Explosion of Online Casino War
Since 1992, sports betting has been illegal across most of the United States, creating a robust underground market. Experts estimate that more than $100 billion was wagered annually through illegal local bookies and offshore sportsbooks.
Much of the legal gambling market was restricted to Nevada in the U.S., with Las Vegas casinos dominating the market. However, in 2018, the U.S. Supreme Court repealed the Professional and Amateur Sports Protection Act (PAPSA) of 1992, opening the market to newer players and enabling it to expand online.
Recently, DraftKings merged with SBTech and became a publicly traded company, while Golden Nugget Online was purchased by Landcadia Holdings days ago and joined DraftKings as a publicly traded company.
Previously, the online casino space was dominated by unregulated offshore sportsbooks, primarily located in Costa Rica. Since these books were unregulated, meaning that there was no guarantee that these books would not steal your money.
However, these books offered their clients a variety of features such as instant live betting which allows bettors to place bets mere seconds after a change in score. Live betting has emphasized the need for top-of-the-line technology in the online gambling space, as customers crave the ability to place immediate bets after game changing plays.
If a sportsbook’s live betting software were to crash, it could often cost its customers large sums of money, as they would be unable to place bets for a period of time.
This motivated DraftKings’ merger with SBTech, a company that specializes in providing technology solutions to online gambling companies. The merger enabled DraftKings to upgrade its software packages and offer its customers top-of-the-line live betting options.
Currently, only fifteen states have legalized online sports betting, and some of these states, such as Delaware, have yet to offer online sports betting options.
However, in Pennsylvania and New Jersey, which are two of the largest sports betting markets in the U.S., almost 90% of wagers are made online.
Consequently, online betting options are expected to generate large revenue as they become more robust across these fifteen states. East coast states with massive sports fan bases such as New York and Massachusetts have also considered legalizing online sports betting.
The online sports betting market still has a lot of room to grow across the United States as both betting platforms and the betting market itself are set to expand.
While sports betting plays a large role in the online casino market, the market also involves other activities such as online poker.
Currently, only Nevada, Pennsylvania, Delaware, and New Jersey offer regulated online poker in the U.S., forcing poker players to turn to unregulated offshore sites such as America’s Cardroom and Ignition Casino.
This market is largely untapped across the country, yet New Jersey raked in $3.6 million in revenue during the month of March alone from online poker. The expansion and legalization of the online poker market across the U.S. could allow online casinos to reach new heights.
There remain several questions regarding how soon online gambling will reach the general American public due to legal barriers. Despite this, the market is clearly untapped and boasts great potential.
DraftKings’ market cap has doubled since its initial IPO, indicating that investors agree the company has growth potential. If the $100 billion that are illegally wagered on sports annually by Americans are wagered through legal, regulated channels, we could see massive revenue streams flow into regulated online casinos.
From June 2018 to June 2020, $22 billion dollars were wagered on sports across the US, generating $1.5 billion in revenue. This number is poised to rise in the future, as online casinos will take advantage of an increasing American market for sports betting and other casino games such as online Poker and Blackjack.
Written by Benjamin Stick
Edited by Alexander Fleiss, Glen Oh, Bryan Xiao, Michael Ding, Jack Argiro, Gihyen Eom & Calvin Ma