The NFL confronts the phenomena of online sports betting

The 2019 football season is the second NFL season in which Vegas casino online sports betting is legal in the United States. The industry is growing and, much to the NFL’s dismay, the division of the sports betting industry that is growing the fastest is the online betting sector.

Sports betting is going mobile and the NFL is determined to keep up. To date, the NFL hasn’t been successful in compelling gambling companies to give the league a cut of the action so they want to ensure that, as sports betting becomes an increasingly online activity, they stay involved. 

Online

Presently, sports betting is legal in 13 states and the number is rising.  Of those, five states – New Jersey, Pennsylvania, West Virginia, Nevada and Mississippi – allow online betting. A number of other states that already have regulated sports betting are considering allowing online betting and most of the states that have pending sports betting legislation are working on making mobile betting part of the package.

New Jersey was the first state to legalize sports betting after the United States Supreme Court ruled that sports betting could be legalized by individual states. (online betting has been legal in Nevada for years – Nevada’s sports betting industry was allowed to operate, even when it wasn’t legal in other states).  New Jersey is one of the first states to legislate for online sports betting.

In 2018, over 80 percent of sports bets placed in New Jersey -- the state that won the high court case last year -- were made over the internet or on smartphones. The question of whether to allow mobile betting, and how to regulate it, has kept several states from entering the market or more fully expanding within it, as is the case in New York.

Chris Grove, a managing director with Eilers & Krejcik Gaming, says fully embracing online sports betting will be the biggest challenge for land-based casinos this year. “It's clear that consumers overwhelmingly prefer to bet on sports online,” he said. “Attempting to route consumers through the casino to access online apps will only limit the potential of legal sports betting and pump oxygen into the illegal market. Where would Amazon be if you had to go into a Kohl's to create your Amazon account before ordering anything?”

Why Online

When surveyed, most online players stated that the convenience of betting online was the major reason that they chose to place their wagers through the Internet.  Justin Roper, a bettor from Knoxville, Tennessee, explained. “I can be sitting here at my house and instead of traveling to a casino, I have all my computer monitors right in front of me and I can see in a few seconds who has the best odds and make the bets right there and then. I'll drive as far as I have to if it means getting the right number, but I want to be able to access as many books as I possibly can, and the way you do that is online.”

As of this month, legal sports bets can be placed in 13 U.S. states including Arkansas, Delaware, Indiana, Iowa, Mississippi, Nevada, New Mexico, New Jersey, New York, Oregon, Pennsylvania, Rhode Island and West Virginia. That’s more than double the number of states where sports betting was legal last year and doesn’t include the five additional states where sports betting has been approved but is not yet running: Illinois, Montana, New Hampshire, North Carolina and Tennessee. Washington DC and Puerto Rico have also legislated for sports betting but the infrastructure to run sports betting in those states is not yet in place.

Next month, Colorado voters will decide via a ballot referendum whether to allow sports betting or not. 

On Site

While sports betting is growing throughout the United States, online sports betting is exploding. Casinos, however, continue to invest in on-premises sportsbooks  -- recently, Bally’s opened a new $8.4 million sportsbook in Atlantic City which was quickly followed by The Borgata’s $12 million sportsbook and entertainment project. 

FanDuel and DraftKings have also invested in their sports books -- FanDuel at the Meadowlands Racetrack, just outside New York City, and DraftKings at Resorts AC. Resorts President Mark Giannantonio credits the casino's in-person sports book for helping to boost revenue from table games and slots as well as from food and beverage sales. “There's no question people love to bet online, and we have a great option for that in DraftKings,” Giannantonio said. “But we also have quite a lot of people that come to our property to bet on sports, a whole new customer base. It was a natural fit for us.”

Revenue

The main reason that lawmakers in so many states are supporting sports betting legislation is that they are attracted by the possibility of big tax revenues for their state. Yet sports betting isn’t proving to be the bonanza that state officials had hoped. According to an Associate Press analysis, of the 7 states that collected sports betting revenue for the first six months of 2019, a total of $74 million was brought in – a drop in the bucket for most state budgets.

Many believe that online betting will change that. Online sportsbooks don’t have the fixed expenses that reduce profits from on-site gambling sites. If people move to online wagering, or add online wagering to their brick-and-mortar sportsbook betting, it could boost states’ tax revenues considerably.

Operators

New operators continue to enter the picture. A number of European operators, including Paddy Powers, Betfair and William Hill have signed affiliation deals with American gambling companies, sports leagues and individual teams. 

These operators have the potential to move online sports gambling even further forward. The NFL and other leagues are starting to become accustomed to the idea as they make deals with operators to pick up a piece of the pie.  

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