BetMGM Layoffs in New Jersey Amid Sports Betting Changes

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00:00Okay, so there's a story up on Legal Sports Report about BetMGM and their company laying

00:06off employees in New Jersey. If I'm not mistaken, Sam, there was a story that we talked about

00:11earlier in the week with a potential tax hike in New Jersey as well. So I'm sort of reading

00:17between the lines here, and I guess you could tell me if I'm wrong. Are they just not happy

00:21with the revenue that's coming in in New Jersey? And did they just take a big hit when New York

00:25legalized sports betting? Because I just thought that there was enough money to go around here,

00:29but it certainly seems like the market is changing in the Garden State. Yeah, you're not

00:36completely far off, but it's not so direct in terms of, hey, New Jersey is thinking about

00:42hiking up their tax rate, so we're going to lay off people there. It's sort of symptomatic

00:46of what every state is doing. It's not just New Jersey who's talking about raising their tax.

00:50The whole overall environment of sports betting is becoming increasingly more and more expensive,

00:56and to compete with the top players, you have to spend a lot of money. And the taxes are

01:01certainly involved in that. A lot of companies are advising that we're going to have an impact

01:05from the possible tax rates in Illinois, Maryland, New Jersey next year. But this past year was a

01:10year of investment for a BetMGM. They have about 6.5% of the market, which is third place in the

01:16country, but it's really nothing compared to FanDuel and DraftKings, which have 77%.

01:20And their mission is to compete with FanDuel and DraftKings. So in order to do that,

01:24this past year, they spent almost $300 million on purchasing technology that would essentially

01:30make their product better to try to compete with those sportsbooks. They spent a lot of money on

01:34rolling out more features in Nevada, as well as across the country. And also, we've talked about

01:39it a bunch of times before, it was a really bad NFL season for the sportsbooks. So when you combine

01:44that along with the tax headwinds, these companies are kind of, investors are telling them, hey,

01:50maybe we were spending too much money in this past year. You got to look for ways to trim the

01:53losses. Now, BetMGM has not come out and exactly said why these employees in Jersey City are going

02:00to get eliminated. I mean, I have to feel for them. There's 83 employees at this office who are going

02:04to be eliminated, and they don't know when, or they don't know who they are. It's going to happen

02:09sometime in May. The only reason we know about this is because there was a filing with the

02:12Department of Labor in the state. But surprising because BetMGM, again, has been one of those

02:17companies that's been able to spend so much and been able to compete because they have MGM

02:20Resorts backing them. They have a lot of money. So now that we're seeing one of these very large

02:24players look for ways to trim losses, especially at their headquarters in New Jersey,

02:29which was a very big, very big thing when it came out in 2018, very big office, big, you know, drum

02:34up with the state and everything. It's definitely concerning. So definitely have to feel for these

02:38employees and figure out how BetMGM is going to kind of try to reverse course going forward with

02:42all these losses.