US Sports Betting: Where It Stands One Year After The Federal Ban Fell
I was one of several hundred people sitting in the US Supreme Court in December 2017, watching oral arguments in Murphy vs. NCAA, the case about the US sports betting ban outside of Nevada.
Roughly five months later — or one year ago this week — SCOTUS ruled that the ban under the Professional and Amateur Sports Protection Act was unconstitutional. (Here is a timeline of the history before and after PASPA.)
And like that, things changed dramatically for the world of sports, sports media and, of course, the gambling industry. At the same time, some things didn't change at all.
What has happened in the year since PASPA went the way of the dodo? And what we can expect in years to follow?
Sports betting has come to a lot of states, with more on the way
If you thought every state was going to legalize sports betting instantly, you were in for a rude awakening.
But in the grand scheme of how things usually progress legislatively, I could argue the pace of legalization has come at a breakneck pace. The current list of states that have legalized sports betting in some fashion stands at 14 (plus sports betting that will take place in Washington, DC).
Has legal betting already:
- New Jersey
- West Virginia
- Rhode Island
- New Mexico
- New York
Tennessee should join that second list later this month when the governor allows a bill to become law.
Still, while the states have turned the map green, and more should go green in 2019, the road in some ways gets tougher from here.
Big states like Florida and California have complicated paths forward. New York, while it will have retail sportsbooks, faces an uncertain future for online betting.
No, sports betting revenue has not been disappointing
One of the narratives in year one after PASPA has been that sports betting revenue has been disappointing.
While it may be disappointing to some, I'm here to tell you that's a ridiculous assertion. Why?
- Of the new states with sports betting, only New Jersey has had mobile wagering. The estimates some states were making counting on meaningful revenue from retail sportsbooks were unrealistic. Over 80% of wagering in NJ takes place online. No wagering online = not that much money.
- The rollout of mobile has been slow. Both West Virginia and PA legalized online, but right now, no bets are being taken online. West Virginia was for a while, but no one is active after the shutdown of BetLucky.
- Sports betting markets are not mature. While the lights are now on, revenue wasn't instantly going to hit its ceiling in the opening months. Every state is still going to grow revenue as marketing efforts ramp up, education improves, more operators serve states, etc.
So, if you're saying sports betting is underperforming, please take a lap. It's way too early to say that.
The NCAA still has its head in the sand
The major US pro sports leagues and the NCAA fought for years to stop sports betting from expanding in the US in federal court. But they ultimately lost that war.
Today, the pro leagues at least understand that sports betting is coming, whether it's on their terms or not. They have generally been supportive of legalization efforts, even if not everyone agrees with their desire to legislate official data or so-called integrity fees or royalties paid directly.
But the NCAA remains intractable in the past. The college sports organization still supports a ban on wagering either federally or at the state level, even if its leadership knows that's not likely.
The NCAA remains in ostrich mode as wagering at college football betting sites and basketball remains a significant source of action offshore, no matter what states do. We also continue to hear athletic directors say tone-deaf things about the increased risk to student-athletes, even when that risk has been sizable for a long time.
It at least rescinded the ban on championship events being held in states with legal wagering, but that was more of a pragmatic move. The NCAA realized it couldn't possibly keep events out of the growing number of states that have legalized wagering.
In reality, the NCAA and its member schools should want to move the offshore action into regulated markets with more transparency, but, so far, no dice.
Things arguably have gotten better for offshore sportsbooks
Lots of people think the US Supreme Court just legalized sports betting everywhere last year, instead of the reality that states can legalize it if they want.
That concept is likely the cause of joy for offshore sportsbooks that serve the US market illegally. Google “sports betting” or a related search from the United States, and you're likely to get a handful of sites and apps that serve Americans, even though they do so disregarding a variety of federal and state laws.
That's also coupled with the fact that the last year has not really resulted in any increased law enforcement action.
Truth be told, until someone tries to make enforcement a priority, that status quo will persist. Ironically, legal forms of online wagering in the US are under fire via the Department of Justice via the Wire Act; a federal court case is currently active.
DraftKings, FanDuel and William Hill are early leaders
A few people might have envisioned a world where FanDuel and DraftKings would be early dominant forces in legal sports betting.
But it's a relatively surprising development to many. Prior to PASPA's fall, DraftKings and FanDuel were both relying on what had become a DFS market that was not growing rapidly.
But FanDuel was taken over by Paddy Power Betfair and quickly pivoted to sports betting with the help of its European parent company. DraftKings was first to market for NJ online sports betting.
Now, the two operators dominate the market, with everyone trying to play catch-up in NJ.
How have they succeeded? It's been a mixture of things, including but not limited to:
- Good brand recognition from their position in daily fantasy sports.
- A robust database of players would be relatively easy to convert to sportsbook.
- An early-mover advantage in NJ.
- Apps that stack up well against the competition and are arguably better than just about anything on the market.
- Solid marketing efforts.
It's a formula they will try to replicate in other states, although certainly, competitors are likely learning from the NJ experience.
And it's not a guarantee they can or will always be able to run the same gameplan to perfection. Both should be in WV; FanDuel will launch in PA, while DraftKings' path is a bit more uncertain.
In any event, the two DFS companies have successfully pivoted to sports wagering, and are a major part of the conversation today.
Also doing well is William Hill, which is a leader in Nevada and also has a presence in just about every state and a solid footprint in NJ. They are the only sportsbook in the mix in Delaware and Rhode Island.
It has likely left large gaming companies like MGM and Caesars wondering how they let this happen.
The post US Sports Betting: Where It Stands One Year After The Federal Ban Fell appeared first on Legal Sports Report.
Andy has been writing and posting about offshore sportsbooks for over 15 years. He's also an active sportsbook bonus seeker and seasoned online gambler on US sports.
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