Oregon continues making strides to bring legal sports betting to the state and has moved forward in bringing SBTech to be their provider. Not wanting to waste any time, the deal could be finalized in the next few weeks. This deal is not without opposition though as there was a last-minute protest from an SBTech competitor, Scientific Games. However, this might be a somewhat pointless gesture as the Oregon Lottery Commission, during a special commission meeting last week, quickly approved the state’s sports betting contract to SBTech.
Farshad Allahdadi, who is the chief gaming operations officer for the Oregon Lottery, was sure to point out that SBTech is “a major component” of the lottery’s sports betting strategy, which completely revolves around growing state revenue. Allahdadi stated, “Based on preliminary security and due diligence investigations, the Oregon Lottery believes entering into a contract with SBTech is consistent with our principles of fairness, integrity, security, and honesty.”
Although these particular contract talks have been ongoing for some time, it was only late last month that the Oregon Lottery made its SBTech recommendation as its legal sports betting provider. The lottery feels SBTech provides a “Turn-key sports-betting platform and sportsbook for digital and on-property wagering.” This would mean SBTech will offer online sports betting and wagering within “certain land-based retail sales channels,” according to Allahdadi.
On March 13th, after reviewing all proposals, the Oregon Lottery selected SBTech in a unanimous decision. A Notice of Intent was then sent out a week later, and since that time, the lottery began its due diligence on SBTech.
Allahdadi also noted, “We are well along the way in our background check process. We have done a lot of our review and feel at this point preliminarily that there are no issues that would prevent us from entering into a contract. However, as I indicated, we still have a couple of weeks left in the process to finalize our due diligence.”
The lottery’s investigation is expected to be completed by April 19 at the latest. Does this mean the Oregon Lottery and SBTech are locked in together, even without a completed due diligence? These types of investigations are to find problems and conflicts which could derail the legislation after all. Allahdadi quickly provided assurance that the lottery could, in fact, pull out if need be. “We are not entering into the contract. You are authorizing the director to enter into it pending these final reports.”
Early Details Between SBTech and the Oregon Lottery
While nothing is official as of yet between the Oregon Lottery and SBTech, their discussions over the past few weeks can provide us with a quick glance into what their partnership might look like. Per one memo from Allahdadi directly to the Oregon Lottery commissioners, the state lottery “expects to enter into a tiered revenue-sharing agreement with SBTech.” This agreement is supposed to start small, lasting between just three and five years.
The agreement would also direct nine to 11 percent of the earned revenue generated to SBTech. Of course, the final terms and conditions of the entire deal remain under negotiation between both parties. If Oregon legal sports betting continues on the road forward as planned, a statewide launch before football season remains possible. You can imagine just how important it is for all parties involved to hit that date as football season is the biggest sports betting time of the year.
Some Protests Could Upend SBTech/Oregon Lottery Deal
As we have documented here time and again, states looking to legalize sports gambling often run into their share of roadblocks. To make matters worse, every state is different and faces its own set on problems. In Oregon, Scientific Games and their SG Digital brand was a finalist for being the sports betting operator along with SBTech. Of course, SBTech won the deal. Well, Scientific Games did not like this outcome, obviously, or the way it all played out. Therefore, they filed a letter protesting the lottery’s recommendation of SBTech.
This letter made its way to the Oregon Lottery and suggested that SBTech may have direct ties to operators in the gray and black markets. SBTech is a large company, and it’s worth noting that they have licenses and also operate in both New Jersey and Mississippi. Not to mention, many additional jurisdictions around the world.
SG Digital essentially urged the Oregon Lottery Commission to do a deep-dive background check into SBTech and subsequently reconsider its award to SBTech. Of course, according to the lottery, their due diligence is not yet complete and can back out at any time. If something like this was to happen, SG Digital would be back in the race to complete the deal and, theoretically, could be awarded the bid.
During last week’s meeting, this protest seemingly came up only once, but that apparently was all the attention it needed. One commissioner is quoted on the topic during the archived audio of the meeting: “SBTech did disclose both relationships that were raised in the letter. We looked into those and found nothing untoward.”