US betting market trends: A state-by-state summary of the summer's betting movements

The regulated US sports betting market generated handle of $575.42m for the month of July, which was down 16.66% on June’s total of $690.42m.

The significant decline was reflective of July being the slowest sports month of the year. For perspective, of the four major professional sports leagues, only Major League Baseball was active.
In July, as in previous months, Nevada and New Jersey accounted for the lion’s share – or about 84% – of total regulated US sports betting handle. Notably, New Jersey, where online sports betting accounted for 84% of total statewide handle in July, generated approximately 43% of total regulated US sports betting handle.

We expect the US market as a whole to remain flat-ish in August, when the sports calendar is relatively light, before rounding back into form during the peak NFL months of September-November.

Delaware feeling the heat

Bordering states giveth and bordering states taketh away. That’s the lesson that Delaware’s tiny, retail-only sports betting market appears to be broadcasting to the US market at large.
In June, statewide casino sportsbook handle dipped 9.6% year-on-year to $6.3m. Of note, that decline was entirely attributable to Delaware Park, which is located near the Maryland, Pennsylvania and New Jersey borders. At Delaware Park, handle fell 24.1% year-on-year to $3.9m.

June 2018, recall, was the first month that Delaware’s three casinos began offering single-game sports wagering. The year-on-year comp strongly suggests that New Jersey (which launched sports betting last June) and Pennsylvania (which launched last November) have recaptured some of the in-state play that was crossing the border to bet at Delaware Park.

At the same time, anemic year-on-year growth at Delaware’s two remaining casinos, paired with the pronounced downward slide at Delaware Park, has us wondering whether the Delaware casino sportsbook market may already have peaked.

Even after Penn National’s skin access sell-off, plenty of open skins remain

In July, regional casino giant Penn National announced strategic partnerships with DraftKings, The Stars Group, PointsBet and theScore that would provide each of those brands with US online sports betting (and online casino) market access.

Penn sold off some choice virtual real estate (DraftKings, for example, nabbed first-skin access in Florida), but the company still appears to have some attractive skin-access slots left open, including a first-skin access slot in Illinois, and two in Louisiana.

Those open slots won’t escape the notice of non-endemics whose US prospects hinge on their ability to secure market access. So, Penn, it seems, is set to enjoy this seller’s market a little while longer.

Big markets set to underperform

Two of the largest sports betting markets in the US – New York and North Carolina – have implemented or will soon implement retail-only sports betting. New York restricts sports betting to commercial and tribal casinos located a few hours away from the New York City metro area. North Carolina, meanwhile, restricts sports betting to two tribal casinos, each of which is located in a rural area.

Online sports betting results from New Jersey and Pennsylvania unequivocally show that New York and North Carolina – sans online sports betting – will perform well below their potential. On balance, though, we think that underperformance – especially when considered alongside case studies from first-wave online markets like New Jersey and Pennsylvania – will ultimately help accelerate online sports betting expansion in New York and North Carolina.

‘Definitional flexibility’

The more widely sports betting expands, the more likely we think it is that operators will attempt to push the envelope in terms of what state definitions of ‘wager’ actually allow.
Take Tennessee, for example. Under the state’s recently enacted online sports betting law, the term ‘wager’ is defined as “a sum of money that is risked by a bettor on the unknown outcome of one or more sporting events, including, but not limited to, the form of fixed-odds betting, a future bet, live betting, a money line bet, pari-mutuel betting, parlay bet, pools, proposition bet, spread bet, or in any other form or manner as authorized by rule of the [Tennessee Lottery].”

Although the definition of ‘wager’ in Tennessee would limit legal sports betting to the risking of money on the unknown outcome of one or more sporting events, we note that the gambling industry has a long history of indulging in what we’re calling ‘definitional flexibility.’ Gaming equipment makers have turned bingo into a slot machine, for example, while PokerStars’ Spin & Go games effectively turn poker into a progressive slot.

We therefore expect that operators – in Tennessee and elsewhere – will attempt to use sports outcomes as an actual or effective random number generator. Products we wouldn’t be surprised to see range from auto-fill six-pick parlays to more aggressive slots-style games powered by sports outcomes.

Iowa joins fast growing US online sports betting market

Iowa, which launched online sports betting in mid-August, is one of six US jurisdictions that has legalized online sports betting this year alone. More broadly, meanwhile, it is one of 13 US jurisdictions where online sports betting is – or will soon be – operational.

Iowa’s online launch is merely the latest indicator that online sports betting legislation plays by a different set of rules than traditional gambling legislation. Given the current pace of online sports betting expansion, it’s becoming increasingly easy to foresee a world in which online sports betting widely normalizes online gambling and, in doing so, clears a political path for the widespread-ish adoption of legislation that would allow online casino.