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An evolving market

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Cole Rush gives a legislative overview of the US Sports Betting Market in part 1 and discusses the changes that have occurred since the Professional and Amateur Sports Protection Act was repealed. He also discusses which states may be the next to legalize Sports Betting.

In May, the gambling industry will mark five years since PASPA was repealed. Supreme Court’s landmark ruling opened up a whole new world for gambling. In the US, nearly five years after its legalization, sports betting has been made available in more than 30 markets, with many of these allowing online wagering.

Massachusetts and Ohio are the latest to launch online sportsbooks, in January and November 2023 respectively. The industry is now looking to the future. What will happen when all or most states legalize? What happens to the cannabis industry when legislation and launch, the two main obstacles of the past are removed?

Who is first to go?

As 2023 approaches, all eyes will be on 15 or so markets.

Brendan Bussmann, managing partner, B Global

Brendan Bussmann is the managing partner of B Global. He says that with a small number of remaining states, legalization becomes more difficult. When you’re dealing with over 35 jurisdictions the odds are even tougher, especially when you consider states which have little chance to move or states where there may be greater obstacles.

Bussmann believes that Georgia, Minnesota Missouri Vermont and North Carolina are the likely candidates for legislative action in 2023. North Carolina offers only retail betting, but online gambling has made recent advances.

Bussmann continued, “Texas is still in the conversation but it’s all about what happens at the Senate.” If Georgia or Texas make it through the legislature, they can still go to the voters in their respective states. Others disagree, but I believe that this is the best way to go. It’s much better than starting out wrong.

Eric Frank, CEO and founder of Odds On Compliance believes that 10 or close to 10 states will legalize marijuana in 2023.

He says that the legislative sessions for several states have only just started. “We have seen Kentucky, Missouri and Oklahoma present sports betting laws,” he said. Kentucky’s State House passed a bill on sports betting last year, and they have introduced legislation for sports betting every year since 2019. They are a state you should keep an eye on.

Frank, like Bussmann thinks Texas should be watched.

Frank says that Texas will dominate the 2023 election. The state legislature of Texas only meets in odd-numbered years. This means that there will be pressure to move legislation forward. It’s hard to say if this will happen, but Senators have already introduced bills that would create a Texas gambling commission. Pro sports team owners Jerry Jones, and Mark Cuban, also support sports betting.

We’ve witnessed a number of significant legislative waves since the repeal of PASPA. In the past two years, numerous states have been launched. This includes Michigan and New York.

Has the five-year period of legislation on sports betting reached its peak?

Alex Monahan is the co-founder and CEO of OddsJam. He says, simply: “No. Massachusetts and Ohio are proof of that. In 2023, we’ll see more states legalize sport betting to raise tax revenue.

Frank claims it is a game of numbers. The number of states that are eligible is decreasing. He says that if we’ve reached a plateau, it is not because of a lack in interest. It could be due to simple math. Only 15 states are left that have not legalized sports betting. About half of them will do it by 2023.

Eric Frank, CEO and founder, Odds On Compliance

Bussmann says that the field of play is narrowing, and therefore the opportunities for growth are also shrinking.

He adds, “I believe you’re seeing a whole new era of legislative initiatives–both bad and good.”

Will New York be able ever to fix their flawed model, in a state driven by revenues and not economy? What will be the reactions or the over-reactions of some of these state to the controversial issues raised by the play that has precedents for advertising and deduction?

As the number of states shrinks, so will the focus on legislation. The industry, when there is no other way to go, will maximize its profits by tackling issues that have already been raised from time-to-time: Responsible gaming, advertising regulation, and betor education.

There are new hurdles

The days of wishing for a state to be legalized are over. We’re now in the hyper-real phase of growth for sports betting. Challenges have changed. Goalposts are no longer straight. Of course, operators and governments will still try to legalize it if not already. With the continued saturation, however, come new obstacles.

Bussmann: “You have seen how the industry has changed.” You’ve witnessed the leagues, teams, and legislators change. This has involved education and individual markets. It has also included the evolution of the market.

There are other messages that we must convey, and this includes economics in sports betting. Not only tax rates, but also the costs of player acquisition and retention and the reinvestment into the innovative product are included. “While the discussion has evolved, the basic principles remain unchanged.”

The A-story in the US sports betting sitcom has always been legislation. It has dominated the narrative. We’re now moving into B-story, C-story territory as we address issues previously pushed to the back burner in favor of expansion.

Frank says that the taboo surrounding sports betting is no longer as prevalent today. This, he believes, has changed the obstacles to legalizing sports betting.

The majority of the states haven’t yet legalized sport betting. So the question for them isn’t’should we do it?’, but ‘how can our state legalize the sports betting the best way?’

Naturally, the answer will vary from one state to another. It’s not new, but I believe that with the rise in popularity of sports betting in the last few years, the efforts to promote responsible gambling have pushed their way into the forefront.

Sports betting markets that are forming may face new challenges, but can also learn from those states who have failed to meet their goals.

California Effect

Alex Monahan, co-founder, OddsJam

California is often referred to as the holy grail for legalizing sports betting, and this explains the fierce competition amongst those who wanted a piece of it. After a heated debate between two competing proposals, the voters of California snuffed out any hope for a delicious sports betting treat.

California, with a population of nearly 40 millions and a GDP estimated at 3.63 trillion dollars, had to find a balance between a number of stakeholders. The November vote failed to bring about legalization in California.

The learning curve for California is applicable to all parties involved. Bussmann says that it is an example of not relying on history. The industry has much to learn on how voter-approved measures work. It isn’t a one size fits all approach.

California can certainly learn from past mistakes. But other markets could use this failure to guide their future growth.

Bussmann says, “First of all,” it should serve as a reminder that operators can’t simply see tribes only as an entry point. It’s about building a trusting relationship. It can take years for a relationship to develop and is not something you could put into a contract. We were likely four years behind schedule because of the actions in California 2022. The timing and solution will make it difficult to bring 2024 into the end.

Frank adds that collaboration is essential.

He continues, “One of the most important lessons to be learned from California’s 2022 efforts to legalize sports gambling is that collaboration should take precedence over competition.” The fact that the propositions were so different complicated things from the beginning.

California should look to Arizona’s legislation and adopt a similar approach, especially when considering the state’s large Native American population. California should adopt the same approach as Arizona, which passed similar legislation.

Ohio and Massachusetts, which have recently legalized marijuana, avoided many of the issues that California faced. Texas, among other big states that have many people watching their efforts, should take note.

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