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A case for mobile sports betting regulation in the US

Our latest research data indicates that casinos are missing out on a new revenue stream by not supporting online gaming regulation.

With the repeal of PASPA last May, sports betting regulation was returned into the hands of state legislators. This move enabled individual states to assess each’s own appetite for permitting sports betting, and act accordingly.

Naturally, each state has taken its own approach to the question of sports betting, and done so at its own pace. As of today sports betting is live in eight states including Nevada, with a double-digit number of states reportedly closing in on the regulatory finish line.

But of course, when it comes to sports betting each state’s legislation decision tree doesn’t begin and end with the simple question of whether to regulate. States that move forward with regulation must determine how their newly market should operate; and one of the most fundamental questions to answer will be whether or not to permit online sports betting.

Online sports betting: where are we today?

Currently only three of the eight aforementioned states – Nevada, New Jersey and West Virginia – have online sports betting platforms live in the market. Legislation that facilitates online sports betting has also been enacted in Pennsylvania, but currently no operator has launched in the state.

One potential reason we are yet to see more states pursue this opportunity is a lack of support for online sports betting from license holders. In states with existing gambling presence, such as casinos or racetracks, sports betting licenses are currently only being awarded to those entities. As one key advantage of launching a sportsbook is the increased casino footfall and revenue potential this generates via alternative gaming or amenities, on one level it is understandable that casinos might not be inclined to throw any support behind online sports betting regulation.

However, our latest consumer research strongly suggests that there is a significant opportunity cost for casinos by taking this approach, as having an online presence would not only significantly increase their player base but also the frequency with which those players place wagers, leading to increased direct revenue from their sportsbook operation.

Casinos: the case for supporting mobile sports betting

For our latest consumer research report All the ways players pay we surveyed 1,700 consumers that were either active sports bettors in the US or had an interest in sports betting in the future.

65% of our survey audience that had an interest in betting in the future were interested in doing so online, compared to only 46% of potential gamblers being interested in gambling in-person. A mobile app accessed via a smartphone (33%) was the most popular online method of interest for potential future players.

A third (33%) of sports bettors also stated that they would place more sports wagers if they could register an account with a sportsbook online.

In addition to surveying sports bettors from across the US, we also focused our research on a number of states to determine differences between individual markets. By contrasting two of these spotlight surveys, Nevada and New Jersey, we can draw some important inferences about how often players place wagers online and in-person.

In both states online and retail sports betting is regulated, but with marked differences. Despite a strong push online in recent years, Nevada’s rich history of retail sports betting is still a significant factor in the state, but in New Jersey 72% of sport betting handle in December was taken online.  

Our research revealed that 29% of sports bettors in Nevada placed bets at least once a week; in New Jersey this increased to 40%. For casino operators in other states, and regulators considering the revenue potential from taxing sports betting, this could be a further clear indication that taking an online-first approach to sports betting will have an impact on betting volume, handle, and consequently revenue.

The impact of the Wire Act

In January 2019 a new opinion was published reversing a 2011 Department of Justice (DoJ) opinion stating that the Wire Act only applied to sports betting, instead stating that the Wire Act applied to all forms of online gambling. It also stated that the Unlawful Internet Gambling Enforcement Act (UIGEA) cannot be interpreted as modifying the Wire Act.

As a 90 day grace period was given to businesses by the DoJ, the full implications of this are not clear.  Like most of the industry, we are eager to see the DOJ guidelines when they are released to see if they shed any further light on the Department’s position.

All eyes on New Jersey

Ultimately, it may be the case that New Jersey is the testing ground many states look to when assessing their own legislation options. This includes whether to embrace mobile sports betting.

As one operator outside of the state told us:

“As soon as sports betting is approved in the state, I am sure we would pull the trigger on launching a product. And the same would be true for online sports betting, but again we’d be waiting on approval from the state. Our state wouldn’t want to be the first to approve online sports betting, but now there is a state that is live online (New Jersey) I’m sure legislators will look very closely at how that is working and speak to the people there.”

To find out more about the emerging consumer trends that will shape the US sports betting industry, download All the ways players pay now.

This article was first published in iGB in February 2019