Firms Foresee $7 Billion in Sports Betting Markets by 2025
Firms Foresee $7 Billion Sports Betting Market by 2025
Sports betting in the United States is close to crossing the one billion dollar threshold in generated revenue annually. But that does not mean that gambling analysts expects the growth to stop there as investment firm Morgan Stanley recently predicted that the sports betting market will reach close to $7 billion in total revenue by 2025.
Even though $7 billion is a drop in the bucket to the $41.7 billion that casinos won in the United States in 2018, the revenue stream is something that bookmakers cannot ignore as betting expands throughout the country.
At a recent investors event sponsored by Morgan Stanley, management from MGM Resorts International, the Hard Rock casinos and the Mohegan Sun all gave their predictions that the sports betting market was ready to explode to the tune of $6-8 billion annually in revenue.
The estimates were backed up by the research firm Eilers & Krejcik Gaming, who specializes in tracking sports betting revenue and handle figures for states across America that have already legalized. The firm told forum participants that their figures are “very close” to what the casinos are signaling for the future of the business.
There were a few outliers at the forum as Morgan Stanley said that the betting market could reach $25 billion by 2025 if every state legalized but also have a floor, telling the audience that the market could just reach $2.5 billion if only 22 states had legal betting in five years.
What are the Biggest Obstacles for Operators?
Despite the jaw-dropping figures thrown out by executives, gaming operators continue to see stiff competition and with their cost-per-customer rising, companies are looking for every advantage to stay relevant in the ever-changing world of sports betting in America.
But although the industry continues to make substantial gains every quarter, many companies know that not all of them will make it to 2025.
“It’s a war out there,” said Seth Young, chief information officer for PointsBet. “At the end of the day, there’s going to be a lot of carcasses out there on the road.
For companies like MGM Resorts International, they see the future as a survival of the fittest among the dozens of betting operators looking for their slice of the pie.
“It is a growing market here in terms of revenue but it’s a very tough market,” said Scott Butera, president of interacting gaming for MGM Resorts International. “Everybody wants to be here. Ultimately I think we’ll see some shaking out.”
What About the Cost to Attract Customers?
Most industry experts believe that another 10 companies could soon join the betting market as more states reach agreements to legalize.
For operators, the high cost of attracting customers is compounded by the hurdles that most states force bettors to jump through to make deposits on their accounts. Several states require an in-person visit to a casino with cash as the only form of deposit they will take to open an account.
In Europe, bettors use credit cards to place bets roughly 80% of the time, according to Kresmir Spajic, senior vice president of online gaming and sports betting for Hard Rock International.
In comparison, U.S. bettors only use a credit card around 30% of all betting transactions.
For most operators, the push to get more states to legalize will take center stage as more betting operator associations will hire lobbyists to persuade lawmakers to author and approve legislation in states where wagering on sporting events is not yet legal.