Nine months ago, something remarkable happened in the world of sports. After 26 years of sports betting being illegal outside the state of Nevada and a handful of other venues, the Supreme Court struck down the law that made bookmaking illegal. After a quarter-century of moral panic over the potential impact of legal betting, the court suddenly realized that a black market that takes an estimated $150 billion in illegal bets every year might be a lot worse.
The court's decision last May to strike down the Professional and Amateur Sports Protection Act (PASPA) opened the door for states to decide for themselves whether or not they wanted legalized sports betting. Joining Nevada on that front are Delaware, Mississippi, West Virginia, Pennsylvania, Rhode Island, New Mexico, and the state that twice attempted to legalize sports betting before emerging victorious, New Jersey.
You could argue that legalizing sports betting was a win for fans of civil liberties, but the real reason was much simpler.
"They were looking for revenue," said Dustin Gouker, lead sports betting analyst for PlayNJ.com, part of the PlayUSA Network. "Given what happened to Atlantic City obviously, after the economic downturn, [New Jersey] was just trying to find ways to get revenue. Casinos were saying, 'We could really use this.' Horse racing was in decline too, so this was a way to increase revenue and attendance at Monmouth Park and the Meadowlands. That's what it will be moving forward in a lot of states."
The next state up could be New York. On Tuesday, Governor Andrew Cuomo brought up the upside of sports betting early in his State of the State address.
"Let's authorize sports betting in the upstate casinos," Cuomo said in his address. "It's here. It's a reality, and it will generate activity in those casinos."
The casinos in question are Del Lago Resort, Tioga Downs, Rivers, and Resorts World Catskills, all four of which were authorized to offer sports betting following the passing of a state law in 2013. With federal law now allowing states to chart their own path, Cuomo sees that same revenue upside that New Jersey is starting to capture.
Sportsbooks in the Garden State took in more than $1 billion in wagers over a period of less than seven months and stand poised to rake in a lot more with Super Bowl 53 next month. Research firm Eilers and Krejcik Gaming predicts that betting at sportsbooks in New York could top $500 million in revenue a year.
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Those kinds of numbers could prompt at least 20 states to pursue legislation in 2019 that would legalize sports betting, Gouker said. Still, even with the federal government turning the issue of legalizing sports betting over to the states, and so many states thirsting to get going, sheer opportunity and will might not be enough to give you the right to bet legally on sports immediately, if you live in one of the 42 states sitting on deck.
"There are different stakeholders, different sets of rules, and we didn't even discuss Tribal gaming," Gouker said. "They have to figure out how all those parties get their cut. The sports leagues are telling policymakers what they want. The states are getting bombarded from all kinds of different angles, from lobbyists, from everyone. People in a lot of states just want to do it, but getting to that answer may not happen in one year."
Chris Grove, a gambling industry analyst for Eilers and Krejcik, echoed those thoughts. In terms of total population, about 10 percent of Americans can now legally bet on sports. Grove sees that number rising to about 25 percent by the start of next year, with about half the nation being able to place legal sports wagers by around 2022. Growth could plateau from there, he said, due to some of America's biggest states having complicated politics -- and Utah being Utah.
"Texas is so anti-sports betting, but the sports culture is also so big there," Grove said. "California has an incredibly diverse mix of stakeholders, so it's hard to find legislative consensus. We can get to about 50 percent of the U.S. population in a hurry, then [growth] starts to slow down. Some states might never adopt."
PASPA passed just as the internet started to make its way into American homes. From there, it only took a few years before offshore companies began raking in gobs of cash in sports bets. Despite the massive betting black market that ensued, major North American professional sports leagues and the NCAA for years fought hard to prevent legalization.
But the tide started to turn in 2014. That year, NBA commissioner Adam Silver wrote a New York Times op-ed lobbying Congress to give states the ability to legalize and regulate sports betting. In a wild coincidence, the league happened to be investing in daily fantasy sports company FanDuel at the same time.
Five years later, it's DFS powerhouse DraftKings, followed by FanDuel, that lead the way in the race to rake in sports betting money. In New Jersey, DraftKings Sportsbook and FanDuel Sportsbook (in conjunction with betting app provider PointsBet) accounted for more than 80 percent of the state's online sports gaming revenue in December.
As exciting as placing sports bets in person might be for lots of gamblers, the big upside sits in mobile wagering. But the proliferation of mobile betting could be even more sensitive to state-by-state whims than simply getting legislation passed and opening sportsbooks. Grove lives in Las Vegas, where he still finds himself perplexed to see online sports bettors forced to actually go into casinos to complete the process of placing bets on their phones.
The moral police still hasn't gone away, even as sports betting has gained traction. North American sports leagues still see the potential to abuse the system, so they're reaching out to leagues abroad with more established betting infrastructures. That includes the NBA closely studying the policies and procedures of the English Premier League, where almost every soccer stadium has betting outlets on site, and the ability for spectators to see betting odds in real time.
Still, Grove sees legalization as a positive when it comes to stamping out corruption.
"Sports betting isn't coming, it's already here," Grove said. "What's coming is regulated sports betting. What you'll see is the regulated market draw a lot of the demand out of the black market. Will there be total eradication of corruption at the intersection of sports betting? I think that's an assumption that goes too far. But on balance, regulated sports betting has the overall positive effect of moving some activity out of the illegal market. Regulated sports betting is so transparent, you'd be a bit of a fool to conduct match-fixing schemes in proximity to regulated markets."
Legalizing sports betting could have unintended consequences in other areas too. When it comes to match-fixing and point-shaving, we've seen more corruption in the college ranks than we have in the big four North American pro sports. That makes a lot of sense, when you consider that college athletes risk their health and their future to play for no money, even as the schools that throw them on the field rake in ungodly riches. Once more people can legally bet on big college football and college basketball games, the debate over paying college athletes could heat up in a hurry.
"There's so much money flowing around these athletes," Grove said. "You already had TV, merchandising, and now legal betting. How much weight needs to be on that side of the scale before it becomes untenable to not pay athletes. It's another piece of revenue, but also that tie-in to 'integrity' becomes much harder to argue. The spread of regulated sports betting will accelerate the discussion around whether collegiate athletes should be compensated."
Many questions remain. Even after states legalize sports betting, how will they make it available to gamblers? Who gets to offer it -- sportsbooks, online operators, tribal casinos, state lotteries, or all of the above? And if smaller and newer sports leagues like UFC and the Arena Football League were to aggressively embrace sports gambling from the start, how quickly would more established leagues dive all the way into the pool, in an effort to capture every dollar they can?
As the race to tap into that gigantic $150 billion-a-year industry gains steam, these and other questions will get answered as quickly as possible. Bet on it.
