By: Suzanne P. Leckert, AICP
Since my last article for iGB North America in August 2018, sports betting fervor in the United States has only increased. To date, 32 states (probably more by the time this article is published) have either legalized sports betting or introduced legislation to do so. Efforts to legalize igaming had largely fizzled out across the country until the Supreme Court overturned PASPA in May 2018. Online and mobile gaming have since gotten swept up in this flurry of legislation and regulations to permit sports betting. As the largest competitor to legal sports betting in the US has been the illegal online market, it seems only logical that legal sports betting should include an online component to be competitive. However, there remains political resistance to the inclusion of online and mobile in legal sports betting. Both commercial gaming operators and Native American tribes must engage in the political system, and sports betting without online may not be worth the fight.
Translating Wagers into Revenues
According to the American Sports Betting Coalition (an entity of the American Gaming Association), $58bn is wagered on NFL and college football games in the US annually. At a 5% hold rate, this translates into $2.9bn in gross gaming revenues (versus $71.5bn in gross gaming revenues generated by casinos in the US annually).
If all of these football wagers were captured by existing gaming facilities, it would impact gaming revenues by only 3 or 4%. For a facility generating $100m in GGR annually, this would mean an additional $3m or $4m at best—and then only assuming there is an online component.
Let’s look at the New Jersey example for commercial casinos. NJ Online Gambling estimates that New Jersey will pull in $4.2bn in total sports wagers (not just football) for 2019. If this is true, and hold percentages even out to 5%, that translates into $210m in GGR for a market that generates approximately $2.8bn in GGR from casinos. Most of New Jersey’s sports bets, about 70% so far, are placed online or on mobile devices, leaving only $63m in sports betting revenues generated at brick-and-mortar facilities—a bump of about 2% to the properties before you factor in online and mobile (or related bumps to slot and table play).
For states that have permitted only on-site sports wagering without an online or mobile component such as Rhode Island and Mississippi, we are seeing actual revenues falling far short of initial projections. This is likely because estimates of the current sports betting market include wagers on the illegal off-shore sites, and brick-and-mortar facilities aren’t on an equal footing with those easily accessible sites.