On May 14, 2018, the U.S. Supreme Court overturned the Professional and Amateur Sports Protection Act (PASPA), culminating a six-year legal crusade by New Jersey lawmakers. Then Governor Chris Christie and former state Senator Ray Lesniak led the way, and victory in New Jersey opened the floodgates for other states.
It’s been a flood, all right. Just three years in, sports betting is legal in 27 states and Washington, D.C. And the money is real too: Nine states have seen handle in excess of $1 billion, including three— Illinois, Colorado and Michigan—that didn’t go live until 2020. Another six states should launch sports betting this year, and 14 have active bills in the hopper, according to the American Gaming Association.
Big Bucks, But ‘Supplemental’
Each of Atlantic City’s nine casinos has a presence in the sports betting marketplace. So do New Jersey’s three racetracks, including the Meadowlands, just across the Hudson River from New York City.
In New Jersey, the overwhelming percentage of sports wagers is placed via mobile phone apps. It’s easy for New Yorkers to cross over to Jersey to wager on their favorite games, something that will continue until New York finally launches mobile betting on its own. The bets are included in New York’s current state budget, and according to Forbes, by 2025, taxes from online sports wagers will beat those from recreational pot by more than 100 percent).
Even before the pandemic boosted online wagering, sports betting “added a unique gaming product that appealed to consumers, many of them new to the casino experience,” according to Jane F. Bokunewicz, coordinator of the Lloyd D. Levenson Institute of Gaming, Hospitality & Tourism at New Jersey’s Stockton University. Still, she added, online wagers aren’t a direct financial windfall for casinos.
“A higher tax rate which provides revenue to the state and revenue shared with the sportsbook providers mean sportsbooks play a more supplemental rather than central role in overall gaming revenues,” Bokunewicz said.
Where sportsbooks do help is inside live brick-and-mortar venues, particularly during major sporting events. “They provide an exciting amenity, one more attraction for casino visitors that generates complementary non-gaming revenues, particularly from food and beverage services,” said Bokunewicz.
The Crowd Cheers
“We’ve always known that sports betting was wildly popular all across the country, it was just relegated to the black market outside Nevada,” said former William Hill U.S. CEO Joe Asher. “Now that people see it happening legally in other states, they want it in their own state.”
The pro sports teams want it too. For decades, professional leagues opposed legal sports betting, saying it would undermine the integrity of the games. In fact, PASPA is also known as the Bradley Act for its chief proponent, onetime New Jersey Senator Bill Bradley. Ironically, the man who stood foursquare against sports bets was a two-time NBA champion who played with the New York Knicks.
But nowadays, sports leagues have embraced sports betting as a way to expand fan engagement. Many teams have established partnerships with sportsbooks and casinos.
How popular is sports betting? Twenty states took in more than $21.5 billion in legal sports wagers in 2020. Millions or billions more are still going to illegal offshore sportsbooks, but AGA CEO Bill Miller expects that to shift as legal options become more widespread. “We’re continuing to set monthly record handles, which suggests that people, once they’re made aware of legal markets, are more supportive of them,” Miller said.
By some estimates, the U.S. market could generate up to $1.3 billion this year. By 2023, with 37 states offering some form of sports betting, the total could reach $6 billion. And total overall revenues could reach $30 billion in the next five years. With Covid behind us, 2021 should prove a pivotal year.
According to the AGA website, “It’s only a matter of time before all American states offer sports betting, either via a physical sportsbook or online sports betting sites. The potential revenues are massive, and lawmakers can’t ignore the incredible tax revenues offered for much longer, especially in the wake of the pandemic.”
It’s just one reason the AGA is constantly updating its interactive state gaming map. One of many.
