A major player has finally entered the sports betting market five years after the Supreme Court ruled that the Professional and Amateur Sports Protection Act was invalid. This opened the floodgates to legalized sports gambling in the United States.
Fanatics purchased Australian sportsbook PointsBet for $150 million on May 14. This marked the first time the apparel and collectibles company entered the world of gambling.
The sale highlighted the consolidation of an industry that was expected to be one with a lot of competition and variety. In the first five legal years of sports gambling, four companies dominated the market, leaving corporations like Fanatics on the sidelines.
What will sports betting be like in the next five?
How many states allow online sports betting?
Thirty three states plus Puerto Rico and the District of Columbia have legalized gambling. Three other states are planning to launch their betting operations later this year.
According to the American Gaming Association (AGA), 39.2 millions people have placed a sports bet over the past 12 months. According to a Harris Poll conducted in November 2022, 71% of sports bettors wager on sports every week. 20% of those people even bet at least daily.
Less than 2 percent of bets are over $100. Andrew Bimson is Sportradar North America’s president and chief operational officer. He noted that the increase in bets placed on multipliers and parlays of the same game points to the notion of the “recreational gambler”.
A report by Variety Intelligence from December 2022 found that 56% of gamblers find betting entertaining, and 42% believe it makes games more thrilling.
Bimson, a spokesperson for USA TODAY Sports, said that people are looking to be entertained. They’re seeing this as part of being a fan.
The AGA reported that $220 billion had been wagered at U.S. Sportsbooks since May 2018. Nearly $90 Billion of this figure was wagered between May 2022 and April 20,23, a 22% year-over-year increase as three new states opened their markets.
Four major sports leagues have signed deals with operators of sportsbooks (NFL MLB NBA MLS). Twelve sportsbooks are attached to professional stadiums. Josh Harris, the soon-to be owner of Washington Commanders and obtained by ESPN in his ownership prospectus, said that sports betting would add between $10 million and $15 million annually to a team’s earnings.
California, Texas and Florida are sleeping giants when it comes to legal sports betting
California, Texas, and Florida, the three states with the largest populations, do not have legal gambling markets yet. But forecasters are optimistic about the future. Eilers & Krejcik Gaming is an analytics firm that studies the gambling industry. They predict more growth in the next five-year period.
The firm told USA TODAY Sports that “Legal sports gambling will become more mainstream in the U.S., with deeper integration of operators and stakeholders such as leagues, stadiums and teams — and between operators, betting-adjacent stakeholder like media companies and hotel chains and beverage companies.”
The company estimates that the industry will generate $8.6 billion dollars in revenue in 2023. This figure is expected to rise to $14.1 billion dollars by 2027.
“We cannot stress enough that from both a stakeholder-integration and a product-development perspective, U.S. sports betting is still very much in its infancy,” the firm said.
FanDuel and DraftKings benefit from familiarity
According to Eilers & Krejcik, four primary sportsbooks hold 90% of the market.
FanDuel, DraftKings, and BetMGM, two Las Vegas-based companies that were born out of the daily fantasy craze, are the leaders in the top group.
John Holden, a management professor at Oklahoma State University who has written extensively on the gambling industry and made many comments, told USA TODAY Sport that “A lot of people underestimated FanDuel and DraftKings customer lists.”
The United Kingdom, Australia and other countries with legalized gambling industries dating back decades were expected to be more competitive.
Holden said that “what we saw is that Americans are very familiar with FanDuel’s technology and DraftKings. They like the interface, and they enjoy the daily fantasy experience.”
The familiarity was an advantage.
Bimson stated that the consolidation process is only beginning due to the pressures on the market, and the stranglehold of the top four.
He said, “It will be difficult to compete with the other four.”
Holden wonders if a bigger corporation such as Disney or Microsoft could enter the market to challenge FanDuel and DraftKings.
He said, “That’s a billion-dollar problem.”
It’s difficult to imagine such a change at the top even though Fanatics claims a customer base of 94 millions.
Does sports apparel or sports cards translate to sports betting? Holden replied, “I don’t think so.”
Problem gambling is an afterthought
Holden says that the failure to pay attention to problem gambling, both by operators and governments, has been the biggest failure in the past five years.
He said, “It is largely an afterthought.”
There are 1-800 numbers, as well as state-specific hotlines for those who need help. Holden said that there are often not enough funds to operate phone lines.
Keith Whyte is the executive director of NCPG, the National Council on Problem Gambling. He believes that there are two major failures on behalf of state legislators who legalized gambling.
- It is not a requirement that a certain percentage of state tax revenues from sports betting be used to combat problem gambling
- No requirement that operators share data on potential gambling issues. Only New Jersey and Ohio have passed legislation that requires this.
Whyte stated that states will only do what is required. D.C., for example, recently approved a budget that reduced funds allocated to deal with problem gambling from $200,000 down to $0.
Whyte stated that sportsbooks are unlikely to voluntarily go above and beyond what is required by the state. He noted that forward-thinking books, such as those at the top end of the market, have already set high standards for themselves, even when they were not legally obliged to. FanDuel’s mobile app includes a feature which tells users how long they’ve been logged in for and the amount they wagered.
Whyte stated that the NCPG tried to lobby at the state-level for greater consumer protections but “we couldn’t get them to adopt it.”
Gambling can become problematic if you bet irresponsibly. Whyte, along with other advocates, are also aware that in order to make gambling addiction a public health concern at the national level, it is important to conduct a comprehensive national study on gambling. This will help to determine who has gambling issues and identify those most at risk.
Young bettors at risk for gambling problems
In 2021, the NCPG conducted a survey with 3,000 respondents and found that online sports bettors aged 18-24 were at a higher risk. The 18-24 group has a low level of gambling literacy, and 75% of those surveyed in this cohort believe gambling is a good way to earn money.
Whyte said, “That’s terrifying.” They’re starting their gambling career with the wrong attitude, which is a surefire way to get into gambling problems.
100 % of respondents 65 years and older said it is not.
Whyte stated, “Gambling is not the way to earn money. “It’s entertainment. “You wouldn’t think that going to the movie is a great way to earn money either.”
Whyte stated that young people are more likely than older men to take risks, and their brains do not develop fully until they reach 25 years old. With the legalization of gambling and its prevalence, youth face a new challenge that was not faced by their predecessors: the “four A’s,” as Whyte called them.
- According to iSpotTV, sportsbook brands will spend $314.6 millions on national TV advertising in 2022.
- Accessibility — Playing on the phone, using a credit card to pay, or watching a Twitch stream of a casino
- Gambling was stigmatized in the past. Celebrities like Kevin Hart and Jamie Foxx are now the face of gambling companies.
- Action – There are always hundreds of wagering options, even for a single game.
Sports betting is different from other gambling activities in that it can be used to identify high-risk gamblers. The NCPG survey revealed that a college graduate is more likely to bet sports than someone with only a high-school diploma. And the odds of betting on sports increase with income.
The streaming giants that have integrated betting in live games
In the past five years, both graphic producers and announcers have embraced betting talk.
Amazon and Apple, the streaming giants, have recently signed media rights deals with the NFL and MLS. This gives operators a look into the future of how betting will be integrated in over-the-top broadcasts for sports that are aimed directly at consumers.
Sportradar’s Bimson says that nine out of ten bets are made on mobile devices. Bimson believes embedded betting is a great example of real-time engagement that allows fans bet while watching the game.
Bimson stated that “that, for us is the type game-changing technology which will start to drive greater activity, especially when we think about the most recent media rights deals.”
The sports betting industry will not be exempt as Artificial Intelligence becomes more integrated in all aspects of society. The collection of data is crucial, from the movement of a player’s to the actions taken by a potential bettor.
You can soon receive a push message on your smartphone while watching a game on your Smart TV.
Bimson stated that “all of those things become an extremely interesting component” for him.
What has been the impact on NCAA and pro leagues?
Since its legalization, sports betting has been the subject of scandals. Reports of irregularities in a sportsbook linked to Great American Ballpark, home of the Cincinnati Reds, led to the firing by the Alabama head coach Brad Bohannon in May.
The NFL suspended wide receiver Calvin Ridley from the Jacksonville Jaguars for an entire NFL season because he bet on NFL games when he was away from the Atlanta Falcons, his team. Ridley was reinstated since then. NFL players can bet on sports other than football, but not on league ground. Detroit Lions wideout Jameson Williams is going to miss six games for breaking this rule in 2023.
Miles Austin, the wide receivers coach for the New York Jets, was suspended indefinitely by NFL officials after he violated its gambling policy. This policy prohibits all gambling among coaches and personnel.
NCAA rules prohibit all athletes, coaches, and staff to bet on sports in which an entity holds a championship. The state gambling commission was also investigating more than 40 athletes in Iowa and Iowa State.
The impact of golf on sports betting
Golf is one of the more popular sports for betting as sports betting continues to grow. Golf offers bettors an opportunity to make higher payouts because of longer odds.
Future bets can be placed on the New England Patriots, for example, to win the Super Bowl. The Patriots are currently +6500 or 65/1 to win the Super Bowl this February. In this case, the problem for bettors is that they would have to wait an entire year to find out if their wager pays off.
Fans can place bets on a player every week at odds of 65/1. Even the favorites like Scottie Schiffer at Memorial this week are usually around +600. Gamblers will continue to be attracted by the potential payouts.
What has changed in Las Vegas sports betting?
Las Vegas has been the center of gambling for decades. In 2018, sportsbooks made nearly $5 billion from wagers. The repeal of PASPA had a profound effect on all states.
Sin City has not changed much in the past five years. MGM Resorts announced a record-breaking handle bet during Super Bowl 57, between the Philadelphia Eagles vs Kansas City Chiefs.
Jay Kornegay is vice president at the Las Vegas Hotel & Casino SuperBook. He said that the concern about legalization in other states affecting the overall state take did not come to pass.
Kornegay said to USA TODAY Sports that “that’s possible over the long term, especially if California legalized it.” Voters in 2022 rejected two propositions which would have legalized gambling in sports. The fight also includes protecting the sovereignty and control of Native American tribes in the state. “However I’ve also spoken to a few people who have recently been introduced to sports betting and that led to their visit to Las Vegas.”
Kornegay says that sportsbooks are available across the nation, but it’s “difficult” to replicate the Las Vegas offerings.
Kornegay says that during major sporting events like the Super Bowl and March Madness, the conversation shifts to “we have to go to Vegas to do this.”
Vegas should keep a close eye on the national scene because it could be overtaken by creative offers and promotions in other states.
Kornegay, a Las Vegas-based operator, said that the operators invest in technology to keep up with the competition. The technology they have is “well behind what you can see nationally” he added.
Follow Chris Bumbaca via Twitter @BOOMbaca
