Sports betting, once a black market or overseas operation, was brought into the limelight in May 2018 when the Supreme Court of the United States lifted the 25 year old federal ban on it. [2] The push to get out of the ban began in 2011 when New Jersey, in great need of tax revenue, noticed the public sentiment tilting toward the legalization of sports betting. [3] In December 2017, then New Jersey Governor Chris Christie argued that the federal law that bans betting on sports, the Professional and Amateur Sports Protection Act of 1992 (PASPA), was unconstitutional because it interferes with the individual states’ rights.
While opponents argued that legal betting can threaten the integrity of the sports, supporters pointed to Europe to show how a collaboration of regulators and industry make the sports betting business safe going so far as to say that PASPA simply gave rise to underground betting with no oversight. [4] The author of the original ban was former basketball great Bill Bradley whose motivation was personal. Bradley explains “Betting on sports was betting on human beings, and I thought it was wrong.” He further stated that the Supreme Court, in invalidating the law turned “every baseball player, basketball player, football player into a roulette chip.” [5]
Once perceived as taboo, NPR reporter Uri Berliner reported that America as a whole has seen a cultural shift on the question of sports gambling in recent times. Major U.S. pro and college sports leagues do not necessarily distance themselves completely from gambling any more. Fantasy sports leagues are more popular than ever and have helped push sports betting into the mainstream. He further noticed that starting in 2015, ESPN had been increasing its coverage of gambling by directly referencing the point spread set by odds-makers. [6] No longer lurking in back alleys, sports gambling is now more mainstream and accessible than ever.
British betting and gambling firm William Hill is set to come under American ownership as Caesar’s Entertainment has agreed to pay cash of $3.7 billion. [7] Caesars is excited to close the deal, which is expected to happen in the second half of 2021, estimating that William Hill business will add $600-700 million of net revenue to US accounts. [8] Sports gambling in the UK has been legal since 1961 and at its peak in the 1970s, William Hill operated more than 14,000 shops. William Hill’s presence in the UK has been suffering the past few years as it relies on storefronts for much of its business. Besides being hit hard by the COVID-19 pandemic, UK sports gambling houses were already under pressure from increased regulation and the shift to online betting. [9]
Recently, as US gambling laws have loosened up, William Hill has expanded its stateside operations. CEO of Caesars Entertainment -Thomas Reeg looks forward to combining with William Hill saying, “The opportunity to combine our land-based casinos, sports betting, and online gaming in the US is a truly exciting prospect. William Hill’s sports betting expertise will compliment Caesars’ current offering, enabling the combined group to better serve our customers in the fast growing US sports betting and online market.”[10]
According to Macquarie Research, the US online casino and sports betting market is expected to increase revenue to 18 billion by 2025. [11] Caesars has already signed a deal with ESPN that would see its betting odds integrated into ESPNs website and fantasy app in states where betting is legal. So far, 22 states plus Washington, DC have legalized sports wagering since the 2018 Supreme Court ruling and 22 other states are waiting on proposed legislation. [12] Therefore, as sports betting continues to grow in popularity, Caesars’ acquisition of William Hill will likely have a huge impact on sports betting operations moving forward.
Finally, the US pro sports industries have resumed their seasons which led to a massive increase in sports betting. The states that have already passed bills to legalize and regulate are profiting greatly from this growth through taxes. Even with less than half the states on board right now, analysts say the US is the most profitable sports gambling market in the world. Sports betting revenue is expected to continue surging for years.[13] According to Sportsgeek writer Zack McGovern, “It’s a great time to be a sports fan in the United States.” [14] Besides Caesars and William Hill, this surge is attracting the attention of more companies who want in on the profit.
The gambling market looks quite different in the US right now than it does in the UK. Last August, William Hill announced it was permanently closing 119 betting shops as many bettors switched to online and regulations increased. The market in the US, meanwhile, has been on fire. Dave Portnoy and Penn National Gaming launched Barstool Sportsbook app on September 18, 2020 in Pennsylvania breaking records with the number of daily downloads.[15] Shares of DraftKings have more than tripled this year and partnerships have been formed with ESPN and Michael Jordan. [16] But will a pairing as enormous as Caesars and William Hill leave out other competitors to this lucrative market? Not necessarily. The US sports betting market is huge. Smaller companies can still excel considering American sports betting is only in its third legal year with plenty of room for new entrants especially if smaller ones find a certain niche or client base, which Dave Portnoy and Barstool Sports seem to excel at. [17]
After the COVOD-19 pandemic shut down much of the sports world for months, it was no surprise that the fans’ pent-up demand turned into record breaking betting numbers in several states. It’s legal, it’s fun, and everybody’s doing it. So, is there a downside? New Jersey- and many other states- doesn’t think so as it is poised to become the top market even surpassing Nevada. [18] While many states look forward to increased tax revenue, the former president of the American Gaming Association (AGA) Geoff Freeman warned that states should tax sports betting at a low rate because a higher tax would likely drive gamblers back to the illegal market.
In a letter to Congress, Freeman asked lawmakers to closely examine the amount of federal tax on sports bets. He warns that a high tax, “hinders the ability of the legal market to compete with illegal operators that do not pay any tax.” [19] Now, a couple years in, current president of AGA Bill Miller has been urging media outlets covering the evolving industry to stop mentioning offshore sportsbooks. Miller, believing PASPA did not protect athletes and consumers against the illegal marketplace, warns that legitimizing unregulated offshore operators leaves athletes and bettors vulnerable. He further explains, “This becomes especially difficult when mainstream publications continue to legitimize the dangerous illegal market.” [20] Miller clarifies the point that tax revenue from legal sports betting goes to state governments to support various programs while income from offshore books is often used for “nefarious” activities. He also reiterates that offshore books are “illegal, unregulated, and predatory.” [21]
Regardless of any concerns, sports gambling is booming and it looks like it is here to stay. People have long been interested in gambling on sports and have usually been able to find a way to place a sports bet. Now, legalized sports betting allows them to continue their habit in a more regulated and fair environment. It will be safer, more socially acceptable, and, rather than corrupt the leagues, legalized sports betting could possibly keep everyone involved more honest. Most of all, many researchers estimate that legalized, regulated sports betting could actually bring in billions of dollars in annual revenue for states. [22] That is billion with a B which is the main reason most states are jumping at the chance to get on board.
When New Jersey began pushing for legalized gambling in 2011 as a way to increase state tax revenue it looked like they knew what a moneymaker it would be. Setting records for the state, and the US sports betting market as a whole, the start of the NFL and NCAA football seasons helped push the market to new heights last month. Regardless of the debate between the pros and cons of legalized sports gambling, it is now a reality. Legal sports betting in the US is profitable, popular, and here to stay. You can bet on it.
References:
[2] Charlie Roumeliotis, It’s Official: Supreme Court Lifts Ban on Sports Betting in America, NBC Sports, (May 14, 2018), https://www.nbcsports.com/chicago/bears/its-official-supreme-court-lifts-ban-sports-betting-america#:~:text=In%20a%207%2D2%20decision,on%20college%20and%20professional%20sports.&text=%22Congress%20can%20regulate%20sports%20gambling,to%20act%20on%20its%20own.%22
[3] Nina Totenberg, Sports Betting Ruling Could Have Consequences, Especially for College Athletes, NPR, (May 14, 2018), https://npr.org/selections/thetwo-way/2018/05/14/589087523/supreme-court-rules-states-are-free-to-legalize-sports-betting
[4] Scott Agness, Ed., Betting on Sports in Europe vs. USA, Vigilant Sports, (January 20, 1018). https://vigilantsports.com/betting-on-sports-in-europe-vs-usa/
[5] Nina Totenberg, Sports Betting Ruling Could Have Consequences, Especially for College Athletes, NPR, (May 14, 2018), https://npr.org/selections/thetwo-way/2018/05/14/589087523/supreme-court-rules-states-are-free-to-legalize-sports-betting
[6] Id.
[7] Ian Walker and Katherine Sayre, Caesars Makes $3.7 Billion Offer for UK Bookmaker, William Hill, The Wall Street Journal, (September 28, 2020), https://wsj.com/articles/ceasars-makes-3-7-billion-offer-for-u-k-bookmaker-william-hill-11601276750
[8] Matthew Pitt, Caesars Entertainment Set to Acquire William Hill for £2.9 Billion, Poker News, (October 1, 2020), https://pokernews.com/news/2020/10/caesars-entertainment-set-to-acquire-william-hill-for-2-9-bi-38053.htm
[9] Ian Walker and Katherine Sayre, Caesars Makes $3.7 Billion Offer for UK Bookmaker, William Hill, The Wall Street Journal, (September 28, 2020), https://wsj.com/articles/caesars-makes-3-7-billion-offer-for-u-k-bookmaker-william-hill-11601276750
[10] Caesars Entertainment Buys Bookmaker William Hill for $3.7 Billion, Fox News, (September 30, 2020). https://foxnews.com/sports/caesars-entertainment-buys-bookmaker-william-hill-for-3-7b
[11] Katherine Sayre and Ian Walker, Caesars, Apollo Make Takeover Approaches for U.K. Bookmaker William Hill, The Wall Street Journal, (September 25, 2020), https://wsj.com/articles/caesar-apollo-make-takeover-approaches-for-u-k-s-william-hill-bookmaker-says-11601048340
[12] Id.
[13] Zack McGovern, Here’s Why Caesars Buying William Hill Makes Sense Right Now, The Sports Geek, (September 30, 2020), https://thesportsgeek.com/news/here’s-why-casars-buying-william-hill-makes-sense-right-now/
[14] Id.
[15] https://www.gambling.com/news/us/barstool-sportsbook-mobile-app-goes-live-in-pennsylvania-2313100
[16] Caesars Shows Its Cards With William Hill Offer, The Motley Fool, (September 28, 2020), https://fool.com/investing/2020/09/28/caesars-shows-its-cards-with-william-hill-offer/
[17] Ryan Butler, Caesars’ William Hill Deal Bolsters Potential But Leaves Questions, Sun Sentinel, (October 1, 2020), https://sun-sentinel.com/gamblings/sns-actnet-caesars-william-hill-deal-20201001-ofpb7yh2n5eiraj3rnotpr7v7e-story.html.
[18] New Jersey Sets U.S. Sports Betting Monthly Record at $668 Million, Market Watch, (September 14, 2020), https://marketwatch.com/story/new-jersey-sets-u-s-sports-betting-monthly-record-at-668-million-11600114970#:~:text=The%20biggest%20news%20was%20a,2019.
[19] Johnny Kampis, Op-Ed: States Should Tread Carefully in Setting Sports Betting Tax Rates, (August 15, 2018), https://thecentersquare.com/national/op-ed-states-should-tread-carefully-in-setting-sports-betting-tax-rates-articles_be54cd26-9fc9-11e8-b220-8fc8710f49db.html
[20] Devin O’Connor, AGA President Bill Miller Calls on Media to Stop Referencing Unregulated Offshore Sportsbooks. (May 17, 2020), https://casino.org/news/aga-president-miller-calls-media-stop-referencing-offshore-sportsbooks/
[21] Id.
[22] Sports Debates, Persepctive Media, (June 15, 2018), https://thepersepctive.com/debates/sports/sports-betting-legal/