New US States Seeking Sports Wagering Can Learn From Twenty-One Currently in Business

Us States Seeking Sports Wagering

  • The advantage of “being late” is learning the number of things states have done right to succeed
  • Puzzling how many state legislators have ignored positive strategies drafting legislation
  • Still, US sports wagering is new, it will take more time drafting firm business conclusions

From a business perspective, it is interesting to see pending US states seeking legalization for their states to enter into sports wagering going through such contention toward progressing further and at a quicker pace.

Each week yields headlines of Illinois, Michigan, Tennessee, and others proclaiming monthly records of handle and revenue success. It would be a simple formula for new states to emulate yet so many legislators have their own ideas about how they want to pursue their individual plan.

New York, New York

The state of New York is only one among the most puzzling. Granted, they could be install mode due to Governor Cuomo’s distracting personal problems, but he has only himself to blame for being so blind.

The issue is New York strangely turning away from mobile wagering to begin operation. Their struggle basically hinges upon whether Cuomo will adamantly hold to demanding the NY State Lottery Commission rule sports wagering vs. opposers wanting to turn the market toward private operators as customary in other US states.

Meanwhile, sports bettors in close bordering New Jersey wagered $6 billion in 2020, smashing the $5.4 billion record set by Nevada. Besides the 85-90% share contributed through online wagering; the most sobering fact is a large percentage was contributed by New York residents crossing the geolocation border into New Jersey to obtain mobile wagering opportunity to bet.

Anyone running any type of business whatsoever would look at this and wonder, how long could you avoid this reality? How much longer can you wait to face a multi-billion-dollar COVID-19-tinged budget deficit? Coronavirus or not, online wagering is and will continue to be a dominant force for every US state in the future involving the sports betting industry.

North Dakota

Quite a small and conservative state in comparison to New York but perplexing in reading notices of their potential extensive delay introducing sports wagering.

While the revised proposal moves through their legislative process, it appears like sports betting won’t arrive until late in 2025 and that might be optimistic. That schedule is if an amended version of their current sports wagering bill moves positively forward and voters within the state vote Yes on an upcoming November 2022 ballot.

Several controversial amendments are being suggested that likely could doom progress including banning credit card usage for bettors.

Most puzzling is Rep. James Kasper calling for a two-year wait for mobile betting to be introduced in the state after retail sports wagering begins. A rule not only defying the reality of several other states defined success but asking people within North Dakota to potentially continue to rely on illegal offshore wagering options for wagering convenience.

While sportsbook operators including DraftKings Sportsbook have taken the lead voicing their outspoken disagreement with North Dakota legislators, you can hardly argue against their logic as being selfish.

Connecticut Tribal Roadmap

With California and Florida potentially the biggest remaining states for US sports wagering upcoming in the future, they both could learn important lessons from Connecticut while building their road toward the first bet.

Gov. Ned Lamont and the Mohegan Tribe agreed earlier this month to establish online gambling and sports betting in Connecticut, allowing for the first-time nontribal gambling operators to compete for bettors. The deal was struck with the Mohegan Tribe, owner of the Mohegan Sun Resort in Uncasville, CT, and also included new gaming options for the Connecticut Lottery Corp.

Immediately upon announcement, the agreement came under fire from the Mohegan Tribe’s major competitor, the Mashantucket Pequot Tribal Nation and Connecticut’s state’s pari-mutuel operator.

Gov. Lamont had drawn up key elements of the proposal including tax rates and licensing fees in agreement with the Connecticut Lottery to begin assisting operations. However, nothing was going to proceed without the consent of the Mashantucket Pequot Tribal Nation and the cooperation involved in the process.

Lesson learned for other US states involved in a similar scenario with Native American partners, this is a complex situation that involves full cooperation to succeed. The latest news indicates Connecticut is now making progress going forward with the Mashantucket Tribe’s approval.

Tennessee’s Online-Only is Still a Gamble for the New States

Although Tennessee and its “online-only” sports wagering has gotten off to an excellent start, it still has a way to go proving its long-term substance among controversy with legislative rules different from many other US states.

Prior to launching, Tennessee was the nation’s first online-only sports betting platform. Legislators chose a debatable Lottery-run system, which had been underwhelming in other states. They also decided upon on an unusually high 20% tax rate plus an extremely high 10% hold, which many viewed as a deterrent for prospective top-end sports betting providers.

The controversy quieted down when early results were tabulated. Tennessee accrued $211 in handle for January and overall, the first three months in operation have totaled $523 million in action. At that time, more than any other US state within a first three-month run of sportsbook operation. Still, it is impressive as Tennessee accomplished it with four sportsbooks, operating with online betting only. William Hill joined the sportsbook operator group last week.

The question here is this is a brief sample to make a judgment upon. It has only been three months and it truly should take a year before this online-only formula can be fairly evaluated. Potentially, it is feared that the high tax rate and hold in Tennessee may have an outcome on the odds passed on to bettors. Should that happen, immediate news and bad publicity could surface causing a problem that might not be easily rectified.

When legislators in each new state lobby for sports wagering, they unanimously point toward opportunities lost to “illegal offshore sources”. Give bettors bad non-competitive lines and odds and they will head back toward those illegal sources.

Meanwhile Down in Texas

The Dallas Cowboys, Texas Rangers, and Dallas Mavericks are all reportedly backing legislation allowing Texans voting opportunity to lift the Lone Star State’s ban on gambling. The Sports Betting Alliance, a coalition of franchises and betting platforms is centralizing behind the push for sports betting legalization.

COVID-19 causing a large fiscal budget gap in Texas is the primary reason. But the case has been further magnified by the recent death of casino magnate Sheldon Adelson, who spent $10 million in lobbying efforts to push legalized gambling through in the state.

It’s reported that new executive leadership from his Las Vegas Sands Corporation is aggressively moving to compete in the US sports wagering sector. Ironically, that includes “online wagering”, where Adelson was the main force five years ago spending millions trying to detour the US Supreme Court from reversing their decision to legalize sports wagering.

With the power of this new Sports Betting Alliance gaining strength, likely being joined by other noted Texas professional teams and other state legislators, look for new headlines and potential progress on this issue in the coming months. Most noteworthy, we can expect other states to enlist help from professional sports teams to push legislation through.

Overall, with so many states setting records and popping champagne for newly legalized sports wagering success, they must be doing a few things right. It would be wise for other states and their legislators looking to get into the business to take notice.

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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]