Sports betting has been around for thousands of years. We have records of people wagering on sports dating all the way back to the first Olympics in Athens, Greece (776 BC). But ancient cultures were betting on contests of speed and strength long before this.
The sports betting tradition has carried on into the modern world, with both land-based and online sportsbooks available all over. Internet sports betting has especially become popular in the past two decades, thanks to its convenience.
But while sports gambling’s history is impressive, the question must be asked if this is a dying industry. After all, sports wagering has more competition than ever before. This includes daily fantasy sports (DFS), which sees people gamble on creating optimal sports lineups.
I’m going to explore if sports betting is dying by looking at reasons why it could be struggling, presenting the actual revenue numbers, and discussing this activity’s future.
What Factors Are Against Sports Betting?
Technology is continually changing the world. And with these changes come new interests among the global population. People have always been fascinated with sports betting because they can wager on their favorite games.
Sports gambling has been limited due to illegal restrictions across a wide number of countries. This remains the case in the United States, where only Nevada can offer full-blown sports betting. Given America’s history of restricting sports wagering, many people have turned to illegal bookies to get action. This is, of course, dangerous when dealing with the wrong people, especially organized crime members.
Luckily, there are a number of offshore internet sportsbooks that have served people since the mid-1990s. No longer must people turn to nefarious bookies if they want to gamble on sports. But online sports betting is nothing new when considering its age. That said, one might wonder if the luster is wearing off sports betting.
Another factor working against this activity is the rise of new forms of gambling. DFS definitely has the potential to cut into the sports wagering market. DFS sees people choose players to fill out a fantasy sports team. And DFS gamblers must make sure that all of their players fit under a salary cap (e.g. $100,000).
Daily fantasy experienced a meteoric rise in the mid-2010s, thanks to heavy advertising and good marketing. DFS is fresher than sports gambling and draws a younger crowd. Daily fantasy has also managed to gain the support of major sports leagues and state politicians. The activity is now legal in 20 American states and rising.
This is something that sports betting has never been able to do in the US. Sports wagering remains confined to Nevada, while being legal in limited capacity in Delaware, Montana, and Oregon. Considering the fact that American politicians have still refused to expand sports betting, this leaves questions about its future.
The Reality: Both Land-Based and Online Sports Betting Are Thriving
If you’re a sports betting enthusiast, then hopefully I didn’t worry you with the concerns above. The reality is that sports gambling is doing better than ever before. The concerns above represent what the general gambling population thinks regarding sports wagering. But statistics show that none of these potential problems are anything to worry about right now.
According to Statista, sports betting makes up between 30% and 40% of the annual global gambling market. This is impressive when considering that the competition includes casino games, lotteries, poker, and more. The gross global gambling market is estimated to be worth $400 billion. Gross gambling yield represents sportsbooks’ take from customer bets before paying gamblers and deducting operating expenses.
This means that somewhere between $120 and $160 billion is gambled on sports globally. Sportsbooks earn around 5% of this amount in revenue, meaning they collect between $6 and $8 billion in profits. Asia represents one-third of all gross gambling ($133b). Therefore, it’s assumed that between $40 and $53 billion of this amount goes to sports gambling.
Europe also has a thriving sports wagering market. A 2017 report from the UK Gambling Commission showed that the UK leads the continent with over £13.8 billion in annual sports bets.
Keep in mind that it’s hard to get completely accurate numbers for global sports gambling because a large segment still operates in offshore/unregulated markets. But the big numbers discussed before show that sports betting interest is very high.
Earlier, I mentioned that DFS seems to be a threat to sports betting. But the numbers reveal that daily fantasy doesn’t come close to having the same popularity.
A 2017 report from Eilers & Krejcik Gaming revealed that DFS sites handled $3.2 billion in global entry fees. And they earned $350 million in profit from this amount. This is a far cry from the estimated $120-$160 billion in sports bets and $6-$8 billion in profit that sportsbook operators are earning.
Sports Betting Will Become Even More Popular in the Future
It’s impressive that sportsbooks are handling well over $100 billion in annual bets. But a better indicator of sports wagering’s future involves expert predictions. Again, it’s hard to estimate exactly how much people are gambling on sports every year due to the offshore sites. But future predictions show that the US could be a sleeping giant in the sports betting world. The American Gaming Association (AGA) estimates that up to $150 billion is gambled in the US alone.
This is a lofty estimate when referring back to the Statista report, which estimates around the same amount for global sports gambling. But even if American sports gambling is only a quarter or half of $150 billion, it’s still an impressive amount.
According to a 2017 Forbes article, Eilers & Krejcik Gaming predicts a best-case scenario where 32 states will offer legal sports betting by 2023. This would lead to an estimated $6 billion in revenue, along with $120 billion in bets (based on 5% house take).
A 2017 report from the UNLV Center for Gaming Research shows that Nevada sportsbooks earned a record-win of $248.78 million. But legalizing the activity in more states would mean far greater sports betting across the US. Logic suggests that legal sports betting in dozens of states will hurt Nevada sportsbooks. But Eilers & Krejcik estimates that the Silver State will go from $249 million to $450 million in sports gambling revenue by 2023.
Reasons for this prediction include how Vegas is already a worldwide tourism destination, along with the addition of NFL football (Raiders) and NHL hockey (Golden Knights) teams. Evidence of this can be seen in the fact that Nevada earned $17 million more from 2017 sports gambling than at any point in its history.
Attitudes Towards Sports Betting Have Changed
European countries have embraced sports gambling for a long time. Asian and African markets are also increasing as more countries accept the activity. But America has a very different relationship with sports betting. Much of the reason why Nevada is the only state with full-blown sportsbooks is due to the 1919 Chicago White Sox Scandal. This incidence saw professional gambler Joseph Sullivan pay eight members of the White Sox to help throw the 1919 World Series.
Another major betting scandal arose in 1906 between the Massillon Tigers and Canton Bulldogs football teams. Canton Bulldogs coach Blondy Wallace and Massillon Tigers end Walter East allegedly fixed two games between the clubs so that a third-and-deciding match could decide the Ohio League championship.
Both sides denied the allegations and pointed the finger at each other. But the damage was clearly done to professional football at the time. These scandals have long reverberated throughout US sports history. Sports leagues and many Americans have often looked down on sports gambling ever since. But times appear to finally be changing amongst the general population, sports leagues, and politicians.
A 2017 poll conducted by the Washington Post and the University of Massachusetts Lowell reveals that 55% of Americans now favor legal sports betting. This is a reversal from a poll done by Gallup/CNN/USA Today in the early 1990s, which showed that only 44% of Americans were in favor.
Everything points to how attitudes have changed regarding sports betting. No longer do the majority of Americans believe that sports wagering is a shady activity dominated by organized crime. Much of this change in heart is attributed to how people can already make sports bets online.
Despite not having a single regulated internet sportsbook, America has dozens of offshore sites that offer sports gambling. This means that any adult can hop online and start placing bets. The argument has often been floated that Americans are already gambling online, so why not legalize the activity and make tax revenue off it?
Furthermore, we haven’t seen a major sports betting scandal develop in decades. This is one reason why sports leagues are changing their attitudes on the subject. NBA Commissioner Adam Silver believes that sports wagering should be legal so that operators can pay the leagues an “integrity fee.”
The NHL has lightened up so much on the matter that they became the first major sports league to put a team in Vegas. NFL owners quickly followed suit by approving the Oakland Raiders’ move to Sin City.
Major League Baseball has also shown signs that they’re comfortable with sports betting, even meeting with sportsbook executives to find out how the industry works.
Many US States Interested in Legal Sports Betting
The Professional and Amateur Sports Protection Act of 1992 (PASPA) has banned sports betting across the US for over a quarter century. As mentioned before, just four states can legally offer sports gambling.
Delaware, Montana, and Oregon are only allowed to offer parlay-style betting. The Blue Hen State is the only one of the three that’s currently taking advantage of this opportunity. Many states are interested in repealing PASPA and adding legal sports betting. If this happens, they’d be allowed to offer regular sportsbooks just like Nevada.
New Jersey currently has a lawsuit in effect to remove PASPA and legalize sports betting on a federal level. The US Supreme Court plans to hear this case later in 2018. It’s anybody’s guess as to whether or not the Supreme Court will side with Gov. Chris Christie and the Garden State. But given the potential revenue estimates, it’s possible that we’ll see legal US sports betting this year. If not in 2018, then I don’t see PASPA lasting much longer. Too many states are jumping aboard the push to legalize the activity.
According to CBS News, the following 14 states would legalize sports gambling within two years of legalization: Colorado, Connecticut, Delaware, Indiana, Massachusetts, Michigan, Mississippi, Montana, New Jersey, Ohio, Nevada, Pennsylvania, Virginia, and West Virginia.
The following 18 states would likely legalize sports wagering within five years: Arizona, California, Idaho, Illinois, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Missouri, New York, North Carolina, North Dakota, Oklahoma, Vermont, Washington, and Wyoming.
Other states that would potentially join the party after five years include Alabama, Arkansas, Florida, Georgia, Minnesota, Nebraska, New Hampshire, New Mexico, Oregon, Rhode Island, South Dakota, and Wisconsin. This means that 44 states in total have shown at least some level of interesting in sports gambling.
In answer to my original question, no, sports betting isn’t dying. In fact, it’s thriving more than ever before thanks to big revenue, changing attitudes, and potential regulation that could increase betting popularity. I was surprised after looking at the numbers on both global and US sports betting estimates. To recap, Statista believes that up to $160 billion is wagered on sports every year.
Various prediction estimate that a larger regulated US sports betting market could see around $120 billion in wagers. This alone would increase global sports betting by a considerable degree. I can only imagine how much the world’s sports gambling market would increase if China passed sports betting legislation.
This is a long shot due to China’s strict stance against all forms of gambling. But not long ago, it seemed like the US would never consider the activity. In summary, sports betting is a highly popular form of gambling now. And it has the potential for much greater growth, thanks to all of the unregulated countries that still remain.