US SPORTS BETTING STATUS:
Before 2018 – State of Nevada legalised it
Post May 2018 Supreme Court ruling – 21 states and District of Columbia (D.C.) have legalised it
District of Columbia is not considered as one of the 50 states.
“There is really nothing else you can legalise where you can get $300m per year in tax revenue,” says Chad Beynon, a gaming industry analyst. New York has always repeatedly opposed the idea of legalising online sports betting till Covid-19 hit the US shores.
A BIT OF A PERSPECTIVE:
2018 (before the court ruling) market study : Total market size by turnover was estimated to touch US$8bn by 2024.
2021: Flutter, owner of the online gambling companies FanDuel and FOX Bet, expects the group revenues to exceed US$20bn by 2025!!
That’s how massive an impact the 2018 ruling has had on the industry.
“There is a decent chance we could see New Jersey, Pennsylvania and Michigan become the third, fourth and the fifth largest regulated online gambling markets in the world by the end of 2021. Only behind the UK and Italy,” according to Vixio Gambling Compliance.
Investors from outside the US are all getting excited. They have been lining up to get a foothold in the country by means of takeovers and mergers.
Few notable movements:
- Las Vegas’ casino giant Caesars Entertainment’s purchase of UK Bookmaker, William Hill for an estimated US$4B
- Penn National, the casino company that recently bought the sports and pop culture website Barstool, has seen the share price surge by approximately 235% post the acquisition
- Draft Kings took the IPO route with the help of a SPAC. Franklin Templeton also invested a substantial amount at the time of IPO
As a matter of fact, an industry which has been regularly despised by the professional leagues, now finds takers everywhere. Leagues and team franchises have gone ahead and have started signing partnership agreements. Notable ones have been the NBA making MGM their “Official Gaming Partner.” Major League Baseball didn’t want to miss the bus and did the same.
WHERE IS IT HEADED?
The frenzy and the excitement to pass legislation also stems from the fact that state governments are nursing huge budget holes due to the pandemic. Under these circumstances, legalising this pastime in a country where half of the population – 154M – watch sport on TV at least once a month, sounds like a no-brainer.
An estimated US$150B was bet annually in the black market and offshore markets before 2018. State governments can take advantage of this situation. By levying a state or a service tax can aid them with their budgetary concerns.
Word of caution : UK betting industry had to be curbed with stringent regulations. US state policymakers might have to be more proactive to make this a successful long term play.
SO, A NECESSARY EVIL?