It has been over two years since the legalization of sports betting in the United States and in that time, the industry has quickly entered the mainstream and begun an expansion that is seemingly boundless. In total, 22 states (plus Washington D.C.) have legalized wagering on sporting events in some form or another and now, that revenue will come in handy.
Across the U.S., states are enduring financial hardship due to the response effort required to battle the COVID-19 pandemic. The approach that some states have taken toward the legalization of sports betting has enabled the industry to be a vehicle toward financial recovery during trying times.
But while some states have done all they can to help open up revenue streams and bring in tax dollars, others aren't maximizing the revenue potential of the industry.
Of the nearly two-dozen states with legislation enacted, only six offer full mobile (or online) sports betting, which allows players to wager from any geographic location inside state lines. The rest have partial online betting or physical-only wagering, which forces players to be present in a casino in order to wager and generally leads to far less revenue and tax dollars.
Whatever the reason for not including online wagering via mobile devices, the states are missing out on additional sources of tax income. And any states that choose to stay out of the industry entirely or legalize betting without the mobile component will be doing the same thing.
Mobile Sports Betting Advantages
Whether you look at it from the point of view of the bettor or a state looking to generate revenue from the industry, it doesn't take much detective work to uncover the benefits of online sports betting for all parties. Of the 22 states with legislation in place, the following six have full online sports betting:
- New Jersey
- West Virginia
- New Hampshire
Simply put, the above states are able to offer a few things that the rest cannot, and it's led to substantial taxes being raised via sports betting revenue.
In comparison to the seven states with only physical sportsbooks, the operations running in states which allow mobile betting are unsurprisingly reaping more monetary benefits. There are several pros to allowing folks to wager from anywhere, but here are the three key benefits:
Online sports betting is by far, the most convenient way to wager. This means bettors can place wagers from any location of their choosing whether in the comfort of their own home, out at the supermarket, or anywhere else.
As long as you are physically located inside the state, which is verified by the sportsbook's geolocation feature, you're eligible to bet. There's absolutely no contest between being able to bet from anywhere and being forced to drive all the way to a brick-and-mortar casino and line up at the window just to place a wager. It also saves bettors some money right off the bet by removing travel costs
The growth of mobile betting has paved the way for new ways to wager, including live betting. Previously, bettors could only get action before a game, or possible at intermissions such as the end of quarters or halves.
Thanks to live betting, constantly-adjusting lines are available to wager on throughout the length of an entire game. The ease with which players can wager on live odds via mobile is unmatched, making this another feature of online betting that cannot be replicated by a land-based venue.
More Betting Options
In addition to live betting, the emergence of online sports gambling has led to an explosion in the number of markets offered across a wide range of sports. Bet types such as props and futures have catapulted into an entirely new stratosphere in terms of both quantity and specificity, providing options for every kind of bettor.
The usage of online sports betting apps is also a boon for the players themselves, who are given the option of shopping around for a specific market or the most advantageous line possible.
All of the above factors add up to make online sports betting with mobile devices a much more lucrative way to do things for states hoping to add revenue. But rather than taking it from us, let's allow the numbers to do the talking.
New York vs. New Jersey - The Case For Mobile Sports Betting
If you're wondering about the difference between a state which has full mobile sports betting and one that doesn't, look no further than the tri-state area.
New York and New Jersey are not only neighboring states with nearly equal populations. A comparison between the two also serves as the perfect example of just how lucrative online betting can be to the areas which allow it, and what the states without it are missing out on.
New Jersey Thriving With Online Sports Betting
New Jersey online sports betting first launched live during June 2018, shortly following the federal repeal of PASPA, which gave states the ability to decide for themselves whether to allow legal wagering on sports.
In the time since then, the Garden State has emerged as the blueprint for states looking for healthy revenue creation via sports betting.
In its first few months since going live, New Jersey closed 2018 by generating nearly $54 million in revenue. Now compare those numbers with New York, a state in dire need of revenue streams. Empire State sportsbooks began taking wagers almost exactly one year later in July 2019 and in the six months which closed 2019, New York produced just under $7 million in revenue.
Now let's look at the first full year of mobile sports betting in the Garden State was 2019, and this is where the gap between the two widens by an almost laughable margin. New Jersey saw nearly $4.6 billion in sports wagers, which resulted in around $300 million in total revenue.
Once factoring in taxes, $36 million went straight to the state and local governments to help with addiction issues, educational programs, and job creation. Keep in mind that nearly 90 percent of the state's wagers are placed online.
It's bad enough that New York only has in-person sports wagering, but it adds insult to injury that the simplicity of the mobile component actually has the Empire State losing out on the potential for revenue from its own residents.
Nobody knows this better than state Senator Joseph Addabbo, who is the author of the legislation to legalize mobile wagering in the state and chairman of the New York Racing, Gaming and Wagering Committee.
"People look for convenience. They look for what's safe for them, what's legal, but they look for convenience...they go across the border to [New] Jersey because it's simple," Addabbo told BonusSeeker. "That's why Jersey took $837 million of our money last year. Because it's easy."
What Addabbo is referring to is a study conducted by Eilers & Krejcik Gaming, which estimated that New Yorkers accounted for over $837 million of the sports wagering handle in New Jersey. That means operators in the Garden State earned almost $60 million while the state pulled in about $6 million in tax revenue from New York residents alone.
The study also estimated that New York, which is on its way to being $13 billion in debt, is missing out on over $200 million per year by leaving online sports betting off the table.
Revenue Says Online Is The Future Of Sports Betting
It should come as no surprise that when looking at places with the most sports betting revenue generated, most of the states littering the top of the list are ones with online wagering as part of the equation.
Even Nevada, the state most synonymous with land-based gambling, has partial sports betting. The Silver State pulled in a massive $5.3 billion handle from sports betting in 2019 with revenues nearing $330, although there's no way of knowing just how much came from online since the state doesn't release breakdowns.
The point remains that if a state making hand-over-fist cash at brick-and-mortar casinos can still see value in the inclusion of mobile sports betting, what is everyone else waiting for?
Due to Nevada's intertwinement with the industry and it only having partial online betting, there are better models to look at. As mentioned, New Jersey has become the poster child for what a sports betting launch is supposed to look like.
The Garden State's total earnings are second only to Nevada, and New Jersey even became the first state to take in a higher betting handle in the Silver State during May 2019. In the first two months of 2020 (prior to COVID-19), New Jersey pulled in over $60 million in total sports betting revenue to just barely out-earn Nevada.
While New Jersey is a difficult target to aim at, several states have copied the blueprint and as a result, seen positive results thanks to online wagering.
Pennsylvania is largely regarded as third behind Nevada and New Jersey. Its extremely high 36 percent tax rate has resulted in a huge boon for the state, even if one could argue it has limited the number of operators to launch. Even still, the state saw a $3.4 billion handle and $84 million in revenue, although mobile betting didn't launch until the summer of 2019.
For a clearer picture, let's look at some 2020 Keystone State sports betting revenue numbers according to the Pennsylvania Gaming Control Board. In January, online wagering brought in a handle over $150 million while the retail handle was about $3 million. In February, it was $138 million spent online and just $2.5 million in person.
That means that in just the first two months of 2020, online made over $10 million in revenue while land-based sports betting acquainted for $1.3 million.
Things aren't much different in New Hampshire, where a massive 51 percent tax rate on mobile wagers (50 percent on retail wagers) means that the Granite State benefits more from sports betting than any other.
At first, the state went live without mobile wagering before DraftKings joined the party as the only non-lottery operator. Until COVID-19, New Hampshire was the latest state to surpass early expectations following its December 2019 launch.
West Virginia introduced sports betting in 2018 but it disappeared before reappearing in August 2019. Due to only having a few months to work with, it is the only state with full mobile wagering to make more revenue from retail.
In 2020, however, early signs point to online wagering pulling in much more than land-based in its first full year. As of mid-April, about two-thirds of the handle and revenue has come from online.
Colorado & Indiana
Sports betting in Colorado just launched as the calendar flipped to May 2020 so there are no official numbers, although projections say the state could eventually take billions of dollars every year in handle and dozens of millions in potential tax revenue.
Indiana sports betting went live in 2019 just before the start of NFL season and the timing could not have been better. The Hoosier State saw $436 million in wagers during its first four months to close the year, with nearly 70 percent of bets coming online and that number expected to rise.
Will Mobile Sports Betting Be Included Going Forward?
The past two years are sufficient evidence that sports betting is more popular than ever before, and it's unlikely to end anytime soon. Rather than slowing down, the industry is more like a freight train moving downhill.
By 2022, most states will have at least voted on legislation regarding the industry, and much sooner rather than later, the number of states without legal wagering will be in the minority. It is believed that by 2024, 80 percent of the country's states could allow some form of sports betting.
Before we get too far ahead, however, let's focus on the states that are launching next. Since the summer of 2019, there are five additional locations which passed sports betting legislation but haven't yet gone live:
- North Carolina
- Washington D.C.
Just by looking at the legislation that has passed, we can determine which states have the brightest future ahead.
Despite all the evidence pointing to online wagering being the best way to generate the most revenue possible, some states are unfortunately still leaving considerable money on the table.
New States Are Limiting Sports Betting
Both North Carolina and Washington have passed bills and should be able to commence operations shortly, although it won't be living up to its potential.
Sports betting won't do much for North Carolina, which is limiting wagering to just two tribal casinos that are in the western half of the state. They are both over three hours from Charlotte and over five hours from Raleigh, the state's two most populous cities.
Washington became the first state to pass betting in 2020, although this some more pretty restrictive legislation. Following lobbying from tribal casinos to pass the bill, wagering is limited to those locations. To make matters worse, bettors in the Evergreen State won't even be able to wager on teams that play in Washington.
Sports Betting Launching The Right Way In Tennessee, Virginia, And Washington D.C.
Thankfully, there are a few locations that are passing sports betting in its most ideal form and including the online component, starting with our nation's capital. Washington D.C. approved sports betting back in 2018 but amended its original plans to include mobile wagering and should launch in the wake of COVID-19.
Tennessee is set to become the first mobile-only sports betting state by the time it launches and should see massive success due to its proximity to several states that don't yet have betting. Virginia is launching both mobile and in-person sports betting and is expected to attract similar operator competition as New Jersey, which has nearly 20 sports betting sites.
If all goes according to plan, the three territories above will make it nine of the 23 in total with full online sports betting included in its legislation. While the percentage of states with the mobile feature included is improving, there are still far too many millions being left on the table.
At a time where nobody should be turning down new streams of revenue, future states would do well to follow the money and the blueprint laid out by those which are pulling in the most tax dollars.
Undoubtedly, mobile sports betting will continue being a common denominator among the most successful in the industry.