A Deep Dive into Sports Betting - Consumer Discretionary Sector Head: Amanda Luong
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A Deep Dive into
Sports Betting
Consumer Discretionary
Sector Head: Amanda Luong
Contributing Analyst:
Brandon Wexler
April 2021Page | 2
The Rising Popularity of Sports Betting
The Beginning of a Transformation
In early 2018, it was illegal to bet on a sporting event in the United States. In just
three years’ time, the US sports betting industry has been awakened, and, through
monumental change, has posted sky-scraping numbers that many predicted would
take decades.
PASPA
On May 14, 2018, the Professional and Amateur Sports Protection Act
(PASPA) was overturned when the Supreme Court ruled in favor of New
Jersey’s law permitting wagering on sports. PASPA had previously outlawed
sports wagering across the US in every state except Nevada, home of
America’s gambling capital, Las Vegas.
The global sports betting market is projected to grow at a
CAGR of ~10% to more than $134B through 2024, with
North America growing at 14.8%.
Growth Catalysts
American sports fans and gambling enthusiasts had long been deprived of sports
betting, and every major casino and media company is eager to get their hands on
the action. Extraordinary growth at record speed has been achieved through:
1. A strong demand for sports betting
2. A wide-ranging, rapidly growing supply of online sportsbooks1
3. Swift state-by-state legalization
So let’s take a deep dive into an industry with no shortage of excitement, where
there’s an inimitable intersection of dissenting politicians, passionate sports fans,
money-hungry corporations, and of course, the disease of addiction constantly
adding fuel to the fire.
Legalization
Complications
Most legalizations are complex, and sports betting is no different. Because each
state has its own set of distinct laws and restrictions regarding the legalization of
sports gambling, it is difficult to encapsulate the current environment with a single
1 : An establishment that takes bets on sporting events and pays out winningsPage | 3
number of “legalized” states. Several are in favor of legalizing to obtain additional
revenue and bolster their economies; however, they struggle with deep-seated
political opposition to gambling and complex tribal2 relationships.
Current State Statuses
Legalized
➢ Full Legalization, Mobile Betting with Multiple Options
● Colorado, Michigan, Pennsylvania, Illinois, Indiana, Iowa, Nevada,
New Jersey, Tennessee, Virginia, West Virginia
➢ One Mobile Betting Option Only
● New Hampshire (DraftKings), Oregon (State Lottery), Rhode Island
(William Hill), Washington D.C. (GamBet)
➢ Brick-and-Mortar Sportsbooks Only
● Arkansas, Delaware, New Mexico, New York (Full legalization in
2022)
➢ “In-Person Online” Betting – Casinos Only
● Mississippi, Montana
Pending, 2021 Likely
➢ Approved, Awaiting First Bet
● North Carolina, Washington
➢ Awaiting Further Action by Legislature
● Louisiana, Maryland, South Dakota
Possibly 2021-2022
➢ Under Consideration by Legislature
● Arizona, Connecticut, Georgia, Kansas, Kentucky, Massachusetts,
Missouri, Ohio, Vermont, Florida, Georgia, Maine, Texas
➢ Potential Tribal Legalization
● Wyoming, North Dakota
2023, Later, or Never
➢ Longshot, Under Consideration by Legislature
● Alabama, Nebraska, South Carolina
➢ Possible Tribal Action
● California, Minnesota, Oklahoma, Wisconsin
➢ No Movement
● Alaska, Hawaii, Idaho, Utah
2 : Some casinos are run by Native American tribes on Indigenous territories; legalizing sports
betting is at their discretion.Page | 4
Industry Players
Industry Leaders
Since 2018, there has been an intense race for market share among a number of
companies attempting to add revenue through the creation of an online
sportsbook. The two industry leaders are currently FanDuel and DraftKings,
who both made their mark in daily fantasy sports, but quickly transformed into
full-fledged bookmakers and online casino operators.
Other Competitors
Another group consists of casinos who have also expanded their operations to
include online sportsbooks, such as BetMGM, Caesars Sportsbook, William
Hill Sportsbook, and BetRivers.
Additionally, many state lotteries have created sportsbooks in an effort for states
to better oversee and regulate the new industry. The competition, however, does
not end there.
Even media companies like Fox and Barstool Sports have entered the market,
with Fox partnering with The Stars Group to launch the Fox Bet app and the
acquisition of Barstool Sports by Penn National Gaming and launch of the
Barstool Sportsbook app.
Obstacles
While the competition is fierce, barriers to entry are high, as each company must
obtain a license to operate in each individual state. Furthermore, some states
permit just one sportsbook operator, and others allow for only physical
sportsbooks to operate.
Currently, there are only 11 states who have fully legalized
gambling with a full menu of mobile sports betting options to
choose from.
Yet, there are hundreds of sportsbooks fighting for market share, as they know
just how big this market is, with even bigger growth prospects.Page | 5
Partnerships
NBA
Sportsbooks are not the source of competition; strategic partnerships are
forming left and right, as corporations in wide-ranging industries look for creative
ways to enter the high growth industry. The National Basketball Association
currently has more than 20 sports betting partnerships with gambling companies, a
number that will only rise.
“Our goal is to partner with every sportsbook in the United
States.”
~Scott Kaufman-Ross, NBA Senior VP, Head of Fantasy and Gaming
In one example, the NBA teamed up with BetMGM in their betting-focused
video service, NBA BetStream, designed to augment the experience of live-
bettors by using real-time betting odds, special commentary, and odds analysis.
Additionally, the NBA extended its betting data partnerships with Genius Sports
Group and Sportradar, enabling both companies to continue distributing official
league data to licensed operators in the US.
Other Sports
Going into baseball, the MLB made MGM their “official gaming partner,”
giving them access to league logos and official data for use in their sports betting
operations. MGM has also become the official gaming partner of the National
Hockey Association.
Individual Franchises
Individual franchises are also getting involved by signing lucrative, exclusive multi-
year sportsbook deals.
MLB’s Chicago Cubs' contract with DraftKings is reportedly
worth ~$100M alone.
Online US casino Unibet has partnered with the Philadelphia Eagles to release
an Eagles-themed blackjack game, designed with Eagles colors, logos, a “Fly Eagles
Fly” tagline, and more. Other partnerships include:
➢ NFL & Caesars
➢ UFC & Fox Bet
➢ Dallas Cowboys & Winstar Casino
➢ NY Jets & BetMGMPage | 6 ➢ Tennessee Titans & BetMGM ➢ Denver Broncos & BetMGM Additionally, every major sports media company has also obtained a betting partnership, including NBC & PointsBet, ESPN & DraftKings, CBS & William Hill, and Fox & Flutter (FanDuel). Outlook Concluding Thoughts The sky is truly the limit for the American sports betting market. While the developing sports betting industry is only three years old, there have already been extraordinary signs of growth and as more states continue to legalize gambling, the number of licenses given to sportsbook operators and strategic partnerships formed between industry players will continue to increase. Despite a plethora of competition, there is clear and obvious upside in entering this industry as companies who have made very small investments have seen massive returns. Data has shown that compared to traditional fans, those who play fantasy sports and bet on sporting events are: 1. More Engaged 2. Consume More Content 3. Watch More Games for Longer Periods of Time The fact of the matter is that for many Americans, traditional sports fandom is no longer enough, for when money becomes involved, people are simply more entertained and invested. While there is great uncertainty in many sectors and the economy as a whole, one thing the consumer discretionary sector can count on is the continued growth and fierce competition of the sports betting industry.
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The Figures
Annual US Revenue From Sports Betting (in $B)
12
9.57
10
8
6
4
1.6
2
0
2019 2020 2021E 2022E 2023E 2024E 2025E
NJ Sports Betting Handle (Total Amt Wagered in $M)
$996
$1,000
$800
$600
$400
$200
$0
Sportsbook Mobile App Market Share
BetRivers
3% DraftKings
William Hill FanDuel
5%
FoxBet
TwinSpires
BetMGM DraftKings BetMGM
7% 32%
William Hill
TwinSpires
6% BetRivers
PointsBet
FoxBet Play SugarHouse
10% FanDuel Monkey Knife Fight
30%
Sportsbook AG
BetAmerica
BarstoolYou can also read
