Sports betting is one of most popular activities in the world of sports, with bettors lining up to place their wagers all over the globe. But there’s something important you should know…
Sports betting is legal federally, but still isn’t legal across most states in the union. That means that the industry has succeeded in the US despite not being fully legal. And with more and more states looking to offer sports betting, the industry looks poised to continue to grow in America.
In this guide to online sports betting in the United States, keep scrolling to find out just how big the sports wagering industry really is, which states currently allow legal wagering, and what states are poised to add their names to the list.
Table Of Contents
How big is the sports betting industry?
Reports on the amount of money wagered on sports each year estimate anywhere from $95 to $150 billion in illegal wagers in the United States alone. The US is a big source of the ambiguity when it comes to those numbers, given that the lack of nationwide legality leads to many bettors wagering “under the table” so to speak, through bookies or other non-sanctioned methods.
How large is the online casino industry?
The online casino industry is also massive, as bettors can play their favorite casino games without having to leave the comfort of their home if they don’t wish to do so. However, the online gambling industry for casino games doesn’t carry the same weight as the sports betting industry.
The global online gambling handle is estimated to be near $40-50 billion annually, which is dwarfed by the massive footprint of sports betting.
Which states have already legalized online sports betting?
With sports betting becoming more and more popular, some states have already put themselves into the action by legalizing the practice.
But the list is shorter than you might expect.
Four states already had legalized sports gambling prior to the recent influx of additional states legalizing. These states were allowed to keep their legal sports betting status that was obtained under the PASPA (Professional and Amateur Sports Protection Act) in 1992.
Those states are Montana, Oregon, Nevada, and Delaware, with both coasts being represented. Delaware expanded its sports betting availability after the elimination of PASPA, as it did not previously allow single-game wagering.
Since PASPA was taken down by the Supreme Court, several other states have joined the sports betting game.
Those states are New Jersey, Pennsylvania, Rhode Island, Mississippi, West Virginia, and New Mexico. New Mexico is a state that currently only allows sports betting on tribal properties only, with the industry still not being legal for the rest of the state.
The other states listed here have introduced legal sports betting as state law, while New Mexico has yet to legalize it on a statewide basis.
Of these states, New Jersey has done the most to integrate sports betting into its gambling repertoire since being signed by Governor Phil Murphy, to the point that it’s thought to be possible that the state may surpass Nevada as America’s sports betting hub.
The state is already known for wagering thanks to Atlantic City casinos and a vibrant horse racing scene, which made it a natural fit for sports betting as well.
Since sports betting became legal in New Jersey, with Monmouth Park leading the way, bettors have been able to place wagers at both physical and online casinos, with many of the big brands in the gambling industry introducing sports betting products to go along with their existing betting options.
Examples of this include FanDuel, Hard Rock, and William Hill. Bettors have only been able to place wagers at these sites while in New Jersey, thanks to the Wire Act prohibiting interstate sports betting.
Pennsylvania has also been at the forefront of the industry, with Hollywood Casino being one of its first physical sports betting locations.
Like most laws, federal law not criminalizing gambling doesn’t mean that sports have legalized it. The Supreme Court decision was a huge step, but states still have to cross the finish line and legalize action in their state as Congress can’t do that for them.
Which states are close to legalization?
Fortunately for fans of sports betting, there are other states that are on the verge of legalizing sports betting as well.
And the best part?
Those states are located in different parts of the country, so bettors should be able to go somewhere nearby to bet on sports legally in the near future. Among the states that are close to legalizing sports betting are New York and Arkansas, with several other states inching closer to legalization the action.
New York actually approved a law that would permit sports betting in four physical locations throughout the state back in 2013, but no action was taken to put the specifics into place. But momentum is picking up once again to get their four physical locations up and running, as well as for full-scale sports betting legalization throughout the state.
Right now, fittingly for sports betting laws, the state is considered to be a coin flip to have sports betting rolled out for the start of the 2019 NFL season, which is the state’s target.
It was the 2018 midterm elections that saw Arkansas approve sports betting, by way of a constitutional amendment to allow sports betting in four counties throughout the state. It is thought that sportsbooks will be coming soon in the state, adding Arkansas to the list of states that will soon have sports betting within their grasp.
Tennessee has also had legislation pass in 2019, with legal sports betting set to hit the state in July of 2019.
Connecticut has introduced a sports betting bill at the beginning of 2019 to legalize sports betting, and is awaiting a vote. Kentucky has also introduced legislation in 2019, and will hope to get it through to allow betting on pro and college sports.
Which states bet online the most?
Tracking the amount of online betting done in each state depends on the legal status of sports betting in each state. As you might expect, states where sports betting is not yet legal will not be as easy to track as states where betting is legal. In states where sports betting is legal, though, which states feature the most online betting?
The answers will not surprise you.
Most of the sports bettors in the United States are in the states that are legal and in the states where betting is embedded into the economies and identities in those states. Specifically, New Jersey and Nevada are the most replete with bettors.
However, other states that have just legalized sports betting like Mississippi and West Virginia are catching up.
It can be argued that states where sports betting is not yet legal would feature the most online wagering, but that offshore betting can’t be tracked the same way that legal betting can be.
But with states like New York, California, and Texas being the most populous states and states that have yet to legalize, it is entirely possible that a large chunk of the action that bettors are taking part in online isn’t being documented the way it is in legal states.
Thanks to the Unlawful Internet Gambling Enforcement Act, though,it’s tough for bettors in non-legalized states to fund their accounts, as credit card transactions are made much more difficult by that piece of legislation. Instead of credit cards, these bettors would be forced to fund their accounts another way, with cryptocurrency becoming a popular option in the place of more traditional currency.
What’s the online betting revenue for each state?
As far as specific revenue for online sports betting is concerned, tracking down totals depends on the status of legality in each individual state. The states where betting is legal see their action regulated and taxed. As a result, bookmakers must disclose their revenue so that it can be properly accounted for.
States where betting has not yet been legalized are not as easy to hunt down revenue amounts for. These states would require offshore and other sources of sports betting to disclose the amount of revenue that has been generated by each state on their sports betting sites, which they are under no obligation to do.
As a result, these sports betting sites generally do not disclose that information. In states where betting is legal, though, revenue numbers vary.
What kind of tax revenue does online betting bring?
One of the major selling points of legalizing sports betting is the ability for the states to bring in money via tax revenue. That tax revenue can be used to pay for education, infrastructure, and other things that states need to serve their residents.
But the results have been mixed for states so far.
Take a state like Nevada for example.
New Jersey got off to a good start with tax revenue on its wagering handle as well. From June 2018 to December 2018, the state brought in a very respectable $94.1 million in revenue, with taxes ranging from 9.75% on in-person bets and 13% on online bets.
It averaged $1.8 million per month in tax revenue through its first half year in action.. As the industry continues to grow and bettors get more and more accustomed to sports betting, New Jersey can realistically expect that revenue figure to increase.
Rhode Island expected to generate $1 million per month in tax revenue on sports betting. Their tax revenue from its launch in November of 2018 through the end of the 2019 NFL Playoffs was closer to $50,000 per month.
The New England Patriots winning the Super Bowl didn’t help the state based in New England, but that doesn’t account for the entire shortfall. West Virginia and Mississippi were only collecting roughly half of the revenue that they expected upon legalizing as well.
What are some of the reasons for these shortfalls? A lot of it has to do with a combination of not knowing what to expect, as well as not having as many convenient options as bettors might like to place wagers.
Without any experience in the sports betting world, politicians and those who set these expectations didn’t have as much of a frame of reference as they do in other areas that have been taxed for a long time.
Even with industry professionals potentially working with each state to come up with tax revenue estimates, knowing how each state would receive sports betting from the start was a difficult task.
And in the case of a state like Rhode Island, one of the least populous states in the country, it could have just been a case of misguided expectations to think that state could generate a million dollars in tax revenue alone from betting.
What are online sports betting regulations like?
Regulation is one of the most important aspects of sports betting, as that regulation can provide peace of mind for bettors who can be confident that their state will not allow their funds to disappear on them.
So how does sports betting regulation work?
The answer to that question depends on what state you are looking at.
While the American Gaming Association serves as an advocate for the industry as a whole, each state has their own regulatory body that oversees the gambling industry in some capacity.
In New Jersey, for example, the New Jersey Division of Gaming Enforcement is responsible for this oversight. This entity regulates the casino, sports betting, and daily fantasy sports (DFS) industries together, although other states may have different regulatory structures.
Corruption and scandals
Due to the potentially lucrative nature of sports wagering, many people with financial interests in the events have attempted to influence events with the help of players or those who are otherwise close to the game.
And in some cases, they have succeeded.
The most prominent example of corruption in major US sports was the scandal involving the 1919 Black Sox. After being beaten soundly in a World Series game, it was found that eight players on the team had conspired to aid in throwing the World Series to benefit gamblers. Those who were in on the conspiracy were banned from baseball for life.
Speaking of being banned from baseball for life, Pete Rose’s betting on baseball while he was a part of the Major Leagues was the source of great controversy. It was never documented that Rose was throwing games or otherwise exhibiting improper conduct in his role within baseball, but the act of betting on the game was still enough to get him banned for life. To this day, the all-time hit king in Major League Baseball is being held outside of the sport’s hall of fame.
In basketball, the Tim Donaghy scandal rocked the NBA. Donaghy, a former official for many high-profile NBA games, was found to be betting on games and sharing inside information with other bettors.
Given the NBA’s star-friendly officiating, the scandal called the integrity of NBA officiating as a whole into question, with the league ousting Donaghy before he went to prison and further scrutinizing its officials in the aftermath.
These scandals, among others, were not enough to derail the sports in which they took place. The leagues involved did a great job of eliminating the rogue agents responsible, before operations returned to normal in those leagues.
But it is scandals like that which have stopped some professional sports leagues from wanting to see sports online betting legalized across the board.
Which pro sports leagues are in favor of legalization?
For many years, legal sports betting was something that professional sports leagues did not want to acknowledge, let alone discuss.
The tides are turning, though.
Thanks to some leagues embracing the positives of legal sports betting, there are some top-tier leagues that have come out in favor of legalization for American bettors. These leagues understand the value that the industry can have in terms of interaction with the product, which can increase fandom in each sport as a whole.
The NBA has been the most vocal proponent of legalization, with commissioner Adam Silver leading the way among major pro sports league commissioners in embracing the industry’s impact on his business.
Silver has stated that he understands that betting on the NBA will take place whether or not it is legal, and that he would rather see it legal to ensure proper regulation with that in mind.
Silver is not deterred by the aforementioned Donaghy scandal, which bodes well for proponents of betting.
Silver has sparked controversy with his request for a 1% integrity fee on all NBA action. With an estimated $1.4 billion bet on college and pro basketball in Nevada sportsbooks in 2017, the NBA could be in for a massive payday if he got that one percent.
Hockey has also been a source of support for betting, with the NHL stepping up and showing its support for more opportunities to bet. NHL commissioner Gary Bettman, once an opponent of legalization, has voiced his support for wagering and has overseen his league generate partnerships, thanks in large part to Bettman’s new attitude on the industry.
Of course, the NHL became the first major American sports league with a team in Las Vegas when the Golden Knights joined the league as an expansion team. They They partnered with William Hill to become the first team with a sportsbook partner in America, and nearly cost Vegas in a major way by coming close to winning the Stanley Cup.
Major League Baseball and the National Football League have come out less in support of legalized sports betting, and more in favor of their sports by whatever means necessary.
MLB has stated that they want to work with other sports leagues to achieve those goals, as well as with sports betting operators, in a slight lean toward being pro-legalization by MLB.
Despite baseball being thought of as a sport that is losing its most loyal fans due to old age, fans flock to the betting windows thanks to the sheer number of games available to wager on. There was $1.1 billion bet on baseball in Nevada alone in 2017, with legalization in other states combined with the regional nature of baseball making for a big business to say the least.
The NFL, like other sports leagues, has done less talking about being in favor of sports betting and has used their actions to show their willingness to support it instead.
They’ve done this by seeking out a casino partner to be their official sports betting provider, just like the NBA has already done with MGM. While these leagues might state that they have integrity concerns, they have all shown that this is a business that they want to be a part of financially.
According to ESPN, $1.7 billion was bet on college and pro football in 2017 in Nevada, with billions being wagered on the league illegally in other states. With more states continuing to legalize, cutting down the amount of illegal dollars wagered will lead to more tax revenue for states across the country.
What will legalization mean for brick and mortar sportsbooks?
One would think that sports betting legalization would have a disastrous impact on brick and mortar sportsbooks.
That is not the case.
The reason for that is that most sportsbooks are simply going to be involved in online sports betting in addition to their physical locations. William Hill’s presence in Nevada is a great example of this, as bettors who can’t make it to their physical locations in Nevada can place their bets online in the rest of the state.
While William Hill has lamented the slow rollout of sports betting in America, they are one of many physical casino and betting brands that will be a player as legalization increases nationwide.
Who is in favor legalization?
The list of those in favor of legalization greatly outweighs the list of those who are against it.
Most importantly, sports leagues and state legislatures tend to be in favor of legalization, with those two entities being the most important to earning legalization across the United States. Without the support of the leagues and state governments, sports betting wouldn’t have much of a chance of being legalized, as the votes on legislation wouldn’t stand much of a chance.
Also important is the fact that the fans want to see sports betting become legal in overwhelming numbers. How many fans want to see legalization take place depends largely on the state, due to the varying political philosophies of residents in each state. But for those who already bet on sports, the chance to do so in a legal and regulated environment is an alluring possibility.
Who is against legalization?
There are, of course, some states that are against sports betting legislation that have either voted against legalization or haven’t introduced legislation due to the lack of interest in bringing it into play in those states.
Seven states specifically already have anti-gambling legislation on the books. Those states are Alaska, Florida, Wyoming, Wisconsin, Nebraska, Idaho, and Utah.
Utah is the most interesting of those states, as it is the only state that has gambling prohibition written into its constitution. But each of those states would require a repeal of existing law or an amendment of some kind to bring wagering into those states, which doesn’t appear to be in progress at this stage.
What is the future of sports betting?
The future of sports betting is an exciting one.
There are a number of reasons why the future of sports betting is bright. As previously mentioned, the start of this future is the continued increased legalization of wagering in different states. This will make the industry as a whole much more popular, and will only serve to make the sports that are being bet on more popular as well.
But for a look into the future of American sports betting, fans should look at the current wagering climates in Europe and Australia. There, sports betting is fully ingrained into the sporting culture, with online sportsbooks sponsoring different teams and leagues, and sports betting advertising being prominently featured throughout sports programming.
How will revenue increase as popularity does?
There are two main ways that revenue can increase in the sports betting world. One way is to increase the number of bettors that can take part in the action, and the other is to see players place more wagers.
In terms of getting more bettors into the picture, it is likely for that to take place most commonly through the legalization of sports betting in more and more states. Studies have shown that bettors are wagering offshore or through other means in states where gambling isn’t yet legal, such as Massachusetts. Once those states legalize, that revenue will be attributable to those states and the tax revenue will come along with it.
And as far as making bettors into more frequent bettors, the addition of more convenient features will get that done. Online betting, live betting, and the additional of things like more favorable odds and promotions will get bettors more involved and make them more willing to place sports bets in the place of other forms of casino wagering.
The sports betting space is one that is evolving in a big way, thanks to the legalization of the industry in many states and the impending legalization in many more. This process will lead to more revenue for states and a better sports betting experience for the players in those states. And while some states are locked into a waiting game, bettors should know that the wait will be worth it.