The build up to American sports betting has dominated gaming media headlines for months, but only a few weeks after that inaugural Supreme Court decision, the hype has begun to subside, revealing various important questions for the industry in its wake.
In a blog titled, “The Supreme Court Changes Everything”, renowned gaming professor and author of Gambling and the Law, I Nelson Rose, highlights the impact the decision has on wider US law.
“For the first time in American history,” Nelson writes, “the federal government cannot order states, or state officials, to do anything.”
For the betting industry however, all the key characteristics of almost all markets are yet to be determined. As states gradually and unilaterally introduce a variety of different models, it could be that not much changes for the international operators for some time.
Doubts remain around whether certain states’ existing laws come into conflict with sports betting. Congress could yet play a hand by introducing a national regulatory framework, and the Wire Act still theoretically poses a barrier to interstate and international bets. (Although Rose points out that even before the Supreme Court decision, “operators were devising schemes to allow sports bets across state lines” using terminology such as “risk management”.)
Further down the line, the most consequential unknowns for the betting operators will be around who ultimately get the licences, what products they can provide and via which channels.
Some will grant permits only to state lotteries, while other will issue licences to private operators. Most will likely chose incumbent operators that states know and trust, but others may yet offer licences directly to international brands. Some will allow mobile, online, in-play – others may not.
In terms of licensing, “the problem is political”, writes Rose. “There is so much legal gambling that almost every state has politically powerful local gaming operators.
“If those operators, for example the racetracks and casinos in New Jersey, are the ones getting the right to now take sports bets, the legislation will sail through. But in a state like California, the gaming tribes, cardclubs and racetracks each have the political power to kill a proposal they do not like, but do not have enough influence to get one passed that cuts out their competitors.”
All the above will yet determine how much air the US will give international firms in the longer term. But the immediate outlook is not materially overwhelming.
Partners at Regulus have made an initial assessment of the regulatory frameworks different states are likely to adopt. While they suggest around seven states (comprising 32 million people) are poised for imminent liberalisation, it could be another 18 months to three years before a second wave of a further nine states (with 80 million people) follow them.
“Therefore, this is a fiddly slow burn opportunity rather than a big bang, in our view. Equally, we struggle to see the total market adding up to much more than US$2bn in revenue terms by the end of the second wave – not a lot to go round.”
DELVING INTO DETAIL
Regulus points to Delaware, which was the first market to launch this month, as a “useful quick case study” for showing just how much difference the finer details can make.
Bets are only allowed in Delaware’s three casinos – not in its 100+ retail outlets, nor online – and it won’t be allowing betting on college sports. Furthermore, “the spoils have gone to the incumbent: the Delaware Lottery, distributed through casinos, supplied (only) by Scientific Games and William Hill (through the Brandywine legacy).
“If this is what ‘opportunity’ looks like, European operators should probably unpack their bags and put their passports away.”
Granted, Delaware is a tiny state. How states like California choose to exploit their newfound freedom will be more interesting. But tempering enthusiasm yet again, and echoing Nelson, Regulus points out that California’s gambling interests are “dominated by racetracks and tribes […] who would much rather fight over land-based scraps than allow online competition.
“Can we imagine a land-based-only California? It currently looks more likely than online, meaning a very long wait for some very restrictive legislation is likely, in our view.”