The sports betting industry has swept the nation in the five years since 2018, when the United States Supreme Court overturned a federal ban on the pastime that had stood for more than a quarter century. The explosion of a brand new market aided by the integration of modern technology has made the betting industry one of the fastest-growing in the United States, but it also provides for some interesting scenarios as sportsbooks continue to carve out the niche that fits them best.
Right now we’re seeing survival of the fittest play out on a nationwide scale as betting platforms and state governments compete against one another in an attempt to corner the bustling market as quickly as they can. Here’s a look at what’s happening with the booming industry today, and how it’s affecting factors outside of the gambling industry like travel and interstate commerce.
One of the most interesting factors pushing the adoption of the sports gambling industry is competition between neighboring states. Sportsbook operators and prospective gamblers alike want the industry legalized because they hope to win big, and state governments are no different.
The old adage goes that ‘the house always wins,’ but perhaps it would be more accurate if phrased that ‘Uncle Sam always wins,’ because the IRS and the various state departments of revenue are always going to get their share of commerce through taxation.
Even though most states in the Union have already legalized sports gambling, not all legalizations are created equal. Some states only allow for betting on professional games, keeping college sports out of the fray because of the athletes’ protected status as amateurs.
Other states have yet to legalize mobile betting, requiring that prospective bettors travel to a physical sportsbook location in order to place bets. If one state offers sports betting sites and another requires that you travel to a casino to place and collect on wagers, it isn’t hard to decide which one will draw a greater share of consumer interest.
All About the Tax Dollars
More states still have vast discrepancies in what tax rate they charge: take the state of New York, for instance, where sportsbooks are taxed on a whopping 51 percent of their winnings.
Compared to the neighboring state of New Jersey, which only taxes sportsbooks at a 15 percent rate, it’ll be interesting to see if the Garden State tries to suck commerce away from the Empire State with the allure of lower tax rates.
With these discrepancies from place to place, competing state governments can still try to draw out of state commerce, even though the legalization battle has largely already been won.
Continuing the theme of competition between New Jersey and New York, the latter only legalized sports wagering after they saw how it affected the economy of the former, hoping that they could get their own share of the pie… and prevent New York consumers from spending their dollars elsewhere in order to get in on the betting fun.
The More Things Change, the More They Stay the Same
Even though sportsbooks have been able to open their doors in much of the United States, the power of gambling Meccas like Las Vegas remain unchanged. The state of Nevada set a record for gaming revenue brought in in 2022, reporting more than $14.8 billion in total value of bets placed.
When you consider that prospective bettors don’t have to travel all the way to Sin City or Reno in order to get in on the fun these days, that’s a testament to the allure of the industry. We’re still in the early days of widespread, legal and regulated sports gambling, and it’s worth keeping an eye on how the market continues to settle as time goes on.
The three most populous states in the country, California, Texas and Florida, still haven’t legalized sports betting. Texas and Florida seem likely to open up to the industry in the next couple years, while voters in the Golden State remain steadily against legalization.
With holdouts that significant, we’re still going to see interstate commerce affected by customers traveling back and forth.
Similarly, just because sports betting is available on a widespread basis using mobile apps doesn’t mean that that’s the preferred method of use for every prospective bettor. You don’t have to be a gambling aficionado to be interested in traveling to Las Vegas to play the slots for a night or two, and the novelty of these unique gambling environments speaks for itself: the glitz and the glamor is as much of an attraction as the betting itself is, something that will help maintain the staying power of Sin City and other betting hotspots for decades to come.