There’s no doubt that 2021 has been a very active year for sports betting in the United States. Twelve states began offering legal sports betting for the first time: Virginia, North Carolina, North Dakota, Wyoming, Arizona, South Dakota, Washington, Connecticut, Louisiana, Florida, Wisconsin and Maryland. Besides, ten states passed laws in 2021 to either authorize sports wagering or materially expand their markets (as in New York), versus just two in 2020.
Based in this segment evolution, VIXIO GamblingCompliance, a key provider of independent legal, regulatory and business intelligence to the global gambling industry, launched its exclusive report Get ahead of the game. U.S. Sports Betting & iGaming Outlook 2022. In this excellent document, there is a deep analysis of current situation and future possibilities for this segment in the country, from 2022 to 2025.
ESTIMATIONS FOR THIS SEASON
VIXIO GamblingCompliance forecasts the U.S. sports betting market will generate USD 6.7 billion to USD 8.0 billion in gross revenue in 2022, depending on key factors that include whether online sports betting can continue in Florida amid legal challenges. According to the company, despite feeling the impact of new competition from neighboring New York, New Jersey will remain at the top among sports betting states in revenue terms, ahead of Illinois, New York and Pennsylvania. Although Nevada could surpass USD 500 million in annual revenue for the first time in 2022, the Silver State could drop out of the top five largest U.S. markets in the unlikely event of the Seminole Tribe resuming mobile operations in Florida early enough in 2022.
In terms of legalization, the firm expects a further three to nine states to approve sports betting in 2022, depending on the outcome of conflicting ballot measures in California, the impact of election-year politics in certain states, and a variety of state-specific lobbying and policy dynamics. Elsewhere, North Carolina and Mississippi will look at expanding to mobile from their current retail-only models, while various states -including Iowa and Pennsylvania- will consider bills to implement more minor changes to their sports wagering laws in order to address permitted bet types, Esports or tax matters. Also in focus will be high-profile launches in New York and Ohio, litigation in Florida, plus Maryland’s convoluted process to license up to 60 online sportsbooks.
About online gaming, VIXIO analysts believe the U.S. iGaming market will remain with slower development compared to sports betting in 2022. Currently, Indiana appears the most likely contender to join the six states that now offer legal online casino games, but lobbying success is not assured, despite concerted efforts by industry stakeholders to better educate lawmakers on the merits of iGaming. The U.S. market for Internet lottery games could also expand to a handful of states beyond the ten established iLottery jurisdictions, with Massachusetts, Missouri, Kansas, Ohio and Oregon among the more obvious candidates. Opposition by tribal and commercial casino interests to e-instant games and cannibalization fears among traditional lottery retailers remain significant lobbying impediments, however.
STATE BY STATE SITUATION
When considering sports betting expansion for 2022, these are the different possibilities in some relevant states:
California: This state is poised to play the leading role in 2022. State residents will definitely vote in a Nov. 8 referendum on a retail-only initiative supported by a broad alliance of CA Indian tribes, but at least three further measures could also be qualified for the ballot pending collection of voter signatures early in the year. With a fully-fledged CA market worth well over USD 2 billion in annual revenue, the Golden State enters 2022 not only as the biggest potential prize on offer, but also the state where the final legislative outcome is perhaps most uncertain.
Florida: Like California, Florida is another premium sports betting market facing a tumultuous 2022. On one front, ongoing and potentially lengthy litigation should determine whether federal law will allow the Seminole Tribe to operate state-wide mobile wagering via servers on tribal lands. On a parallel track, FanDuel and DraftKings will be seeking to qualify a referendum for Nov. 2022 to establish a competitive online sports betting market there.
Georgia: Although legislation was not definitively approved, the Peach State made major progress toward legalizing mobile sports betting in 2021. Heading into 2022, the main obstacles standing in the way of a Nov. 8 voter referendum are largely about the broader political issues that will dominate discussions during the brief legislative session running from January through March.
Massachusetts: It was a case of déjà vu for Massachusetts sports betting in 2021, as the state’s House of Representatives again passed a bill only for the Senate to apply the brakes and insist upon a more deliberative approach. A mid-year deadline to adopt a state budget might be a good gauge for whether MA will finally get over the goal line in 2021, with the launch of legal online betting in Connecticut and New York serving to amplify concerns voiced by proponents. Key challenges to address include what restrictions to apply to college sports, whether sports teams should have any control over market access, and whether MA might take a more aggressive stance on advertising and responsible betting.
North Carolina: After a bill passed the Senate in Summer 2021, North Carolina is a solid bet to authorize online sports betting in 2022 and expand a market currently limited to retail sportsbooks in the state’s tribal casinos. On the table is legislation to permit up to 14 mobile-only licensees (with two licenses reserved for Indian tribes), with operators able to install mobile wagering locations at major sports stadiums and arenas.
Kansas: A bill that passed the Kansas Senate in February 2021 died after a negative House vote a few weeks later, essentially leaving KS in exactly the same position at the end of 2021 as it was when it started the year. The two legislative chambers are at odds over several provisions, including official league data and a tax rate. If legislation is to pass in 2022, a compromise of sorts may have to be found.
Missouri: On its face, sports betting should be able to count on strong support in Missouri as casinos and local sports franchises push for legalization to keep up with neighboring states, including Illinois, Iowa, Tennessee and Arkansas. Thinking about 2022, MO pro sports teams have upped the ante by proposing a ballot initiative on sports wagering that would enable proponents to bypass the legislature, in the event that ongoing debate on VLTs and skill-game machines continues to stall the issue.
Mississippi: After becoming one of the earliest post-PASPA adopters of legal sports betting by authorizing sportsbooks at established casinos, Mississippi has since seen a series of bills to also permit state-wide mobile wagering essentially declared dead on arrival at the state legislature. Currently, MS is surrounded by states with online sports wagering. A deadline of February 1st for a bill to be passed out of committee represents an immediate test of whether regional expansion has altered the equation in the Magnolia State.
Maine: After Gov. Janet Mills vetoed a bill in early 2020, it looked briefly like Maine would put another bill on her desk in Summer 2021 until a push to get a measure through the legislature stalled right on the goal line. The principal issue to resolve in ME is whether online operators should be required to partner with an incumbent land-based casino or instead be able to obtain a standalone mobile license.
Minnesota: Past bills to authorize sports betting in the North Star State have failed to shine amid entrenched opposition from politically influential Indian gaming tribes who have unequivocally rejected any effort to expand off-reservation gaming. This year, however, there is just the hint of a softening of tribal opposition after the MN Indian Gaming Association said it was “examining the various ways sports betting has been implemented across the country. A more serious debate than in previous years appears to be in the cards after key tribal states Arizona and Connecticut passed laws in 2021.
Alabama: Legal sports wagering is a solid bet to arrive in Alabama if members of the House and Senate can agree upon a much broader package of gambling legislation addressing casinos, tribal gaming and establishing a state lottery, all subject to voter approval in a state-wide referendum. Such legislation was passed by the Senate last year, but stalled in the House. Specifically on sports betting, the Senate and House started to differ on whether to tie licenses for mobile wagering to newly authorized land-based casinos or instead enable operators to obtain them on an untethered basis.
Others: Other states set to consider sports betting bills in 2022 include Kentucky, Vermont, Wisconsin and New Mexico.
When it comes to discuss about possible iGaming development and legalization in the U.S., VIXIO says main states to take a look at are Indiana, Illinois, Iowa, and Nevada (expanding legal interactive gaming market beyond online poker to include potentially all casino-style games)
PROJECTIONS TOWARDS A PROFITABLE FUTURE
When it comes to a more extensive prediction, VIXIO GamblingCompliance takes the year 2025 as a reference. The company forecasts the U.S. sports betting market to be worth USD 12.1 billion to USD 17.7 billion in total annual gross revenue by 2025, depending on whether legislative trends align with the Base scenario or the more optimistic Bull-Case scenario. Meanwhile, research group states that total revenue from all U.S. online gambling (online sports betting plus iGaming in certain states) will reach USD 17.3 billion to USD 22.6 billion by 2025.
Besides, the ten states that approved sports wagering legislation in 2021 will add approximately USD 4.2 billion to the total addressable market for U.S. sports betting by 2025. New York mobile is anticipated to be the largest market from the Class of 2021, despite a high tax rate suppressing overall revenue. But Florida (assuming the new Seminole compact holds up in court), Ohio and, to a lesser extent, Maryland and Arizona are all set to become major markets in their own right, with the three latter states offering far more opportunity in terms of market access than more populous NY.