$220B Wagered On Sports Bets In 5 Years Since Supreme Court Ruling

ACROSS AMERICA — How much would you bet has been wagered on sports in the five years since the U.S. Supreme Court cleared the way for the states to legalize this form of gambling?

The total is $220 billion through the end of March, according to American Gaming Association data provided to The Associated Press as the fifth anniversary of the decision rolls around Sunday.

The gaming industry trade group said the $220 billion figure is up from the $125 billion that had been wagered by the four-year mark of the May 14, 2018, Supreme Court decision on a New Jersey case that was the longest of long shots: a bid to overturn a federal law, the Professional and Amateur Sports Protection Act, that restricted sports betting to just four states that met a 1991 deadline to legalize it.

Now, 37 states and the District of Columbia have legalized sports betting, and more states are expected to do the same in the coming months and years.

“While the milestones of legalized sports betting that have led up to now are remarkable, this industry is excitingly still far from being fully realized,” Jason Robins, CEO of DraftKings, one of the industry's two dominant companies, told the AP.

“Legal betting is already part of mainstream sports culture, and I anticipate this trend will grow as adoption increases,” Robins said. “The accessibility right now for fans to place a live, micro-bet during a game, for example, shares parallels with other smartphone-powered capabilities like hailing a ride, buying a stock, or playing a podcast.”

States have a strong incentive to legalize sports gambling. Sports betting taxes on operators have generated about $3.6 billion in revenue: $3 billion for state and local governments, and $570 million for the federal government.

States take different approaches to the tax structure. Some have high tax rates between 36 percent and 51 percent, but most are between 10 percent and 15 percent.

Those treating compulsive gambling say calls to their hotlines seeking help have increased by about 15 percent in the five years since sports betting was legalized and made available on cell phones.

Of particular note, according to a separate report from Stateline, a publication of States Newsroom, a national nonprofit news outlet, calls to gambling hotlines by men ages 18-25 are up. The national problem gambling helpline is 1-800-GAMBLER. Help by state is available, too.

Other problems have occurred as well, including the suspension of several NFL players for betting on games. Also, some colleges struck partnerships with sports leagues and illegally marketed sports betting to students under the legal age of 21, prompting leagues and gambling companies to revise their policies.

And last week, regulators in Ohio, Pennsylvania and New Jersey ordered their sports books to stop taking bets on the University of Alabama baseball team after suspicious activity was identified in an Alabama-Louisiana State University game on April 28.

Alabama baseball coach Brad Bohannon was fired amid an investigation that began when one of the numerous companies monitoring sports betting data and other activities found what it considered suspicious activity and tipped off gambling regulators. No criminal charges have been filed.

In some ways, the growth of sports betting has been a business success story.

Sports books, which generally keep about 10 percent of all the money they handle after paying out winning bets, are finally seeing profitability. They have kept $17 billion in winnings over the last five years, according to the American Gaming Association. It is a fairly concentrated market, though. Five years in, just two companies control over 70 percent of the legal sports betting market in the United States, according to the gambling analytics firm Eilers & Krejcik.

In the 12-month period ending with Feb. 2023, FanDuel has just under 46 percent of the market, while DraftKings has more than 25 percent. BetMGM has nearly 12 percent, Caesars Entertainment has 6.7 percent, and no one else has more than 2.4 percent, the company said.

Sports betting has also kept the Meadowlands Racetrack in northern New Jersey, just across the Hudson River from New York City, alive.

“Sports betting has saved the day,” said Jeff Gural, who operates the track in East Rutherford that includes a FanDuel sportsbook, which combined with FanDuel's online operation takes in nearly 50 cents of every dollar wagered on sports in New Jersey.

“I don’t think the Meadowlands would be open as a racetrack now without sports betting,” he said.

Consumer protection was also part of the argument for legalized sports betting, because it allows people to bet with entities that are regulated by the government, where their deposits are secure and there’s no danger of a sports book suddenly disappearing with their cash.

However, the avalanche of advertising for sports betting triggered a backlash to the point where the gambling industry and most major professional sports leagues adopted stronger standards for their own advertisements. These were widely seen as an attempt not only to do something about the proliferation of gambling, and particularly sports betting ads, but also to be seen as doing something and hopefully head off threatened government regulation of sports betting ads.

What will the next five years look like? Chris Krafcik of Eilers & Krejcik predicts more multi-faceted deals among teams, leagues and stadiums, and among betting operators and media companies, hotel chains, and beverage companies.

Krafcik said sports betting companies could develop VIP-focused retail destinations, and look to expand “hyper-casual” online wagering.

The trend of gambling companies locating sportsbooks in or next to pro sports stadiums is likely to continue. Sports books as a whole may slow down their promotional spending to rein in costs. And uncertainty should continue in the near term about the prospects for online sports betting in California, the nation's largest state, and in Florida, where it is tied up in litigation.

The industry is constantly coming up with new ways to bet, too. One fast-growing trend is so-called microbetting, which can be a series of rapid-fire bets. In baseball, it could involve how fast the next pitch will be; whether it will be put into play; whether that ball will be caught for an out, or become a single, double, triple or home run.

Those who treat problem gambling are particularly concerned about this type of betting for its capacity to lure gamblers into one wager after another in a very short period of time, potentially racking up large losses quickly.

Reporting by The Associated Press