obviously this loss cap of being able now only to deduct 90% of actual slot losses against taxable jackpots, which for high frequency players, VIP players is potentially leading to the scenario where players who are not cashflow positive at the end of the year have a significant taxable bill. There've been a lot of efforts from the AGA and state legislatures to get the federal government to put a fix it, but so far nothing has happened. What's the status on that potentially being amended in 2026?

I think obviously, and this goes back to, I think we need to look at the history on how this ended up. Obviously, the 2,000 bucks has been something that the industry's advocated on for several years because the 1,200 has not caught up with inflation along the way. And I arguably this, I can't even remember how far back it goes of when that was put in.

The 70s, I believe.

Yeah, I think so.

I know I'm somewhere in the '70s and I'm trying... And that's where some of these things were operating off of 40 plus year history going, "Okay, guys, we got to modernize." And it becomes controversial even over something that seems so normal of, "Hey, 1200 yesterday is not 1200 today." And being able to put that threshold in. As it relates to one big beautiful bill and the deduction level, that threw the back and forth between the House and the Senate as they were trying to get that done before the July 4th recess, the Senate's the one that put that in at the end and everybody woke up the next morning, went, "Ah, what's this in here," type thing.

And so, you've seen over the last six months, and obviously being from Nevada, Congresswoman Titus has been one of the leading chargers on that, not only as head of the gaming caucus, but also obviously how it affects those, as I think the term you use, the high propensity and high capacity user along the way that does that, to be able to do stuff and have that deduction that they've had in place for decades as it relates to that, that moving that back from where the 90 that got put in July back up to 100. You've seen a bipartisan effort over a lot of this in the House, which it's largely been by the House to be able to get this done.

My hope is that this gets, because it does affect so many various stakeholders in the industry, and you've seen some of the advocates, not only in M and Sands and WIN and those along the way, Derek Stevens has been absolutely one of the champions on this posting videos, even as he's done this accordingly. And you've seen delegations from DC as they've been out here meeting with the industry going, "What is the impact? How is this happening?" And you want to be able to have that back in the fold. The legislative process though is very messy as we've talked about so far today. And there's not an easy answer to say, "Hey, this is going to get done as part of X and be able to do it."

I know there was a lot of hope that this was going to be part of the Defense Reauthorization Act that got passed in December. That obviously didn't occur, so it's a matter of when and how that may happen. The challenges I would hope to see, and I'm sure everybody's that's supporting this along the way, would hope to see this done in the first few months of this year, which obviously there've been some movement to do that because the longer you get closer to the election in the fall, it means the less likelihood. And then it gets turned into the lame duck session going, "Can we get this in December?"

But obviously, the longer this also gets delayed because it's in place, it has implications on those players that are affected by it starting here from the start of the first of the year.

Yeah. Okay.

So, we'll see how it goes. I know that was a non-answer to that, but I think there's enough bodieship in the house. The problem is the Senate and those pro gaming legislators that understand the impact off of this get that to move and then we can get a compromise along the way and the vehicle in which it moves.

Gotcha. Okay. So, I want to stick with the land-based side of things here, but want to get out of the US, jumped upon here. So, I'm a bit edgy, nervous about the so-called reregulation stuff that's going on now in European markets, especially there's this big emphasis on financial checks on players who wager above certain, which are fairly modest levels. So, as these kinds of regs that contributed massively to the complete collapse of land-based casinos in Sweden, and I do get nervous that similar regs in other markets could do some damage. So, I really have two questions here.

First is, what's really behind these reregulation initiatives? Is it just the growth of online and people getting a political flack about that? And then secondly, do you share my fears here that these other countries could end up following down the same path as Sweden?

I'm going to answer them in reverse order because I want to open up by saying I do share that same fear and I was saying, why is this industry that is an acceptable form of entertainment across the globe in various aspects and how they look at it, why is this industry different than anything else? If I walk into a store, and I always use the example, if I walk into Harrods in London, no one sits there and says, "Hey, can Busman afford all these luxury goods that he just purchased along the way and should he even be in this store type thing and no other industry."

It's the same debate we're having on some of these things of, "Hey guys, don't use AI tools in being able to do this because they think the only thing we use AI tools is for is to try to get somebody to gamble more because we see some propensity or some hole." Well, those are the only holes that we have to be able to say, "Hey, we may have a problem with somebody here if they're doing play and it's carded play along the way to be able to do that." So, you can't remove those tools, but also does that mean you're going to tell Amazon and any other online retail operator or even a restaurant, "Hey, don't market me because you see something in my algorithm that shows up in my X feed or Facebook or Instagram or any other social to be able to do that that's all driven by data."

And data can be your enemy in how you look at it, but we need to think of these terms back to your second question of, do we want to do this because of the fears that happened along the way? The answer is let's look at the data that really is showing there, but we also have to put into fact, "Hey guys, there's a level of personal responsibility. We're all adults here and we need to be able to have that framework to say, I'm able to be an adult and take care of this and I don't need somebody telling what I can and can't do along the way."

You had the same thing of where Europe came in earlier this year as it related to some of these sports and online things going, "Well, heck people in New Jersey, they should be spending more of their money on this and everything got taken out while they went into the I Gaming Path." You've seen shifts and patterns and change in how people spend their money over the course of time. We all at one point in time went to every Friday night to go run a video at Blockbuster, grab a popcorn and be able to do it. And today we're streaming that same movie on a Wednesday night because we can, because we want to. So, do that along the way.

Now, back to your first question on the reregulation, this is where I go back to the two things of saying, "Yes, we can have data lead, but we need data to be both good and bad and look at all sorts of data, as opposed to just one set of data where certain stakeholders want to have the outcome driven before they know the answer." So, it's a prescribed effort to be able to do that saying, "Oh no, we're better. We know what's going on and be able to do it." But you're going to see between taxes and this reregulation stuff as it relates to Europe, you're trying to see people virtually try to kill this industry because they either don't understand it, or two, they see it as the cash cow that they think they can to be along the way.

And you're going to run into the problem going, "Hey, let me tax you like you just saw on the recent budget in the UK, but also we want to put these controls on it so people aren't doing as much, even though they may have the means to or anything else along the way, it's just a matter of how they look at it and what do they want to do?"

Yeah, yeah. And I agree with you there and to me, it just seems so incredibly shortsighted where we see this. I mean, we saw this in Switzerland forever where they're doing all these checks on players. So, basically you get up over a certain level of, I believe it's just gross wager and I don't believe it's lost. I think it's gross wager. And they do a check on the player and they ask them, "Can you substantiate that you have the financial wherewithal to gamble at this level?" And if they refuse to provide that, they get banned nationwide. And so, what's the result of that? Well, you have casinos in Lichtenstein that take that action all day long. That was what fueled them.

And then now Lichtenstein gets folded into the umbrella. They can't do this anymore. So, then players go to France or Germany or wherever else. I mean, they're not killing the demand or addressing the demand at all. So, I really struggle to understand what's going on, but I think those two points that you outlined there are good ones.

Well, and you're right in that is people are always going to have a propensity to do these sorts of things along the way. I go back to, and it's not apples for apples when I say this, but I go back to the days of prohibition. And there's a story of a guy that operated a bar in the middle of prohibition and he was able to get away with it and all these things at an underground bar and he's like, "How did you do it and why did you do it?" And he goes, "Because the people were thirsty."

And you've given this form of energy is acceptable and responsibly done by, you 90 plus percent of the people out there, depending on... I give that big wrath of saying, in some places, 98% of the people do this responsibly in our industry. Look at true problem gambling rates of that 1% to 2% that have a serious problem over the course of time. And yes, there should be tools in place to help those people and give resources along the way.

A hundred percent.

But that going about people that overeat. What about people that over-exceed in other things along the way and give them tools whichever things they need to? And there are things, but why are those treated differently than we are, which as an industry, which is why we need to sit there and say, "Okay guys, this is very simple. This is an entertainment industry that does it and tries to do it responsibly." Yes, we should have bad actors put aside that don't want to, but it goes back to what I said at the beginning. Gaming is privileged, not a right. You have to pass suitability, you have people that want to do it right and act in a responsible way. And those people would be good stewards for the industry.

And as long as you keep those people do it, they're going to do the responsible thing because no one wants to sit there and say, "Hey, Busman went beyond his means and I took all of his money and he lost his car, he lost his house, and I sound like a country song from the '80s along the way." Play it backwards, I get it all back. But it's one of those going, nobody wants that as their customer. I want somebody that wants to come in and have fun and enjoy the experience, not sit there and go, "Wow, this really sucks and I just really hate doing this." People with bad experience leave if they have a bad experience. It's no different than if I go to a restaurant and have a bad meal. I'm not going back.

Yeah. Okay, so let's move then from Europe into a jurisdiction that I can't even believe is going to leave my lips here. UAE. Okay. So, we have Wynn Al Marjan. It's set to open in Ras Al-Khaimah in early '27, talk of MGM making moves in Abu Dhabi and Dubai. So, what do you think, Brendan? You feel there may be some room for expansion in the UAE in the near future?

Being very familiar with Ras Al-Khaimah and the wind project that's going on over there, having been there for now five and a plus years, I think what a jurisdiction that a lot of us in this industry never thought we'd ever see open is going to be a very spectacular market. With that saying, there are very few great opportunities left in the globe and being able to find those unicorns that exist. And obviously MGM has one as it relates to Japan that they'll open up in the early 2030 range over there to be able to do that.

But I think UAE, you've got tremendous lift into that market along the way with both Dubai and Abu Dhabi, obviously Dubai having one of the largest airports in the world and being able to have not just the wealth that's within the GCC and even the MENA region that really hasn't had true casino gaming open to it other than a few spots like Egypt and Lebanon along the way to be able to do that. You've seen a regulator come in there at the federal level that has licensed a lottery, has licensed now online as most recently came in December end of November timeframe. And then obviously with the 2027 opening of a land-based facility, I think that market will grow over the course of time.

Where that goes between the seven Emirates is I think a work in progress. But I think obviously with what's going on between the three facets along there, it's going to be a fabulous market that brings in a certain customer that doesn't have access to that today.

And Brendan, how did the Emirates shake out politically? So, Ras Al-Khaimah, is that just one of the more progressive Emirates total? What's that landscape look like?

So, there's seven Emirates over there and I in US terms always like to say they're very much more like Articles of Confederation than United States, if you want to use the history of. They have a federal government. There's very much of a hierarchy within that, but each Emirate gets to look at in very entrepreneurial way. It's a very business-friendly climate over there, first and foremost. And it's a very order set. It's one of my favorite places in the world that I've ever been, but obviously Abu Dhabi and Dubai are the two chiefs in that hierarchy within that.

But you have more conservative Emirates like Sharjah along the way versus more progressive ones like Ras Al-Khaimah that definitely saw an opportunity and seized upon it.

Gotcha. Okay, cool. Well, that is very encouraging to hear that. And I have to say as one of my, for me personally, probably my most anticipated opening ever. I'm really curious to get down there and see this. I mean, I still have to rub my eyes a bit and question whether I'm dreaming when I read about it, but it's incredibly encouraging to hear this.

It is. I mean, I always tell everybody, if you haven't been to the UAE, and it's going to sound like a tourism commercial, but it is truly one of the most unique places left. It's one of the most safest places left. As long as you want to do the right thing, it's a great place to live, work or play. And I say that saying it's very orderly along the way. I always jokingly say, I could be working on my laptop at a bar, leave my phone in my wallet and go to the bathroom and come back and no one's touched anything.

Yeah, cool.

And do that in New York or even in Vegas or anything else, my wallet, my phone and laptop are somewhere else and being used immediately by something that various actions.

Yeah. They've already been sold by the time you get back.

Yeah.

Okay, cool, Brendan. Well, are there, let's see, any upcoming events or speaking engagements that you have you'd like to mention here?

Obviously, there's a host of different things legislatively that are happening. You've got ICE that's moving along and other shows that are happening here in the spring with Indian Gaming Association and those events. So, I've got a busy schedule ahead between the legislative cycle, my current client work, as well as making sure I'm at all the right shows in between. And there's a few I'd like to go to, but sometimes it's hard to get over across the other side of the globe to do some of these things, but you figure out a way to do it as best you can.

Yeah. Cool. Are you going to be at ICE next week by chance?

I will be at ICE. I'm looking forward to it. It's my favorite show of the year, IGA being my other along the way with G2E obviously when everybody's here in Vegas. But ICE is always what I always say is it's where gaming goes to do business because the world shows up on the doorstep and you see 50,000 of your friends and catch up and figure out where the industry's going next.

Yeah, cool. Well, great to hear you, DB. I'll shoot you a text next week and maybe we can meet up and grab a drink or something. It'd be great to see you again. Cool. Well, guys, I think that wraps us up for the day. So, I'd like to thank you both for your time today. And yeah, well, Brandon, we hope to see you at ICE. And Dan, do you have something coming up by chance the next little bit here?

I don't, really just want to thank our guests. Brendan's been a fountain of knowledge and-

For sure.

... really incredible conversations, so thank you so much.

Not every has knowledge when I start talking. So, I appreciate words.

Okay. Well, thank you so much, gents and have a lovely rest of your day here.

Thank you guys. Appreciate the time.

Thanks.