With the end of 2022, it is worth looking back on some of the big stories that ran through the sports betting industry.
Some highlights were good, some were bad, and some were ugly.
There are a ton of things that happened across the US sports betting industry this past year, but these are few that stand out to me as significant for one reason or another.
New York, New York
There was perhaps no bigger story in sports betting last year than the New York market going live in January , in time for the NFL playoffs. Of course, the long-anticipated launch in New York was not without controversies.
There continues to be a debate over the tax rate being charged to operators. Still, despite some claiming the 51% tax and lack of promotion deductibility would result in companies not sticking around, the party is still pretty full.
New York, for its part, is swimming in sports betting tax revenue (at least compared to everywhere else.) It only took months for New York to generate more tax revenue than any other post-PASPA state – an incredible feat.
Despite the success of the tax rate, the industry remains unhappy, though it does not appear that any change is expected.
Grand sports betting experiment launches
Shortly after New York launched sports betting, a northerly neighbor launched what would serve as an interesting experiment.
For years, online sports betting in Canada existed in a hazy legal area. The ambiguity surrounding only betting resulted in a significant gray market, with many well-known names serving Canadian customers.
The Canadian online gray market existed for decades with no convictions (that I am aware of,) making it likely a fairly safe place for operators to exist even without explicit authority to be there.
Why gray wasn’t OK
The gray market, however, posed two areas of concern to Canadian politicians. One, it was not regulated by a Canadian authority, and two, the wagering dollars were going untaxed. While the amount of money not being taxed was the subject of some tremendous hyperbole in the lead-up to regulated single-game betting, it was not an insignificant amount.
Prior to sports betting being approved, Ontario broke away from the decision-making process of the rest of the country, choosing to allow private operators into the arena. The decision included allowing former gray-market companies to cross the bridge into the regulated market.
The result appears to be a success, at least according to Ontario officials, who are reporting a significant reduction in (now) black-market activity. Other provinces are undoubtedly watching.
The Ontario experiment could one day even be looked at as a pathway for allowing offshore operators into U.S. markets, though at the moment that appears to be several years away, and the Wire Act and the Department of Justice remain likely obstacles.
Finding out the hard way
One of the bigger stories of the year was the defeat of ballot initiatives in states where Tribal governments are significant gaming stakeholders.
Back in January, some of the commercial sports betting industry got hit with an eye-opening defeat after spending tens of millions of dollars to get a question about legalizing sports betting on the November ballot in Florida. There were two efforts: one backed by the Sands Group to expand gaming and one launched by a group called Florida Education Champions, backed by FanDuel and DraftKings.
The two initiatives were met by the Seminole Tribe of Florida, who spent heavily to defeat the measures. Ultimately, neither measure gathered enough signatures to get on the ballot in November.
California (bad) dreamin’
Across the country in California, operators tried again to get a ballot measure before voters for the November midterm election. While operators were successful in getting on the ballot in California, they ran into a problem when many of the California gaming Tribes came out against the measure and put in significant efforts to defeat the measure that would have created a market access pathway for some of the biggest national operators.
While the online sports betting bill made the ballot, it was defeated by an incredible margin, garnering support from just over 17% of voters. A second measure failed that would have allowed sports betting at tribal casinos and licensed race tracks, which was likely a result of the advertising campaign waged against each other.
The ballot battles showed that coming into states with powerful gaming interests and trying to impose a new model without the support of those interests is not a cheap proposition.
Continued sports betting expansion
My fourth and final trend for 2022 was the continued expansion of sports betting across the country. With the number of states still without regulated sports betting dwindling, progress has slowed.
Nonetheless, there was still expansion in 2022, with perhaps Massachusetts being the most anticipated approval. After years of speculation from some gaming commentators that this would be Massachusetts’ year to legalize sports betting, it finally happened.
Maine also crossed the finish line after past efforts came up against obstacles after gaining traction. Both Massachusetts and Maine are scheduled to launch in 2023.
What’s next in US sports betting?
Some of the big questions looking ahead are whether any state will cross the goal line in 2023.
Could some miracle happen in Texas? Does Oklahoma have a chance of passing a bill despite the still frosty relationship between the state’s governor and the Tribes? What will the D.C. Court of Appeals do in the Florida Compact case?
The only thing certain is that there will be no shortage of news in the year ahead.
