There has been a radical shake up of sports betting legislation in the USA, which has now made it possible for individual states to decide whether or not to allow what is known as single sports betting within their borders. This means that for the first time, US punters in seven states (with more set to follow) can bet on sports online legally, including the NFL, NBA, MLB and NHL.
The change in legislation came about after the US Supreme Court struck down, by a margin of 6-3, the 1992 Professional and Amateur Sports Protection Act which had hitherto prevented states (with a few exceptions) from legalizing sports betting within their jurisdictions. There is no obligation on states to introduce sports betting legislation, but rather this new ruling removes the barriers that prevented them from so doing.
Nevada, Delaware, New Jersey, Mississippi, West Virginia, New Mexico and Pennsylvania are already enjoying full-scale legalized sports betting, bills have been passed for its introduction in New York, Rhode Island and Arkansas, while bills have been introduced but not yet passed in another 16 states.
The size of the existing illegal US sports betting market, estimated to be in the region of USD$150 billion annually, combined with the potential for growth and expansion in a legal, regulated environment, means that UK online betting sites have unsurprisingly been very quick out of the blocks in order to get in on the ground floor, and in so doing the leading brands have already made a significant impact.
That UK sports books have been engaging so aggressively with the US market has also partly been brought about through necessity, as a result of the ever-increasing controls and advertising regulations being enforced on bookmakers here, not least of which is the proposed increase in the duty on online gambling from 15% to 21% from 2019 and the changes to how and where online betting companies can advertise.
These restrictions, plus new laws regarding maximum wagers on FOBTs in high street betting shops, have meant that many operators have seen their profits in the UK take a hit recently, and so the changes in US law couldn’t have been more fortuitously timed.
UK bookmakers hitting the US market
A number of the leading UK bookies have been very aggressive in their bids to claim a share of the new sports betting market in the USA.
bet365 has signed a partnership deal with Empire Resorts that will see the UK online bookie provide live and online sports betting services at the Resorts World Catskills casino in New York State when legal betting on sports eventually begins there. This follows on from bet365’s deal with the Hard Rock Atlantic City to provide sports betting in New Jersey. The newly relaunched casino (it was formerly the Trump Taj Mahal) is one of six in Atlantic City, all of whom will also be offering single sports betting as well.
SkyBet was purchased in July 2018 by Stars Group, the Canadian online gaming company that operates pokerstars.com, amongst a number of other sites. As Stars Group already has a significant North American presence, it is expected that the new SkyBet will be a key player in the rapidly expanding US sports betting market.
Paddy Power Betfair
In July 2018, Paddy Power Betfair merged its existing US business arm with the fantasy sports company Fan Duel, in order to be better placed in the market to capitalize on the reformed US sports betting laws. The reasons behind this move became clear when it was revealed that Paddy Power Betfair’s US revenue increased by 22% in the wake of the deal, thanks in particular to sports betting turnover in the Meadowlands Casino in New Jersey. It now finds itself strongly positioned in the market as new states come aboard and the provision of US online sports betting increases.
In order to raise their sports betting profile in the US market, 888 Sport has entered into a deal with the New York Jets NFL franchise. Although it is not explicitly promoting it through its sponsorship arrangement with the Jets, 888 Sport would seem to be using the venture as a means of gaining attention and coverage for its New Jersey online sports book. It is estimated that sponsorship deals with online betting companies could soon be worth USD$2.3 billion for the NFL annually.
William Hill has perhaps been the most aggressive UK online bookmaker in terms of its US expansion. It now operates the sports betting at two casinos in New Jersey — the Tropicana and the Ocean Resort Casino — as well as at Monmouth Park racetrack. This follows on from the deal William Hill struck with Eldorado Resorts, owner of the Tropicana along with six other casinos in five states beyond New Jersey. This partnership between the two betting giants has the potential to become one of the most powerful in the industry, with William Hill estimating profits from its US operations to reach somewhere in the region of USD$300 million by 2023.
In order to stake its claim in the US sports betting market, Ladbrokes has established a partnership thought to be worth USD$200 million with MGM Resorts. Ladbrokes, which is owned by GVC Holdings (along with Coral, Sportingbet, Foxy Bingo, Gala and Bwin), will offer sports betting services at some of MGM’s most prestigious casinos, including the MGM Grand, The Bellagio and The Mirage in Las Vegas. It is expected that the partnership’s operations will soon expand to encompass other states as well.
Good news for affiliates too
Affiliate marketing is in many ways the lifeblood of the online gaming industry. It has been shown to be a highly effective way for operators to reach bigger and more diverse audiences than might otherwise be the case through more conventional online advertising methods, and it has also proved to be highly cost-effective.
The model works well for affiliates too, essentially enabling multiple brands in the same industry to be promoted alongside one another, increasing commission and revenue potential.
As evidence of the potential boom times ahead for online gaming affiliate marketers, one of the leading names in the industry, Catena Media from Sweden, reported a 60% increase in its revenue in Q3 2018 on the back of its entry into the new US sports betting market.
The next stage in this journey will unfold when the states that have passed legislation but not yet brought it into law begin to offer sports betting. It is estimated by most industry observers that at least 32 US states will eventually make sports betting legal, and it is likewise anticipated that the current USD$150 billion market will grow significantly once regulatory regimes bed in, if the example of the UK is anything to go by.
The hardest part may be to persuade legislators not to view this burgeoning market as anything other than a cash cow, and inadvertently tax it into submission as has increasingly been the case in European jurisdictions where online gambling is regulated by the state.