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More states embrace online sports gambling as popularity soars

Industry experts say mobile gaming has helped fuel a nearly 230 percent jump in revenue in the first 10 months of 2021.
Bally's hotel & casino, Paris hotel & casino
Bally's casino on the Las Vegas stripKirby Lee / via AP

Maryland is the latest state to authorize online sports gambling as advocates see the use of mobile apps surging in popularity.

Sports betting overall generated $3.16 billion in the first 10 months of 2021, surpassing the total revenue for the same 10-month period of 2020 by nearly 230 percent, according to the Washington-based American Gaming Association's Commercial Gaming Revenue Tracker. At least 11 states have embraced sports betting this year alone, according to the AGA, an industry trade group.

Of the states that made sports gambling legal in 2021, four launched an online or mobile component, including Florida, which in November legalized betting on major sports both online and in person by awarding a deal to the Seminole tribe. The other states that began operating online sports betting were Virginia, Wyoming and Arizona, according to the AGA.

David Forman, senior director of research at the AGA, said much of the sports gambling growth has been driven by the fact that people in many states can place bets on their smart phones, without having to travel to a casino.

“It’s been a boom for consumers, really. I mean, prior to 2019 consumers had to either pay to fly to Vegas to place your bet, which most people are unable to do or are unwilling to do, or you had to be with an illegal bookie or with an offshore site,” Forman said.

New York, which already allowed some casinos to have sports betting operations on the premises, also awarded mobile sports wagering contracts to nine operators last month, including well-known names like Bally's Interactive LLC, BetMGM LLC and Resorts World, according to the New York State Gaming Commission's website. New York's online sports betting launch is expected to be operational next year.

Maryland, which last week approved two casinos to begin offering sports gambling by the end of this week, will begin operating the mobile component next year, too.

In May 2018, the Supreme Court overturned a 1992 law that prohibited states from legalizing sports gambling. A few states like, New Jersey, quickly opened sports betting. Three and a half years later,30 states and Washington, D.C., now have some form of legal sports betting available.

As of September, data from the AGA shows that New Jersey has the highest total sports betting revenue at $557.77 million, compared to South Dakota, which just launched sports betting three months ago and has already seen $70,000.

The revenue growth, in all states where it's legal, is “driven by new markets opening up and more and more people, more and more consumers having access to legal operators,” Forman said.

Some states, like Tennessee, have no traditional casino gambling “so they jumped at the chance of online sports betting,” Forman said.

Now Tennessee, which opened up online betting in November 2020, has the ninth highest year-to-date total revenue for sports gambling at $155 million, as of September, according to data from the AGA.

For states, sports gambling has translated into increased tax revenue, but it has not been without its speed bumps.

In Florida, two gaming groups that lost out to the Seminole tribe sued over the deal.

Less than a month later, U.S. District Judge Dabney Friedrich ruled that the way Florida was running their operation did not follow the guidelines in the Indian Gaming Regulatory Act, the federal law that regulates gaming on Indian Lands.

Friedrich's Nov. 22 ruling stated that online sports betting in Florida violated federal law because the bets were not placed on tribal land.

The Seminole tribe, which operates the online operation Hard Rock Sportsbook, as well as six casinos in the state, lost an appeal to the U.S. Circuit Court of Appeals in Washington, D.C., on Dec. 3. Sports betting is on hold in Florida while the parties work out a plan that's legal under the federal Indian gaming law.

Regulators also need to pay attention to the costs of sports betting, said Keith Whyte, executive director of the National Council on Problem Gambling.

Whyte said about 6 million adults meet the criteria for a gambling problem in a given year.

Problem gambling includes all gambling behavior patterns that compromise, disrupt or damage personal, family or vocational pursuits.

Although not addressing sports gambling specifically, Whyte said his organization encourages states to invest a portion of their gambling revenue into gambling-addiction programs.

“The state has to take responsibility for the social costs of expanded gambling, as well as the benefits, and you need to treat and measure both equally,” Whyte said. “There’s a perverse incentive for some in state government to avoid calculating or addressing the social costs. Because they don't want it to dampen public opinion. They only want to look at the benefits, they don’t want to see the downside.”