Opinion: Two Big Questions For US Sports Betting Industry In 2022

Written By John Holden on February 1, 2022
US sports betting

Trying to make predictions about what will happen in the coming year has been a risky proposition since the pandemic hit, and US sports betting is no exception.

After all, some days, it is difficult to tell if time has moved forward at all during the past two years. The calendar, however, would indicate that we have moved forward.

The last two years have had their ups and downs. Despite the ongoing risks of canceled games and even periodic league-wide shutdowns, we have found something of a new normal in the sports industry. Coupled with the continued expansion of regulated sports betting across the country, this has resulted in the industry beginning to enter a more mature phase than many likely predicted.

However, with the growth of the US sports betting industry, concerns have come as well. While various concerns have occasionally been lofted at regulated sports betting, two that are worth keeping a close eye on in 2022 are first, consolidation within the industry; and, second, problem gambling concerns beginning to get a lot more attention.

Is the time ripe for mergers in US sports betting?

As we enter year four of regulated US sports betting outside of Nevada, some companies will begin to start feeling pressure from investors.

The industry has seen several segments emerge, with legacy Nevada (or worldwide) brands competing against the daily fantasy sports juggernauts and venture capital-backed startups. As a result, the market is beginning to take a more defined shape than it had previously.

The emerging figure sees the same names at the top month after month. Of course, a few states opted against allowing any competition, and DraftKings now dominates some of those markets.

But even where there is competition, little seems to change month over month, at least amongst the names in the top group. We have now heard Wynn is looking to sell its sports betting brand for a reported $500 million after a SPAC deal for $3.2 billion fell through. Discounts are ripe for the picking at the moment.

Missed opportunities in US sports betting?

A quick survey of the products out there or coming to market in various places around the country reveals that many different options are coming. Still, American consumers do not seem to be shopping around.

For example, Geocomply recently reported that in the opening days of legal sports betting in New York, the average consumer bet using only 1.36 sportsbooks despite the abundance of promos that flooded the state. Some of these customers might have already set up accounts when they used to have to cross into New Jersey, but that does not likely account for the totality of the low number.

There is only so much room

Given the beatdowns happening on Wall Street, coupled with the stagnation at the top of the monthly revenue charts and investors looking for a return on their investment, 2022 may be a year where there is some consolidation in the market.

The hammering of stock prices for giants in the industry could even make them target non-industry buyers. If we look at the reported sale of Activision to Microsoft for $68.7 billion, it raises questions about whether a company like Microsoft could see a cheap target in the space and decide to make a move.

Of course, there is also that any number of the operators already in the industry decide to team up to get a better foothold of market share.

Problem gambling coming to the forefront

Most people who study the gambling industry would argue that a regulated market is preferable to an unregulated market, if for nothing else because it allows some checks to be put in place to help problem gamblers.

Nonetheless, few would argue against the idea that a great deal remains to be done to improve recognition and treatment of problem gambling in society. The expansion of legal US sports betting has been accompanied by shockingly small funding increases for gambling treatment, which has long been a documented concern. The lack of funding leaves the existing infrastructure vulnerable.

Not a new warning

For some time, experts have expressed concerns about increased problem gambling. A mix of expanded gaming options and the pandemic has been a concern for those who track problem gambling.

As more and more states legalize sports betting and online gambling within their jurisdictions, the attention that problem gambling receives is likely to increase, as states now take their share of gambling revenue. Whether that be 6.75% or 51%, that imprimatur of state-sanctioning creates an added responsibility to create a system for those that might be vulnerable.

One of the problems that has been identified in states like Connecticut is that the measures put in place to protect people who seek to self-exclude are challenging to navigate.

Time for more concrete steps in US sports betting

The NFL recently launched its advertising campaign about knowing your gambling limits, and every politician talks about the subject as though it is essential.

Still, it is time to start putting more money and research into resources because, at the moment, the minimal resources that much of the country devotes to problem gambling are being stretched thin.

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John Holden

John Holden J.D. / Ph.D. is an academic. His research focuses on policy issues surrounding sports corruption.

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