From the top: Bettors, basketball and March Madness ballers

May 18, 2023

Was this year's March Madness NCAA tournament a slam dunk for the US sports betting industry?

In 2022, $3.1bn was projected to be wagered on the March Madness tournament by 45 million American basketball fans. Fast forward to 2023 and the same American Gaming Association (AGA) research shows that number has meteorically risen to $15.5bn for the tournament, bet by 68 million fans. 

In total, $16bn was wagered on Super Bowl LVII only a month earlier, but a comparatively small $1.8bn was bet by American soccer fans on the World Cup in the fall of 2022, making March Madness stand out. Perhaps the biggest surprise, and what may be bolstering basketball bettors, is the rebound in popularity of bracket competitions – which the AGA said 56.3 million Americans took part in this March.

This increase in fans’ madness for sports betting could also be due to the number of legal markets now available. There were 33+ legal live sports betting states including Washington DC, in which 57% of American adults happen to live in these states – and potentially watch basketball. AGA President and CEO, Bill Miller, said of the tournament, “March Madness is one of the best traditions in American sports – and America’s most wagered-on competition. Critically, the expansion of regulated sports betting over the past five years has brought safeguards to more than half of American adults who can now bet legally in their home market.”

A bracket of 68 hopeful college teams represented a total of 37 states and Washington DC, but only 22 states with a team in the tournament had legalized sports betting. Newcomers Massachusetts, Ohio and Kansas have only recently legalized and launched legal sports betting for their residents, while other states have introduced mobile betting options. Maryland Lottery and Gaming Director John Martin said, “This was the first time mobile wagering on March Madness was available in Maryland, and as our market continues to mature, we’re pleased to see it generate a strong contribution to education funding.”

Who’s going all in?

Millions of hopeful basketball fans engage by taking part in March Madness competitions meant for bettors rather than ballers. Incentive Games and bet365 offered perhaps the largest grand prize: a $10m jackpot for anyone who bet a perfectly accurate list of winning teams in their Mega March Bracket Challenge. The game was free to play in New Jersey, Virginia, Colorado, Ohio, Mexico and New Zealand; a leaderboard and other prizes were available based on points earned for any correct prediction. The odds of filling out a perfect bracket, though, were a staggering 1 in 9.2 quintillion.

BetRivers launched bonus payouts in a new NCAA version of its Squares game. A winning standard square earned $20 in bonus money for that bettor, while the potential payout for winning “boosted” squares was worth designated amounts ranging from $25 to $10,000. Betr also expanded from its usual offerings, from microbetting to a core sports betting market. Bettors could wager on an outright winner, the margin of win and an over/under on total points. Other gaming providers that sought to offer more options included: Meridianbet, a European sports betting operator, which announced more than 200 odds per game and Low6, an iGaming freeplay provider that created a customizable bracket game suite with Clutchbet, from Australian bookmaker, Bluebet.

Tipico Sportsbook’s in-app competition announced a winner and started at a modest $20 minimum wager. Bettors could place unlimited bets throughout the duration of the tournament, rank on state leaderboards, earn exclusive rewards and potentially win a grand prize. Tipico’s competition winner, who placed over 110 winning betslips with a total of $10,000 in handle, won a full year of bet credits.

Guarding the points

These contests and operators did not see any advertisement air time during March Madness games, though. 2023’s Super Bowl saw an uptick in sports betting advertising deals, including a DraftKings and Molson Coors “High Stakes Beer Ad,” but the NCAA bans networks from selling air time to sportsbook ads. The organization’s website contains an official statement saying, “Sports competition should be appreciated for the inherent benefits related to the participation of student-athletes, coaches and institutions in fair contests, not the amount of  money wagered on the outcome of the competition.”

College football games, however, have not seen the same blanket ban on sportsbook advertising. The New York Times called relationships between popular sportsbooks and several universities the ‘Caesarization’ of campuses. Caesars Sportsbook and Michigan State University struck the first deal in 2021.

As of November 2022, at least eight universities had partnered with sportsbooks. However, the AGA marketing code now prohibits new “college partnerships that promote, market or advertise sports wagering activity.” The University of Colorado ended its “controversial” partnership with PointsBet only a day after the AGA’s announcement of the new code, and other schools may soon follow that lead. Michigan State faculty members have already started a petition to end its athletic department’s $9m Caesars partnership. Conversely, the AGA has also reported that Americans under 35-years-old are both more likely to remember viewing a responsible gaming message and more likely to advocate the importance of wagering legally.

Historically, no matter how much money is bet during the course of the action, neither the schools nor the players see a cent of that handle. The Supreme Court ruled in 2021 that players can receive sponsorships and negotiate endorsement deals, but even the schools and players with the most favorable odds can’t make any revenue from the overs, point spreads, or totals that bettors predict.

Nothing but net (profit)?

Overall US tax revenue from sports wagers in 2022 reached a combined $1.4bn, across 27 legal states. With more states legalizing the ability to wager on a win for the home team, more states have benefitted from increased revenue during the mad rush to bet this March. The American Action Forum has already reported a disparity between tax revenue structure in each state where sports betting is legal. In New York alone the rules differ greatly; mobile betting revenue is taxed at 51%, while land-based revenue is taxed 10%. The Empire State brought in a total of $1.8bn in bets during March 2023.

Texas, which hosted the Final Four games, has yet to legalize sports betting. However, bettors didn’t have to look very hard for websites posting lists of sportsbooks that still accept bets from the Lone Star State. Unregulated and offshore betting was still easily accessible to those hoping to make a backdoor cut around state laws. Wagers with unlicensed sportsbooks took nearly $4bn in revenue from legal operators in 2022, also taking $700m in taxes and fees away from the states.

Critics of sports betting’s sweep of the nation have focused on potential rises in gambling addiction rather than rises in tax revenue. This quick and thorough expansion of legal gambling creates a duality between excitement and responsibility. Michigan’s ‘Don’t Regret the Bet’ campaign urges players to: “think of gambling as “entertainment, not a side job.” The Massachusetts Gaming Commission (MGC), in its newly legal gambling market, has also already introduced PlayMyWay, a free budgeting tool to track player spending. According to the AGA, three-quarters of this year’s March Madness bettors using popular online sportsbooks were brand new to placing sports bets online. While March Madness wasn't expected to quite reach the $16bn handle heights of Super Bowl Sunday, sportsbooks like DraftKings are already predicting the odds for the 2024 tournament, and states’ reported gaming revenues for March are on the rise due to the madness. No matter which schools do well, odds are that sportsbooks will see even more legal sports bets placed around 2024’s Big Dance. 


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