Op-Ed: Picking The Winners And Losers From The Big Sports Betting Week

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The Supreme Court of the United States struck down the law that made sports betting illegal almost everywhere outside of Nevada this week.

The court declared the Professional and Amateur Sports Protection Act (PASPA) unconstitutional, claiming it infringed upon state sovereignty.

In the court’s written decision, Justice Samuel Alito said states should have a choice when it comes to sports betting. Words that essentially opened the door to legal and regulated sports gambling across the country.

Much like the average sports bet, there are clearly defined winners and losers coming out of this whole thing. Here’s a look at those expected to be the biggest beneficiaries of this landmark Supreme Court decision. Plus, others that will likely be the most hurt by it:

Winners

New Jersey

New Jersey has been fighting for the right to offer legal and regulated sports betting since 2011. Now that the Garden State is getting what it wanted, it should start reaping the benefits almost immediately.

Through a partnership with British bookmaker William Hill, Monmouth Park built a sportsbook in 2014. They were anticipating New Jersey’s sports betting law would eventually be upheld by some level of US court. The sportsbook has been operating as a sports bar for the past few years. However, they’ll be able to convert it back now that the Supreme Court has come out on NJ’s side.

Atlantic City casinos, other racetracks across the state, and New Jersey online gambling sites won’t be far behind. Conservative estimates from gaming research firm Eilers & Krejcik have New Jersey generating at least $250 million in sports betting revenue per year. The state should be ready to start meeting, or exceeding, those expectations right out of the gate.

Pennsylvania

Pennsylvania is one of just a handful of states that legalized sports betting pending a change in federal law prior to the release of the Supreme Court decision.

That means Pennsylvania residents and visitors will soon be able to place bets on a variety of sporting events inside one of the many PA casinos expected to open up sportsbooks over the next few months. The Pennsylvania Gaming Control Board is in the middle of putting together regulations to govern local sports betting. The market may not open as fast as the one in New Jersey. But when it does, PA is poised to be one of the biggest beneficiaries of legal sports betting across the entire country.

Under the state’s new sports wagering law, operators will be forced to fork over 36 percent of all sports betting revenue to the state in taxes.

No other state that has sports betting, or is currently in the process of getting it, has a tax rate as high. Nevada only charges sportsbooks 6.5 percent tax. In New Jersey, the state is set up to charge its sportsbooks only eight percent in tax.

There’s no doubt the high tax rate could limit the size of local market. Particularly if operators pass on that tax burden to gamblers, who will surely go elsewhere to make bets if it makes financial sense to do so. But no matter how much is wagered in the PA sports betting market, the state will be taking a bigger cut of it than any other.

The horse racing industry

Almost every horse racing track that has installed slot machines over the past 30 years has been able to revive what was a dying local horse racing industry. It’s more than just more people coming to the track. Most tracks have used a portion of the proceeds from slots and other casino games to boost purses and bolster the business.

Whether they already have slots or not, the pari-mutuel wagering set up makes racetracks an obvious answer in most states as to where to locate a sportsbook. If the horse racing industry can manage to work out the same kind of deal it has with slots, it could be sharing a big piece of the sports betting pie. Whether people turn up at the track to play slots, see the horses run, or bet on sports, the horse racing industry will continue to be propped up by the various revenue streams attached to it.

Horse racing may not be anywhere near as popular as it was in the Seabiscuit days. However, sports betting could help the business stay as healthy as ever.

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Losers

Nevada

Before the Supreme Court decision, Nevada had a near-monopoly on sports betting in this country.

Now that the court has paved the way for states outside Nevada to legalize sports gambling, is there anyone that thinks sportsbooks in the Silver State won’t see business drop off at least a little bit?

Gamblers from a number of states who previously traveled to Las Vegas to make a bet will soon be able to get in on the action wherever they live.

It hard to say how much money is actually bet at Nevada sportsbooks by out-of-state visitors. But it’s obvious some percentage of it won’t be bet there anymore.

Nevada sportsbooks generated record revenues of $248.8 million last year. In fact, revenues have reached over $200 million every year since 2013. However, with new competition about to pop up all across the country, its a good bet the good news for Nevada’s sports betting industry is about to end.

Offshore and illegal bookies

The American Gaming Association estimates somewhere near $150 billion is bet on sports illegally every year in the US. Being able to get a slice of that in taxes is the major reason why New Jersey and other states went after legal sports betting to begin with.

Most of that $150 billion is handled by offshore online sportsbooks and illegal bookmakers. Many of whom are suspected to have ties to organized crime.

It won’t be all of it, but some percentage of that $150 billion will move over to legal sportsbooks. Illegal bookmakers will just have to wait and see if there’s enough left over to keep them in business.

PASPA Author Sen. Orrin Hatch

Utah Republican Senator Orrin Hatch helped write PASPA. He still believes the act has helped uphold the integrity of sports across this country since it was passed.

It may sound like a few sour grapes. However, in the wake of the Supreme Court decision repealing the law he helped create, Sen. Hatch says he’s preparing to introduce a new sports betting bill to Congress. This one is aimed at establishing new standards for sports betting in the US.

Sen. Hatch says it will protect consumers, states without sports betting plans, and the integrity of sports. Many of the same things he also believes PASPA was meant to do.

Sen. Hatch is said to be retiring at the end of this session of Congress. He lost this round of the fight against widespread sports betting across the US. So, he should probably just take his ball and go home. Instead, he’s decided to spend his last months in office fighting what looks like a losing battle.

Martin Derbyshire

About

Martin Derbyshire has more than ten years of experience reporting on the poker, online gambling, and land-based casino industries for a variety of publications including Bluff Magazine, PokerNews, and PokerListings. He has traveled extensively, attending tournaments and interviewing major players in the gambling world.

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