Sports Betting Could Become An $8 Billion Business By 2025
According to an 11/4/19 article on APNews.com, experts predict that within five years, legalized sports betting in the US will become a $6 to $8 billion dollar business.
It’s hard to believe considering that prior to the repeal of the Professional and Amateur Sports Protection Act (PASPA) on May 14, 2018, that full-scale sports betting was only legal in one state–Nevada. That’s how fast this industry is growing.
Sports betting is now legal in 14 states
Now that each individual state has the power to decide whether and to what extent to make legalized sports wagering an option there, 14 states have already come aboard. Many more are considering it.
NJ sports betting
One of the first states to act was New Jersey. On June 14, 2018, the first two NJ legal retail sportsbooks opened for business: one at Borgata Hotel Casino & Spa in Atlantic City and another at Monmouth Park. As of this writing, there are now 10 retail sportsbooks in the state (11 separately counting Moneyline, the recently opened second sportsbook at the Borgata) and 16 more for online and mobile sports betting.
In fact, legalized sports betting has already proven to be such a resounding success in New Jersey that it serve as a model for other states that have recently introduced it or have legislation in the works. With NJ sports betting revenue running neck and neck with Nevada’s, some experts maintain that it is only a matter of time before New Jersey surpasses Nevada as the undisputed No. 1 sports betting capital of the US. During September alone, Atlantic City casinos reported $37.9 million gross revenue from sports betting.
Expect a big increase in NBA betting
The 2019-2020 NBA regular season got underway on Oct. 22. Two recent developments should give NJ a big boost as far as betting on this sport is concerned.
No longer banned at Golden Nugget in NJ
The first is that the Golden Nugget Atlantic City sportsbook and its online and mobile NJ affiliates, after being prevented from offering any NBA bets at all during the 2018-2019 season, finally had that ban lifted. Gov. Murphy signed a bill into law whereby starting this NBA season, Golden Nugget NJ sportsbooks can take bets on any NBA games not involving the Houston Rockets. The reason for the restriction is that the owner of Golden Nugget, Tilman Fertitta, also owns the Houston Rockets.
NBA – DraftKings Partnership
Another major development is the announcement on Nov. 4 of a new multiyear partnership between DraftKings and the NBA. The partnership makes DraftKings an Authorized Sports Betting Operator of the NBA with access to official NBA betting data and league marks across its mobile platform in all of its US sportsbooks. The two organizations will also work together to protect the integrity of the game.
DraftKings was the first online sportsbook to be launched in NJ. Recent monthly figures show it ranks second only to Fanduel in online/mobile sports betting revenue in the state. DraftKings is also a leading site for in-play betting, which is becoming an increasingly popular option among NBA bettors.
Both parties are excited about the new partnership. According to Scott Kaufman-Ross, Senior Vice President, Head of Fantasy & Gaming, NBA:
“Our partnership will provide our fans with an authentic and enhanced gaming experience and help us further protect the integrity of our games.”
Ezra Kucharz, chief business officer at DraftKings said that “we look forward to the opportunities that being an Authorized Gaming Operator of the NBA will unlock for consumers.”
The bottom line should be that NBA betting, which is already very popular on this gambling website, will become even more so.
Opinions voiced at the Nov. 4th NYC Sports Betting Investor Summit
At the NYC Sports Betting Investor Summit sponsored by the investment firm Morgan Stanley, held on Nov. 4 at the Harvard Club, investors in the industry got to weigh in on what they envisioned to be the future of sports betting. Panelists from Morgan Stanley, MGM Resorts, Hard Rock, Mohegan Sun, and PointsBet, as well as the research firm Eilers & Krejcik Gaming all projected that by 2025, revenue from sports bets in the US should reach at least the range of $6 to $8 billion.
In 2018, Morgan Stanley projected that sports betting revenue five years later would be $5 billion. However, with legalized sports betting revenue across the US this year already at $833 million, the investment firm revised its projection for five years from now to $7 billion.
Scott Butera, president of interacting gaming for MGM Resorts International thought the other panelists’ projections might be underestimates. He said that even with inevitable attrition from some sportsbook failures, “I’ll take the over on $8 billion.”
Of course, whether the panelists’ projections are underestimates, overestimates, or right on target will ultimately depend largely on how many more states are going to legalize betting on sports. Morgan Stanely projected that if sports betting is legal in all 50 states by 2025 (highly unlikely), the industry could generate as much as $15 billion in revenue. On the other hand, if the option exists then in only 22 states, Morgan Stanley estimates only $2.5 billion in revenue.
Possible roadblocks to the growth of sports betting
Participants at the Nov. 4 forum acknowledged that despite the phenomenal growth in the sports betting industry so far, progress won’t be smooth sailing for all companies getting involved. Some of them will have difficulty meeting the high operating costs and will fall by the wayside.
Challenge of continuing to attract new customers
One heavy expense entailed in running a successful sports operation is sufficiently promoting it to produce a continuous influx of new customers. Despite the great convenience of online and mobile sports betting as opposed to having to travel to a retail sportsbook, many would-be bettors refrain because their bank won’t accept their major credit card to finance gambling transactions.
According to Kresmir Spajic, senior vice president of online gaming and sports betting for Hard Rock International, 80 percent of sports betting transactions are financed using credit cards. However, only about 30 percent are in the US.
Competitive nature of the market
Furthermore, the sports betting market is very competitive. Having a lot of options available to them makes sports bettors more discriminating where they choose to do their business.
As Seth Young, chief information officer for PointsBet mentioned:
“It’s a war out there. At the end of the day, there’s going to be a lot of carcasses out there on the road.”
Scott Butera of MGM Resorts International agreed.
“It’s a tough market,” he warned. “Everybody wants to be here. Ultimately, I think we’ll see some shaking out.”
Summary and conclusion
It will be interesting to see how the experts’ projections regarding where the sports betting industry will be five years from now play out. Meanwhile, as more and more NJ sports fans discover, there is no need to go to Nevada or bet illegally to be in action. All of the sports betting options you could possibly ask for and more exist right here in New Jersey.