Double Up

Predictions are that at least 40 of the 50 states will legalize sports wagering in the next five years. Will mobile and online gaming be far behind?

Double Up

Five states have already legalized sports betting, and at least that many more will consider it in 2019. Predictions are that at least 40 of the 50 states will legalize sports wagering in the next five years. While the model seems to have the sports wagering controlled by the casinos and racetracks in the individual states, there is also a movement in some states to put the lottery in charge. But when that happens—as it has in Delaware, West Virginia and Rhode Island so far—the casinos still play a role as the only physical locations where sports betting can be made.

But of course, the real money these days comes from mobile or online sports betting. In Nevada, more than 60 percent of the revenue is derived from the mobile apps that have been developed by the host casinos. And in just three months in New Jersey, as demonstrated by the charts in the By the Numbers section on page 8 of this issue, mobile and online sports bets already account for more than half of the betting.

Some states have decided to move forward without mobile or online betting, such as Mississippi. Undoubtedly, state legislators will reconsider when they see the revenue that is being left on the table.

When new states begin to legalize sports betting, they are also going to look at the ratio between in-person and mobile betting, and likely decide to offer both. This will please the casinos, which will get a bigger market, and the legislators, who will garner more tax revenue. Of course, we’ll see how the Pennsylvania experience plays out with a 34 percent tax rate. It’s hardly conducive to a profitable sports book operation, but since several casinos have applied for the license, maybe they know something I don’t.

But in addition to the legalization of sports betting, there is a huge opportunity to also legalize online gaming at the same time or maybe a few years later. It’s not a huge leap from betting on sports to playing casino games online. And for legislators, there is a bit more flexibility with taxes on online casino games. It’s not unusual for taxes to be set anywhere up to around 20 percent before operators start to flinch.

Remember, online gaming is now a proven commodity. The hysteria about children gambling online or betting occurring in places where it’s not legal—such as across state lines—have proven to be red herrings. There are few if any accounts of those things emanating from the states where online gaming is currently legal—Nevada, Delaware and New Jersey, and soon Pennsylvania. So the job of convincing state legislators has gotten easier.

But who is going to be the champion of online gaming? Probably not the American Gaming Association, whose members are still uncertain about how to get their arms around that side of the industry. Individual online gaming companies could certainly advocate for an expanded industry, but that always sounds like so much greed.

What is needed is an association of online gaming companies. They need to present research on how it has been conducted safely and securely, not only in the U.S., but also around the world. They need to make a case—just like sports betting—that it is already occurring and the potential tax revenues that each state could generate are now going to criminal enterprises.

An association could give facts about the integrity of online gaming operators, the transparency of the data, the efforts set up to prevent underage gambling and protections against problem gambling.

An association could speak with one voice—a voice that is unified and confident, and one that would be influential in the state capitals. It could designate minimum standards for legislators to consider—legislators who may not understand the costs of operating an online gaming site, affiliate marketing, cross-border compacts and a host of other topics that are too far down in the weeds for them to understand.

This is an opportunity for the entire industry. Certainly this kind of association would include the giants of iGaming like GVC, the Stars Group, Betfair, William Hill, Paddy Power and others, but should also add IGT, Scientific Games, Aristocrat, and even operators like MGM and Caesars.

Legalization of iGaming would benefit the entire industry and the states in which it operates. The time is now to organize and be ready for the inevitable debates that will follow.

Roger Gros
Roger Gros is publisher of Global Gaming Business, the industry's leading gaming trade publication, and all its related publications. Prior to joining Global Gaming Business, Gros was president of Inlet Communications, an independent consulting firm. He was vice president of Casino Journal Publishing Group from 1984-2000, and held virtually every editorial title during his tenure. Gros was editor of Casino Journal, the National Gaming Summary and the Atlantic City Insider, and was the founding editor of Casino Player magazine. He was a co-founder of the American Gaming Summit and the Southern Gaming Summit conferences and trade shows. He is the author of the best-selling book, How to Win at Casino Gambling (Carlton Books, 1995), now in its fourth edition. Gros was named "Businessman of the Year" for 1998 by the Greater Atlantic City Chamber of Commerce, and received the Lifetime Achievement Award from the American Gaming Association in 2012.