The sports betting industry in the United States is growing with relative speed. This month we will look at how wagering has been impacted by the shutdown.
The forced lockdowns of physical buildings caused on-site casino revenue to drop substantially. Most laid off thousands of employees and closed down their ancillary operations for hotel rooms, restaurants, and convention business. Recently there had been consolidation of the major operators as they sought scale in a competitive, capital intensive and low margin business.
Sports betting was given the green flag when the Supreme Court repealed the Professional and Amateur Sports Protection Act in 2018.
Individual states have rapidly passed legislation that allowed sports betting. Licenses were granted to online operators such as DraftKings and Fan Duel, along with established casino companies including Caesar’s and Penn National. By working with established entities, they could ensure that games and events were offered in a safe and responsible manner, along with monitoring the social problems associated with gambling.
Currently legal in over 20 states and expected to reach 40 states by 2022. They are looking generate tax revenue and capture black market activity dominated by bookies. States requires operators to pay steep licensing fees and tax rates. Illinois were offered at $20 million while New Jersey sold for $100,000.
When evaluating the data behind sports betting, there a several key metrics: Handle – the amount wagered; Revenue and Hold – amount and percent kept by the sports book; and Tax Revenue for the state.
The largest sports book by handle is still led by Nevada, followed by New Jersey and Pennsylvania. The rapid growth of New Jersey is primarily due to its proximately to dense populations and expected reach $1 billion in monthly handle and becoming the nation’s leader.
On a percentage basis, sports books in Delaware retain the highest hold, then Michigan and Mississippi. Home to Dover Downs, all betting has to be done on-site since they do not yet allow online or mobile betting. Most operators retain between 6% to 8%, higher amounts may drive bettors to more favorable jurisdictions.
State tax revenues have been rising. During challenging economic times, they need all the money they can get to fill budget gaps. Tax rates for sports betting typically range between 8% and 10%. There are a few states that charge up to 25%.
Nascar and the American Gaming Association have established a program – “Have a Game Plan – Bet Responsibly”. The goal is to enlighten fans on responsible sports betting. One theme will be “Know When to Pit.” Nascar is their first League Partner and underscores their commitment to allowing fans to engage with their favorite drivers and race team. This supports their existing relationships with Sportsradar as their integrity partner, BetGenius as its data provider, and Penn National and BetMGM as gaming operators.
Nascar’s comprehensive approach to gaming will lay the foundation for other series to follow. It also allows for the sponsorship and activation opportunities unique to motorsports. Facility operators may also consider redevelopment as Atlanta Motor Speedway unveiled $1 billion resort project with Foxwoods Casino that would include a casino and hotel along with a water park and concert venue.
The lack of live sports games and races during the early part of the shutdown sent bettors to foreign markets looking for opportunities. At the same time, operators moved their marketing budgets online. Led by Nascar, soon sports got bet on track and wagering resumed to totals never seen before.