Where US Sports Betting Stands One Year After The Federal Ban Fell

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hacheman@therx.com
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.US Sports Betting: Where It Stands One Year After
The Federal Ban Fell


Dustin Gouker Updated on May 16, 2019


I was one of several hundred people sitting in the US Supreme Court in December 2017, watching oral arguments in Murphy vs. NCAA, the case about the US sports betting ban outside of Nevada.


Roughly five months later — or one year ago this week — SCOTUS ruled that the ban under the Professional and Amateur Sports Protection Act was unconstitutional. (Here is a timeline of the history before and after PASPA.)


And like that, things changed dramatically for the world of sports, sports media and, of course, the gambling industry. At the same time, some things didn’t change at all.


What has happened in the year since PASPA went the way of the dodo? And what we can expect in years to follow?



Sports betting has come to a lot of states, with more on the way


If you thought every state was going to legalize sports betting instantly, you were in for a rude awakening.


But in the grand scheme of how things usually progress legislatively, I could argue the pace of legalization has come at a breakneck pace. The current list of states that have legalized sports betting in some fashion stands at 14 (plus sports betting that will take place in Washington, DC).


Has legal betting already:

  • Nevada
  • New Jersey
  • Pennsylvania
  • West Virginia
  • Delaware
  • Rhode Island
  • Mississippi
  • New Mexico

Pending launch:


  • New York
  • Oregon
  • Arkansas
  • Indiana
  • Iowa
  • Montana

Tennessee
should join that second list later this month when the governor allows a bill to become law.


Still, while the states have turned the map green, and more should go green in 2019, the road in some ways gets tougher from here.


Big states like Florida and California have complicated paths forward. New York, while it will have retail sportsbooks, faces an uncertain future for online betting.



No, sports betting revenue has not been disappointing

One of the narratives in year one after PASPA has been that sports betting revenue has been disappointing.


While it may be disappointing to some, I’m here to tell you that’s a ridiculous assertion. Why?



  • Of the new states with sports betting, only New Jersey has had mobile wagering. The estimates some states were making counting on meaningful revenue from retail sportsbooks were unrealistic. Over 80% of wagering in NJ takes place online. No wagering online = not that much money.
  • The rollout of mobile has been slow. Both West Virginia and PA legalized online, but right now, no bets are being taken online. West Virginia was for a while, but no one is active after the shutdown of BetLucky.
  • Sports betting markets are not mature. While the lights are now on, revenue wasn’t instantly going to hit its ceiling in the opening months. Every state is still going to grow revenue as marketing efforts ramp up, education improves, more operators serve states, etc.
So, if you’re saying sports betting is underperforming, please take a lap. It’s way too early to say that.



The NCAA still has its head in the sand


The major US pro sports leagues and the NCAA fought for years to stop sports betting from expanding in the US in federal court. But they ultimately lost that war.Today, the pro leagues at least understand that sports betting is coming, whether it’s on their terms or not. They have generally been supportive of legalization efforts, even if not everyone agrees with their desire to legislate official data or so-called integrity fees or royalties paid directly.


But the NCAA remains intractable in the past. The college sports organization still supports a ban on wagering either federally or at the state level, even if its leadership knows that’s not likely.


The NCAA remains in ostrich mode as wagering on college football and basketball remains a significant source of action offshore, no matter what states do. We also continue to hear athletic directors say tone-deaf things about the increased risk to student-athletes, even when that risk has been sizable for a long time.


It at least rescinded the ban on championship events being held in states with legal wagering, but that was more of a pragmatic move. The NCAA realized it couldn’t possibly keep events out of the growing number of states that have legalized wagering.


In reality, the NCAA and its member schools should want to move the offshore action into regulated markets with more transparency, but, so far, no dice.


Things arguably have gotten better for offshore sportsbooks


Lots of people think the US Supreme Court just legalized sports betting everywhere last year, instead of the reality that states can legalize it if they want.


That concept is likely the cause of joy for offshore sportsbooks that serve the US market illegally. Google “sports betting” or a related search from the United States, and you’re likely to get a handful of sites and apps that serve Americans, even though they do so disregarding a variety of federal and state laws.


That’s also coupled with the fact that the last year has not really resulted in any increased law enforcement action.


Truth be told, until someone tries to make enforcement a priority, that status quo will persist. Ironically, legal forms of online wagering in the US are under fire via the Department of Justice via the Wire Act; a federal court case is currently active.



DraftKings, FanDuel and William Hill are early
leaders



A few people might have envisioned a world where FanDuel and DraftKings would be early dominant forces in legal sports betting.


But it’s a relatively surprising development to many. Prior to PASPA’s fall, DraftKings and FanDuel were both relying on what had become a DFS market that was not growing rapidly.


But FanDuel was taken over by Paddy Power Betfair and quickly pivoted to sports betting with the help of its European parent company. DraftKings was first to market for NJ online sports betting.


Now, the two operators dominate the market, with everyone trying to play catch-up in NJ.


How have they succeeded? It’s been a mixture of things, including but not limited to:



  • Good brand recognition from their position in daily fantasy sports.
  • A robust database of players would be relatively easy to convert to sportsbook.
  • An early-mover advantage in NJ.
  • Apps that stack up well against the competition and are arguably better than just about anything on the market.
  • Solid marketing efforts.


It’s a formula they will try to replicate in other states, although certainly, competitors are likely learning from the NJ experience.


And it’s not a guarantee they can or will always be able to run the same gameplan to perfection. Both should be in WV; FanDuel will launch in PA, while DraftKings’ path is a bit more uncertain.


In any event, the two DFS companies have successfully pivoted to sports wagering, and are a major part of the conversation today.


Also doing well is William Hill, which is a leader in Nevada and also has a presence in just about every state and a solid footprint in NJ. They are the only sportsbook in the mix in Delaware and Rhode Island.


It has likely left large gaming companies like MGM and Caesars wondering how they let this happen.
 

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How will this affect Las Vegas? Wouldn't these books in the new markets raid Vegas sportsbook managers to start up their new books? It reminds me when offshore was taking off.
 
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Why do I have a feeling this will be an unorganized mess.

The people that write these laws don't have a clue.

It's like a 70 year old man without an internet connection questioning Mark Zuckerberg about computers
 

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Why do I have a feeling this will be an unorganized mess.

The people that write these laws don't have a clue.

It's like a 70 year old man without an internet connection questioning Mark Zuckerberg about computers


May be true at first in the beginning. I have more faith in brain resources outside the state of Nevada so I think they’ll get it figured out quickly enough. Indian reservations is a whole different story though. Casino operations on Indian reservations are a bit cowboy (pun intended) on how they do business. I wouldn’t make a sports bet on a reservation unless the sports book was being run by a major operator like William Hill.
 

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May be true at first in the beginning. I have more faith in brain resources outside the state of Nevada so I think they’ll get it figured out quickly enough. Indian reservations is a whole different story though. Casino operations on Indian reservations are a bit cowboy (pun intended) on how they do business. I wouldn’t make a sports bet on a reservation unless the sports book was being run by a major operator like William Hill.

They do have to go by state gaming rules. The problems that could occur are having rookie mistakes by bettors and SB employees.
 

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That is true Fair Warning, however, I do know personally and from fellow accountants who were hired by reservations to do the books that native Americans are not always too keen on following state rules and regs. Much of it has to do with ignorance, arrogance, defiance, and lack of academic Human Resources on the rez. States know this and have years ago done things like shut down the trailer casinos for a short time but then the BIA gets involved and it just becomes a hassle between government bureaucracies. For the most part I think these states figure as long as nothing gets way out of hand and they get a reasonable cut and that the rules and regs are mostly followed they’ll leave the rez alone. I don’t dislike Indian casinos and some of them have great promos. It’s just the sports betting operations part I would be careful of. One I know of down by Laughlin NV has William Hill as the book operator and have had no issues. I don’t know of any Indian casino that runs their own book but if they eventually do as more states make it legal it would be buyer beware.
 

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That is true Fair Warning, however, I do know personally and from fellow accountants who were hired by reservations to do the books that native Americans are not always too keen on following state rules and regs. Much of it has to do with ignorance, arrogance, defiance, and lack of academic Human Resources on the rez. States know this and have years ago done things like shut down the trailer casinos for a short time but then the BIA gets involved and it just becomes a hassle between government bureaucracies. For the most part I think these states figure as long as nothing gets way out of hand and they get a reasonable cut and that the rules and regs are mostly followed they’ll leave the rez alone. I don’t dislike Indian casinos and some of them have great promos. It’s just the sports betting operations part I would be careful of. One I know of down by Laughlin NV has William Hill as the book operator and have had no issues. I don’t know of any Indian casino that runs their own book but if they eventually do as more states make it legal it would be buyer beware.

I graduated with the head of legal council for the Pottowatami Indians here, he would probably laugh if I went to Tribal Court. The nice thing here is I'm on the Mich/Ind state line and if people thought it wasn't on the level, in Mich, the Boyd-owned Blue Chip casino is 10 minutes away in Indiana.
 

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I graduated with the head of legal council for the Pottowatami Indians here, he would probably laugh if I went to Tribal Court. The nice thing here is I'm on the Mich/Ind state line and if people thought it wasn't on the level, in Mich, the Boyd-owned Blue Chip casino is 10 minutes away in Indiana.

That’s awesome. Each tribe is its own nation. Some tribes that got an early foot in the door with gaming back in the ‘80s and took to great investor advice have done rather well for the tribes. The Shakopee tribe in Minnesota are living like kings. It is funny though they have a few more white Native American tribal members than when they first started. My wife’s tribe back home likes pointing that out ha ha. Shakopee has done rather well and has to having such a large market nearby which helps a lot. Hopefully when it comes to sports books the reservations will just outsource it to a reputable operator.
 

hacheman@therx.com
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How will this affect Las Vegas? Wouldn't these books in the new markets raid Vegas sportsbook managers to start up their new books? It reminds me when offshore was taking off.




Vegas has supported legalization from the beginning of this and has stood by their belief that Vegas is unique and it will not hurt them.

Matter of fact there were recent numbers that showed Vegas recently broke a record despite spreading legalization.
 
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