For US States “Online” Sports Wagering Just Makes More Dollars and Sense

For US States “Online” Sports Wagering Just Makes More Dollars and Sense

  • Online wagering commanded incredible 85% to 98% US state shares over the past 6 months
  • Before the PASPA reversal, Vegas books were the ultimate & only legal wagering experience
  • COVID-19 plus Tennessee’s initial success has been factors pushing new states online

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For anyone reading continuous announcements regarding each US state setting “monthly records” for their legalized sports wagering handle and/or revenue intake, one factor is commonly featured. Their online betting percentage is going up and up and up.

The latest figures from several states have reported their record intake has been earned via mobile/online sports wagering of anywhere from 85% to as high as 98% of total receipts. More than 94% of Pennsylvania wagers were made online in January. That figure is a slight decrease from December’s record 97.6% online share.

It has become so common over the past six months it seems that no sports bettor is barely stepping foot into retail sports betting facility to place a bet. And in some cases, they haven’t. Due to COVID-19 restrictions, either casinos and their onsite sportsbooks have been totally closed or ordered for limited participation.

The result has been a habit-forming ritual for sports bettors to play online. Something they may have been accustomed to either recently through their state or long formed through illegal sources. Twenty years before having access to visit any state casino to wager on sports, a bettor had the illegal option of playing online via the hundreds of offshore sportsbooks. Or the chance to contact their local bookmaker to place a bet. Overall, the convenience of mobile sports wagering is not new.

The Good Ol’ Days

What is new is having the choice. Before the US Supreme Court reversal of PASPA (the Professional and Sports Protection Act of 1992) in May 2018 there really was not any legal choice. There was only one special place to wager on sports. Nevada and especially Las Vegas, Nevada.

Many, including myself, relished the opportunity of traveling to Las Vegas with the sole opportunity of being at an official race and sportsbook to bet. There simply was no option as there was no other US state legally allowed to offer sports betting. And if we really want to take things back, the Internet for wagering was not invented yet.

Only about a dozen or so race and sportsbooks existed pre-Internet days with a few being pure destination meccas for sports bettors.

The Caesars Palace Race & Sportsbook is among them and perhaps still is revered because of its importance in US casino history. It was last renovated in 2015 but its size and mystic dark sportsbook atmosphere kept it cool for gamblers on 108-degree days. Many legendary boxing events helped surround its reputation in past years.

No doubt the most famous US sportsbook and the granddaddy of them all is and maybe still is The Westgate Las Vegas Sportsbook. Formerly the Las Vegas Hilton Sportsbook has always been the largest, most spacious book in Sin City, spreading out almost 5,000 sq. feet and having 400 seats available for players. For historians, this was the place Elvis came to play.

Although there was no convenience of a cell phone to tap, win or lose, bettors enjoyed the social atmosphere and electric energy inside the room. Whether screaming across the finish line for a horse or moaning for a bad beat on a game, there was always someone there to either celebrate or cry with you.

COVID-19 Changes Everything

Before the onset of the Coronavirus, several US state’s marketing strategies to introduce sports wagering was to mandate customers signing up for their new accounts at their retail casino facilities to begin betting.

While not making motivation clear in welcoming potential new players, the thought might have been an opportunity to capture additional revenue while people were onsite at casinos. Also, to dine and have them introduced to the entire loyalty experience.

New states introducing sports were forced to scrap that policy early in 2020 due to COVID-19. The most prominent example was Illinois, whose Governor J.P. Pritzker signed legislation six times, allowing new sports bettors to sign-up online as state sportsbooks were under continuing closure laws due to the pandemic.

With the Illinois budget being severely tested because of COVID-19, it is unlikely that the in-person requirement will ever be brought back into effect. Online wagering for sports has simply proven to be a better moneymaker for the state, reporting record revenue every consecutive month.

Tennessee Begins an Online Trend

The Volunteer State of Tennessee took a bold step late in 2020 as the first in the US to adopt an “online-only” policy in legalizing sports wagering.

Any doubts or debaters were quieted quickly as Tennessee roared out of the gate reporting a then-record $131.4 million in the handle and $13.2 in revenue for its first month. Quite impressive considering the state was using only four sportsbook operators including DraftKings Sportsbook, FanDuel, and BetMGM, and does not have the comparison population of a New Jersey or Pennsylvania. The record for initial online supremacy has since been broken by Michigan, who posted $115.4 in just their first ten days of the January 2021 operation.

What might be more significant is that other states have been watching Tennessee’s early return success while legislators have suggested an online-only model as well.

Just this month Georgia announced a similar model to Tennessee with an online sports wagering legislative format. Although some rules were different, one controversial rule was put into the new bill. A 20% rate on gross revenue (GGR) that Tennessee has put into effect along with a few other US states. Obviously unpopular with sportsbook operators, the concern should also be taken notice of by experienced bettors.

What to Expect Next

Sadly, while the US is still within the grip of COVID-19, current favorable conditions for online wagering will continue for the casino gaming industry. That includes month-to-month monitored conditions limiting onsite casino operations.

It is expected that no states will require onsite sign-ups for new sports wagering accounts and that policy may be something of the past. The bottom-line results for online wagering far outweigh any advantage or motivation to have customers sign-up at any state casino. The opportunity to wager online, especially adding the new popularity of “in-play” wagering on sports on any mobile device defeats the purpose of visiting a sportsbook.

The key question should come of what do retail onsite sportsbooks do to welcome players back AFTER we blessedly see the end of our pandemic. We look forward to new incentive opportunities to visit sportsbooks in-person and recapture the fun feeling of joining other sports fans and bettors. Yes, online is no doubt superior but sometimes you don’t want to either celebrate or cry alone.

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Larry Gibbs

Expert on Sports Betting Industry

Larry Gibbs is both a seasoned journalist and a respected online gaming industry consultant. His wry commentary & sharp analysis have appeared in numerous top gaming and sports wagering publications. He has also served as Vice President of US Gaming Services, a marketing research organization with 15 years of experience in US online wagering. He has spoken at noted gaming industry conferences including G2E, GiGSE, and NCLGS.

Email: [email protected]