Online sportsbooks operating legally in the US could give rise to a $150 billion industry. However, getting past the different laws and regulations or each state could be tricky for betting operators. In New Jersey, DraftKings and FanDuel hold an 83% market share in the state’s sports betting market, but as other states are also following suit, they may have problems navigating new laws.
This disorderly state of laws in different US states could create a Wild West situation for the operators. FanDuel Chief Revenue Officer Mike Raffensperger said that New Jersey exceeded its estimates, but he also noted that gambling is still dominated by the illegal market. With the current state of sports betting legalization, there could be different leaders in different markets. The rules are expected to differ wildly as well. Some states could be lottery-only while others will not allow companies to use their own brands, participating with local casino brand instead.
Though the market appears to be in chaos today, it is still in much better shape than last year when legalized sports betting was limited to Nevada. New Jersey, which led the fight against the PASPA in the Supreme Court grabbed $862 million in online sports betting in Q1, 2019 alone. Land-based casinos could only manage about $216 million. Both DraftKings and FanDuel cleared $700 million worth of bets together. According to some estimates, a 5% charge on each bet would lead to both companies earning $35 million in revenue in the first quarter alone.
Rhode Island, Mississippi, New Mexico, West Virginia and Pennsylvania have all legalized sports betting. By the end of this year, an estimated 15 states could have legal sports betting market. The number is expected to double by 2020, according to sports gambling research and analytics company, The Action Network CEP Patrick Keane.
For now, sports betting companies have a tough road to navigate. They will have to apply for supplier licenses in each state they want to work in. This long and tedious process includes a lot of paperwork- which may include detailed financial histories of key employees and any person who owns more than a 5% stake in the company. However, the background checks of each state are different, which means that the same process will have to be repeated across all states in different capacities. When they finally receive a license, companies will have to establish deals with existing land-based casinos of the state. There is no separate digital licensing for operators who wish to operate online, although Massachusetts is contemplating it.