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Sports betting surges, but for how long?

27th December, 21:22

Since a U.S. Supreme Court ruling in 2018 allowed sports betting to be legalized in every state, its popularity has soared and now about a third of the nation's population lives in a place where it is legal -- including Iowa.

The new year will be a test of whether that rapid expansion marches on to more states, and whether sports betting will stay robust where it already has been approved.

In 2019, the first legal sports bets were made in Arkansas, Indiana, Iowa, New York and Oregon, joining eight states where betting was already running.

A bill passed by the Michigan Legislature was just signed into law. Voters in Colorado and lawmakers in Illinois, Montana, New Hampshire, North Carolina and Tennessee also legalized it this year, but the programs have not yet launched. The same is true in the District of Columbia and Puerto Rico.

The next sportsbook could be in New Hampshire. The state's lottery commission approved having DraftKings, one of the biggest players in online sports betting, set up mobile wagering there in January.

What's Ahead

Whether to legalize sports betting is expected to be debated in 2020 in a number of states, including Connecticut, Massachusetts, Missouri and Ohio -- all states where efforts earlier this year fell short.

In Georgia, state Sen. Brandon Beach has been pushing for years to legalize horse racing as a way to promote economic development. He's now trying to get momentum for a constitutional amendment to allow casino betting, horse racing and sports betting in a state that doesn't have any legalized gambling outside the lottery. He wants to use the revenue to beef up a college scholarship program.

"If we're going to look at sports betting, we've got to look at the whole thing," said Beach, a Republican.

The Georgia effort is getting pushback from the Faith and Freedom Coalition, which has its headquarters there. The socially conservative group says gambling can lead to addiction, bankruptcy and crime.

Biggest States Not In

So far, the three most populous states -- California, Texas and Florida -- have not legalized sportsbooks.

But the industry is watching them, along with the fourth-largest, New York, where bets can be made only in person at four upstate casinos far from the New York City area's massive population. Whether those four casinos can add online betting without an amendment to the state constitution is under debate.

In California, a group of Native American tribes has proposed a ballot measure for next year. The proposal would cut out rival card rooms but not provide for online bets. Lawmakers also can propose their own plans for the ballot.

Like in New York, advocates in Florida disagree about whether legalizing sports betting would require voter approval. In Texas, it's clear that a constitutional amendment is needed.

How it Works

As with their other gambling offerings, states vary widely on what they're allowing.

In New Mexico, lawmakers never explicitly allowed sportsbooks, but two Native American tribal casinos are offering it on site. In Arkansas, bets are being taken only at Oaklawn Racing Casino Resort.

By contrast, bets can be made practically everywhere in the nine states where it is underway -- but it can be the casinos themselves that limit the online offerings.

In Iowa, for instance, state legislators crafted the sports betting law to initially bolster foot traffic at casinos. The law allows for digital betting, but initially requires sports bettors to first go to a state-licensed casino to establish an account.

And it has worked as intended: Revenue is up compared with the same period a year ago at 14 of the state's 19 licensed casinos, regulators reported earlier this month.

But that also provides casinos an incentive to delay rolling out a digital platform. If bettors are coming in to set up an account but then lingering to play the slots or table games, what's the hurry?

That in-person rule remains in place for another year -- expiring Jan. 1, 2021. At this point, about 60 percent of Iowa's sports wagering is done online.

How's it Doing?

From July -- when most state fiscal years begin -- through October, sports betting generated about $50 million in state tax revenue across the country, according to an Associated Press analysis of state data.

New Jersey accounted for over $15 million of it.

Compared with other states, Iowa is on the low end of the scale by taxing casinos only 6.75 percent of the sports betting handle. The tax revenue in Iowa during the period was about $1 million.

In contrast, the tax rate is more than 30 percent in Pennsylvania.

But states including Rhode Island and West Virginia are falling short of their own projections for revenue.

Rhode Island is the only state in New England where sports betting is happening -- for the moment. State Senate President Dominick Ruggerio, a Democrat, the biggest advocate for legalized sports betting in the legislature, is unsure whether the state will hit its $22.7 million target and worries about potential competition soon from nearby states.

But even if it falls short of projections, Ruggerio added, sports betting is bringing in revenue the state didn't have before.

The Gazette staff contributed.