Dominick Reuter / AFP
The coronavirus aftermath in the US has yet to be fully realized but one thing can be widely and accurately projected for every state in the Union – a mind-numbing financial cost. How states will deal with inevitable budget shortfalls remains to be seen but legal sports betting platforms are being floated as an alternative revenue generator and as a way to at least mitigate some of the seemingly immeasurable costs of the global pandemic.
There are currently 22 states that have welcomed their own form of legal sports betting platform with a few more including Louisiana and Massachusetts seemingly on the way. While the global shutdown of meaningful and marketable sports action has put a temporary pause on tax revenues flowing in to various states, optimism surrounding the return of the games we love in North America has put a new spotlight on jurisdictions that are still holding out on the legalization of legal wagers.
COVID-19 “will accelerate the expansion of sports betting and online casinos in the next 12 to 24 months,” said Chris Krafcik, a managing director with Eilers & Krejcik Gaming. “Both activities provide states, whose economies have been massively disrupted by the outbreak, the opportunity to capture new revenue immediately in the form of upfront license fees, and over time through taxes.”
Sports coming back online
Sportsbooks are prepping a full menu of betting opportunities with German soccer, the UFC, some golf and NASCAR already staging some meaningful events. The NHL is close to an agreement on its return, the NBA looks as though it will continue its season soon, and MLB is in talks to crank up their season this summer.
If all goes well, the NFL, betting’s biggest cash cow will be in full swing in the fall, meaning that betting on your favorite team will be back to normal sooner than later. With that comes calls for prospective states to get on board or at least draft legislation so voters can have their say on legal sports betting on the November ballot.
Budget shortfalls are real
Although the coronavirus-related bills haven’t been tallied up yet there are a couple of intriguing states that have popped up on the radar with their own reasons to either expand their sports betting platform or bring one into their state.
First off, there is New York that has been operating a legal sports betting platform for some time but has major holes in how the rollout has taken place. In New York, there is NO mobile betting opportunity for citizens – if they want to place a wager, four upstate casinos and neighboring New Jersey are the only places to do so. Neither does the occupants of New York City any good.
The budget deficit in New York has been estimated between $13 billion and $17 billion. One way to mitigate some of the losses is to adopt a mobile betting platform – one that has consistently been responsible for between 85% and 90% of New Jersey’s off-the-charts monthly handles. Mobile betting also helps social-distancing-minded bettors wager without stepping foot into crowded casinos – some of which can’t even open yet.
California is also seen as a big fish that continues to miss out on the financial benefits of a legal sports betting platform in the state. A state with 16 pro sports teams and the biggest population among states on the country, conservative estimates have legal sports betting contributing projected $300 million in taxes revenue annually off $30 billion in wagers per year and a projected operator revenue of $2 billion annually. That’s big money for the cash strapped state.
If you legalize… they will come
The US sports betting industry just passed $22 billion in legal bets in the two years since it has been legal. Every state that has brought on a legal sports betting platform has benefitted, some more than others. But one thing is clear – there is an appetite for legal sports betting in America and everybody with sportsbooks in their jurisdictions seems to win – from the gambling providers, to the labor pools of welcoming states to the state and local coffers that collect much-needed funds to provide services for states.
Legal sport betting used to be viewed as a problem. It has quickly switched to becoming a possible solution for states under the immense weight of the coronavirus reality. “The virus has highlighted the need for revenue diversification,” Yaniv Sherman, head of commercial development for the online gambling company 888 Holdings. “The future is around online growth, and it’s right now, not in 5 or 10 years. We hope to get additional states on board.”