As the Supreme Court ruled to strike down a 1992 federal law banning commercial sports betting in May 2018, a new era of sports gambling officially began. Before the ban was lifted, a person wanting to place a bet on a sporting event had two options — have their boots on the ground in Nevada, or go underground with a bookmaker.
The avid bettor has always found ways to wager on sports. With the legalization of the practice, however, it opens the door for a multi-billion dollar business to move above ground with casual bettors jumping in on the action. Soon, every armchair quarterback in America will be able to place a bet while yelling at an offensive coordinator through their TV to run the ball more.
After conducting research with the American Gaming Association following the Supreme Court decision, Nielsen projects a large increase in betting across all four major US professional sports. Also, for the upcoming NCAA Tournament, the AGA determined through a survey that nearly 47 million people will place roughly $8.5 billion worth of bets during March Madness. That comes out to one in five American adults wagering money in some fashion during the three-week event. Here’s a breakdown of results from the AGA’s survey, which is posted on its website.
- $4.6 billion will be wagered on 149 million brackets by more than 40 million people
- Nearly 18 million people will bet $3.9 billion at a sportsbook, online, with a bookie or with a friend
- 4.1 million will place a bet at a casino sportsbook or use a legal app
- 2.4 million will bet illegally with a bookie
- 5.2 million will bet online, likely at illegal offshore sites
In both NBA and NHL games, Nielsen projects a 24 percent increase in betting, with the influx being contributed entirely to casual bettors. MLB stands to gain even more from legalization, as Nielsen projects a 55 percent increase in betting, with the percentage of casual bettors more than doubling. Among respondents, 16 percent said they would bet on MLB games if it were legal, compared to 10 percent otherwise.
The Nielsen study confirmed what everyone already knew — interest in legalized sports betting is immense. DraftKings, which has set up a mobile app called DraftKings Sportsbook that is available to use only in New Jersey, has already seen more than nine million people – equal to roughly the entire population of the state – download the app. DraftKings, which launched the app in August 2018, claims to have already paid out more than $5 billion.
We have already seen the popularity of DraftKings and FanDuel in their original forms. Both companies are valued at roughly $1.2 billion due to their daily fantasy offerings, which injected a new way of betting into the marketplace when FanDuel was founded in 2009. The online sportsbooks that the two companies have opened in New Jersey are the next wave.
Partnerships are being made in other states in anticipation of legalized sportsbooks. When that happens, companies like DraftKings and FanDuel can expand beyond New Jersey state lines and offer its app to residents of those states, and casinos in those states will be able to open their own sportsbooks.
By the end of 2018, eight states already had legal sports betting markets and immediately saw large interest from residents. From the time Delaware legalized single-game betting in June 2018 until the end of last year, $84.3 million was bet on sporting events in the state. And Delaware is one of the smaller-scale operations on a month-to-month basis among states that offer sports betting, so just imagine what those numbers would look like in California or New York.
From its start in August through the end of 2018, Mississippi saw $157 million wagered on sporting events. The state that boasts two big-time college football teams saw a huge spike starting in September and lasting through December, acting as an impactful case study to any other state where football is king.
New Jersey and Nevada far outpaced every other state, with New Jersey reporting a total handle over $1.6 billion from its start in June 2018 until the end of the year. Nevada, which of course has been at this quite a bit longer than any other state, reported just over $3 billion in that same time frame.
The numbers in New Jersey and Mississippi bring validation to Nielsen’s claim that more than half of bettors who had previously worked with a bookie would rather go the legal route. Of those such bettors, 33 percent said they would use a bookie less and a legal platform more, and 38 percent said they would completely do away with bookies.
According to gambling reporter David Payne Purdum during a recent appearance on ESPN, 80 percent of wagers placed in New Jersey since legalization have been through mobile or online.
The dominoes are starting to fall quickly. New York, Arkansas, and Washington D.C. have all recently passed bills to allow sports betting, and 29 other states are moving toward legalization through current legislation, including high-population states such as California, Illinois, Michigan, and Ohio.
It is possible that upwards of 30 states could be fully operational in the sports gambling world by the end of 2019, with many having eyes on the start of football season as a launch date.
It would certainly be beneficial for sportsbooks to open their doors by the time kickoff comes around next fall, as Nielsen projected in its survey that betting on football will increase by 60 percent, while a whopping 31 percent of all respondents said they would bet on the sport.
With legal sports gambling adding an influx of revenue for eight states in less than a year since the Supreme Court’s decision, the floodgates are about to open for the majority of the country to get their cut of extra dough. Your state could be next.