The spread of New York’s high-tax model and an anticipated backlash on advertising are policy risks of chief concern for a U.S. sports betting market that is set to expand to almost every state within the next three years, according to the findings of the second annual VIXIO GamblingCompliance and SBC U.S. Sports Betting Regulatory Survey.
Just over half of the 145 senior industry executives, regulatory officials and legal advisors who participated in the survey said they expect sports betting to be legal in 45 or more states by 2025, compared with 32 at the start of 2022.
But concerns related to New York’s unique regulatory model for online sports betting was a clear theme of survey responses.
In 2021, New York imposed by far the highest tax rate of any major U.S. market when a group of nine operators agreed to pay a rate of 51 percent with no bonus deductions, double the effective rate in high-tax Pennsylvania, as well as a record upfront fee of $25m.
When asked in the VIXIO/SBC survey to select the policy issue most likely to impede growth of the U.S. sports betting market in future years, 21 percent of respondents picked high tax rates and license fees, ahead of the 12-14 percent who selected either the slower rollout of iGaming, the Wire Act, limited enforcement actions against offshore operators, or restrictions on permitted bet types or events.
The spread of New York’s high-tax model to other states was also selected by almost 28 percent as the most concerning from a list of hypothetical regulatory events.
The initial VIXIO/SBC survey conducted in late 2020 mainly highlighted industry concerns related to the 1961 Wire Act, an enigmatic federal law which prohibits interstate sports wagering, but these appear to have diminished since a favorable federal appellate court ruling that came on the same day as the inauguration of a Biden administration seen as less likely to clamp down on online gambling than that of former President Trump.
While sports betting is expanding rapidly, online casino or iGaming is stuck in a much lower gear, limited to just six states at the start of 2022. 25 percent of survey participants said perceived risks of problem gambling were the main reason for the slower rollout of iGaming compared with sports betting, closely followed by concerns of cannibalization of land-based casino revenue. Still, 55 percent said they expected iGaming to expand to ten or more states by 2025.
On another hot topic, survey participants were also asked about nascent concerns related to advertising, which has exploded in various states that have recently launched online sports wagering. 65 percent said they agreed some kind of policy backlash, similar to that currently sweeping across Europe, is inevitable without industry efforts to proactively limit marketing activity.
A full report on the survey’s findings, as well as a timeline of key regulatory events of 2021, can be downloaded here.
The second and most recent VIXIO/SBC U.S. Sports Betting Regulatory Survey was conducted in the run-up to the SBC Summit North America that was held in New Jersey in December 2021 and saw VIXIO discuss preliminary findings with a panel of legal and regulatory experts.
The 2022 SBC Summit North America will be held July 12-14 at the Meadowlands Exposition Center in Seacaucus. More information about the summit can be found here.
U.S. Sports Betting Regulatory Survey
Discover the key perspectives of more than 100 legal, compliance and strategy executives. From the role of advertising to high tax rates, see where industry leaders feel there are hindrances and opportunities when it comes to the regulatory landscape in the U.S.