While casinos have taken the lead introducing sports betting kiosks, major league sports facilities, retailers and third party gaming machine operators are also cashing in as more states legalize sports betting.
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More people are in a betting mood these days thanks to the 2018 Supreme Court decision to allow states other than a selected few to regulate sports betting.
Americans spent more than $125 billion on legal sports betting since it became legal in all 50 states, according to a recent Las Vegas Sun report.
And while casinos have taken the lead introducing sports betting kiosks, major league sports facilities, retailers and third party gaming machine operators are also cashing in as more states legalize sports betting.
Which is why kiosk hardware manufacturers cited «gaming/entertainment/sports» kiosks as among the most frequent kiosk installations in 2021, according to the 2022 Kiosk Marketplace Census Report.
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| Paul Jenson of Taft Stettinius and Hollister LLP outlines the future of sports betting, flanked by Sam Westgate, president of the Amusement and Music Owners Association at the Las Vegas Convention Center. |
Opportunities vary by state
While the market is clearly in a fast growth mode, the opportunities vary by state, due to differences in regulatory structures, license fees, tax rates and other factors.
Paul Jenson, an attorney in the Chicago office of Taft Stettinius and Hollister LLP, offered an overview on the growth, challenges and opportunities of «non-destination» gaming during the recent Amusement Expo International in Las Vegas.
Jenson focused on sports betting and, as previously reported, video gaming.
«It’s become part of the game experience at this point,» Jenson said with regard to sports betting. «The vast majority of the money that’s being spent on March Madness this year is estimated to come from making the individualized team bets through legalized sports wagering…And it’s raising new tax revenues.»
Before the Supreme Court legalized sports betting for the majority of states, $150 billion was spent on illegal sports betting in the U.S. every year, Jenson said. Of the $4.7 billion bet on the 2017 Super Bowl, 97% was illegal, as was a similar percent of the $10 million wagered on Mach Madness.
Major league sports on board
Major league sports organizations initially opposed the 2018 Supreme Court ruling, thinking it would negatively affect their play and the way people viewed sports.
«That has changed dramatically,» Jenson said, as sports facilities are following casinos in recently legalized states.
Live sports betting now exists in 30 states and Washington, D.C. and is scheduled to be operational in Nebraska, Florida and Ohio.
Six states, meanwhile, have sports betting on the ballot this year: California, Georgia, Kansas, Massachusetts, Missouri and Oklahoma.
«You’re going to see sports wagering probably in every one of those states with the possible exception of Hawaii and Utah, which are the two states that really don’t have gaming right now, but I’m not going to hold my breath,» Jenson said. «Pretty soon, it’s going to be something that you see in every major sports venue across the country.»
Video gaming locations are also getting on board.
New audiences emerge
As markets open up, new audiences are emerging.
«People like me that never really involved themselves with illegal betting, they’re beginning to get comfortable with sports wagering in part of regular life,» he said.
Even the pandemic did not slow down the momentum.
«The pandemic I think has hurt some forms of gaming like casinos, but it’s helped things like sports wagering,» Jenson said. «Sports wagering has a mobile aspect to it.»
Regulations vary by state
Casinos are trying to protect their gaming opportunities and are lobbying state legislatures to restrict the number of licenses. Hence, Jenson said it is «incredibly important» for organizations seeking a sports wagering license to have a lobbyist representing their interest.
Regulations vary by state, as do the regulatory agencies. In some states, the casino regulator handles sports wagering, while in others, the lottery commission does, or some other designated entity.
License fees also vary by state. Some licenses cost tens of millions of dollars.
Illinois has only three online sports wagering licenses, each costing a minimum of $30 million.
Maryland will make up to 30 sports wagering licenses available in a competitive bid, Jenson said, while Ohio will see two to 20 terminal operators licensed for up to two sports betting kiosks.
The state licensing processes are not for the impatient.
Regulators in newly legalized states are examining where financing is coming from when reviewing an application. There are different types of investors coming into the market.
Tax rates vary
Tax rates also vary.
«If the tax rate is too high, sports wagering is not going to do well in that state, and we’re seeing that happen in some of our East Coast jurisdictions where the tax rates are much higher than we have in the Midwest,» Jenson said.
The profit margins are thin compared to other businesses, such as video gaming terminals.
«We are seeing casinos typically keeping only 5% or 6% of the sports wagering bet…that is much smaller in terms of a margin than we see in casinos and we see certainly in VGTs (video gaming terminals),» Jenson said. «Just because you have it doesn’t mean you’re immediately going to start making tons of dollars.»
Another thing Jenson was clear about: Legalized sports betting will not eliminate the black market.
«The black market is still going to exist,» he said. «People are comfortable with the person that they have making their bets. It’s just part of their routine.
«People can bet on credit which they can’t with a legalized operation,» he said. «People that have enrolled in self exclusion programs (problem gamblers)…they’re going to the black market in order to make these sports wagering bets.»
Nevertheless, sports betting will become a significant industry.
«I think what you’re betting on is that as the industry evolves and as more people come and bet, the market’s going to grow,» Jenson said.
Photo: Networld Media Group.