Finance

Research Brief: State Legislative Update on U.S. Sports Betting & Online Gaming February 2021

The buzz from this year’s Super Bowl continues to catch fire with the legal sports betting market as it continues to expand across the country. Almost every media outlet has talked about not only the matchup between the Tampa Bay Buccaneers and the Kansas City Chiefs (or Brady vs. Mahomes), but also a story about wagering, handle, the line, and some of the major brand names across the states that are conducting legal sports betting. This has been the case for several years, but sports betting has become much more mainstream.

This year’s Super Bowl did not offer the match up that everyone had expected between two premier teams featuring what many viewed as the ‘GOAT’ vs. the rising star “Kid.” Tampa Bay’s dominance in all facets of the game threw many sportsbooks off that had the line hovering around three to four points leading up to kickoff. The American Gaming Association prior to the game estimated that $4.3 Billion would be wagered.

Research Brief: State Legislative Outlook 2021

As 2020 comes to a close and 2021 begins, there is hope for new beginnings. While this happens among many as new year’s resolutions and new starts happen in any year, this is the case now more than ever as the world continues to grapple with the Great Shutdown and SARS-CoV-2. A little over a year ago, the world began the journey that none have experienced in over 100 years since the last pandemic. No one could have predicted that the year would have gone the way that it did, with brick-and-mortar gaming being brought to a complete halt, in some cases more than once. The world also came to realize that online gaming and mobile sports betting can be a strong source of revenue to supplement, not supplant, existing gaming revenue. While the world hopes for a quick turn of the calendar as turning over a new leaf, it will take some time before the world returns to normal and excels beyond, having learned from the past year’s experiences.

One thing that can be noted at the close of 2020 is that revenues for sports betting and online gaming continue to grow. Numerous states have launched their product in the middle of the pandemic, including Colorado, the District of Columbia, Tennessee, and others. Others continued to modify their setup, with Illinois in flux as it hands down executive orders to allow in-person registration without enacting strong, permanent regulations. While many states are still trying to move forward as they launch their market, revenue will continue to increase, with many markets now reaching a stabilized year for growth with a favorable sports calendar that included almost every major sport this past fall. This includes modified schedules in football, baseball, basketball, hockey, golf, and others.

Research Brief: State Legislative Update on U.S. Sports Betting & Online Gaming December 2020

Some may believe that the counting of votes is related to the continuation of the November Election. As the November Election continues to take up the airwaves, states are certifying their results, leading up to the Electoral College vote that occurred on December 14th. While court challenges remain, the counting of votes in sports betting showed a wide passage of legislation to legalize the activities. November proved that voters took a strong stance showing that sports betting is supported by a plurality in these jurisdictions.

Research Brief: State Legislative Update on U.S. Sports Betting & Online Gaming November 2020

While the national scene continues to sort through its trials and tabulations at the presidential level, the 2020 Election saw a great deal of success for gaming at the ballot box. Gaming was featured on the ballot in six states, with five of those having direct implications to sports betting. As will be highlighted later on in this brief, this continues to show that taking measures to the ballot is a method that operators, legislators, and regulators should not shy away from. The key is having the proper education campaign on the positive impacts of sports betting, as well as being prepared to provide answers to the naysayers.

While this applied well to sports betting and to a lesser extent brick and mortar operations, the future for iGaming may not have the same success unless an effective education campaign is run. iGaming brings in a different element to the ballot and legislative conversation, and it is one that will be tested in the coming months as every state legislature meets in 2021. Passage of sports betting measures is often easier when voters can often turn on their television, radio, or social media apps and discuss the line, just as one would discuss how well or how poorly a quarterback is playing in any given football game. iGaming is a more challenging sell, as this is viewed more similarly to a traditional slot machine or a table game directly in the hands of consumers, and legislators need to know that the right measures would in place for financial and consumer protections.

Research Brief: State Legislative Update on U.S. Sports Betting & Online Gaming October 2020

September became the crossroads never seen before in sports. Between the NBA and the NHL that were in their playoffs, the start of a limited college football season, MLB rounding out its abbreviated regular season, the start of the NFL, along with NASCAR, the U.S. Open in both golf and tennis, and the Kentucky Derby, it was quite an opportunity for sports bettors and operators. Numerous states continue to see record setting levels of revenue. Due in part to the unbalanced schedule as well as the continued increase in those states that now have active sports betting, record volumes overall are being wagered legally in the U.S. since the repeal of PASPA (Professional and Amateur Sports Protection Act).

The past month also saw significant agreements and deals between operators, media companies, and teams. The two biggest deals of the month involved NBC Universal and ESPN. In a blockbuster $500 million deal between NBC Universal and PointsBet, the two companies are moving down the field with sports betting that will become part of the viewing experience. Meanwhile, ESPN confirmed its sports betting partner in Caesars Entertainment and William Hill. DraftKings continues on as its fantasy sports partner. The Caesars Entertainment-William Hill partnership brings further light to the recently announced acquisition by Caesars of William Hill that is schedule be completed pending regulatory approval in the second half of 2021.

Research Brief: State Legislative Update on U.S. Sports Betting & Online Gaming September 2020

As the sporting industry continues to reemerge from the Great Shutdown, it now faces its next challenge as it relates to local politics within the United States, including factors such as racial tensions, views of the use of police force, and the upcoming presidential election. Sports has always been viewed as a unifier – one where sports fans can escape the nonsense of the political world to enjoy a game. It appears that in the near term, those days are over.

In the middle of August, the NBA initiated a boycott following the shooting in Kenosha, Wisconsin. The Milwaukee Bucks began what turned into a short silencing of sports. This followed with the rest of the NBA and the WNBA taking a pause before their eventual return to the court after several internal and external discussions between the athletes, teams, and league on whether the season would even continue. The spillover then went into the MLB, NHL, and MLS in response to the initial action by the NBA. While sports betting operators have been banking on the return of sports based on the health and safety measures related to SARS-CoV-2, it was not foreseen that politics would become a deciding factor into another potential shutdown of sports.

Research Brief: State Legislative Update on U.S. Sports Betting & Online Gaming August 2020

Sports have begun to reemerge with more traditional sports with which American consumers are more familiar and have a deeper affinity for wagering. After nearly five months since the start of the Great Shutdown, sports are starting the long and winding road to recovery. Optimism reigns for the fall as we potentially see the return of football as well as the potential addition of the remaining 2020 schedule for the NBA and NHL that just recently restarted. MLB’s abbreviated schedule has faced a bumpy ride out of the gate, not just with Dr. Fauci’s first pitch at the Washington National’s Game, but by the subsequent canceling of games due to coronavirus-related concerns. Nevertheless, while the stands may not be full, sports have returned.

As GMA continues to look at sports betting markets that are limping through the downturn (while also exposing sports bettors to new options), the numbers continue to show that a competitive market leads the way for states versus those that have a limited number of providers or a model driven by land-based gaming. Those states that operate a full mobile wagering product continue to dominate the market and offer the best alternative to the black market. That being said, tax rates also matter and can inhibit a market, as can be seen in states like Pennsylvania. While offering a full mobile experience, the tax rate continues to impose challenges by limiting the operator’s ability to spend marketing dollars, cutting into overall operations, and leaving money on the table for the state that, in a competitive gaming region, would actually see an increase in revenue with a decreased tax rate.