Sports Betting Thrives After PASPA as Law, Tech, Finance Converge
Today’s guest columnist is Sara Slane, the founder of Slane Advisory, which specializes in sports betting business development strategy.
Three years have passed since the U.S. Supreme Court overturned the Professional and Amateur Sports Protection Act (PASPA)—the federal ban on sports betting—and the industry has been booming since.
Before May 14, 2018, when SCOTUS handed down its decision, full-scale sports betting was limited to Nevada. Today, sports betting is legal in 27 states and the District of Columbia, covering 42% of the U.S. population.
In reflecting on what’s been most impactful on the industry’s success to date, and in trying to predict what will fuel its continued growth, a single word comes to mind: convergence. Since PASPA was struck down, several factors—from pro sports leagues’ acceptance to state regulation to technological and financial innovation—have all converged to create a thriving business sector.
The purpose of PASPA was to protect the integrity of sports games and stop illegal sports betting. While the intention was good, the law was ineffective. The legal prohibition enabled a massive illegal sports betting market that exceeded $150 billion dollars a year. In the case, Murphy, Governor Of New Jersey, et al. v. National Collegiate Athletic Assn, which ultimately prompted the SCOTUS ruling, the court sided with the Garden State, reasoning that the federal law violated the U.S. Constitution, specifically the 10th Amendment’s declaration that certain rights “…are reserved to the States, or to the people.” Hence, sports betting is unique in each state—and in some states the issue has been put to a vote to leave the decision to the people.
PASPA was also known as the Bradley Act, named after then Sen. Bill Bradley who had previously played professional basketball for the New York Knicks. Like Bradley, the professional sports leagues in the 1990s widely supported the Act.
Fast forward to today, when nearly every league’s opposition to sports betting has evolved. NBA, MLB and NHL commissioners were early public proponents of sports betting, leaving the NFL as the last major stick-and-ball sport to make the transition. Last month’s announcement of the NFL’s first-ever betting partnerships revealed a marked turning of the tide.
Individual professional sports teams have also joined in the action. A trend that will likely continue is the expansion of the “home-field” advantage in betting, from community casinos to literally the home fields of pro sports teams. Washington, D.C., and Virginia dabbled with this approach, but Arizona has fully embraced it. Each of the Grand Canyon State’s major sports franchises, a PGA Tour golf venue and a NASCAR speedway track were authorized market-access control to operate retail and state-wide online betting alongside a sportsbook “designee” partner.
In the years ahead, I anticipate even more creative integrations to bring sports and betting more closely connected as the industry matures.
Digitization of the Gaming Industry
Another area of continuing convergence is the shift from predominantly retail casino opportunities to digital betting. Prior to PASPA falling, casino gaming was primarily offered through brick-and-mortar locations. Now, the gaming industry has shifted online, and convergence with media and sports will shift as well.
In-play proposition betting, whereby you can place a wager on any aspect of the game while it’s being played, remains the next clear frontier for growth. However, this next phase will require major technological improvements, among them resolution of broadcast, data and betting latency issues; safety and security; and emerging international cyber-warfare threats. Gaming companies often tout themselves as technology companies. Now they have to prove it.
User experience on sports betting apps cannot go anywhere but up. The 2021 Super Bowl came with record-breaking sports betting participation as well as outages and UX issues. An inability to place wagers due to the surge in traffic was encountered by major betting apps in nearly every legal U.S. jurisdiction. These technological shortcomings translate into financial issues. No betting company wants to leave eager bettors’ money on the table or have to increase marketing efforts and credits to smooth over a bad experience. In an already low-margin business, the need to see tech problems resolved is becoming a bottom-line imperative.
Despite these issues, the reception and public perception of sports betting is positive, especially in contrast to casino gambling. Major buzzwords surrounding casino gaming’s expansion skewed negative, with terms such as “cannibalization” and “saturation” quite common.
Yet, sports betting—especially during the COVID pandemic’s closure of brick-and-mortar casinos across the U.S.—has been well-received as a revenue driver for state and local governments.
Legislators and regulators cannot move fast enough to keep pace with the calls for sports betting. That demand isn’t going to lessen. Therefore, in the years ahead, the industry and public entities must push the boundaries for what has always been into what could be. The global pandemic demonstrated some aspects of what could be.
For instance, the pandemic opened the door for technology that allows for easy player registration and cashless payments. These improvements shouldn’t be repealed as the pandemic relents, because they helped move customers from offshore, illegal operations into legitimate venues. States should embrace the technological improvements rolled out in the past year, seeing that the “trial” period of COVID proved that they’re effective, safe and secure—and build upon them.
Much like states have reciprocity agreements for attorneys’ bar licenses, gaming regulators should consider reducing the enormous workload that goes into a licensing review and background check by establishing similar agreements with like-minded states. Such a change would reduce the effort required by the regulator, shrink the barrier to entry into the industry, and more swiftly allow jurisdictions to be live and operational—stimulating economic activity.
Everyone involved has an interest in ensuring the ongoing safe, secure and prosperous growth of sports betting. Coming together and evolving based on the best qualities that each stakeholder brings to the table is a clear way to ensure success.
In addition to orchestrating numerous successful business opportunities for her diverse client base of media companies, professional sports leagues and teams, Slane serves as a board advisor to numerous companies, and is a distinguished fellow for The International Center for Gaming Regulation at the University of Nevada, Las Vegas.
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