2018 was a landmark year for the gambling industry in the US. On June 14th Phil Murphy, Governor of New Jersey, placed the first legal bet in his state. It was the end of a long, hard fought battle to legalise sports betting in the Garden State – a battle that had, in due course, overturned legislation preventing states deciding on whether to legalise sports betting for themselves.
Previously, the Professional and Amateur Sports Protection Act (PASPA) had prohibited states (with the exception of Nevada) from determining their own sports gambling laws. In 2012, however, New Jersey began the process that would see the Supreme Court reforming PASPA last year.
“The legalization of sports gambling requires an important policy choice, but the choice is not ours to make. Congress can regulate sports gambling directly, but if it elects not to do so, each state is free to act on its own. Our job is to interpret the law Congress has enacted and decide whether it is consistent with the constitution. PASPA is not,” Justice Samuel Alito wrote for the court.
The decision opened up the very real possibility for national online sports betting, which could pave the way for huge developments for gambling in general.
Giving sports fans the ability to make data-informed bets
“It brings a multibillion dollar industry out of the shadows and into the sunlight, where its integrity can be guaranteed and consumers can be better protected,” Ted Leonsis, who owns the NBA’s Washington Wizards, the WNBA’s Washington Mystics and the NHL’s Washington Capitals wrote in a blog post. “I think that the increased transparency that will accompany more legalized betting around the country will only further protect against potential corruption,” he added.
Proponents of online gambling argue that as new generations of sports fans continue to embrace the second screens they carry in their pockets, it isn’t hard to imagine them using their devices to analyse data, place bets and communicate with each other in real time as games progress.
Advocates note that data analysis has always been the lifeblood of sports fandom, and with ever more information about player movements, biometrics and detailed opponent history, it’s a logical next step to enable fans to place bets based on that data. It will bring fans closer to the game, intensifying the action with the increase in personal stakes, they argue.
Beyond the fans, professional sports teams are also likely to benefit. Famed investor and Dallas Mavericks owner Mark Cuban even went so far as to say that franchise owners saw their investments double overnight with the change to the law.
The NBA has been swift to embrace the new changes. “We’re going to have better results in a regulated market than an unregulated market,” said Scott Kaufman-Ross, vice president and head of fantasy and gaming for the NBA. The upshot is a deal with Sportradar and Genius Sports to distribute NBA betting data to sports gambling providers in the U.S., just one of many such deals that will see sports brands, media outlets and platform holders such as Google and Facebook benefit from the new regulations.
Britain: a case study for potential benefits
The UK provides a compelling case study for the benefits that legalised sports betting can bring. It’s a much smaller market than the US with a tighter selection of popular sports, but it still had a total gross gambling yield of $18.19 billion in 2017 – the equivalent of £208.50 for every one of the country’s citizens.
The online sports betting market is thought to be worth around £650 million and saw a compounding annual growth rate from 2009–12 of approximately 7%. Gross profits are taxed at 15%, with taxes on online casinos set to increase to 21%. That’s a significant boom to Treasury coffers – and the government can reinvest this cash to maintain hospital, schools and transport.
Online gambling has driven this growth. It now accounts for £4.5 billion annually – making it the largest single gambling sector in terms of revenue produced. And it’s clear to see the reasons why. Attracted by the option of playing their favourite casino games and slots from the comfort of their own home, players have headed to virtual operators in their droves. With a range of exciting games that can be played anytime, anywhere and on any device, here’s an example of a leading online casino in the UK.
Ripple effects of the PASPA ruling
Many expect that the legalisation of sports betting in the US will have a worldwide impact, particularly in Asian markets. “This decision is going to have ramifications around the world,” David Leppo, CEO of FootballBet.com and BetMex.net, said. “If sports betting in the U.S. is legalized, others will fall in line.”
It’s expected that legalised sports betting, mostly done online, will have a knock on effect domestically, too. It’s likely to lead to the legalisation of other forms of online gambling – something some jurisdictions are already exploring. Know Your Customer provisions and other safeguards created for sports betting designed to prevent money laundering and tackle problem gambling could be rolled out to other forms of online play, and the increased tax revenue is likely to prove extremely tempting for government on both state and federal levels.
Illegal sports betting is estimated to be worth $150 billion on the black market. A 2017 gaming industry study estimated that offshore bookmakers are already making $2.5 billion to $3 billion from Americans betting illegally. That same report said that somewhere in the region of 12–15 million people in the U.S. are currently active illegal bettors, and that doesn’t even account for ‘casual’ or ‘social’ sports fans having a flutter on their favourite team.
The potential tax revenues for sports betting alone are huge, never mind the streams that could be opened up by legalising other forms of online gambling. An Oxford Economics report commissioned by the American Gaming Association, published in 2017, said that sports betting could contribute $11.6 billion to $14.2 billion to US gross domestic product annually, depending on the specifics of which states adopt it and what tax rates they use.
Furthermore, that same Oxford Economics report found that legal sports betting would create between 125,000 and 152,000 jobs, paying between $6 billion and $7.5 billion in total wages. So if Trump’s so in favour of jobs for Americans, this looks like a golden opportunity.
Research firm Eilers & Krejcik Gaming LLC estimates that online gambling could account for $9 billion of sports betting revenue thanks to the ease of access to mobile applications, and it’s not hard to imagine that growth spilling over to other forms of online gambling too, should expectations of further gambling liberalisation be met.
The new regulations could open up more interesting forms of sports betting than those currently provided in Nevada, too.
In the UK, many sports books let you create your own prop bets, focusing on a single aspect of a game and giving you personalized odds. If you want to bet on whether Harry Kane will score the next goal in a game, for example, a bookie will let you do so.
The exact fallout of recent changes to US sports betting regulations are difficult to predict, but it’s clear that sports fans will have new opportunities to engage with their sports, professional leagues and franchises will have new markets open to them and tax revenues will increase – providing a win-win situation for everyone. For now, all eyes are on the dozen states who’ve applied to have their own gambling laws reviewed in a bid to enjoy the same freedoms afforded to New Jersey. The likes of Oklahoma, South Carolina and Kentucky are all hoping to authorise sports betting – and there’s every chance that this trickle of interest will lead to a sea change.
Nicole Hicks a graduate of UFT. She’s based in Toronto but travels much of the year. Nicole has written for NPR, Motherboard, MSN Money, and the Huffington Post. Nicole is a financial reporter, focusing on technology, national security, and policing.