On Monday, the Supreme Court overturned the Professional and Amateur Sports Protection Act, a law enacted in 1992 that enabled the federal government to order certain states to disallow sports-based gambling. Until now, there were only four states that met a 1991 deadline to legalize the activity in their state: Delaware, Montana, Nevada and Oregon. Nevada has been the only state since that point to allow wagering on single games. Yesterday’s action opens the door for other states that already allow gambling, like Kentucky, New Jersey, Pennsylvania, West Virginia, New York and Massachusetts to name just a few to add sports wagering to their portfolios.
How big is the opportunity the ruling could open up? Well, first consider that the Nevada Gaming Commission reported $4.8 billion in sports betting in 2017. That is in only one out of 48 states in the Union that allow at least one form of gambling, and that fact alone could represent a very tempting carrot for other states to reach for. Supporting that idea even more are studies that revolve around illegal sports betting. A 1999 Congressional study estimated that illegal sports betting totaled more than $400 million; not quite twenty years later, that number in the United States alone at around $150 billion. Future estimates predict it will reach as much as $400 billion. The truth is that no matter where you sit on the ethical or moral questions about gambling, these are numbers that are increasingly hard to ignore.
It is a documented fact that in 2016, tax revenues from gambling activities in the U.S. totaled more than $8 billion nationwide. Seeing more than $150 billion spent on illegal sports betting in the U.S. means that there is a massive resource for useful tax revenue that states aren’t seeing. The reversal of the 26-year law that has prohibited legalized sports betting opens the door to gaming companies of all kinds to tap legally into what is clearly an attractive consumer market, which also translates to an increase in tax revenues for the states those companies operate in.
How quickly could this trend start?
A lot of supporters of overturning of that 1992 act cheered on Monday, predicting that major changes were in store for the nationwide gaming industry. In the long term, that could very well be true; but the truth is that this ruling doesn’t actually change existing law at all. It only ruled that the federal government does not have the power to dictate the legalization of sports betting to any state. What it really does is to open the door for each state to make its own determination about whether or not to allow sports-based wagering, and to establish its own rules to regulate it. That said, there are states that have already been laying the foundation to make inroads into what has up to now been an untapped market.
New Jersey, the state made famous in part by the casinos and resorts of Atlantic City, is one of the states that sat poised to jump headfirst into this new market. Monmouth Park Racetrack, a racetrack for thoroughbred horse racing, had begun moving to begin offering sports wagering on Memorial Day; and while questions about state regulations have temporarily put those plans on hold, state authorities as well as track officers indicate that could get started as early as mid-June. Mississippi, West Virginia and Pennsylvania are close behind New Jersey, having either passed recent legislation to clear the way for sports wagering or deleting old prohibitive regulations from their books in anticipation of this week’s ruling. It is anticipated that these states could start running sports pools before the 2018 NFL football season opener. West Virginia’s legislation includes provisions that cut a piece of the tax revenue pie with each of the state’s Division I college institutions, Marshall and West Virginia University.
While New Jersey, Mississippi, West Virginia and Pennsylvania are simply the first in line, other states have been moving quickly to keep up. From California to South Carolina, and Michigan to Louisiana, the writing is on the wall: sports betting on a national level, including wagering across state lines, is right around the corner, and just a click away.
With this week’s ruling clearing the way for states to move forward without federal oversight, let’s take a more comprehensive look at the states that are likely to offer sports betting within two to five years:
- North Carolina
- North Dakota
- West Virginia