What does 2021 hold for Sports Betting?

The end of one year and the beginning of another is a good time to consider the state of affairs in US sports betting right now and venture into the predictions business. After a year of accelerating growth, along with unprecedented challenges, 2021 promises to be another pivotal year in the development of the US industry. 

Wire Act Worries

The overturning of the 1992 PASPA Act in May 2018 heralded the current era of sports betting expansion, but that legal victory does not mean that the industry is free of worries in this area. In particular, we can expect the Wire Act issue to be a pressing problem. 

The Trump Administration threw a curveball at the growing sports betting industry with its interpretation of the Wire Act that could effectively hamstring sports betting operators. A new Presidency could, in theory, ease those worries, and President-Elect Joe Biden has been on record as saying he doesn’t agree with the Department of Justice’s interpretation. But Biden’s administration will face a huge workload, and it may be some time before the industry gets the clarification it needs. 

Big Four Waiting Game

Despite the rapid expansion of the sports betting sector over the last two and a half years, it remains a remarkable fact that of the four biggest states in the US, only one, New York, has any form of sports betting industry, and even in New York, it is a minor retail presence, with no online sports betting. 

New York appears to be moving towards legalization, courtesy of recent comments by Governor Andrew Cuomo, but betting fans in the state have been here before, only to be frustrated. California looks a good bet in the longer term, but nothing will happen before 2022, while in Florida, the situation is deadlocked with the Seminole Nation holding all the cards. 

The other big four-state, Texas, would also be a potentially huge market, but politics moves slow in that part of the world, and there will be considerable opposition from conservative voices. Ultimately, the urgent need for revenue, combined with the fact that millions of New Yorkers are crossing the border into New Jersey to bet, probably makes New York the likeliest to legislate in 2021. 

Third Place Tussle

FanDuel and DraftKings have dominated the US sports betting market so far, but the battle for third place in terms of market share appears to be fairly open as a number of contenders tussle to catch up to the front two, who have the advantage of their DFS experience. 

Barstool Sportsbook is one of the main rivals, and their deal with Penn National saw them have plenty of early success in Pennsylvania. But the challenge of upscaling that effort and replicating it nationwide remains a tough one. Barstool has also shown a remarkable ability to shoot themselves in the foot, and their maverick approach to marketing could land them in trouble in 2021. 

If Barstool begins to waver, the main challenger could turn out to be BetMGM. Powered by the resources of MGM and benefitting from the experience of Roar Digital and SportRadar, they have struck a host of deals, including with NASCAR and MLS, and although there have been a few missteps in recent months, they seem to be making relentless progress. 

Expansion of 2021

The spread of sports betting to new states has been remarkable, and at some point, the growth will surely have to slow as the handful of states with deeply rooted opposition to sports betting are the only territories yet to legalize. But we aren’t quite at that stage yet. 

At the time of writing, there are more states with legal sports betting than without, but sports betting is still not available in 22 of the 50 US states. It is hard to imagine progress on sports betting in states like Utah, Idaho, Oklahoma, and Kansas, and the same goes for Georgia and Alabama, as well as Alaska. There are also no signs of progress on this front in Wisconsin. 

Still, it is not unrealistic to imagine that at least four more states could legalize in 2021. 

Connecticut and Massachusetts seem like virtual certainties to bring more betting options to New England, to add to those in New Hampshire and Rhode Island. Ohio and Nebraska are two more possibilities, while the recent history of the industry suggests there could be a surprise contender or two this year. 

Race for the Top Handle

Having been involved in the battle for legalization, New Jersey was up and running in the summer of 2018, and they have since built up a dominant position at the top of the tree when it comes to sports betting handle. Going into 2021, they are in an ideal position to enjoy a bumper period, with the NFL playoffs and a host of other sports continuing, and it wouldn’t be a huge surprise to see them cross the $1 billion mark in January, with several months in 2021 potentially offering a $2 billion figure. 

Can any other state challenge? At the moment, the only realistic competitor is Pennsylvania. The state is second in terms of sports betting handle and is around 30% off the pace at the moment. In Pennsylvania’s favor, however, is the fact that it is a newer market, with more room to grow and a population that is 40% larger than that of the Garden State. 

The wild card here, assuming that neither Florida nor California legalize in 2021, is New York. As mentioned above, this is the likeliest of the big four to move to legalization in the short term, and they are uniquely well placed to draw revenue away from New Jersey. Not only could New York sports betting stem the flow of New York customers crossing into New Jersey to bet, but it could also even draw customers in the opposite direction. If New York legalizes mobile sports betting early in 2021, there is huge potential for a change in the pecking order when it comes to sports betting handle. 

Wild Cards for 2021

The nature of the US sports betting sector has been unpredictable so far, and that could well continue in 2021, with a number of intriguing possibilities to consider. 

For a start, could ESPN move into sports betting? On the face of it, this seems unlikely, but few media organizations are as well placed to cash in. The pressing need for revenue may also act as an incentive. ESPN is having to lay off employees as it prepares for a new round of TV rights bids, and sports betting revenue could plug a very important income hole. 

Another distinct possibility is a major sports betting scandal. Thus far, aside from the occasional marketing slip-up, the new sector has been remarkably scandal-free, but that is far from certain to last. Whether it is match-fixing or some form of a financial scandal, there is likely to be a major sports betting controversy at some point, and the nature of the reaction from politicians and media, as well as the reaction from the industry, could tell us much about sports betting’s future in the US. 

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