If it weren’t already glaringly obvious by the number of illegally transacted sports bets placed on the Super Bowl alone, the full potential of a lawful sports betting operation in the United States is nothing short of titanic.
That’s the upshot of a report by GamblingCompliance titled “U.S. Sports Betting: The Final Frontier of American Gaming.”
GamblingCompliance breaks its sports betting projections down into three operating models:
- Casino: $1.5 billion
- Online: $4.5 billion
- Retail: $6.3 billion
At 12% of total gross gaming revenue (GGR) the casino model, which would establish sportsbooks at commercial and tribal casinos and also permit limited account-driven mobile wagering, stacks up quite poorly relative to the other models.
This is presumably due to the fact that commercial and/or tribal casinos do not yet exist in every U.S. state, and in the ones where they do, they’re often located far enough away from the state’s population center to render them an inconvenient option for most gamblers.
New Jersey is a perfect example of this, as the state’s four most populated counties are located in the northern region of the state, at least a two-hour drive from Atlantic City.
On the other end of the spectrum are retail outlets, which GamblingCompliance sees accounting for just over half of all sports betting revenue. This figure is largely justified by the high frequency of lottery outlets and sports bars in the U.S., not to mention the potential explosion of betting shops, akin to those that have found favor in the United Kingdom.
Walking the middle line is online sports betting. While the growth of all online betting formats is undeniable, sports betting is undoubtedly the vertical that is benefiting the most from online wagering.
To illustrate the potential of online sports betting in the U.S., consider that New Jersey online casino revenue only constitutes approximately 4% of total casino win (even less in Delaware), yet GamblingCompliance has online sports wagering generating a staggering 36% of industry revenue.
And why not? Wagers on sports generate more revenue for UK operators than any other online vertical (£1.19 billion in 2014).
How would sports betting stack up against other gambling verticals?
Should all three sports betting models be legalized on a federal level, industry revenue would hold its own against other gaming verticals.
But at $12.4 billion, the sports betting industry eventually stands to challenge the lottery for third place. The lottery generated $19.9 billion in transfers last year.
Is now the time to legalize sports betting?
Illegal sports betting has run rampant in the United States. It is estimated that $95 billion dollars will be wagered on NFL and college football this season alone.
Considering that in 2014, legal sports betting in Nevada handled just approximately $3.9 billion worth of wagers across all sports, it’s safe to say that the federal government is under sufficient pressure to repeal the 1992 Professional and Amateur Sports Protection Act (PASPA).
Already, states are either preparing for its reversal or have designs on bypassing the law altogether:
- California Assemblyman Adam Gray has recently introduced a bill that will legalize sports betting in the state should federal law allow it. Read the full text of AB 1441.
- Pennsylvania has recently introduced a bill, as well.
- New Jersey has made repeated attempts to take matters into its own hands, only to have its plans to introduce sports wagering at state casinos and racetracks rejected on the basis that they would violate the PASPA.
- Other states including Indiana, Minnesota, New York, South Carolina, Texas and Mississippi are all considering sports betting legislation.
What’s more, even professional sports leagues are having a change of heart. There’s perhaps no greater example of this than NBA commissioner Adam Silver, who has gone so far as to pen an op-ed calling for the legalization and regulation of sports betting.
Just as online gambling regulation is now a state issue, it is high time federal legislators loosen their belts and allow individual states to decide what’s best for their economy.
Alternatively, they could turn the other cheek as U.S. residents wager tens of billions of dollars on sports each year, illegally.