Amid the unprecedented disruption caused by the coronavirus pandemic, it’s stating the obvious to say the first half of 2020 didn’t exactly go according to plan for the rapidly expanding U.S. sports betting market.
Although in December we predicted 5-10 states to legalize sports wagering in 2020, at the halfway point of the year only two states (Washington and Virginia) had joined the 22 others in the post-PASPA clubhouse as COVID-19 halted legislative sessions and caused ripening policy discussions in various state capitals to be shelved.
Still, even with the mass suspension of global sporting events in mid-March, total H1 U.S. sports betting revenue ex. Nevada was up around 57 percent to roughly $255m, as major market expansions in Pennsylvania and Indiana led to a roaring start to the year that offset a drop-off in the second quarter.
As major U.S. sports return to action, here’s five things we’ll be watching for in the second half of the year.
Can Barstool Disrupt Dominant Duo?
H1 2020 was a case of ‘as you were’ in terms of operator market-share, with FanDuel and DraftKings accounting for 73.5 percent of revenue in key online sports-betting markets outside Nevada, per VIXIO GamblingCompliance estimates. In H2, we will be watching closely for whether the duo can maintain that level of dominance in Colorado, arguably the most competitive U.S. market to date and one where various European and Nevada sportsbook operators are looking to lay down a marker.
Elsewhere, we’ll be watching whether Penn National Gaming’s Barstool Sports can succeed in landing a glove on FanDuel and DraftKings where the likes of Fox Bet and BetMGM didn’t last football season. Like the fantasy-sports duo, Barstool has a shortcut on customer acquisition through its existing brand loyalty among millions of potential sports bettors. Barstool’s launch – initially in Pennsylvania, it seems – will undoubtedly be the most intriguing of H2.
Illinois Co-Branding Battle
Of all the many stories within the story of U.S. sports betting, Illinois has probably had the most plot twists so far.
The latest chapters in Illinois’ sports-betting saga have been a proposed workaround to statutory language that seemed to restrict online betting to land-based casino brands, plus a temporary suspension of the requirement for online accounts to be established in person at land-based gambling venues.
Whether that in person registration requirement returns as the state’s COVID situation improves is one key question for H2 2020, when clarity will also finally be expected on the hot-button issue of co-branding. As things stand, it’s not clear how liberally branding restrictions will be applied in the case of partnerships between online companies and Illinois casinos, with lawyers for Illinois’ largest land-based casino hinting at a possible legal challenge as Rivers looks to keep the likes of FanDuel and DraftKings off its turf.
U.S. Sports Betting’s ‘Super Tuesday’
On November 3, voters in Louisiana, Maryland and South Dakota will all vote in a referendum on whether to authorize sports wagering in their states. Although all three states would still need to pass more specific implementing legislation should those ballots be successful, voter approval could unlock markets worth up to $571m in combined annual revenue at maturity, according to our forecasts.
After a Colorado referendum last November passed by a razor-thin margin, few will see any of the Class of 2020 as a sure bet – particularly in a presidential election year expected to see a high turnout of liberal voters. Still, the trio of plebiscites on U.S. Sports Betting’s Super Tuesday means we should learn plenty about sports wagering’s appeal at the ballot box, ahead of future referendums that could be required in such major markets as California, Texas and possibly New York, Florida and Georgia.
Although most states have already ended their 2020 legislative sessions, a handful of opportunities remain in play through the second half of the year.
Massachusetts is set to see a last-ditch lobbying pitch before lawmakers adjourn on July 31, while New York faces a August 3 deadline to either take the first step toward a November 2021 constitutional referendum, or instead go all-in on trying to legalize online sports betting without a voter referendum, likely by tying mobile wagering and other gambling issues to a much broader revenue-raising initiative.
However, it is Ohio that’s closest to the goal line as things stand.
Lawmakers in the Buckeye State will be in session through year-end, leaving enough time for the state Senate to pick up a bill already passed by the House in May and attempt to resolve policy tensions that include which agency should regulate sports wagering.
Elsewhere, online sports betting should be launched in H2 2020 or early 2021 in Tennessee, Michigan and Virginia. Regulators in the latter will hold a competitive bid process in H2 for just a dozen available online betting licenses, with demand likely to outstrip supply. The last market-access points in Michigan, meanwhile, should close quickly as operators partner with Indian tribes to deploy skins for online sportsbooks and lucrative online casino games.
Game, Set & Match For Table Tennis Betting Boom
Of course, perhaps the biggest question mark for U.S. sports betting in H2 2020 is the rejigged sporting calendar. Will the return of MLB, NBA and NHL go as smooth as that of major European soccer leagues? Will the NFL start on schedule? And, perhaps least certain of all, how much college football will be played?
All things being equal, U.S. sportsbooks certainly shouldn’t be anywhere near as reliant on Eastern European table tennis tournaments as they evidently were in April and May.
Although state regulators took a pragmatic approach in authorizing Ukrainian table tennis and other obscure events for wagering at the height of the pandemic, in the coming months we will be observing whether those approvals were a sign of a more permissive attitude, or whether regulators will revert to their previous position of keeping a tight leash on bet types on integrity grounds.
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