Where are the next big US sports betting wins?

Other states – Maine, Kentucky and Nebraska – are making progress in sports betting legislation. All three states are in the regulation phase, with launch dates to be determined.

Meanwhile, in the last day, Vermont and North Carolina have passed sports betting into law.

Which states, then, will join them? And what will the impact be on the big-picture US sports betting market?

Who’s on first?

North Carolina governor, Roy Cooper, signed House Bill 347 into law yesterday (14 June), following weeks of build-up. This, plus Vermont’s legalisation of sports betting puts an end to sports betting legislative journeys for two US states. 

Almost every expert we spoke to also mentioned Texas. The Lone Star State remains a bit of an enigma, thanks in part to its size. Everything’s bigger in Texas, so the saying goes, and everyone wants a piece of that sports betting pie.

Texas ended its legislative session in May without any movement on the sports betting front. The state operates on a biennial cycle. This means that the soonest legalisation could occur is 2025, with a launch likely the following year.

Five years post-PASPA, the US landscape can teach us quite a bit, even with regard to states that aren’t yet legal.

Still ain’t easy

Missouri’s constant attempts and subsequent failures; Texas’ lapse into the end of the session; California’s referendum debacle; these states – which are a few notable foibles – prove that it’s still difficult to push sports betting over the line. All the pieces have to come together to make it work.

If one piece doesn’t fit, states risk long delays or big blunders in the public eye.

“While much has been made of the potential for Texas legalisation,” says Justin Stempeck, chief regulatory officer for Compliable. “Lieutenant-governor and senate president, Dan Patrick, has voiced significant opposition to the likelihood of success even if a bill can make it into the state senate chambers.”

As noted above, Texas couldn’t make it happen, and Patrick’s opposition was undeniably a factor.

However, setbacks can come from myriad sources. Last year, a wave of negative media panned the sports betting industry. Some of the points were completely fair. Others showed a stark misunderstanding of the industry.

Despite the efficacy of mainstream media attention, sports betting can be impacted either way.

“Look at the recent launch in Massachusetts to see how stringent lawmakers are now being,” says Callum Broxton, head of US operations for Checkd Group. “They came very close to outlawing affiliate marketing altogether, which could well come back into the conversation at some point.”

“The complete removal of risk-free promotions from the entire industry is another example of rightfully stricter standards becoming the new baseline.”

Broxton’s points create new hurdles for lawmakers to consider, throwing wrenches into the political gears and slowing the process.

Jessica Feil, vice-president regulatory affairs and compliance at OpenBet, says that sports betting bills have the tendency to limit advertising.

“The variety of news coverage in late 2022 about sports betting has certainly been on lawmakers’ minds,” she says. “It has had more of an impact with lawmakers revisiting current legislation to consider shoring up provisions around responsible gambling, advertising, marketing and other ways that sportsbooks communicate with the public and their customers.”

“We’ve seen a variety of different bills introduced around the country that would limit various sorts of advertising or marketing.”

Always late to the party

Consumer protections are a good thing; that much is clear. As considerations in the legislative process, they can represent necessary delays.

Lawmakers aren’t just legalising sports betting. They are welcoming a multi-faceted regulatory framework into their market. It requires a careful look at how consumers will be affected.

Brendan Bussmann, managing partner at B Global, argues that the industry needs to get out of its own way.

“The industry needs to step up its education effort and telling its story,” he says. “The challenge is that we do not always agree among ourselves on how best to do that which causes further issues.

“We sat silent last fall when the industry’s perspective was either ignored or used as writers saw fit. In politics you learn quickly, if you don’t respond to a lie, it becomes fact and then you have to work harder to dispel the myth and in some cases become more reactionary than needed.”

“If this was easy, Missouri would not have been debating this for five years. There is a proven model of principles that need to be achieved but each state requires its own parameters to match the current gaming environment and local laws.”

There’s another crucial reason state lawmakers tend to squander sports betting opportunities in their first few attempts. Gambling sits near the bottom of a long list of political agenda items.

Gambling remains relatively non-partisan in the US. Initiatives to legalise sports betting and/or online casinos generally get support from both sides. The problem isn’t so much disagreement. Instead, it’s prioritisation.

Stacie Stern, vice-president, government affairs and partnerships for Underdog Sports, LLC says that action on a bill is generally rushed.

“It’s common to see action on a bill, witness a lull period, followed by a rush in the last few days of a legislative session to push items into conference committees,” she says. “We expect to see progress in a number of states in a similar sequence and have an opportunity to pass legislation.”

Indeed, many legislatures follow that exact pattern. North Carolina’s bill appeared to have lost momentum when it spent months in committee, only to move incredibly fast once it returned to the senate and the house.

Stempeck believes that, simply, gaming is not a priority in comparison to other issues.

“In most jurisdictions, gaming is not a high priority when compared to legislation addressing infrastructure, health care, or a myriad of other issues,” he explains. “While gaming bills are often touted as economic benefits to the states, the importance of a given bill will then be tied to the financial health of the jurisdiction.

“If a state does not have a dire need for funds, it may not rapidly advance a sports betting bill particularly where the overall effect of sports betting on state coffers is generally quite modest.”

Gambling tends to become a priority if it’s part of a larger economic initiative meant to bring new revenue to the state.

“Gaming is typically one of the last things that gets done,” says Bussmann. “Due in part to [the fact] that it normally isn’t the highest priority unless states are using it as a revenue mechanism.

“It’s always been a middle-of-the-road issue. But in an age where polarisation has become the norm, things get kicked down to the end and are not necessarily decided on the merits of gaming itself but other issues.”

Apprentice becoming the master?

Can states seeking to legalise use existing market frameworks to their advantage? The answer isn’t as simple as yes or no. Instead, it lies somewhere in the middle of that spectrum, depending on the state in question.

“Lawmakers have nearly three dozen live US markets to use as examples,” says Feil. “They can compare against states that have similar populations, demographics and current gaming markets, which will help them make better-informed policy choices.”

“It is always a benefit to see a similar market succeeding and use that as a legislative and regulatory model. The industry also has increasing examples of what works – and what doesn’t – in US markets to help inform our policymakers as they navigate their legislative process.”

Broxton says the benefit from other states comes after legalisation occurs.

“The consensus is it helps once the state is legal as they are able to repurpose a lot of existing guidelines rather than creating them from scratch,” Broxton says. “However, the recent scandals in college baseball are most likely the first of many and, given the fact they’ve had so long to legalise already and haven’t, those sorts of stories could be especially damaging to the cause.”

Broxton references college betting scandals from the University of Alabama and the University of Iowa. Regulators in Alabama flagged suspicious bets on a particular game, suggesting some insider information. Iowa student athletes came under investigation for violating betting rules.

Both states have rules about who can or can’t place bets, and college athletes are big no-gos.

The NFL recently encountered similar issues. The Detroit Lions had to release players for violating betting policy.

Further details on those scandals lie well outside the scope of this piece, but the broad strokes are helpful when trying to understand the legislative reticence. Regulators have to implement and enforce rules that protect bettors from corruption or bad actors on a given team or within a given organisation.

Even if a betting violation from a professional or college sports team results in a firing or a breach of contract, the possibility of similar problems in the future can be a tough pill to swallow.

If states with existing regulations can’t stem such problems, what can a new market do to mitigate them?

Stempeck notes that legalisation depends heavily on individual factors.

“Tribal interests obviously played a huge role in scuttling the online operators’ chances in California last year but in other jurisdictions, legislation requires cooperation between the private industry and the tribes removing that entire issue,” he explains. “There are certain bullet points when it comes to legislation that will make a market more attractive to the industry.

“They include a reasonable tax rate, lighter touch licensing involving only key players, lower licensing fees, the potential to acquire temporary licences to launch quickly and a market that is relatively open to all comers.”   

Stern offers a different take.

“Most states aren’t influenced by what other states are doing in regards to legalising sports betting,” she says. “Even those which are in close proximity.”

In short, learning from existing markets is somewhat of a mixed bag. Success can breed success, but failures can cause long-term hesitation in potential sports betting markets.

The larger impact

With more than 30 states live and more on the way, let’s look at two final questions. What impact do new potential states make on the larger US sports betting landscape? And will growth come mainly from new state launches or the expansion of existing markets?

New states legalising can make a huge impact on the US sports betting industry, but it varies by state. The bigger the population, the more exciting the state’s impact stands to be.

“Texas really would be a watershed,” says Feil. “It is one of the biggest states in the nation but has historically not been welcoming to any form of gaming.

“Texas legalising sports betting would be a sea change in how gaming is viewed as modern entertainment in the US.”

Bussmann agrees. “As the saying goes, everything is bigger in Texas and that would have the greatest impact of any state in current debate.

“You’ve got a state with a rich tradition of sports both at the college and professional level, plus a big and growing population.”

Unsurprisingly, Broxton also agrees. “Texas is one of the two remaining white wales of the US sports betting world. There would be a huge effort from all players in the market to make moves there.

“That could possibly come at the detriment of other states as operators shift significant marketing spend, the likes of which we haven’t seen in two or three years.”

For Stempeck it’s fundamental: “None of the states in progress, except for Texas, are really game changers to the industry. They are modest markets that will demonstrate a continued gradual expansion of sports betting across the United States.”

That brings us to the second question. Most experts agree that new markets are the primary growth area for the States, although there are a few small caveats.

“It’s hard to imagine where further growth will come in an established market like New Jersey or Pennsylvania,” Stempeck says. “Once sports betting has been live in a jurisdiction for several years, it is unlikely there would be any significant increase in growth except for the introduction of some new, innovative method of betting that would drive more players to the product.

“Significant growth for the foreseeable future is going to be tied to the geographical expansion of sports betting in the United States and, to a lesser extent, the expansion of igaming.”

Stern says there’s a unique opportunity for additional revenue in existing markets.

“We see a significant growth opportunity by shifting users away from offshore books,” she says. “While we continue to strongly advocate the issue, it’s clear that the activity on these platforms needs to be addressed.

“There’s a segment of the population that continues to use unregulated apps without recognising the lack of protections, given they’re able to download them on phones without issue.”

Amid it all, Broxton believes there’s another race going on. “The race for share of wallet is finally underway with meaningful effort,” he says. “Caesars has been hot on this recently, offering very generous profit boost tokens to existing users in an attempt to lure the loyal FanDuel and DraftKings users.”

Even so, the fight for market share is far from over, he argues.

“We shouldn’t overlook how many operators are not yet live in existing states,” Broxton continues. “Bet365, for example, has endless resources, a brilliant product and is only in four states, but when they expand it’ll be a wake-up call to their competitors who’ve taken their positions for granted.”

Feil emphasises the two gaping holes in the US.

“Texas and California have yet to legalise sports betting, so I’d say there’s a lot of growth to come from new state launches,” she explains. “However, there is still a great deal of opportunity in current states.

“While it has been five years since the US Supreme Court struck down PASPA, we’re still learning about American bettors’ preferences, transitioning consumers to the regulated market and rolling out new services and products. The markets in currently live states are incredibly robust and growing at very respectable rates as new sports fans engage.”

Undoubtedly, there is still a way to go for the US sports betting market. As Feil concludes: “There is still a lot of work to do.”