For decades, sports betting has been illegal in the US outside Nevada. With a Supreme Court ruling Monday, that’s about to change, likely before the upcoming NFL season kicks off. But don’t get too excited—or horrified, depending on your perspective—about the future of online sports gambling just yet; it won’t come all at once, and it won’t be everywhere.
In a 6-3 ruling, the Supreme Court backed the state of New Jersey’s challenge to the Professional and Amateur Sports Protection Act, a 1992 law that banned states other than Nevada from operating a sports book. The decision doesn’t legalize gambling nationwide, but it allows states to pass their own laws to that effect.
The upshot: Sports betting, once relegated to Nevada casino corners and black-market online bookies, is about to go mainstream in a big way. While there’s no official accounting of the size of illicit sports betting market in the US, experts estimate total wagers at anywhere from $80 billion to $150 billion annually. GamblingCompliance, a company that provides legal and regulatory services to casinos, pegs the potential revenue to casinos from legalized US sports betting at anywhere between $2 billion and $5.8 billion per year, with states taking a still-to-be-determined cut.
That represents a potential land grab for casinos, but also for online sports betting platforms that have built sophisticated operations overseas. It could also reinvigorate daily fantasy companies like DraftKings, who are well-positioned to transition their customers to more traditional bets.
“I think transformative is the right word,” says Chris Grove, managing director at Eilers & Krejcik Gaming. “There just aren’t a lot of opportunities for the legal, regulated gambling industry in the US to open up a proven market.”
The size and shape of that opportunity, though, remains to be seen. Especially when it comes to the internet.
State of Play
While four states currently allow online gambling generally, only Nevada extends that to sports betting. The process can be tedious. You first need to verify your identity in person at a casino, and open an account. From there, you can download an app and use it to place bets that generally reflect the options available in the physical sports book. Since it’s literally the only game in town—and country—it hasn’t had much motivation to match the fuller betting options of its European counterparts.
That should change soon. While the Supreme Court didn’t legalize sports betting overnight, expect several states to essentially do just that. Twelve states already had legislation pending that anticipated the end of PASPA, fast-tracking their ability to begin taking sports wagers. Six more states have post-PASPA legislation that either died or was placed on hold. You can expect many of them to move quickly.
‘Online betting is just a sensitive topic politically.’
Chris Grove, Eilers & Krejcik Gaming
“We would anticipate within the next few weeks the New Jersey legislature will pass a law that taxes and regulates sports betting,” says James Kilsby, US managing director for GamblingCompliance. From there, expect several more weeks—or possibly a few months—of regulatory and operational work before New Jersey flips the switch. Expect states like Delaware, Mississippi, Pennsylvania, and West Virginia—all of which have sports-betting laws already on the books, in anticipation of Monday’s ruling—to follow close behind.
Within five years, Grove says, you can expect to see up to 32 states legalize sports betting. But your online options may wind up being surprisingly sparse.
Take the states with current or pending legislation. Seven of them would authorize online sports wagering, while Delaware and Mississippi would only allow in-person bets. Others remain undecided. And some of the online-friendly locations would still require bettors to register in person at a casino to set up their account.
“There’s always been differences state by state,” says Kilsby. “Some casinos want to be very progressive, to allow for a robust online method. Other states might be more cautious. It’s a Balkanized market, in a way.”
GamingCompliance’s most optimistic scenario outpaces Grove’s, suggesting as many as 37 states could takes sports bets by 2025. But even then, it projects only a dozen to have an online component.
“Online betting is just a sensitive topic politically,” says Grove. Not even the gaming industry has settled on whether it fully supports it. And with legal, regulated sports betting itself being relatively new entity for these states, Grove says, you can expect a more conservative approach from policymakers.
You can also expect casinos to strictly limit online bets to gamblers within state borders; the Wire Act of 1961 makes interstate betting a federal crime. And no, a virtual private network won’t help.
“We’re not only checking if someone is using a VPN or a proxy. We’re looking at pretty much every way you could spoof your location. By the time all is said and done we’ve done over 350 checks in real-time to verify that where you are is real,” says Lindsay Slader, operations manager at GeoComply, which provides geolocation services to the online gaming industry. The company says it blocks over 100,000 fraudulent users each month.
That means you’ll only be able to place online sports bets with New Jersey casinos when you’re in New Jersey, and Delaware bets in Delaware, and so on. And if you live somewhere else? You’re out of luck.
While geographic limitations might disappoint sports-betting fans who were anticipating a wide-open system, the actual offerings likely won’t.
‘From our side, we’re ready to go.’
Jason Robins, DraftKings
For one, the online component of sports betting should be largely plug-and-play. Casinos will largely rely on partnerships with established third parties like Scientific Games and IGT, which have years of experience running online sports operations overseas, to set up their online operations, minimizing the learning curve. And DraftKings already has a traditional sports betting product waiting in the wings.
“We’re ready,” says DraftKings founder Jason Robins. “We’re going to have to partner well with the various regulators to try to make it as quick and smooth as possible. But from our side, we’re ready to go.”
Opening up the market should also provide more interesting options for sports gamblers than Nevada currently offers. Thanks to increased competition and an infusion of sophistication, you can expect to see fuller in-play betting options—in which you can wager on a game from your phone while you’re watching. Some UK sports books let you create your own prop bets, which focus on a single aspect of a game outside of the outcome, and give you personalized odds; if you want to bet that Lionel Messi will score the next goal in a game, for instance, a bookie will accommodate you. International sports books also offer a “cash-out” option, which lets you settle a bet for reduced odds before an event concludes. So if the Boston Celtics are beating the Cleveland Cavaliers, you can collect smaller winnings in the third quarter rather than risk a late-game run by LeBron.
“The technological gap will close pretty quickly,” says Grove.
The Supreme Court’s ruling Monday really will, in other words, set off a chain reaction that revolutionizes online sports betting in the US. Odds are, though, that it won’t hit where you live any time soon.
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This article was syndicated from wired.com