The levees broke on May 14, 2018. It was on that date that the United States Supreme Court overturned the Professional and Amateur Sports Protection Act of 1992 (PASPA). The upending of the act – a move instigated by a state of New Jersey looking to allow sports betting in what was its otherwise surefooted gaming landscape – opened the floodgates to the widespread legalization of sports betting across the nation.
Lawyers arguing on the side of the Garden State cited the Tenth Amendment which, since its promulgation in 1791, has been widely considered the most potent distillation of the principle of federalism. Anyone who has sat through eighth grade history knows that federalism protects the rights of states to regulate themselves in matters not otherwise delineated in the Constitution.
States’ rights, baby. In this case, it was the right of states to regulate sports betting. After PASPA fell, the strictures melted away, and it seemed as though a carefully erected domino set was crashing down across the nation. With every fallen piece came new markets to open, more money to be made.
Rarely in American history has such a dynamic industry so suddenly emerged out of nothing. In the four short years since PASPA was overturned, sports wagering has become available in 33 states, while people can make legal bets on their mobile devices in 18 states. According to one tally by the US Census Bureau, these markets have opened gambling to 166.9 million people (very nearly half of the entire population).
And there is much more to come. On the very day I write these words at the end of April 2022, lawmakers in both Kansas and Massachusetts have given the green light to mobile sports betting, all but ensuring this pastime’s arrival in these states in the not-too-distant future. Nor have all the golden eggs been found: while New York – which went live in January of this year – is currently the national leader, there are still large swathes of the sports-mad South where the fate of sports betting continues to hang in the lurch. Texas – a nation unto its own – will still have to wait until 2023 before discussion can commence, due to its bizarre practice of having the state legislature meet every other year (only three other states do this). California is the largest state in the union and has the issue of sports betting on the ballot this November.
Of course, sports betting as an industry has undergone such breakneck growth in large part because it was already so popular, albeit illegal. The American Gaming Association today estimates the illegal gambling industry to be worth $150bn. It used to be that gambling fell under the shadow of vice. In this, it shares much with the fledgling cannabis industry in America: where the removal of moral opprobrium has created a legal and regulated juggernaut overnight.
Of the many things in society that have been affected as a result of the overturning of PASPA, none perhaps stand out as much as the experience of sports fandom in the United States. At first, when the reality of legal sports betting began to set in, both teams and leagues were adamiant in their objection, seeing nothing but controversy and divisiveness ahead. That was before they realized how much money was to be made...
Now when sports betting goes live in a given state, teams are eager to strike partnerships with betting operators, for this is the best way to maximize profitability. Today, one cannot watch sports in large parts of America without being reminded – through TV ads, sponsorship deals, what have you – of the rising star of this industry in American life. Traditional sports fans will always be marked by loyalty and devotion – hometown pride – but what we see emerging is a new species of viewer, something which the leagues are happy to encourage.
A viewer who cultivates the pastime of betting will watch a game regardless of loyalty. If they happen to have money riding, they will watch mighty attentively. Indeed, it is a fact that, with the rise of betting in America, sports viewership has been on the rise. In the year prior to the overturning of PASPA, the National Football League saw its most sluggish ratings of the previous decade: according to Forbes, per game, viewership for the 2017-2018 season was down to 14.9 million, a 10% dip over just the season before. Then came PASPA. Besides the disastrous season of pandemic, viewership is up 20% since 2017. The 2021-2022 season – when sports betting is more popular than ever before – saw games average 17.9 million viewers per game. The same can be said for all sports that are favored by American bettors. Leagues, no doubt, are pleased with this return to form, and you will not hear them complaining about the proliferation of sports betting anytime soon.
But it wasn’t just viewership for the teams and league. Entire cottage industries have sprung up as a result of sports betting, opening new avenues for the fulfillment of capitalism and free enterprise. Private equity in the realm of sports has been having a field day. Operators have been importing European technology en masse, Europe having had betting for far longer and, therefore, already in possession of a robust technological infrastructure. Homegrown infrastructure – those B2B systems that connect operator with bettor – have proliferated. PASPA has not affected sports betting alone, rather its repeal planted a seed that will ultimately produce an industry that will rival, if not surpass, the sports wagering segment. IGaming, which at time of writing is live in six states with more on the horizon, has been called the true prize of the American gaming industry and would not be as far along on its journey without the 2018 PASPA decision.
Indeed, with its resistance to the seasonal whims of sports betting and lockdowns that close casinos and sportsbooks, and its appeal to the youth, who are every day gravitating away from traditional sports, online gambling has the potential to be the United States' most potent gaming offering. Currently, New Jersey, Connecticut, Pennsylvania, West Virginia, Michigan and Delaware allow players to play online casino games. Together, this limited selection of states raised profits of almost $400m in January alone, according to the American Gaming Association. Perhaps even more impressively the nation’s market earned $3.7bn in 2021.
These numbers pale in comparison to what may be on the horizon, however, with New York contemplating the legalization of iGaming. The Empire State has already seen the boon that is online sports betting, with it generating handle of $2bn in a single month of legal wagering, and many in the region believe iGaming could be even more profitable. Joseph Addabbo Jr, a New York State Senator, is one such man. He has proposed Bill 8412, a call for the legislature to implement a fully regulated iGaming market before the end of the year. Addabbo claims that this new market could bring in around $500m in state revenue per annum. Ultimately, none of this would be possible had PASPA not been repealed back in 2018. It opened the door not only for legal sports betting, but an industry that appeals to the American youth and is unaffected by pandemics. With this we see the far-reaching effects that the 2018 decision had, changing the gaming landscape, in all aspects, for good. In the end, the online casino sector is preparing itself to be the next big thing as betting goes mainstream. And, finally, the land-based sector is reaping benefits from the growth of betting.
One can only wonder what the next four years will bring (besides more open markets) as sports in America continues to be recast in the light of legal betting. Ultimately, the period since the repealing of PASPA has been one of growth – unprecedented growth in fact. As operators from across the globe flock to the shores of the United States in the hope of capitalizing on this lucrative market, what began as an issue of states’ rights has morphed into something greater; into one of the most profitable and wide-spanning industries in American entertainment. 2018 marked a sea change for our industry, beginning a new paradigm in gaming. The journey it began has only just started.