Another Year Since U.S. Legalized Sports Betting: What has changed?
What is the Current Betting Situation in the United States?
On May 14, 2018, the prohibition on sports betting, in states not named Nevada, ended as the Supreme Court overturned the Professional and Amateur Sports Protection Act after the state of New Jersey filed a lawsuit claiming that PASPA denied states the right to make their own decisions on offering wagering.
Since that historic decision, 13 states have full legalization with some form, either online or in-person or both, of betting available to customers. Another six states have legalized wagering on sporting events and are waiting for regulators to approve licenses and other necessary details before they can open their doors to betting sometime in 2020.
In the 20 months after the Supreme Court decision, several stories have dominated the sports betting headlines. Here’s an in-depth look at the five biggest developments as we take a deeper look into where sports betting in the United States is headed into 2020 and beyond.
New Jersey Aims for Nevada’s Betting Crown
If there is a poster child for how a state can prosper in this post-PASPA world, then New Jersey is reigning supreme. In their first full year of sports betting, New Jersey is the only state that can claim they are moving in on Nevada’s betting revenue territory to be king in the United States.
Last year, the first full year that New Jersey has offered sports betting, the Garden State took in a whopping $4.55 billion in bets. For 2019, the sportsbooks in New Jersey brought in a gross revenue of $299 million dollars with the state hauling in $36.7 million in tax revenue.
Perhaps the most surprising thing about New Jersey’s incredible 2019 is that they ushered in the era of the mobile sports bet. Of the $4.55 billion in handle, close to $3.8 billion in bets were made via mobile apps.
FanDuel was the most popular sportsbook in New Jersey, bringing a gross revenue of $149.9 million with DraftKings coming in second at $79.8 million for 2019.
Although Nevada will still be the top state for wagering after all the 2019 totals are announced, New Jersey has certainly made its mark on the betting landscape.
No Online Means No Revenue for Early Adopting States
Over the 20 months that sports betting has been legal in America, a quick lesson emerged for states trying to decide how to proceed with their wagering regulations: If you don’t offer online betting then you’ll struggle to meet your revenue estimates.
To find a prime example of a state that labored in their infancy without online betting, look no further than Pennsylvania’s betting situation. The Keystone State originally legalized new online casinos, online poker and sports betting via mobile app in their original comprehensive bill.
But instead of setting up the online markets in the span of a few months like most states are doing, Pennsylvania regulators took over a year to roll out the online options. As a result, the state failed to produce solid numbers over the first several months of legalization.
However, once the state got it together and opened the trio of online options, customers responded by betting hundreds of millions. In their first complete year, Pennsylvania accepted $1.1 billion in bets with the books taking in roughly $75 million despite a 36% tax rate.
Currently, online sportsbooks in Pennsylvania take in over 80% of total bets accepted in the state, similar to New Jersey’s percentage, showing that bettors would rather wager on their phones then spend time in a brick and mortar sportsbook.
Why Are the Largest States Not Legalizing Sports Betting?
Even with the huge numbers that states like New Jersey and Pennsylvania post each month, the largest states in America continue to drag their feet when the subject of sports betting is introduced. For Texas, California, New York, and Florida there are very specific and very different reasons why sports betting isn’t legal yet.
Out of the four states, New York is the closest to adopting some form of statewide betting as several casinos upstate are already offering in-person wagering at their sportsbooks. With a $6 billion budget deficit projected for 2020, lawmakers in the Empire State are looking for new ways to raise revenue and online betting could be one of the avenues legislators explore. Until then bettors from New York will continue to make the trip to New Jersey to place their bets.
Lawmakers and the Tribal casinos in California hopes to have dueling initiatives on the ballot in November for voter approval. Tribal casinos want to monopolize the sports betting market in California but card rooms and other businesses want in on the action.
Legislators in California, like Florida, are hoping to bring everyone to the table for a bill that takes care of everyone, but Tribal casino leaders are not enthusiastic about that proposed plan.
If the conversation is about what large states are nowhere near legalizing then you have to talk about the sports betting situation in Texas. With Tribal casinos all over Oklahoma, lobbyists for the state are pounding the wallets of Texas lawmakers with cash in an effort to keep casinos out of the Lone Star State.
Pro Sports Leagues Fail to Get Integrity Fees
The four major professional sports leagues in North America attempted to get a chunk of the expanding betting market by introducing the concept of integrity fees. In theory, the leagues would get a fraction of every bet made on their league’s games and use that money to assure the integrity of the sporting events they offer to the masses.
“As a sports league, our primary focus is to protect the integrity of our games, but also the need to protect the integrity of sports and monitoring from corrupt influences,” said Marquest Meeks, MLB’s senior counsel for sports betting and investigations. “As a sports league, we do not have the unique perspective, but also unique tools and resources.”
But states that legalized betting since the Supreme Court decision have resoundingly rejected the fees, as sportsbooks in Vegas believe that they can spot inaccuracies and spot fraud just as well as the pro leagues.
The cold shoulder from casinos and states left the leagues holding the bag when it came to drawing revenue from expanded betting. But the leagues didn’t take the news lying down and instead, they’ve enacted a new plan through the selling of their official data.
When the Estimates of States Fall Short
Rhode Island was one of the earliest states to adopt sports betting under the premise that wagering would bring close to $23 million in the first year in tax revenue. But the state’s returns over that first year of betting has been noticeably off the estimated mark, with officials claiming that Rhode Island will only bring in $9.4 million over the first twelve months.
In Rhode Island, the year’s upcoming budget uses estimates to create spending proposals, so every dollar counts and when something falls short of the target, then the money has to come from other areas to cover the deficit. The lack of funding from sports betting has created a swirl of criticism focused on Governor Gina Raimondo’s administration.
Cautionary tales like Rhode Island have caused other states to hesitate or even shut down plans to legalize sports betting.
Recently, Maine’s governor, Janet Mills vetoed a sports betting bill that had passed the state’s House and Senate citing in her decision that other states had failed to meet their expected revenue marks. Mills’ veto echoed the thoughts of lawmakers in other states that are resistant to legalize sports betting.
What is the Future of Sports Betting in America?
With six states poised to legalize betting in the next several months and areas like Washington D.C. recently announcing that their mobile app is ready for a launch date in March, the expansion of sports betting in America continues to prosper at an accelerated clip.
But, as the number of states without sports betting continues to fall, the next several years could see the surge of legalization slow to a crawl as the remaining holdouts dig in to hold their ground under the opinion that gaming is not right for their state.