I think there are two verticals that are going to have a very good year in 2021. The first is esports. There’s been a lot of movement, legislators are coming in and out of session, and while they’ve been focused on COVID-19, I believe it’s only a matter of time before esports takes off in multiple jurisdictions, including New Jersey, which hasn’t fully embraced it yet although legislation is propping up there. There are about a dozen states where esports is starting to get some traction and I think we’ll have a good home for it next year.
More importantly, the pièce de résistance I’m working on is fixed-odds horse racing. It’s going to be a bonanza in the new calendar year. I’m working in 10 states now, and probably five more by the end of 2020, and have just been to Mississippi and Texas. We’ve spoken with Governors and the legislators about the value of fixed-odds horse racing. There’s legislation that’s going to move rapidly in New Jersey. We’ve talked to Michigan, Oklahoma and Ohio to name a few, which are all exploring the power of fixed-odds horse racing.
Part of it is horse racing is diminishing in the US with the old parimutuel tote system. It’s been struggling and year-on-year it’s been reducing 2 or 3%. If something doesn’t change soon then horse racing is going to become a thing of the past. Fixed-odds has a benefit in a couple of ways.
First of all, before 1930, US horse racing was all fixed-odds. The tote parimutuel system was introduced in multiple states in the early 1930s then fixed-odds went away. The parimutuel system is antiquated, not innovative and it doesn’t capture the imagination of the younger punter, the 20 and 30-year-olds. The 21 to 39-year-olds are the bulk of sports betting and the fixed-odds horse race bet is similar to a sports bet, straight up with a spread fixed.
We believe, much like what’s happened in New Zealand, Australia, London and Germany, fixed-odds is going to help stabilize the tote without diminishing it and then it’ll grow to where you’ll see bets where for every dollar bet, 70 cents will be on fixed-odds and 30 cents on the tote. We think that’s the direction it’s going in but it’s going to take legalization and regulation, and marketing, for the vertical to get to the predicted heights.
Sports betting will continue to grow
Sports betting in the US is a monster. No one believed me when I predicted in 2018 when New Jersey first launched that we would exceed Las Vegas in 18 months and we did. New Jersey had another record month in October, collecting $803m in sports betting handle (growing again in Nov and Dec). Sports betting is continually growing because people are becoming increasingly more comfortable betting on either mobile or in-person sports bets, as opposed to going to the local street bookmaker because they feel it’s a much more user and customer friendly experience.
We’ve had a great year despite the fact COVID-19 shut down the majority of sport for many months. As we continue to go into the end of college and professional football season before basketball starts, the vertical will continue to gain traction.
In terms of the next states to legalize sports betting, it’s a little unpredictable because the pandemic has taken a lot of the oxygen out of the room. I’m currently talking to multiple states that already have sports betting that are interested in doing mobile and online, and I think there’s going to be some surprises there.
The three primary states that everybody is watching but haven’t moved yet are Texas, Florida and California, each one with its own set of challenges. Looking at Texas, the state doesn’t really have casinos but their citizens are going over the border to Colorado and Oklahoma to go to casinos and place sports bets. I believe in Texas, which has sessions every other year, meaning they didn’t have a legislative session in 2020 but they will have one in 2021, there’s some room for movement.
New York is definitely focused on reviewing the value of online sports betting, and Governor Andrew Cuomo is trying to understand it more and appreciate that a lot of his citizens are going over the border to New Jersey, which is about 20-25% of the New Jersey market. I think he wants to capture that audience because there’s tax revenue and jobs that can be created there.
Both California and Florida have their internal struggles. In California, Governor Gavin Newsom has been trying to work carefully behind the scenes with the race tracks, card rooms and the tribes to try to get their heads around sports betting; those organizations are nervous about getting sports betting in because they think it’s going to cannibalize their existing systems, which it won’t. I think California is the major crown jewel because we’re about a year or two away from California popping, in regard to sports betting.
Conversely in Florida, Governor Ron DeSantis, who is having his own problems with the pandemic, has been in constant conversations with the Hard Rock Seminole Tribe, which has the compact in the state and they’re trying to sort that out. When Florida, Texas and California go, however, look out since that’s going to be a major boom for sports betting in the US.
I do believe that the sports betting market will continue to grow in New Jersey in 2021. There’s some things we’re working on to help and continue that growth, including regulation and tax structure. New Jersey has got it right and it’s now the third-largest online gaming jurisdiction in the world. It’s had no issues with money-laundering, cyber-related crime breaches or geolocation breaches, and the more that continues the better, along with content, which is important, of course. I think the month to watch out for will be February when the Super Bowl is over and when we’re getting into the full-blown NBA and NHL calendar, and then MLB will start a little later in March or April.
In 2021, I also foresee exchange wagering starting to take off. Peer-to-peer betting, which allows users to lay selections rather than only back them as with a traditional sportsbook, hasn’t been utilized outside of horse racing, but I think it’s an operator model that will make strides heading into the new year. The future of the online and sports betting industry is very strong; statistics and figures have shown that. There’s going to be a new governmental alignment that will embrace what this industry represents.
Sports betting in a normal world
The new sports environment will continue to have an impact of the sports betting industry. The way operators have been trying to be more innovative with focusing on the customer has been positive. Data is more powerful than ever as well as having a good data analytics team that can utilize it to push through to a customer’s different offerings. In terms of entry into the market, registrations are becoming more expeditious. Early on in the market, it took about 30 minutes to sign-up but now it’s roughly 12 to 15 minutes and I think that will continue to shrink, which is powerful and important.
The player experiences, once we get back to normality when we can go to pubs, taverns and sporting events, will only have a huge positive impact on sports betting. If we’re able to do this well under a huge COVID-19 spike in the US, we’re going to be fine. I’m confident that the vaccines being administered will continue to allow us to get back to normal and create a stable environment that everyone can swim in, and grow if they have a good offering.
I think this time next year you’re going to see a more robust market that continues to grow, and I’m incredibly optimistic about the online and sports betting industry going forward, both in mobile and retail.