Sports betting and iGaming outlook in the United States

While land-based casinos have suffered significant financial losses after several months of closure due to the pandemic, the industry showed an enormous advance in revenue and handle in online verticals. Those record numbers anticipate new states regulating sports betting before the end of the year, as well as iGaming and Esports are being considered attractive betting options for the future.

The gambling puzzle in the United States is being completed, and sports are kings that express the betting business for operators.
The gambling puzzle in the United States is being completed, and sports are kings that express the betting business for operators.

Reflecting the rapid expansion of legal sports betting, strong growth in internet gaming, and the opening of new casinos, U.S. commercial gaming industry generated a record revenue total of US$43.6 billion in 2019 (an increase of 3.7% over 2018). In spite of the impact of COVID-19 pandemic, 2020 trends are also being positive, especially among the online and sports betting verticals. Those numbers shared by the American Gaming Association (AGA) can be complemented by an interesting recent report: ‘U.S. Sports Betting Tracker, September 2020,’ by VIXIO GamblingCompliance.

SOME NATIONAL PROJECTIONS

This study analyzes current state of the activity in the country, and also predicts future landscapes. According to this text, overall regulated U.S. sports betting revenue for the full year 2020 will total US$1.44 billion in 2020, down 14% from a projected US$1.66 billion before COVID-19, but up 26% from a forecast of US$1.14 billion as of June. VIXIO GamblingCompliance experts also estimate the market to be worth US$3.2 billion in 2021 and between US$6.3 billion and US$8.4 billion by 2024, considering market confidence coming from major U.S. sports and a projection of 45 states having legalized sports betting by 2024.

Recent months have seen major marketing partnerships between sportsbook operators, professional sports teams and leagues and media companies. Besides, major sports have resumed activities after their coronavirus hiatus, another NFL season kicked off, and new states are increasingly legalizing sports betting. It’s also important to notice the proliferation of planned in-stadium mobile sports-betting lounges, as operators partner with major sports teams in various markets. We must add to this that American sportsbooks recorded their highest handle and revenue during August and September. Of course, in the coming years, focus will shift to whether the ROI on marketing spend continues to be strong, and whether these deals turn out to be a key part of the success stories of those who entered into them, or a cautionary tale.

STATES RECORDS IN AUGUST AND SEPTEMBER

In August 2020, Americans wagered US$2.1 billion. Sportsbooks generated US$119.4 million in revenue (90.2+ percent from August 2019). Nationally, 2020 sports betting revenues were up 31.5 percent compared to the first eight months of 2019 and handle was up 24.1 percent during that same time. Online wagering made up more than 80 percent of handle and revenue in mature markets, and some states with closed or restricted brick-and-mortar casinos eclipsed 90 percent. If August was good, September was much better, with historical records. For US sports betting, the nationwide handle exceeded US$25 billion.

Nevada continued to generate the highest sports betting handle, bringing in US$546.2 million in September. Meanwhile, Indiana saw bets totaled US$207.5 million last month, beating its pre-pandemic high of US$187 million. Another state that overcame previous records was Iowa, which generated a handle of US$72 million in September, up 44 percent from August. While in New Jersey, sports betting reached a peak of US$748.6 million in handle in September, topping August numbers by 12.1%. The addition of college football and NFL betting to an already packed sports month helped push the market to a new height. More than US$9 out of every US$10 was bet online in September, with mobile handle of US$678.7 million, or 90.6% of the total. Revenue did not hit a new record, according to the state report. Operators kept US$45.1 million in September, good for 6% hold. Overall, football accounted for 21.6% of the total and was the highest-bet single sport.

SITUATION OF SPORTS BETTING REGULATION

As of beginning of October 2020, sports betting was regulated in 21 states: Arkansas; Colorado; Delaware; District of Columbia; Illinois; Indiana; Iowa; Michigan; Mississippi; Montana; New Hampshire; New Jersey; New Mexico; New York; Nevada; Oregon; Pennsylvania; Rhode Island; Tennessee (is due to go live on November 1st); Virginia, and West Virginia.

There are enabling laws passed, but no implementing regulations adopted, in North Carolina and Washington. Several state legislative sessions have been temporarily suspended or have adjourned early due to the coronavirus. Although it’s unclear if legislatures will consider sports betting when they reconvene, legislation to authorize sports betting remains pending in six states: Louisiana; Maryland; Massachusetts; Ohio; South Dakota, and Vermont. Legislation to expand or reform existing state laws is pending in New Jersey and New York.

According to the report of VIXIO GamblingCompliance, it’s possible that three or four states to fully authorize sports betting before the end of 2020, with Massachusetts’ and Ohio’s extended sessions and recent passage of bills in one house of their legislatures, making them the most obvious candidates to join Virginia and Washington. Although Maryland, South Dakota and Louisiana will hold sports betting referendums in November’s national elections, all three states would still have to pass implementing legislation if those ballots succeed. Longer-term, it is expected seven to ten states to authorize sports wagering in 2021. Following this optimistic trend, legal sports betting might spread to 36-45 states in total by 2024. Moreover, in Nebraska, residents will vote on a trio of ballot initiatives to allow slot machines and table games at racetracks and on tribal lands. Elsewhere, residents of Colorado will vote on a ballot measure to remove the US$100 maximum bet limit in place for casinos in the three mountain towns of Black Hawk, Central City and Cripple Creek and allow them to offer new types of table games. If passed, that would leave South Dakota as last state standing in terms of applying wager limits at casino venues. In Virginia, local voters in Bristol, Danville, Norfolk and Portsmouth must approve plans for their cities to host one of the five new casinos that were authorized under a new state law passed in April. About tribal gaming, the Northern Arapaho Tribe in Wyoming has plans to launch a sports betting operation on the Wind River Reservation in the coming months.

OTHER VERTICALS ARE ALSO GROWING

Besides sports betting, we have to take into account online gaming in general. Though legal in only a handful of states, iGaming grossed US$145.3 million in revenue in August 2020, a 224.2 percent increase from August 2019. Year to date, iGaming has garnered US$923.1 million in revenue, a 203.3 percent rise. For September 2020, total iGaming revenue in Pennsylvania, New Jersey, Delaware, and West Virginia added up to US$147.3 million, 3.2 percent higher than August’s total. Projections for full year 2020 say online gross revenue will be of US$1.05 billion

Apart from this, what is happening with Esports betting?  No state has explicitly legalized betting on all Esports events to date. In the wake of pandemic shutdowns in March, Nevada regulators approved betting on the Counter-Strike ESL Pro League. New Jersey has also authorized legal betting on certain Esports events, including Counter-Strike: Global Offensive’s Legend Series tournament in September. But Esports betting is ‘cloudy’ in other states, even where sports betting is legal. However, among legal sports betting states, only Indiana has expressly disallowed Esports wagering. With states in search of new revenue possibilities, Esports will inevitably become more alluring. Currently, offshore books are successfully offering Esports to US customers, showing the enormous potential. As states begin to embrace it, the Esports market will gain exponentially.

Meanwhile, while sports betting have been legalized in 21 states since the Supreme Court struck down the federal wagering ban in May 2018, iGaming has been a more difficult legislative challenge. Considering imminent national elections, it seems unlikely to advance with iGaming legislation before the start of 2021. Most lawmakers will return to their respective statehouses next January, facing budget shortfalls, but it remains to be seen if those gaps and the strong iGaming figures will compel online gaming legislation. In the meantime, the growing, online-driven sports betting market will likely continue to set records. So too will online casino gaming, especially with the struggles facing brick-and-mortar facilities for the foreseeable future.