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Sports betting has high hopes despite $43 billion hit
12th May, 12:12LAS VEGAS -- It was supposed to be a big day for sports bettors and a big deal in Colorado.
If May 1 had been like it was in other states when sports betting was rolled out, Gov. Jared Polis would have shown up at some ribbon cutting in Denver to make a symbolic first bet on, say, the Broncos to win the Super Bowl.
But instead, the governor's safer-at-home, coronavirus response meant that had he shown up at a shiny, new sportsbook, the doors would have been locked. So much for the big party to celebrate being the 19th state with live, legal sports wagering.
"We were gearing up," said Jay Kornegay, executive vice president of the Westgate, the Las Vegas sportsbook that was all set to open a shop at The Lodge Casino in Black Hawk, 27 miles west of Denver. "Next thing you know we had all these restrictions. We're looking at June, but I wouldn't be surprised now if it's not until July 1."
So instead of 15-20 sportsbooks set to open nearly two weeks ago in Colorado, there were only four -- DraftKings, FanDuel, MGM and Rivers -- and only via mobile apps.
It was just one example of how the pandemic has sucked the momentum out of an industry that was launched like a rocket two years ago Thursday, when the U.S. Supreme Court wiped out federal laws that had blocked sports gambling.
"The gaming industry in the U.S. has been disproportionately affected by this," said Casey Clark, senior vice president of the American Gaming Association. "There aren't any casinos open. So we have seen more than 650,000 people out of work since this started."
With casinos closed nationwide, the only way to take advantage of what few options are on the sports betting menu is through apps. But only 10 states, including Colorado, allow such mobile betting outside brick-and-mortar sportsbooks, according to Legal Sports Report. Even then, it is no bargain for bookmakers to stay open.
"It's a losing situation," said Nick Bogdanovich, director of trading for William Hill. "It's a customer loyalty thing. We gave them something to do during the doom and gloom. I mean darts, sumo, Russian pingpong. There's not a book alive that could have made money during this."
The dollar figures reflect that struggle. In a month when the NCAA Tournament should have been a gold mine, Nevada sportsbooks took in $141.2 million in March, down 72 percent from February and 76 percent from March 2019. They held only $1.45 million, a drop of 96 percent from both the month and the year before.
Other reported handle drops between February and March were no less remarkable:
The growth of sports gambling may have slowed to a crawl, but there is no shortage of hope that it will mushroom beyond the 19 states that have had active betting, including those that are still finding their way.
"It's a good chance for us to reset," said Johnny Aitken, the U.S. CEO of PointsBet, which is based in his native Australia and operating in New Jersey, Indiana and Iowa. "As a technology-based company, this reset will help us as we grow into more markets. The next big state for us is Illinois. We expect to bring back the [20 employees] that we furloughed and then double our workforce to about 200-250 in the next 12 months."
Among the states on deck to take sports bets, Virginia will be allowed to license operators to open as soon as July 1. Launches in Oklahoma, Tennessee, Washington and the District of Columbia have been mired in red tape and legal maneuvering. Sixteen other states, including California and Ohio, have proposed laws that have been grinding through their legislatures.
But considering the economic trouble that the crisis has caused, sports gambling might yet be seen as a source of quick help.
"As states return to some semblance of normal and look at increased budget shortfalls, sports betting gives them an opportunity to do something about that," Clark said.
Still, gambling has dropped down on the "to-do" list, not just for state houses but for the public. The AGA estimated that $43 billion in overall sports betting handle would be lost in the first two months of the crisis.
Last month's NFL draft provided a mixed blessing for bookmakers. PointsBet reported a 265 percent increase in its draft handle from 2019. But the hold was tougher.
"In the first two years of NFL draft betting we got our butts handed to us," said Kornegay, who reopened Westgate's Nevada app only hours before Joe Burrow was chosen by the Cincinnati Bengals. "It's dominated by pretty sharp play with all the information. You don't get any buyback."
Horse racing has gone on mostly uninterrupted by the coronavirus, but the offerings and the benefits have been limited.
"It has been helpful to operators [of closed casinos] who have horse tracks," Clark said. "It has also been beneficial to some of the sports-betting operators who offer that kind of action to provide a revenue stream during these tough times."
Otherwise, bettors and bet takers have had to subsist on off-beat, foreign sports and the occasional morsels provided by such events as Saturday's UFC card, which finally gave app users a whiff of something else closer to business as usual. And they pounced.
"We did really well," said Aitken, whose PointsBet handle Saturday was actually higher than it was for Conor McGregor's return to UFC competition in January. "These are sort of one-off type events, but they're chances to keep your brand in the spotlight."
Upcoming golf exhibitions leading to the resumption of the PGA Tour schedule will be of some help. So will a green flag again for NASCAR on Sunday at Darlington, S.C.
"We're cautiously optimistic," Kornegay said. "We don't have huge expectations. But I don't think that any of this is going to knock down the door. You have to start somewhere and dip your toe into it. Hopefully we're going to get to jump in sooner than later."
That jump could come with a football season that would look close to familiar. If that means continuing to lose money while staying open until then, so be it.
"There's no turning back now," Bogdanovich said. "I'm trying to stay positive. I know I'm lucky that I've got it better than most people, so I don't want to be bitching. But hopefully this thing ends for everyone sooner than later."