Sports Gambling Finally Comes To America

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In May 2018, the U.S. Supreme Court struck out a 1992 federal law banning sports gambling, paving the way for individual states to decide on if they will allow sports betting.

It is a huge moment for gambling and sports, with the U.S. previously having some of the strictest gambling laws in place in the western world. It was all but illegal apart from states, more famously, like Las Vegas, who secured legal status in 1949.

“The legalisation of sports gambling requires an important policy choice, but the choice is not ours to make. Congress can regulate sports gambling directly, but if it elects not to do so, each state is free to act on its own.”

Supreme Court Justice Samuel Alito, source: BBC

Off the back of this news, predictably, the biggest betting operators in Europe saw their shares surge, with the promise of a market of 325 million being opened up to them in the very near future, which also boasts a wide variety of ultra-popular sports.

The U.S. had a country-wide ban (apart from the states mentioned above) on sports gambling in place since 1992 thanks to the Professional and Amateur Sports Protection Act (PASPA).

Most interestingly of all, PASPA was created at the behest of all the major U.S. sports leagues (MLB, NBA, NFL, NHL) and college sports body, the NCAA to curb sports gambling.

“Sports gambling is a national problem. The harms it inflicts are felt beyond the borders of those States that sanction it. The moral erosion it produces cannot be limited geographically. Without federal legislation, sports gambling is likely to spread on a piecemeal basis and ultimately develop an irreversible momentum.”

Senate Judiciary Subcommittee on Patents, Copyrights and Trademarks, 1992

Last year, these leagues also opposed the Supreme Court turning this decision over. Could you imagine the Premier League opposing such a money spinner? Likely not.

Just over two weeks after the Supreme Court’s decision, Delaware became the first state to offer legal sports betting. You can track which states have legalised sports betting here, thanks to Legal Sports Report.

Contrast this to the UK and Ireland’s approach to gambling. The Betting and Gaming Act 1960 in the UK saw the setting up of betting shops, with over 8,000+ such shops across the country now. Meanwhile, in Ireland, the Betting Act of 1926 (yes, 1926) legalised betting.

However, more recently sports gambling companies have seen increased scrutiny and legislation put in their path. In December of last year, they voluntarily agreed to a “whistle-to-whistle” ban on TV adverts during sports events due to concern over such adverts affects on children and also the volume of such ads.

“It has been clear for some time now that the volume and density of advertising and sponsorship messaging from gambling companies around live sport has become unsustainable. This is a welcome move from the leading industry operators who are taking the initiative to respond to public concern.”

Sarah Hanratty, chief executive of the Senet Group

Returning to the U.S. market, how much could it be worth?

It is estimated that illegal sports gambling in the U.S. reached a record $196 billion by 2016, with 79% of this activity conducted remotely (i.e. over the phone, or online)

H2 Gambling Captial

What has been the immediate effects of opening up sports betting in the U.S.?

  • Teams Go All In: Sports teams have been quick to lock up lucrative sports betting partnerships, including the NFL’s New Orleans Saints who recently partnered up with a casino to become official betting partner of the team. Meanwhile MGM Resorts International has already signed up the MLB, NBA and NHL to become their “official gaming partner”.
  • The Leagues Want A Big Piece Of The Action: “Integrity fees”, a basic tax that states can impose on sports betting have gained serious traction. The MLB and NBA want such fees, which could mean that they could get as much as a 1% cut of every wager related to their sports. Such a situation already happens with professional leagues in France and Australia. The NBA is also arguing that such a fee would pay for monitoring of potentially illegal betting activity too.
  • There’s No Uniformity: A state-by-state approach is really underway at the moment. For example, some states propose to only allow online gambling, with no physical betting shops allowed. Some are planning to allow NCAA sports betting (i.e. college teams), while others are not. Much like laws in general in the U.S., expect to see a wide variety of approaches to legalised sports betting.

It will be interesting to see how quickly sports gambling evolves across the U.S. in the near future, but given the money on offer, there’s no doubt that a variety of stakeholders, from gambling operators to states, to sports teams, all want a piece of this very big and lucrative pie.

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