Sports Betting in the US

 

Welcome to the world of legal sports gambling in the United States. Just around a year ago today, The Professional and Amateur Sports Protection Act of 1992 (PASPA) was shot down on the Supreme Court and opened up a whole new wave to sports gambling. In short, PASPA barred every state outside of licensed Nevada sports pools, and later New Jersey, from operating sports gambling books. Since about 2009, New Jersey has been in a heated legal battle with the US Supreme court over the constitutionalism of PASPA. Finally, in 2018, PASPA was overturned on the grounds that it commandeered power from the states. Now, states are allowed to create their own rules and regulations on sports gambling. Currently, 8 states have full scale legalized sports betting and 7 states have recently passed a bill to put sports gambling in place in their state. With sports gambling becoming fully legal in the US now, let us take at what US bettors were previously doing during the PASPA period.

DURING PASPA

There has always been a market for sports gambling in the United States. The biggest outlet was always a trip to the legal, licensed, sportsbooks in Las Vegas, which generated over $300 million in sports betting revenue in the year 2018. However, a huge black market of “offshore” books became commonplace in the world of sports betting. These offshore books are legal in the countries they operate in, such as the Caribbean and the United Kingdom, but still, are technically illegal in the United States. According to ESPN, Americans wager around $150 billion annually on black market sports gambling. As sports gambling became more widely accepted, websites with “.lv” domains started popping up all over the internet. Simply typing in “best online sportsbooks” into Google gives users many options at finding the right website for them. Additionally, willing bettors also find ways to place wagers through local bookies, who run the sportsbook themselves.

 

POST PASPA

We now find ourselves in a middle ground of sports gambling and competition between these offshore international books collide with US-backed businesses now trying to integrate themselves into new legal markets in the US. While US businesses have local reachability and the appropriate funds to implement infrastructure, a lot of their appeal is going to rely on taxation laws. Questions such as: how much money will the state take in taxes, how much money will the sportsbook retain in order to stay in business, and what is the compensation to major leagues (NBA, NFL, MLB, NHL, etc) for betting on their sports? These are huge and looming questions all US run sportsbooks will have to answer and answer quickly. Offshore sites and local bookies do not need to worry about any of this and have very accessible web platforms that make betting easy. Additionally, license fees to start up a legal sportsbook is going to be very costly for the business to start up. One major advantage that these US sportsbooks have over the offshore sites are much less risk in your betting transaction. An offshore book could be closed down at any moment, betting ticket disputes are usually never acknowledged, and contact with the sportsbook is sparse. Quite frankly, there is never a guarantee with your money, whereas US sportsbook is hit with stringent federal and state regulations that will give bettors service guarantees that are comparable to other industries. While the prominence of sports gambling is rising, it doesn’t necessarily mean gamblers will run over to their local sportsbook. A lot still has to happen for customers to transition away from their offshore accounts.

FUTURE OUTLOOK

This is a tricky industry to forecast, mainly because nothing like this has happened in the United States before. A lot of State’s legislation is moving quicker than the rise of legalized recreational marijuana in the US, which is similar in the sense of being allocated to states in the decision process. However, it is still a huge shift from the PASPA timeframe. These US sportsbooks look to not only sway customers over, but they must maintain them. Overall, I can see offshore sites and local bookies still playing a prominent role in the sports betting industry. Bettors are used to what they know and easy functionality and payout structure will always be favored by bettors. Additional competition could come from prominent foreign sportsbooks, such as the UK company, William Hill, who are looking to enter the US market. However, US sportsbook amenities and features, investment in infrastructure and the customer themselves could sway bettors to leave their old ways to the new look sports gambling in the US. With all that being said, this is uncharted waters for most businesses, and looking to take the leap into the industry is a risky one. US bettors must wait and see how the dust settles before they truly transition over in this once taboo industry.

 

-By: Justin Clareman