Americans bet $220 billion on sports in 5 years after legalization

Americans have bet more than $220 billion on sports with legal gambling establishments in the five years since the U.S. Supreme Court cleared the way for all 50 states to offer it, and the industry shows little sign of slowing down despite some recent scandals that have put the attention precautions when betting.

When Sunday marks the anniversary of the ruling in a lawsuit filed by New Jersey, two-thirds of the country will offer legal sports betting, with additional states likely to join in the coming months or years.

The fast-growing industry is also far-reaching: Its ads reach most US homes during sporting events and even non-sports programming. Few television viewers were spared repeated commercials showing a Caesar character discussing sports gambling with members of the Manning football dynasty, or actor Jamie Foxx making sports bets between sets.

“While the milestones legalized sports betting has made so far are remarkable, it’s exciting that this industry is still far from being fully realized,” said Jason Robbins, CEO of DraftKings, one of the two dominant companies in the industry. “Legal betting is now part of mainstream sports culture and I expect this trend to grow as acceptance increases. The accessibility now available for fans to make live micro-bets during a game, for example, shares parallels with other smartphone-powered opportunities such as calling a ride, buying shares or starting a podcast.”

On May 14, 2018, the Supreme Court decided a case that began 10 years earlier in New Jersey as the longest shot: an attempt to overturn a federal law, the Professional and Amateur Sports Protection Act, that limited sports betting to just four states , who met the 1991 deadline to legalize it.

Since then, some once-unthinkable changes have occurred: Professional sports leagues, which fought New Jersey tooth and nail all the way to the Supreme Court in an ultimately unsuccessful effort to prevent legalized betting, are now partnering with gambling companies, plastering their fields with sports betting advertising, and some even have betting outlets in their stadiums. Betting odds are now an integral part of many game broadcasts.

Legalizing sports betting opened up opportunities: additional tax revenue for states, a small additional revenue stream for casinos and racetracks, and a way to keep many people away from the dangers of unregulated offshore gambling websites.

It’s also causing problems: Those in treatment for compulsive gambling say calls to their helplines have increased significantly in the five years since sports betting was legalized and made available on mobile phones. Keith White, executive director of the National Council on Problem Gambling, says calls to the 800-GAMBLER helpline have increased 15 percent over the past five years as “states began the fastest and largest expansion of gambling in our history’.

Several NFL players were suspended for betting on games, and some colleges that partnered with sports leagues illegally advertised sports betting to students under the legal age of 21, prompting leagues and gambling companies to review their policies.

Gambling integrity was in the news again last week when regulators in Ohio, Pennsylvania and New Jersey ordered their sportsbooks to stop accepting bets on the University of Alabama baseball team after suspicious activity was identified at a State University game on Alabama-Louisiana on April 28. Alabama baseball coach Brad Bohannon was fired amid an investigation that began when one of the many companies monitoring data on sports betting and other activity found what it believed to be suspicious activity and reported it to gambling regulators. No criminal charges have been filed.

The $220 billion figure includes bets placed through the end of March in most states, according to the American Gaming Association, the gambling industry’s national trade group. That’s more than the $125 billion that was pledged at the four-year mark.

Consider this: Sportsbooks typically keep about 10% of all the money they handle after paying out winning bets to customers.

Achieving profitability was a long and difficult process. FanDuel became the first to report a profitable quarter in the latter part of 2022 and expects to be profitable for 2023. DraftKings expects its first profitable quarter later this year, and BetMGM expects to break even in the second half of this year.

Sports betting also keeps alive the Meadowlands racetrack in northern New Jersey, just across the Hudson River from New York.

“Sports betting saved the day,” said Jeff Gural, who runs the East Rutherford track, which includes a FanDuel sportsbook that, combined with FanDuel’s online operation, takes nearly 50 cents of every dollar wagered on New Jersey sports.

“I don’t think the Meadowlands would be open as a racetrack now without sports betting,” he said.

The amount of money held by sports betting as winnings over the past five years was $17 billion, according to the American Gambling Association, the gambling industry’s national trade group.

During that same period, sports betting taxes for operators generated almost $3.6 billion: $3 billion for state and local governments and $570 million for the federal government. In many cases, taking a separate country is a drop in the bucket.

While the extra money for state governments was used as a selling point for legal sports betting, another goal was to protect consumers by allowing customers to bet with government-regulated entities where their deposits are safe and there is no danger of a sports bookie suddenly disappearing with someone’s cash.

The avalanche of sports betting ads also caused a backlash to the point where the gambling industry and most major professional sports leagues adopted stricter standards for their own ads. They were widely seen as an attempt not only to do something about the proliferation of gambling and sports betting ads in particular, but also to be seen as doing something about and hopefully preventing threatened government regulation of sports betting ads.

Five years later, just two companies — FanDuel and Draft Kings — control more than 70 percent of the legal U.S. sports betting market, according to gambling analytics firm Eilers & Krejcik.

In the 12-month period ending February 2023, FanDuel has just under 46% of the market, while DraftKings has over 25%. BetMGM has nearly 12 percent, Caesars Entertainment has 6.7 percent and no one else has more than 2.4 percent, the company said.

What will the next five years look like? Chris Krajcik of Eilers & Krejcik predicts more multi-party deals between teams, leagues and stadiums, as well as between betting operators and media companies, hotel chains and beverage companies.

Krafcik said sports betting companies could develop VIP-focused retail destinations and look to expand “ultra-casual” online betting.

The trend of gambling companies locating sports betting at or next to professional sports stadiums is likely to continue. Sportsbooks in general may slow down their promotional spending to rein in costs. And uncertainty should continue for the foreseeable future about the prospects for online sports betting in California, the nation’s largest state, and in Florida, where it is mired in litigation.

The industry is constantly inventing new ways to bet. One fast-growing trend is so-called microbetting, which can be a series of quick bets. In baseball, this might include how fast the next pitch will be; whether it will be put into play; whether that ball will be caught for an out, or become a single, double, triple, or home run.

Those who treat problem gambling are particularly concerned about this type of betting because of its ability to lure gamblers into one bet after another in a very short period of time, potentially quickly accumulating large losses.

Leave a Comment

Your email address will not be published. Required fields are marked *