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✨ Situational awareness: OpenAI released a powerful new speech technology at a developer event yesterday, Axios AI+'s Ina Fried writes.

FanDuel's $70 billion promise to investors relies on getting major states like California and Texas to legalize sports betting, though it's uncertain exactly when that will happen, FanDuel CEO Amy Howe tells Axios. 

Why it matters: FanDuel is now the largest division within global betting giant Flutter, as evidenced by its recent stock listing move from London to New York.

Zoom in: Flutter told investors last week that it expects the sports betting market in the U.S. and Canada to reach $70 billion by 2030, including $63 billion in the U.S. alone.

That forecast was 50% higher than its previous prediction in 2022. 

Speaking with Axios at the New York Stock Exchange, Howe said that lofty figure "assumes that we will get to about an 80% penetration" in the U.S. "You have to get at least two of the three big states."

Sports betting is now legal in 38 states and Washington, D.C., but California and Texas remain the two largest holdouts. In Florida, only Hard Rock Bet is allowed to operate.

State of play: Sports betting legalization was resoundingly defeated by California voters in 2022, largely because commercial operators like FanDuel were at odds with the Native American tribes, the organization that controls the gaming space in the state.

"We've completely rebooted our strategy," Howe says. "We are working very closely with and through the tribes. And at the end of the day, the tribes will decide when it happens and how it happens."

In 2022, the tribes backed a rival proposition in which sports betting would have been legalized only on tribal lands, in opposition to the commercial-supported one, which would have legalized online sports betting. Both were rejected by voters.

Howe is now eyeing 2026 or 2028 for legalization.

"It's really just going to be a function of how long it takes to get to a solution that protects tribal sovereignty, but, at the same time, works for all the stakeholders."

In Texas, sports betting bill HB 1942 is making its way through the state legislature, which will next meet in 2025. Howe says it could take until 2027, however, for sports betting to be legal.

"Tough to pinpoint exactly when it's going to happen," she said. "We feel good about the momentum, so hard to say exactly which year, but we think we feel cautiously optimistic."

Big state parlay

Illustration of someone holding playing cards with different sports balls on them instead of suits. 

Chicago-based startup iAsk has raised $4.2 million in seed funding to build a generative AI-powered search engine. 

Why it's the BFD: The investment bets on generative AI fueling competition with Google's search dominance.

How it works: The startup offers a search engine, available on the web and as an app, that answers questions through a mixture of large language models.

CEO Dominik Mazur and CTO Brad Folkens met 23 years ago in college. Prior to iAsk, they co-founded two other search businesses — Net Ideas, search tools for websites, and CloudSight, an image recognition platform. They started iAsk in 2022 and launched in early 2023. 

The startup makes money through search ads, powered by Google's AdSense for Search, and a paid product that costs $9.95 per month and offers more features and usage. They also developed an API.

Zoom in: Corazon Capital led and was joined by Chingona Ventures, Starting Line VC, Alumni Ventures, Listen VC, Motivate VC, Octava Singapore, Chicago Early Growth Ventures and angel investors.

Corazon Capital co-founder Sam Yagan tells Axios he prioritizes meeting Chicago-based founders and was introduced to the iAsk team a year ago, where he was impressed by the product's initial scale and quality.  

"In the last 23 years, I would never, ever, ever have funded a search company. Why would you ever go against Google in search? We are at a moment in time when AI has changed the game," Yagan says.

"Why did Google win in the early days? Because it was better," he adds. "There's going to be such a flight to quality because consumers want the most efficient access to their answers."

Zoom out: Google has long reigned as the leader in search. But the rise of generative AI with new players like OpenAI, Anthropic and Perplexity has disrupted the business.

Microsoft has tried to best Google by bringing OpenAI to Bing, and startups like iAsk have emerged. In turn, Google has incorporated more generative AI into its products.

Gen Z has also turned to TikTok and YouTube as search engines.

By the numbers: The engine is expected to surpass 500 million search queries by year-end, a five-fold increase from last year.

According to Google Analytics, 65% of its audience are between 18 and 24 years old.

What's next: Folkens says the funding is for expanding its 12-person team and for marketing. The majority of growth has been word of mouth, he says.

Exclusive ... Search engine seed

Illustration of a hand cursor holding hundred dollar bills.

Go deeper in our full database in the Axios Pro Deals Tracker.

• Runware, a San Francisco-based generative media startup, raised $3m from a16z's Speedrun, LakeStar's Halo II , Lunar Ventures, Begin Capital and Zero Prime. Go deeper

• Omnicom (NYSE: OMC) agreed to buy LeapPoint, a Reston, Va., digital advisory, from Renovus Capital Partners. Go deeper

• Creative Artists Agency acquired Hanold Associates, an executive search firm that specializes in C-suite candidates in human resources and diversity, equity and inclusion roles. Go deeper

• VideoAmp, a video measurement startup, is in talks to sell or form a joint venture with a rival, Sara Fischer and Kerry report. Go deeper

Deal flow

• Taylor Lorenz left The Washington Post as a tech culture columnist to launch User Mag on Substack. Go deeper

• Jeremy Erlich is leaving as global head of music at Spotify. Go deeper

• Ryan Lizza is taking a leave of absence from Politico while an investigation is conducted after his ex-fiancée Olivia Nuzzi accused him of orchestrating a harassment and blackmail campaign against her. Go deeper

• Disney TV will shutter its ABC Signature studio and combine its operations with 20th Television. ABC and Hulu are merging their comedy and drama development teams. Simran Sethi was promoted to president scripted programming for Hulu Originals and ABC Entertainment. About 30 people will be laid off. Go deeper

Movin' on up (or out)

🗞️ Reuters, CNN add website paywalls (Axios)

"A slowdown in the ad market for traditional media publishers has made it harder for news sites to sell out their inventory. Sacrificing a few million advertising eyeballs for the potential upside of gaining more reliable revenue from subscriptions could make economic sense," Sara writes. 

💸 How Google's ad business could be saved by a $150 billion spinoff (BI)

"Arete proposed Google Network become a B Corp with a capped profit margin that it could extract from its clients, known in the industry as a take rate. ... The spinoff would free Google of accusations of self-preferencing and unfair tying within its adtech stack," Lara O'Reilly writes.

📺 DirecTV CEO sees a future beyond satellites in big pay-TV merger (Bloomberg)

"[CEO Bill] Morrow's plan is to offer viewers a one-stop shop for streaming apps like Hulu and smaller bundles of live TV channels built around specific genres, all delivered, if consumers want it, via the internet. ... Morrow also sees the opportunity to work with a new generation of broadband providers, like Elon Musk's Starlink," Kelcee Griffis writes.

Channel surfing

an illustration of a television that says "channel surfing" on the screen being held up by hands on a dark smoky background

@tim_bays: Mets vs. Brewers on ESPN. One more win for the Mets and I get the "joy" of more playoff pressure.

@kerrymflynn: "Water For Elephants." Listening to the cast recording as the show just announced its closing day. Go see it before Dec. 8! 🎪

✏️ Thanks to Michael Flaherty for editing and Katie Lewis for copy editing this newsletter.

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October 02, 2024

1 big thing: Big state parlay