When it comes to money earned, sports betting classifies as a huge success. But the success of $220 billion has come with a down side, highlighted by increased calls to helplines and growing concern over developing problem gambling.
The five-year mark is considered a good time to reflect on what transpired, good or bad. And five years ago on May 14, the Supreme Court gave New Jersey a hard fought victory when it overturned the Professional and Amateur Sports Protection Act (PASPA) to allow every state the chance to legalize sports betting if they so wished.
For the Garden State it was a 10-year odyssey and a long shot, apropos for a case built on betting longshots.
While New Jersey set the tone for the first few years, in those five years, Americans have legally wagered $220 billion online or in retail sportsbooks now available in two-thirds of the U.S. That’s the good news.
What about the bad news? Advertisements, for example. They’re probably good news for sportsbooks, but for the general populace who is bombarded with ads at all times in shows unrelated to sports, it can be too much. To be fair, some of the ads are humorous, like the ones with the Manning family. And Jamie Foxx.
“While the milestones of legalized sports betting that have led up to now are remarkable, this industry is excitingly still far from being fully realized,” Jason Robins, CEO of DraftKings, one of the industry’s two dominant companies, told the Associated Press. “Legal betting is already part of mainstream sports culture, and I anticipate this trend will grow as adoption increases. The accessibility right now for fans to place a live, micro-bet during a game, for example, shares parallels with other smartphone-powered capabilities like hailing a ride, buying a stock, or playing a podcast.”
So there you have it. One more thing—PASPA went into effect in 1992 but prior to the deadline, New Jersey had the opportunity to approve sports betting before the bill took effect. Lawmakers chose not to. So if you don’t feel sorry for Jersey, completely understandable.
Enough reminiscing. The new sports betting parameters involve partnerships between sportsbooks and leagues and teams, the same leagues and teams that opposed the end of PASPA and said the arrival of gambling was detrimental to the well being of sport. Money can do that.
Betting is now part of the language of sports everywhere, except for the few states that still have yet to legalize sports betting. Participating states receive taxes, perhaps not as much as they hoped for, but more than they got without sports betting. Casinos get a pittance. But it certainly is no gold mine, as even the top dogs in the industry are still barely profitable.
Now the real problems. Compulsive gambling. The 800-GAMBLER helpline has seen an increase of 15 percent, the largest jump on record, according to Keith Whyte, executive director of the National Council on Problem Gambling.
NFL players have been suspended for betting on games, and some colleges that struck partnerships with sports leagues, marketed sports betting to those under 21.
The $220 billion figure includes bets through March, according to the American Gaming Association (AGA), the gambling industry’s national trade group.
Sports betting has also kept numerous race tracks, such as the Meadowlands Racetrack, from folding up.
“It saved the day,” said Jeff Gural, who operates the track in East Rutherford that includes a FanDuel sportsbook, which combined with FanDuel’s online operation takes in nearly 50 cents of every dollar wagered on sports in New Jersey.
“I don’t think the Meadowlands would be open as a racetrack now without sports betting,” he told the AP.
Sportsbooks won $17 billion in the five years. Of that, $3.6 billion went for taxes. FanDuel and Draft Kings control over 70 percent of the legal sports betting market in the U.S., according to the gambling analytics firm Eilers & Krejcik.
In the 12-month period ending with February 2023, FanDuel had just under 46 percent of the market, while DraftKings had over 25 percent. BetMGM had nearly 12 percent, Caesars Entertainment had 6.7 percent, and no one else had more than 2.4 percent.
And for the next five years? Look for multifaceted deals with teams, leagues and venues, maybe even media companies and hotel chains.
The trend of gambling companies locating sportsbooks in or next to pro sports stadiums is likely to continue. Sportsbooks as a whole may slow down their promotional spending to rein in costs. And uncertainty should continue in the near term about the prospects for online sports betting in California, the nation’s largest state, and in Florida, where it is tied up in litigation.
The industry also continues to churn up more ways to win and lose. Take microbetting, a prop bet on whether the next pitch will be an out or single, a sinker or fastball, or in football, a running play for eight yards.
Those who treat problem gambling are particularly concerned about this type of betting for its capacity to lure gamblers into one wager after another in a very short period of time, potentially racking up large losses quickly.
The AGA also released a slew of new research to go with the five-year mark. Here are some of the key elements.
- The percentage of Americans who approved of the Supreme Court decision has gone up from 63 percent in 2019—one year later—to 85 percent now.
- 77 percent of American adults support legalization in their home state.
- 39.2 million have placed a sports wager in the last 12 months
- 78 percent of bettors place all or most bets through regulated operators.
- 77 percent of online sports bets are now placed through regulated operators, compared to just 44 percent in 2019.
“American adults have always enjoyed betting on sports, and overwhelmingly value the ability to bring their action into a legal market, close to home,” said AGA President and CEO Bill Miller. “The rapid spread of legal sports betting—fueled by regulated, responsible entities—has contributed to communities and established consumer protections by migrating betting away from the illegal market monopoly that PASPA perpetuated.”
As the legal market grows, it is increasingly attracting and retaining customers from illegal bookies and offshore operators: almost half of bettors that currently bet primarily with unregulated operators plan to transition to regulated within the next 12 months.
90 percent of bettors who place most of their wagers legally intend to stay within the legal market in the next year. The reasons why are obvious: confidence about getting paid; trust in payment options; resource availability.
Compared to five years ago, consumers have a significantly better understanding of the legal status of sports betting in their state, however, survey results also point to continued need for consumer education:
- Only 29 percent of American adults say they are unsure of the legality of online sportsbooks in their state, a 45 percent decrease since 2018.
- Yet, 70 percent of sports bettors who placed most of their bets with illegal operators believed they were betting either exclusively with legal sportsbooks or splitting their bets evenly between legal and illegal operators.
Consumer confusion is in part attributable to illegal offshore sites misrepresenting their status by marketing themselves as regulated sites.
“Five years post-PASPA, the AGA and our members continue to support responsibly expanding the legal market while cracking down on predatory illegal operators,” Miller said.