Use this button to switch between dark and light mode.

Sports Gambling Continues to Expand Across the U.S.

April 28, 2022

If you’re a sports fan, you could be forgiven for thinking that sports gambling is now legal everywhere in the United States. These days, the logos for gambling brands are plastered all over sporting arenas, betting lines are frequently incorporated into pre-game shows, and gambling advertisements are as common on sports talk radio and television broadcasts as promotions for beer.

But, in actuality, sports gambling in the United States is still in its infancy, with the practice as yet illegal in nearly half of the states.

Sports gambling is legal in 31 states, but the form it takes varies widely. In more than 20 states, gamblers can wager online using mobile devices, but the action is more restricted in some jurisdictions than others. In 11 states, gamblers can only place bets in person, at sportsbooks.

More are set to join them.

Late last Thursday, Kansas lawmakers approved SB 84, a measure that will legalize sports betting via both casinos and online apps. It heads to Gov. Laura Kelly (D), who is expected to sign it into law.

That same evening, the Massachusetts Senate endorsed SB 2844, which would allow those 21 and older to place sports bets either online or at a Bay State casino, slot parlor, or brick-and-mortar sportsbook. Lawmakers must now reconcile several major differences between this measure and one the House endorsed last year.  

Another six states beyond that ‑ Maine, Minnesota, Missouri, Ohio, South Carolina, and Vermont – also have promising bills pending that would enact some form of legalized sports wagering.

Legalization, however, faces longer odds in a handful of states where support has been enthusiastic but the opposition has been particularly fierce: Alabama, Alaska, California, Hawaii, Idaho, Oklahoma, Texas, and Utah.

And two measures (HB 606 and HB 609) in Kentucky that would have legalized online sports gaming – and online poker as well –got through the House but then died in the Senate.

A similar fate befell Georgia SB 142, which would have allowed up to 18 online sportsbooks to begin operation in the Peach State. The measure cleared the Senate in March of 2021 but failed to get out of committee in the House before the Legislature adjourned this March. A proposal to put a referendum on sports betting before voters (SR 135) gave advocates some hope, but it was gutted and amended to deal with a tax on timber. 

And then there is Florida, which essentially legalized sports betting in May of last year when the state House of Representatives authorized a gaming compact with the Seminole tribe. But that agreement has been struck down by the courts. Efforts to get a ballot measure before voters this year failed, and there appears to be little to no enthusiasm in the Sunshine State Legislature for a new legalization bill.

If all of this is confusing to you, don’t feel embarrassed. The sports gambling landscape in the United States isn’t nearly as uniform as it appears to be in popular culture.

Golden State Remains Sports Gaming’s White Whale

Four years ago, when the U.S. Supreme Court overturned a 1992 law banning sports betting in all states but Nevada, Oregon, Delaware, and Montana, there was a rush in state capitals across the country to cash in on the new market, and states have been steadily passing legislation legalizing some form of sports betting ever since.

But adoption of this new normal has been far from homogeneous, and powerful, entrenched interests in some states have steadfastly fought the tide.

Consider California, a state with 15 major professional sports franchises, far more than any other state. Powerful California Native American tribes that operate lucrative casinos in the state have effectively blocked legislation in Sacramento, punting the issue to the ballot box, where voters this fall will consider a slate of competing initiatives on sports gambling.

The tribes, the nation’s top bookmaking companies, and California card rooms are expected to spend tens of millions of dollars pushing their preferred initiatives, which range from proposals for in-person wagers at tribal casinos and horse racing tracks to wide-open, online sports betting across the state.

“It’s the Golden State and will be if everybody’s estimates are correct when it’s legalized,” Andrew Diss, senior vice president and chief strategy officer for Meruelo Gaming, the hospitality and gaming divisions of the Meruelo Group, which owns the Grand Sierra Resort in Reno, the Sahara Las Vegas casino and SaharaBets, an online sports betting platform. “There’s a lot of money at stake.”

Diss previously served as the vice president of government affairs for the Meruelo Group and, before that, worked in state and federal government positions where he gained legislative experience in Nevada, California, Arizona, and Washington, D.C. Alex Meruelo, the founder of the Meruelo Group, also owns the NHL's Arizona Coyotes hockey team.

“From our perspective – I can only speak to the NHL – we think [sports betting] increases interest in the game,” Diss said.

As the nation’s most populated state, California represents a lucrative opportunity to expand the American sports betting marketplace. In fact, as with many public policy trends, there’s a widespread belief that if California legalizes sports gaming the practice will indeed become legal everywhere else across the country.

The fight for legalization in California will come down to online betting. The California tribes view unfettered online sports gambling as an existential threat to their very existence. They’ve already qualified for the ballot one initiative to allow in-person sports betting at tribal casinos and horse racetracks, but it is notably silent about online gaming.

Large bookmaking companies, including DraftKings, FanDuel, and BetMGM, responded by circulating their own initiative to give themselves purview over online sports betting in California. That, in turn, led the tribes to begin gathering signatures for another initiative, this one focused on online gaming.  

In all, as many as four sports gaming initiatives could be on the ballot in California this November. The stakes for the interests involved couldn’t be higher.

Sports Betting Brings Big Promises but Low margins

Of course, states are interested in sports gaming because of the potential revenues it generates for public policy programs. In Florida, sports betting funds public education. In California, one of the initiatives would fund programs to help the homeless.

However, even with $52.7 billion legally wagered on sports in the United States in 2021, sports betting remains a relatively low margin deal, especially when compared with other types of gaming.

Nationwide, the average “hold” for sportsbooks is only about 7 percent – that is, the percentage of the money the sportsbook keeps from the “handle” or the total amount wagered.

As the National Conference of State Legislatures (NCSL) pointed out in a fiscal brief last year, sports betting brings in roughly 20 times less revenue than the lottery in New Jersey – and the Garden State is the nation’s No. 1 sports betting state.

Even more concerning, the NCSL noted that gambling revenues often can’t keep pace with the spending needs of the programs they’re intended to fund, because gambling revenues typically spike when a new game is introduced but then plateau or even decline until yet another new game is introduced.

Add in the negative effects of gambling addictions and the potential that sports betting could entice athletes to throw games and it’s too soon to tell whether legalization actually translates into a net positive for society.

But that uncertainty isn’t likely to slow sports gaming’s spread. There’s just too much money on the table for states to ignore it.

--By SNCJ Correspondent Brian Joseph

 

Sports Betting Legal in Over Half of States

Sports gambling is currently legal in 31 states, according to The Action Network and independent reporting by State Net. In 20 of those states, gamblers can wager online, while in the other 11 bets can only be placed in person. Promising legalization bills are pending in eight more states. But sports betting is in legal limbo in Florida, and the outcome of legalization efforts is uncertain this year in 10 other states.

 

Subscribe

News & Views from the 50 States

Free subscription to the Capitol Journal keeps you current on legislative and regulatory news.