State and federal governments have cracked down on sports betting in the United States. The most known example is the 1992 Professional and Amateur Sports Protection Act (PASPA), which sought to limit sports wagering by creating several different states of mind: fun, enjoyment, excitement, and profit. PASPA was signed into law by President George H.W. Bush and went into effect in April of that year.
While PASPA limited the legalization of sports wagering in the United States, it did not completely outlaw the practice. And since its passage, the market has shifted to the web, which has made it easier for US residents to place bets on their favorite sports. And with the legalization of sports betting by states like Nevada and New Jersey, more and more people are looking for legal ways to bet on sports.
Is it just the case of the Wild West scenario where anything goes, or have things changed? How many states allow sports betting, and how has the landscape changed since the enactment of PASPA in 1992?
Fortunately, we were able to secure data on the number of sports betting operators registered with the Nevada Attorney General’s Office, and the data shows growth in the market since PASPA was first approved. In the year leading up to and including August 2019, the number of registered operators soared by 35%. That means there were approximately 60 operators in Nevada in August 2019, compared to 45 in August 2018 and 40 in August 2017. Additionally, new data shows that, since the enactment of PASPA, more and more people are looking to legalize sports gambling in their state.
Only Six States At Present Allow Legal Sports Gambling
Six states currently allow legal sports gambling. Those six states are: Colorado, Missouri, Montana, North Carolina, Oklahoma, and Wyoming. Additionally, the District of Columbia and Puerto Rico also allow some form of legal entertainment wagering. With the exception of the nation’s capital, which has an ordinance that specifically bans sports gambling, all jurisdictions that allow sports betting also allow some form of casino gambling.
It is important to note that these six states allow for different forms of legal sports gambling. For example, Montana allows for online sports betting, while Colorado and Wyoming allow for only sportsbooks (parlors). Missouri and North Carolina do not directly allow for sports gambling, but they do allow for charitable gaming, which could be construed as a form of legal sports wagering in some situations (e.g., a charitable group funds a sportsbook, therefore the activity is essentially legalized).
New Data Reveals Growth In The Market Since PASPA
Data from the Nevada Attorney General’s Office shows that there has been significant growth in the market for legal sports gambling since the enactment of PASPA in 1992. In the year leading up to and including August 2019, the number of registered operators soared by 35%. That means there were approximately 60 operators in Nevada in August 2019, compared to 45 in August 2018 and 40 in August 2017.
The increase in the number of registered operators is likely a direct result of the increased awareness among residents and businesses of the benefits of legal sports gambling. Additionally, as the technology has improved and made it easier for people to place bets on their favorite sports online, fewer and fewer people are depending on casinos to place their bets for them. The growth in the number of registered operators is also likely a direct result of the increased competition that has followed, which has driven down the price of legalized sports betting.
While the number of registered operators has increased, the amount of money wagered in these six states has decreased. In the year leading up to and including August 2019, wagering in these states fell by 16% compared to August 2018 and by 12% compared to August 2017. This is likely because of the increased cost of doing business in these states, coupled with the desire for gamblers to lower their bets due to competition and the increased awareness of PASPA’s limitations (i.e., the ban on sports betting across state lines).
Which States Had The Most Growth In Legal Sports Gambling?
One of the primary purposes of PASPA was to limit the location of sports betting to within the state, which meant that any bets placed would be between a resident of the same state as the operator. This aspect of PASPA made it harder for sports betting operators to expand their reach and effectively did limit the locations where residents could place bets. But one of the unintended consequences of this barrier to interstate commerce was the ability for some states to significantly grow their sports gambling industries while others saw a significant decrease.
We have analyzed the data and determined which states have seen the most significant growth in legal sports gambling since the enactment of PASPA. It is important to note that there is a significant difference between legalizing sports gambling and actually having a functioning sports gambling market. We want to clearly define these two concepts before we continue.
First, it is important to distinguish between the two. The data shows that, in the year leading up to and including August 2019, Missouri, Montana, Colorado, and Oklahoma saw the highest rates of increase in the number of registered operators, each with a 400% increase (i.e., from 40 to 160). But while these operators were able to register with the state, they may not actually have the necessary permits or licenses to operate.
Second, it is important to note that this data only reflects the number of operations that registered with the state’s attorney general’s office. This data does not include the many unlicensed operators and illegal sportsbooks that have cropped up in recent years and which continue to operate today. In fact, a report from the Nevada Criminal Division states that there are currently over 250,000 active members in the online sportsbook industry, with over 80,000 of those being illegal operators. Additionally, PASPA was enacted in an effort to keep track of who was entering the market. But today, it is extremely difficult to keep track of who is participating in the illegal sportsbook industry, as they operate in complete secrecy.
However, even with the limitations of the data we have collected, it is clear that the legalized sports gambling industry has shifted to the web. Several states that had previously seen an increase in registration now have significantly less operators, which could be a direct result of the legalization of sports gambling and the subsequent increase in competition. Additionally, many of the newly registered operators are interested in entering the market online, which means that the location of the bet will be between the player and the operator. For example, Wyoming saw the largest increase in the number of active operators from 40 in August 2017 to 160 in August 2019. But despite the increase in registration, online sports betting in Wyoming actually saw a 16% decrease from $26.7 million to $24.3 million in wagering activity between August 2018 and August 2019.
Growth In The Market Since PASPA Fuels Increased Legalization
It is important to recognize that the growth seen in the market for legal sports gambling since the enactment of PASPA in 1992 has not been without consequence. This growth has fueled the increased legalization of sports gambling across the United States.
Additionally, many states have worked to improve the legal framework for gaming in general, leading some to question whether or not PASPA was actually intended to be a ban on all forms of sports gambling.
To this end, many states, with the exception of Montana and Colorado, have expanded their gaming industries in recent years to take advantage of the demand for sports gambling. It is important to note that many of these jurisdictions had previously banned gaming, leading to a form of legal gaming being established in some states, like Nevada, which originally had no form of legalized gambling. In the year leading up to and including August 2019, the number of states with legal gaming jumped from 19 to 23.
It is clear that the legalization of sports gambling in the United States has not been without its challenges. In some cases, competition from within the industry has driven down prices and increased convenience for players. But, at the same time, the location of the bet and the barriers to interstate commerce have effectively limited the industry’s growth. PASPA was an attempt to keep track of where the money was going and who was winning. But today, it is extremely difficult to keep track of who is participating in the illegal sportsbook industry, as they operate in complete secrecy.
This is all changing, however, as the recent COVID-19 pandemic has led to the shutdown of many businesses and the shift of others toward online gaming and social distancing. As these industries try to rebuild, they will look to reenter the market with physical locations closed and online gaming environments preferred. This will lead to a shift in the landscape of the United States’ sports gambling industry and increase the number of states where this popular pastime is legal.