$150 Billion Supreme Court Decision on Sports Betting Ahead
All indications are the US Supreme Court soon will decided the New Jersey sports betting case, which is said to involve a potential $150 billion industry. The New York Times and CNN Money ran stories over the weekend on the implications of the Supreme Court decision, indicating the media establishment has insight that a decision is near-ready.
The American Gaming Associations estimates that Americans gamble $200 billion on sporting events each year. About $3 billion of that is wagered legally, mainly at Las Vegas sportsbooks.
According to the AGA, the remaining $197 billion is wagered through illegal local bookmakers (bookies) and unlicensed offshore bookmaker sites. Financial analysts who (unlike the AGA) are neutral on the subject of sports betting estimate the number to be around $150 billion.
20 States Might Legalize Sports Betting
Whatever the case, a huge amount of cash is wagered on sports — and soon that activity could be legal in nearly two dozen US states. Nevada has legal sports betting, while Oregon, Montana, and Delaware all have legal sports lotteries — a kind of parlay betting on sports.
Eighteen other states are considering the passage of a total of 28 bills associated with sports betting. A full 20 states signed the amicus brief submitted by West Virginia to the Supreme Court in support of New Jersey’s Supreme Court case: Murphy v. NCAA. The signatories to that amicus brief represent a who’s who of states that would seek to legalize land-based sports betting, if the Supreme Court rules in favor of New Jersey.
The change in how Americans wager would be profound. For instance, DraftKings, the daily fantasy sports site, recently began staffing up for a possible legal sports betting industry.
Jason Robins: “We’re Pretty Excited”
Jason Robins, the CEO of DraftKings, told CNNMoney, “We’re pretty excited about it. It’s a huge market that has the opportunity to create lots of new players, lots of new revenue, and really open up things in a way that they never have been before in the United States.”
DraftKings’ decision is one of many changes the decision would bring. For years, DraftKings and its rival, FanDuel, promoted daily fantasy sports as a form of gaming — not gambling. They claimed their contests were a game of skill in which expert players (grinders) collected 90% of the winnings. The DFS sites engaged in protected legal battles to deny their games had anything to do with sports gambling. When required, they withdrew from states like Nevada and Illinois — which offered them gaming licenses — to avoid being labeled sports betting sites.
“Great Value Driver”
If the SCOTUS approves sports betting, DraftKings would embrace that part of its business. In fact, the DraftKings co-founder and CEO believes sports gambling could be one of the biggest parts of the DFS site’s business.
Robins said, “I think if it’s done in the right way, then everybody will see that it’s a great value driver. It creates more revenue opportunity for them. It creates more engagement with their fans. Everybody should be able to benefit from it. And when you have a situation like that where everyone should be able to benefit from it, as long as you do it in the right way, I think everybody usually ends up happy at the end.”
Revenues for the NFL
Legal sports betting in 20 or more US states would be a boon for the US sports leagues, even though they are the ones opposing New Jersey in the US Supreme Court. NBA Commissioner Adam Silver, MLB Commission Rob Manfred, and NHL Commissioner Gary Bettman all have modified their stances away from the traditional hard-line position North American sports commissioners usually take against gambling on sports.
NFL Commissioner Roger Goodell has maintained his anti-gambling stance, even though the NFL and NHL each approved sports franchises for the Las Vegas area — something they never would have done in a previous generation. In fact, coming off two years of declining TV ratings, sports betting might be the one thing which can reverse the trend for the National Football League.
Increased Ratings for NFL Games
Not only would the league collect integrity fees from sportsbooks for using the intellectual property of the leagues for gambling, but it would boost television ratings. It is well-established that betting on sports boosts ratings, because gamblers who might not otherwise be interested in a game have a stake in its outcome. It was that factor that linked fantasy sports rise with the increasing NFL ratings over the past two decades.
It’s simple. In the entertainment industry, caring about the outcome of the story matters. In movies, if you like the central protagonist or hate the central antagonist, you are more likely to care about the ending of the film. In sports, if you have a similar rooting interest, you are likely to tune in to see the results.
Thus, the coming US Supreme Court decision on sports betting is going to have huge implications for state treasuries, casino operations in many states, DFS sites that might get in on the action, and the US-based sports leagues. And of course, it will have tremendous implications for US sports bettors.