By David E. Hubler
Contributor, In Homeland Security
When the U.S. Supreme Court ruled in May 2018 that the 1992 Professional and Amateur Sports Protection Act (PASPA) was unconstitutional, the decision opened a new world of legal gambling that hitherto had been confined to Las Vegas.
Since then, nearly $22 billion has been wagered legally in the United States, bringing in more than $1 billion in tax revenue for those states that have legalized sports betting.
The shutdown of all American major sports leagues and tournaments gave online sports betting exponential growth in states where such gambling is legal.
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As The Motley Fool noted, there is “a lot of hype around the potential size of the online gambling market in the U.S.” Although not many states have legalized online casino gambling yet, Pennsylvania, Michigan, and New Jersey are among those that have.
“Golden Nugget Online Gaming is already a leader in the New Jersey iGaming market,” The Motley Fool added. “It was the first online casino to set up shop in 2013. Today, the company has captured over 10% market share in New Jersey and has plans to expand into other states starting with Michigan and Pennsylvania.”
Casino Closings and Sports Suspensions Turbocharged Online Casino and Poker Revenue
New Jersey is a good example. Betting USA said, “The mid-March closure of the state’s land-based casinos coupled with the suspension of all major sports leagues turbocharged online casino and poker revenue.”
According to the June revenue report from the state’s Division of Gambling Enforcement, New Jersey generated $95.8 million in total gaming revenue in May compared to $276.8 million in May 2019, a 65.4 percent decrease.
Of that $95.8 million, $85.9 million came from internet gambling. Compared to the $38.3 million generated in May 2019, that’s an increase of 124.1 percent. The state took $14.2 million in total gaming taxes for May 2020.
Online Gamblers Bet on Russian Table Tennis Match and Sumo Wrestling
In Las Vegas, after Nevada Governor Steve Sisolak ordered casinos and other nonessential businesses statewide closed in mid-March to help curb the spread of the coronavirus, some inveterate gamblers looked for “action” elsewhere.
They went online and found only a Russian table tennis match to put their money on. “Russian ping-pong has stolen the show,” Nick Bogdanovich of the William Hill betting chain, told the Las Vegas Sun. “You can’t even find it streaming anywhere to watch, but people are betting on it.”
Sumo wrestling has been getting some action, too, Bogdanovich added.
Others have turned to one of the riskiest gambles there is — wagering on sports betting stocks. Matthew Carr, Chief Trends Strategist for The Oxford Club, calls it “a potential $150 billion industry no one’s talking about.”
Writing in Investment U, Carr points out that “we’re seeing one of the greatest gaming expansions in the U.S. in more than 20 years.”
At present 18 states allow legal single-game, live sports betting. Another four states and the District of Columbia have given the green light to legal betting, but they’re not yet operational.
It’s Estimated That by 2025, 36 States Will Have Legalized Gambling
Even better, Carr points out: “16 states have either legislation or ballot measures on deck for this year’s 2020 election. It’s estimated by 2025 that 36 states will have legalized gambling. That number isn’t overly optimistic, considering all the numbers that we just looked at. But it does mean that the boom that we’ve seen is about to go supersonic.”
Another beneficiary of the growing online gaming industry are the gaming technology companies that make gaming consoles for home use such as International Game Technologies, Scientific Games and Flutter Entertainment, which merged with The Stars Group early in May.
Emblematic of today’s helter-skelter stock market, the publicly traded fantasy sports and sports betting website DraftKings went from a high of $43.70 a share on NASDAQ on June 1 to $29.50 on July 14.
Research and Markets notes that global gaming market was valued at $151.55 billion in 2019 and is expected to reach a value of $256.97 billion by 2025, for a compound annual growth rate (CAGR) of 9.17% over the forecast period of 2020-2025.
According to the Dublin-based firm, “Esports is another emerging industry that manages to make more than a billion dollars a year. Now, after the pandemic, it has gained further traction. The increase in the first-time download of Twitch after the epidemic in March has risen to 14% in the U.S.A. and a staggering 41% in Italy.”
So, if you think online sports betting and gambling on gaming stocks will die down once the COVID-19 pandemic is under control — don’t bet on it.