Analyzing The Short-Lived Sports Betting Monopoly In The South

Posted - Updated

For the first year following the demise of the Professional and Amature Sports Protection Act (PASPA), there was only one state in the South where customers could indulge in the pleasures of legalized sports betting.

There was one state where avid fans of the Southeastern Conference (SEC) could go to bet on the Alabama Dynasty, the Bayou Bengals or the Georgia Bulldogs.

The state held a small monopoly for a moment, and it cherished every moment.

That magical oasis was Mississippi.

Sports betting in Mississippi is enough

The Magnolia State, much like New Jersey, was quick to introduce sports betting following the US Supreme Court’s landmark decision due, in part, to a daily fantasy sports (DFS) law passed well before May 2018.

However, the lack of a mobile component caused stakeholders to question how successful the state could become.

But, regardless of how Mississippi made sports betting happen–with mobile, without mobile or retail only–the fact of the matter is, the state did it.

Sure, gaming wizards may consistently use phrases such as, “lost revenue,” or “keeping the black market alive,” when referencing Mississippi.

Still, they did it.

Mississippi brought sports betting to the heart of SEC Country, where, for the better part of a decade, the level of dominance by a single conference has not been replicated.

Even if revenue numbers don’t rival New Jersey or Pennsylvania, they will still be counted as one of the early adopters, and to lawmakers and regulators, that’s enough.

We did it, and we’re proud of it

“From the eyes of regulators here in Mississippi, sports betting did everything and then some, that the operators thought it would,” said Allen Godfrey, the executive director of the Mississippi Gaming Commission (MSGC).

In an interview with Play USA, Godfrey said sports betting generated additional jobs, additional foot traffic and other ancillary benefits.

“That’s all positive in the eyes of the state, that’s additional jobs and additional tax revenue,” Godfrey said.

To date, MS has generated more than $3.6 million in tax revenue with a 10.11 hold percentage, which is impressive when you look at the geographics of the gaming market in the state.

Here is a comprehensive look at sports betting revenue numbers across the US produced by Legal Sports Report.

Properties in the Gulf Coast and Tunica regions have turned $302 million in handle into $30,498,985 in gaming revenue.

Despite what MS regulators view as a positive, stakeholders holding the progressive banner of “mobile first” will always see a missed opportunity.

NJ sports betting, much like the Alabama Dynasty, will always be viewed as the marquee program. To date, the Garden State has generated a staggering $3 billion in handle and $203,656,157 in total revenue, a statistic primarily due to the success of market leaders DraftKings and FanDuel.

Although New Jersey’s hold percentage, 6.30%, maybe lower than Mississippi, New Jersey has generated a sizable $26,339,450 in tax revenue for the state.

But comparing MS to NJ would be a fool’s errand.

The numbers in the South will never be the numbers in the East

One of the significant difference between the Southern gaming market and the Northeastern gaming market is population.

“Most Southern states, even though they have big cities, are often rural in nature,” said Ronnie Jones, chairman of the Louisiana Gaming Control Board (LGCB).

Jones understands an added benefit for rural locations would be the ability to place a wager on a mobile device or computer; everyone knows that. However, states like Mississipi, Louisiana and Arkansas thrive off foot traffic to their facilities.

Another primary difference is the lower tax rate.

According to a report by Spectrum Gaming prepared for the Louisiana Department of Economic Development, a player with the same gaming budget is worth more to operators in Mississippi than in Louisiana.

The 260-page report says:

“Mississippi casinos benefit from a significantly lower gaming tax rate than in Louisiana; after fees and taxes, a MS casino in Bay St. Louis pays an effective gaming tax of 11.6 percent vs. 26 percent for a representative casino in Louisiana.

The net tax advantage means that a multi-property owner making investment decisions has incentive to improve the MS casino over the LA casino, and is similarly incented to market the MS casino to LA residents.”

The importance of collegiate football sports betting

A positive for the South is the passion each state shares for college football.

“We think football all year round,” Jones said. He’s right; the South lives and breaths football and has arguably some of the best teams in the country.

In September 2018, wagering on football generated more tax revenue than basketball and baseball combined, according to a financial report from the MSGC.

  • $421,225.17 – MS Central Region
  • $2,923,511.09 – MS Coastal Region
  • $637,030.25 – MS Northern Region

Although Louisiana missed out on passing a sports betting bill this year, Jones knows the impact wagering on college football could have on the state.

“It would be a huge chunk of the business in Louisiana,” Jones said.

Unfortunately, Louisiana will have to sit and watch neighboring Mississippi and Arkansas reel in customers from their state.

“At a minimum, we are two years away unless (sports betting) is made part of a special session,” Jones said. “And none of us anticipate that happening.”

According to Jones, part of the problem in Louisiana is the well of opposition to the expansion of gaming. The second problem is the states political roots.

“Politically, we have become increasingly more conservative,” Jones said.

But despite this, if gaming is going to thrive in Louisiana, it must be looked at as a whole, and not as individual components.

What dreams may come — from sports betting

It’s still too early to speculate what sports betting might look like from a regional standpoint. But imagine if all 30,000 tailgaters at an LSU football game could place a bet. Or if all 150,000 fans of the annual Georgia versus Flordia game, dubbed “the Largest Outdoor Cocktail Party” could place a bet on their smartphone.

Should Florida one day legalize sports betting, it can undoubtedly shift the balance of power and create a pure sports betting product fueled by football.

Nick Iarossi, the founding partner at Capital City Consulting, said, Florida has complicated factors that no other Southeastern states have to deal with.

“Florida is probably more complicated than others, simply because we have such a large tribal presence,” Iarossi told Play USA in an interview.

“The legislature can’t simply authorize sports betting without taking into account two things,” he said.

Those key issues are:

  • The impact sports betting will have on any looming tribal compact.
  • The fact that Amendment 3 passed, which requires any gaming expansion to go before the voters by a citizens initiative.

“I think there is a political appetite to do sports betting,” Iarossi said. “But it’s going to have to be in conjunction with a renewal of the Seminole gaming compact.”

Claim Your Free $20 At DraftKings DFS
$20 Free
On First Deposit
DraftKings DFS Review
  • $20 Free Play On First Deposit
  • GPP, H2H, Leagues
  • MLB, NBA, NFL, NHL & More.

Looking down the road of southern sports betting

Unfortunately, all reigns must come to an end; ask the Crimson Tide.

The small monopoly once held by Mississippi will be no more as other Southern states work to adopt sports betting.

Arkansas took its first bet on July 1 and Tennessee will introduce sports betting in due time. Georgia, Kentucky and Louisiana are working on getting there, but it may be farther down the road.

Regardless of what the Seminole Tribe thinks, Florida will eventually strike a deal and bring sports betting to South Beach.

The Carolina’s are tricky. North Carolina unselfishly passed S 154, a bill that will allow the Cherokee to offer retail sports betting at two Appalachian casinos. South Carolina, however, is in wait-and-see mode. Then there is Alabama, with its deep-conservative values that will undoubtedly put them at the bottom of the pack, but give it time.

“The South, in general, has evolved a bit,” Iarossi said. “The days of the Bible Belt politicians, who have been anti-gaming, are behind us.”

Iarossi makes a good point. Lawmakers that once viewed gambling as a sinister vice, now see it as a form of entertainment that can reel in necessary tax dollars and fuel state coffers.

But there are some, like Jones, the hard-talking regulator in Louisiana, who view the expansion of gambling in the South as something entirely different.

“The expansion of gaming has begun to look a lot like the Wild West,” Jones said.

Nicholaus Garcia

About

Nick has had stints in Chicago, writing about local politics, and in Washington, D.C., covering the expanding gambling industry. Now back in Chicago, he continues to write about the emerging sports betting market with a focus on the Midwest. Originally from West Texas, he graduated from Texas Tech University and completed his master's degree in journalism at Columbia College Chicago.

Privacy Policy