How legalization impacts sports betting economics has been saved
How legalization impacts sports betting economics
A closer look at factors shaping the future of online sports betting
Americans place $50 billion to $60 billion a year in illegal sports bets, dwarfing the legal $5 billion in Nevada sports betting. This represents a potentially enormous market now that states can decide whether to legalize sports gambling. Although exciting, uncertainties remain that will impact industry size, scale, and opportunity moving forward.
- The current state of sports gambling
- Critical uncertainties await
- The future of an emerging industry
- Get in touch
- Join the conversation
The current state of sports gambling
In the immediate aftermath of the Supreme Court’s decision to overturn the Professional and Amateur Sports Protection Act (PASPA) in May 2018, some states scrambled to pursue a lucrative opportunity independently, without a federal framework in place. Delaware and New Jersey, the plaintiff of the Supreme Court Case (Murphy vs. NCAA), were the first to act and have seen major returns, with more than $385 million a month being wagered in New Jersey alone.
Eight states have currently legalized sports gambling, with more to potentially follow in short order as bills are reviewed by state legislatures. These near-term developments will be interesting to watch as sportsbooks lobby for legalization on the state level.
The federal government is attempting to secure a wider blanket agreement on the federal level to protect public welfare and the integrity of the game, and generate sufficient tax revenue. The leagues support a federal framework because it can address their interests on a national level. The sportsbooks would prefer legislation that mirrors the way gambling is currently regulated on the state level by the Nevada State Gaming Commission.
This situation, like many legalization efforts, is extremely fluid and will change rapidly as the critical uncertainties mentioned below unfold. Depending on the outcome, companies that are able to get in on sports betting could realize a substantial payout.
Critical uncertainties await
The current state of sports gambling, like many legalization efforts, is extremely fluid and will change rapidly as five critical uncertainties unfold.
The future of an emerging industry
Stakeholders across the industry (sportsbooks, leagues, and fans) had been anticipating PASPA being overturned by the Supreme Court. Now that it’s happened, the United States stands at the precipice of a market ready to explode. In the United Kingdom, where sports wagering has been legal for more than 50 years, officials are now exploring ways to restrict a market that some feel has spiraled out of control.
The next three years will go a long way in determining whether the United States will adopt the United Kingdom’s zealous approach to grow the industry or take a more tempered approach. Where and how sports gambling is permitted to take place are the key questions that will dictate the future of this emerging industry. Regardless of the answers to these questions, stakeholders across the industry are jockeying for their piece of the action.
With so much happening so quickly, many stakeholders across the spectrum are left with some key questions to answer. How will all this affect my industry and my business? How should I capitalize on this potential opportunity? What risks should I be mindful of as the market evolves? Due to our virtually unparalleled breadth of experience across consulting, advisory, tax, and audit, Deloitte is positioned to help clients answer these essential questions as they determine the right strategy based on the opportunities and potential risks involved.