With the Supreme Court of the United States’ (SCOTUS) 6-3 decision to strike down the 1992 Professional and Amateur Sports Protection Act (PASPA), the contentious federal law that has for the past 25 years prohibited sports betting in the vast majority of US states, a black market worth anywhere between US$150 billion and US$190 billion annually is set to come out of the shadows.
Administered and regulated appropriately, the ruling opens the door to new streams of tax revenue for individual states, as well as job creation, consumer protection and plenty of other broader economic benefits. But for organisations in sport, too, the impact is likely to be profound.
In recent years, American sport’s major players have been preparing for a post-PASPA landscape. The PGA Tour has been working with the National Basketball Association (NBA) and Major League Baseball (MLB) on best practice to protect the customer and the integrity of their competitions. The golf circuit has also engaged data and integrity company Genius Sports to monitor betting on tournaments and players.
As well as preparing to create robust protections for their products, there are now numerous new revenue opportunities for every US sports to pursue. Representatives for both the NBA and PGA Tour have proposed that any state laws regulating sports betting include a stipulation whereby one per cent of every bet placed on their competitions - a so-called ‘integrity fee’ - goes back to the organisations themselves. Should that proposal become reality, the riches on offer would surely run into the billions.
Having already dabbled with the likes of DraftKings and FanDuel, two of the leading daily fantasy sports providers, those in the US sports industry will also now be able to take advantage of new bookmaker-related commercial options - the kind that sports organisations elsewhere, notably soccer clubs in the UK, have been historically able to leverage to great effect.
But an untapped market also brings its issues. Carsten Koerl, founder and chief executive of Sportradar, an international leader in providing sports betting and integrity services, has stressed the importance of creating a safe system for gambling: “In the aftermath of this landmark decision, and considering the many ways this seismic shift will impact the landscape, it is critical to create a framework that enables US sports fans to engage in the sports and competitions they follow and love, through a safe and secure wagering infrastructure that balances the priorities and needs of all stakeholders.”
Nevada is set to lose its near-monopoly on the US sports gambling market
Integrity protection will be non-negotiable in the new normal that is sports betting in the US
Dr. Laila Mintas, US Sportradar deputy president, added: “All key stakeholders, including leagues, operators, regulators and law enforcement, need to work together and partner with the most reputable service providers to establish best-in-class systems and safeguards overseeing integrity in US sports.
“The public will need to see that in place, and working well, because the reality is that integrity protection will be non-negotiable in the new normal that is sports betting in the US.
“As sport continues to look for new ways to engage fans, legalised betting can serve as not only a catalyst to achieve that goal, but also a growth engine across the entire ecosystem – leagues, teams, networks, municipalities – of an industry that plays an important part in the fabric of American society.”
While Sportradar and Genius will be obvious beneficiaries given their expertise in betting monitoring and integrity services, Monday’s ruling has already created a ripple effect in the wider gambling business beyond US borders. Shares in UK-based bookmakers jumped on the announcement of the ruling, for example; Paddy Power Betfair's share price rose 10.5 per cent, 888 Holdings jumped 14 per cent and William Hill's stock gained 9.4 per cent. William Hill are apparently primed to launch a New Jersey operation within days.
However it is anticipated that gambling firms in Nevada, currently the only US state with a fully legalised gambling industry, will take a hit. Wynn Resorts, a hotels and casino operator based in the state, saw its share price fall by two per cent at the prospect of competition from new entrants in the sports betting market.
Sportradar deputy president Dr. Mintas’ four key takeaways from the SCOTUS ruling:
- Initially, the sports betting market will be chaotic in terms of everyone settling in post-decision and determining go-forward plans.
- Every state’s approach to regulation will be different to some degree; resulting in a complex marketplace and a need for clear strategic decisions and counsel.
- Big media companies will likely enter the marketplace and become bookmakers or simply add turnkey solutions to their current offerings as they have the existing customer base and access to those consumers’ wallets.
- Spend by online bookies – on average they spend over 25 per cent of their total revenues on marketing – will be the next big driver of growth in sports sponsorship.