Once the U.S. Supreme Court allowed states to legalize sports betting, longtime Las Vegas sportsbook operator Jimmy Vaccaro wanted to go home to Pittsburgh. He figured Pennsylvania – the second largest casino revenue state behind Nevada – would eventually add sports betting to its existing gaming options.
Vaccaro just didn’t think it would happen so quickly.
Yet, prior to Super Bowl Sunday in February, Vaccaro found himself in a new role: director of sports relations for the new sportsbook at Rivers Casino.
Vaccaro’s move encapsulates how the first year of the legal U.S. sport betting market has gone after the justices’ landmark 6-3 ruling a year ago Tuesday: fast, and furious.
Once the 25-year-old Professional and Amateur Sports Protection Act was tossed aside, the gaming industry, state lawmakers, and most of the professional sports leagues and teams quickly embraced legal sports betting.
Lawmakers and retired pro athletes got in line to make the first legal sports bets in several states.
New Jersey Governor Phil Murphy, whose state led the nearly six-year fight to legalize sports betting, placed the first legal wager at the Monmouth Park Racetrack on June 14, exactly a month after PASPA ended.
“There’s an old adage that you bet with your head and not with your heart,” Murphy said at the time. “So for the past seven years, our heads and hearts were in alignment as we fought to overturn an unlawful and unfair federal law. We knew in our heads we were right, and we knew in our hearts that we would win. And we have.”
Fast and Furious
Seven states joined Nevada in opening regulated sportsbooks at casinos and racetracks before the end of 2018. In the last few weeks, two other states have legalized sports betting, and three other jurisdictions have sports betting laws in place but have yet to circulate regulations. It’s anticipated that two to three further states could launch legal sports betting before the end of 2019.
“Overall, the last year has represented one of the single most robust expansions of regulated gambling in the history of the U.S. market,” Eilers & Krejcik gaming analyst Chris Grove said.
Since PASPA’s repeal, almost $8 billion has been legally wagered on sports. In March, $1.1 billion was wagered on sports in the eight states, the first month in which the billion-dollar threshold was surpassed.
“It’s exceeded expectations. Anyone who has lived in gaming knows it’s extraordinarily difficult to get legislation passed,” said American Gaming Association Senior Vice President of Public Affairs Sara Slane. “This moved at a much faster clip.”
Nationwide legalization did not slow Nevada’s legacy sports betting industry, either. In 2018, the state’s sportsbooks collected single-year records for both revenues, with $301 million earned, and total wagers, at $5.01 billion. In March – facing competition for the first time from other states during the NCAA basketball tournament – Nevada sportsbooks took in an all-time single-month record of $596.8 million in wagers.
Vinny Magliulo, sports director for Gaughan Gaming, which is managing the sports book for the Pojoaque Pueblo’s Buffalo Thunder Casino, near Santa Fe, in conjunction with the South Point in Las Vegas, said major events attract sports bettors wanting a Las Vegas experience.
“Other states will continue to add sports betting, but there is only one Las Vegas,” Magliulo said.
Added Grove, “Retail sportsbooks outside of Las Vegas have a long way to go before they’ll attract the sort of destination traffic that Vegas books have enjoyed for years.”
The end of PASPA saw Daily Fantasy Sports providers DraftKings and FanDuel and online gambling giant Stars Group jump into the sports betting world through deals with traditional casino companies and media outlets. MGM Resorts International and European betting giant GVC Holdings announced a sports wagering partnership deal.
“We saw areas of partnership we didn’t expect or anticipate,” Slane said.
Every major professional sports league now has some type of marketing arrangement with the casino industry, including the National Football League, which signed a deal with Caesars Entertainment that covers a variety of activities – although, notably, not sports betting.
More than a dozen professional sports teams have entered into partnership deals with individual casinos, including the landmark agreement between the Dallas Cowboys and the WinStar World Casino in Oklahoma that was announced last September. And teams aren’t shying away from embracing the relationship, either – MGM Resorts International’s lion logo, for example, is now affixed to the iconic Green Monster in Fenway Park, home of the Boston Red Sox.
After years spent in courtrooms fighting states that sought to legalize sports betting, the leagues almost immediately saw a new revenue opportunity.
“The Supreme Court did the leagues a favor,” said William Hill US CEO Joe Asher. “Having been opposed (to sports betting) for so long, the leagues were in a box. Once the court ruled, they were able to get out of it.”
At the AGA’s Sports Betting Summit at the MGM National Harbor in March, National Hockey League Commissioner Gary Bettman was asked what had changed the league’s formerly staunch opposition to sports betting
“The Supreme Court,” Bettman said
June 27, 2017
A favorable ruling, which came down the morning of May 14, 2018, had been anticipated for months following oral arguments in front of the Supreme Court on Dec. 4, 2017. But the real date that sticks out in the minds of most observers is June 27, 2017, when the Supreme Court agreed to take up the case.
“They (wouldn’t) take the case unless they were going to do something,” one industry observer surmised. Then-AGA CEO Geoff Freeman said on a June 28 media conference call that the court’s decision to take up the case was a “nail in the coffin” for PASPA.
For the gaming industry, the work started long before the first legal brief was filed.
William Hill, which now operates 115 sports betting facilities in Nevada, began preparing for legal sports betting to go nationwide in 2013. The company secured a deal with Monmouth Park to operate a sports book then, not anticipating that there would be a five-year wait before opening.
“We knew it would happen,” Asher said. “Our focus was to get a good foundation in place.”
In the last year, William Hill has launched sports betting in nearly all the new legal markets, added a second headquarters in Las Vegas, and nearly doubled the size of its staff to 700 employees. Asher said the company hired its chief marketing officer away from Madison Square Garden and its head of digital operations from Yahoo.
“Sports betting has helped Nevada, and we’re hyper-focused on our Nevada business,” Asher said.
Gaming equipment giants International Game Technology and Scientific Games have added sports wagering management systems to their product portfolio, either through acquisition or development.
“We got our first Nevada sports betting approval the same month the Supreme Court repealed PASPA,” Khin said.
Operators soon found that, for new legal sports betting customers, there wasn’t much of a learning curve.
“People have been waiting for this to happen for so long, they had a good understanding,” said Vaccaro, adding that Rivers has seen a large number of women sports bettors. “I think you will see the handle go up every year as we attract new customers.”
There were, however, a few hiccups.
In September, FanDuel honored an $82,000 payout to a New Jersey bettor at the Meadowlands Racetrack after the company posted a wildly incorrect line for 18 seconds during an NFL game. FanDuel initially refused to honor the bet but changed its decision after consulting with state gaming regulators.
A FanDuel executive told ESPN the company wanted to “use this as a learning experience for our new customers about how sports betting works.”
In the last 12 months, Delaware, New Jersey, West Virginia, Mississippi, Rhode Island and Pennsylvania have passed legislation and joined Nevada with regulated sportsbooks, and New Mexico allowed three Indian casinos to open sportsbooks under their state compacts. This month, governors in Montana and Indiana signed sports betting legislation, joining Oregon, Washington D.C., and Arkansas in approving the activity, and Iowa’s sports betting legislation is currently sitting on Governor Kim Reynolds’ desk.
“Looking back, we were a bit too optimistic about the ability of states to get sports betting bills across the finish line,” Grove said.
Legal Sports Report is tracking more than 35 states that have multiple pieces of outstanding sports wagering legislation. Some states, such as Maryland, will let voters decide on sports betting referendums in the 2020 election cycle.
With many annual legislative sessions approaching the deadline, the time to pass new laws is rapidly running out.
In March, the Associated Press reported that external and internal battles would likely keep California, Florida and Texas, the nation’s three most populous states, from legalizing sports betting, at least in the near term.
Slane said she expects to see a few more states “dip their toes in the water” of sports betting, but said it wasn’t surprising that “the first tranche” of sports betting states were those comfortable with gaming.
She said she also wouldn’t be surprised to see states “tweak” some of their initial legislation in the next year, such as changing licensing fees or tax structures or adding mobile sports betting options.
As for tribal gaming states, Slane said it might be at least three years before some of those markets open sports betting facilities.
“There is a whole other layer of complexity when it comes to reopening compacts and the risk analysis calculation,” she said.
Jacob Mejia, vice president of public and external affairs for California’s Pechanga Indian Tribe, said in April it was “important that tribes get in front of this issue” in order to “coalesce” around sports betting policy.
Howard Stutz is the executive editor of CDC Gaming Reports. He can be reached at firstname.lastname@example.org. Follow @howardstutz on Twitter.
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