The National Football League season kicked off Thursday night, with the defending Super Bowl champion Tampa Bay Buccaneers defeating the Dallas Cowboys in a 31-29 thriller.
Football season, pro and college, is to the sports betting industry what Christmas is to retailers, and sports betting stocks have rallied heading into the new season. Over the past month, DraftKings shares have jumped 19%, Penn National Gaming has jumped 18% and Caesars Entertainment has added 17%.
If the nascent legal sports betting industry was an NFL team, it would be the Jacksonville Jaguars, with a promising but inexperienced quarterback and next-to-zero chance of near-term success. The U.S. unit of Flutter Entertainment, which mostly consists of market leader FanDuel, recorded an operating loss of £108 million ($150 million) in the half year even as sports revenue tripled. DraftKings, which doesn’t even bother to put its bottom line in news releases, lost $96 million in the second quarter using a similar metric.
That means for investors that betting on sports gambling companies is a guess on the size of the total addressable market and eventual market share, and then working backward. It’s hardly the only industry in which investors dream of a profitable future for loss-generating companies, and it’s attracting the same long-term-oriented investors. DraftKings is a top-20 holding in the Ark Fintech Innovation ETF run by Cathie Wood, and the Fidelity Blue Chip Growth Fund is Penn National’s top investor.
Flutter has said its U.S. operation may be profitable in 2023, and already 30% of the U.S. population has access to online sports betting, according to UBS. Meanwhile, keep an eye on New Jersey, which has the most sports betting of any state, and may hold the clues to just how large the industry can get.
*** Join contemporary artist Tom Friedman, funk-rock musician turned artist George Clinton, and Penta senior writer Abby Schultz to talk about the next cover of Penta magazine today at noon. The issue comes out Saturday and includes new works by Friedman and Clinton. Sign up here.
Biden Requiring Coronavirus Vaccinations for Two-Thirds of U.S. Workers
President Joe Biden laid out a sweeping plan to drive two-thirds of the U.S. workforce to get vaccinated against Covid-19—from mandates for all federal executive branch employees and government contractors to telling companies with 100 or more workers to require vaccinations or weekly testing.
- Biden also is requiring vaccinations for workers in most healthcare settings that receive Medicare or Medicaid reimbursement, which would apply to about 50,000 health providers and about 17 million healthcare workers.
- Together, Biden’s push will cover about 100 million employees, giving cover to companies that have been hesitant to institute mandates, and setting an example for state and local governments as well as schools.
- Biden also announced more at-home Covid-19 tests and rapid testing sites; expanded low-interest loans for small businesses; more monoclonal antibodies and other coronavirus treatments; double the fines for refusing masks on planes; and twice the number of surge response teams to help overwhelmed hospitals.
- The reaction from Corporate America and unions has been mixed. Labor organizations have raised concerns over workers’ rights. United Airlines said employees with religious exemptions to its vaccine mandate will be put on temporary unpaid leave starting Oct. 2.
What’s Next: The Labor Department will implement the new rules, and federal workers will have about 75 days to get fully vaccinated, said White House press secretary Jen Psaki. Businesses that don’t comply face fines of up to $14,000 per violation.
—Janet H. Cho
Biden and Xi Talk for First Time in Seven Months
Biden and his Chinese counterpart Xi Jinping held a 90-minute phone call Thursday in an attempt to break the stalemate of the Sino-U.S. relationship caused by increased rivalry between the two countries.
- The two leaders had a “broad, strategic” talk, both on areas where the two sides’ “interests converge” and on those where their “interests, values, and perspectives diverge,” the White House said in a release.
- Xi told Biden that the U.S.’s China policy creates “serious difficulties in bilateral relations and runs counter to the fundamental interests of the peoples in the two countries,” the Chinese government-owned newspaper Global Times reported.
- Biden requested the call after contacts between lower-level teams of officials failed to produce results. Biden and Xi’s personal relationship dates back to 2011, when each was his country’s vice president.
- Markets cheered news of the talk, with the Shanghai composite index up 0.3% to a five-year high, and Hong Kong’s Hang Seng Index rising 1.9%.
What’s Next: According to the Chinese side, the two men pledged to have more frequent contacts in the future. But considering both countries’ conflicting fundamental interests on geopolitical and economic matters, there may be limits to what personal diplomacy can achieve.
U.S. Sues Texas Over Abortion Law
The Justice Department sued Texas to block a new state law banning most abortions, setting up a battle between the Republican-led state and the federal government over abortion rights.
- The suit, filed in federal court in Austin, seeks both an immediate block of the law while litigation continues, and a permanent ban. The law prohibits almost all abortions after fetal cardiac activity can be detected, which is usually around six weeks into a pregnancy.
- “The act is clearly unconstitutional under longstanding Supreme Court precedent,” Attorney General Merrick Garland said at a news conference.
- Texas Gov. Greg Abbott defended the law. “Texas passed a law that ensures that the life of every child with a heartbeat will be spared from the ravages of abortion,” said a spokeswoman for the Republican governor, The Wall Street Journal reported.
- The suit will test whether the Justice Department can upend a state law drafted in a way that makes it difficult for abortion-rights advocates to challenge the ban in court, the Journal reported. A provision gives enforcement to private parties, and authorizes damages of $10,000 or more to those who successfully sue a defendant accused of performing or aiding abortions.
What’s Next: The Supreme Court allowed the Texas law to go into effect when the majority of justices decided not to intervene. In its next session, the court is set to hear a case over an abortion ban in Mississippi.
$3.5 Trillion Package Won’t Offer Dental Benefits Until 2028
The $3.5 trillion package of social infrastructure measures that Democrats hope to pass through budget reconciliation includes Medicare coverage for vision and hearing, in 2022 and 2023, respectively. But not dental benefits—until 2028.
- Sen. Bernie Sanders (I., Vt.), who chairs the Senate Budget Committee and initially pushed for a $6 trillion plan, criticized the delay. “Do I think we should take such a long time to implement the dental provisions? No, I don’t,” he said.
- The Congressional Budget Office has estimated that adding dental, vision and hearing coverage to Medicare would cost about $358 billion, most of that for dental ($238 billion).
- The nonprofit Kaiser Family Foundation estimated that Medicare beneficiaries spent an average of $874 out-of-pocket on their dental services in 2018.
- The House Ways and Means committee is working on paid family leave. Chairman Rep. Richard Neal (D., Mass.) is giving detractors “less time to coordinate opposition,” said analyst Benjamin Salisbury of Height Capital Markets.
What’s Next: Separately, the White House wants to cut prescription drug prices by letting Medicare negotiate. The pharmaceutical industry trade group PhRMA is pushing back against the idea, saying allowing that would mean less money to research and develop new drugs.
—Janet H. Cho
Covid Case Spike Damps Travel, Forcing Airlines to Temper Outlooks
The hoped-for rebound in air travel is being dinged by spiraling case counts of coronavirus as would-be travelers cancel flights and hold back new bookings, and the airlines are now tempering expectations, at least for the short term.
- United is trimming flights for the rest of the year. It expects to post a loss this quarter and said it would likely lose money in the fourth quarter if conditions continue. Third-quarter revenue will be 33% lower than two years ago.
- Southwest, snarled by operation issues this summer, said flying capacity in the fourth quarter will be 5% below two years ago. It had previously planned to return to 2019 levels.
- At American Airlines, third-quarter revenue will likely be below the company’s previous forecast. It still expects the third quarter to bring its strongest revenue since the pandemic’s onset.
- International demand picked up this summer after European nations allowed Americans to visit more freely, though bookings have cooled in a normal seasonal slowdown and rising case numbers, Deutsche Bank analysts said.
What’s Next: Recent traffic declines are smaller than the drops during previous Covid-19 case spikes, the airlines said. Some carriers said Thursday that winter holiday bookings appear to be on track.
Do you remember this week’s news? Take our quiz below about this week’s news. Tell us how you did in an email to firstname.lastname@example.org.
1. Boeing’s largest customer outside the U.S. halted talks for 737 MAX 10 planes, the stretch version that seats 230 people, in a dispute over pricing. Which customer was it?
a. China Southern
2. Which Latin American country became the first nation in the world to adopt Bitcoin as an official form of payment for goods and services?
a. El Salvador
3. Chinese regulators summoned videogaming companies such as NetEase and Tencent and ordered them to implement recent regulations that include:
a. Tighter restrictions over minors’ playing time
b. Stepping up content control and censorship
c. Refraining from unfair competition
d. All of the above
4. The Labor Department reported that initial unemployment claims continued a downward trend last week and reached a pandemic low. What was the number of claims?
5. The WSJ reported that Elliott Management has taken a more than 10% stake in this company and is looking to work with it to boost its valuation. Which company is it?
a. F5 Networks
b. Citrix Systems
d. Juniper Networks
—Newsletter edited by Liz Moyer, Mary Romano, Camilla Imperiali, Rupert Steiner, Joe Woelfel