In mid-July, VIXIO GamblingCompliance, provider of independent legal, regulatory and business intelligence to the global gambling industry, considered the U.S. sports betting market could worth USD 9.9 billion to USD 13.2 billion in total annual revenue by 2025, depending on whether legislative trends align with a Base or more optimistic Bull-Case scenarios. Now, in new document ‘Game On: The State of Play in the U.S. Sports Betting Market’, company anticipates total revenue from all U.S. online gambling (online sports betting plus iGaming in certain states) will reach USD 14.2 billion to USD 18.9 billion by 2025. Of course, as the market and regulatory landscape evolves, estimates can change, based on policy developments and hard data reported by states with lawful sports wagering.
MARKETS WITH A PROMISING FUTURE
The nine new sports betting markets established by legislation enacted during the first half of 2021 will be worth more than USD 2.8 billion in annual revenue at maturity, per VIXIO GamblingCompliance forecasts. The largest new markets by far are mobile sports wagering in New York and the prospect of state-wide online sports betting and sportsbook operations at tribal and commercial casino locations in Florida. NY and FL overshadow mid-size markets in Maryland,
Arizona, Louisiana and Connecticut, even after assuming both will be restricted from reaching their full potential by high effective tax rates (NY) and an absence of competition (a plausible outcome in FL). Online sports betting in FL will really expand as a consequence of recent approval by the Federal Department of the Interior to Seminole Tribe possibility of offering in the State both land-based and online sports betting. In this sense, under the agreement, Florida will potentially receive USD 20 billion over the next 30 years. In comparison to this, new markets in Wyoming, South Dakota and Nebraska seem tiny.
Although not as large in revenue terms as New York or Florida, the trio of Arizona, Louisiana and especially Maryland do offer most potential in terms of market-access as determined by the number of online sportsbook skins available under their respective regulatory frameworks. It remains to be seen whether the NY Gaming Commission will select more than a statutory minimum of four skins, whether pari-mutuels or online brands will partner to operate as skins on the Seminole Tribe’s platforms in FL, and how many second-skin brands AZ regulators will permit among its maximum 20 licensees. There could also be more than the statutory minimum of five online sportsbook operators in Wyoming, assuming sufficient demand. With 60 available online-only licenses, however, Maryland is potentially the most competitive and accessible U.S. sports betting market to date.
STATE BY STATE SPOTLIGHT
New York
After the New York Gaming Commission released its request for applications in early July, this week, six consortiums decided to bid for online sports betting licences, which could be awarded by the end of the year. In this market, the regulatory model is only online, and the launch of operations is estimated by first half of 2022. The applicants are the following: 1) competing gaming companies Bally’s, BetMGM, DraftKings NY and FanDuel NY. Other partners include the Seneca Nation, Buffalo Bills, Buffalo Sabres, Major League Soccer’s NYCFC, New York Yankees, and the YES Network; 2) Kambi woth Caesars Sportsbook, Resorts World Catskills, PointsBet, Rush Street Interactive (BetRivers NY) and WynnBET; 3) bet365; 4) FOX Bet; 5) theScore, and 6) Kambi also has a bid with Fanatics, with Penn National Gaming’s Barstool Sportsbook. Applicants will be selected for licensure by December 6th and licences will be awarded at the following commission meeting. The state aims to launch ahead of Super Bowl LVI in February 2022.
Florida
With the Seminole tribe authorized to operate mobile sports wagering in Florida, the key question is how many FL pari-mutuels and online sportsbook brands would seek to partner as white-labeled skins on the Seminole’s platforms. The regulatory model here is land-based and online (tribal only), and will be launched in October 15th 2021.
Maryland
Maryland’s uniquely open law establishes a pivotal role for the newly formed and independent Sports Wagering Application Review Commission to select more than 30 standalone retail sportsbooks and up to 60 mobile-only licensees, with an emphasis on minority participation. With so many licenses up for grabs, MD will possibly be targeted by various operators as a gateway to expanding their presence in the U.S. market. On the regulatory front, we it has to be seen if MD proceeds with imposing an official league data requirement, becoming the first state to do so absent an express mandate from its legislature. With a regulatory model that combines land-based and online, this market is expected to start operating in the second half of this year.
Louisiana
According to data from the market, regulations from LA Gaming Control Board will be adopted in time for a launch of sports betting this year. With incumbent casinos and racinos expected to take at least 19 of 20 available licenses, and with two skins per licensee, LA should also see a variety of market-access partnerships announced in the coming months, as online sportsbooks set their sights on a market that will be uniquely challenging from a geo-fencing perspective, given that sports wagering is legal in only 55 of the 64 parishes in the state.
Arizona
As the AZ Department of Gaming (ADG) moves quickly to craft implementing regulations, at least two critical questions remain. The first is whether one or multiple online skins will be permitted per licensee, with the current proposal for a maximum of two skins to be allowed on a strictly case-by-case basis and subject to both skins utilizing the same system. Thesecond issue is how the ADG will select from AZ tribes competing for a maximum of ten available state-wide mobile licenses. This reflects a curiosity in state law that means there is an overabundance of licenses available to qualifying sports teams and facilities, but not enough to accommodate all of AZ’s compacted Indian tribes.
Connecticut
Assuming Federal Government approval of tribal compact amendments, CT will allow sports betting at tribal casinos and via a single skin affiliated with each of its two Indian tribes, as well as at up to 15 retail sportsbooks and a third online platform operated by the state lottery. With the Mohegan and Mashantucket Pequot tribes having already confirmed FanDuel and DraftKings as their designated skins for sports betting (but not necessarily for iGaming), it has to be determined who the CT Lottery Corporation will select as its sports wagering partner.
Wyoming
State law requires the WY Gaming Commission to select at least five qualified operators for online-only licenses, and it remains to be seen whether the WY market is sufficiently large to attract many more than that statutory minimum number. Also noteworthy is how WY will become the first state to expressly permit crypto or digital currencies as a payment method for online sports betting. Although operators are unlikely to offer crypto immediately, the state’s law could position WY as a potential testing ground down the road.
South Dakota and Nebraska
Both states passed laws in H1 2021 to authorize on-site sportsbooks at land-based casinos (which have yet to be licensed and developed in NE’s case). SD should be ready to launch sports betting at commercial casinos in the town of Deadwood before year-end, with tribal casinos to follow once compact amendments are approved. One perennial question is whether the launch of retail sports betting stokes the fire for potential expansion to statewide mobile in the near future.