People love sports. More than 86% of American men and 84% of American women reported to PEW Research Center that they were “very interested” or “somewhat interested” in sports. And spending on sports tickets, devices, and gear nearly tripled between 2007 and 2012.
While the appeal of sports is not in question, how sports betting affected the economy is. For decades, U.S. law prohibited sports betting, deeming it to be an infringement on states’ rights. However, in a 2018 Supreme Court ruling, the justices ruled that limiting sports betting was unconstitutional. As a result, the ability of American citizens to bet on sports is now, essentially, guaranteed by law.
This change in the law had significant economic ramifications. Overall, sports betting contributed $14.1 billion to the American economy in 2019, according to the New Jersey Casino Control Commission. That’s a 13% increase from 2018 to 2019 and makes it the 14th largest industry in the state. And it’s expected to jump to $18.1 billion by next year.
The Rise Of Professional Sports
Professional sports evolved in the early 20th century in response to the increasing specialization and competitiveness of the industrial workplace. Teams began to rely on well-defined practice schedules and structured training programs to ensure that their athletic talents would be maximized and their skills would remain fresh.
As a result, many top-level athletes, especially those in professional sports, can now make a living solely from sports. If they don’t play professionally, they can still make a good living from athletics, either by coaching or as a commentator.
Many top athletes have leveraged their famous names and large followings into lucrative endorsements. For instance, professional hockey player Wayne Gretzky is credited with selling over 500,000 shirts worldwide, which equates to almost $16 million in annual revenue. He is also the co-owner of a professional hockey team, the Gretzky Group, which manages multiple businesses, including a sports marketing company and a hotel chain.
In the late 1920s, the appeal of sports grew even more as professional baseball took off. It was then that most American sports fans first got to know the thrills of betting on games. For the first time, they could engage in fantasy sports, where they would create teams of famous players and then compete against each other based on game results.
The Great Depression And Its Aftermath
In the 1930s, the Great Depression hit the U.S. like a bolt of lightning. The already-fragile economy took a major hit as people struggled to afford regular meals and shelter. Those who could, however, found time for leisure activities, including sports. So, while the overall number of people participating in sports decreased by 19% between 1935 and 1939, the professional and semi-professional sports industries boomed.
Between 1932 and 1936, gate receipts at the professional level increased by 149%. In 1933, the Major League Baseball (MLB) average attendance was 12,428, compared to 16,322 in 1936. And between 1932 and 1939, the National Football League (NFL) saw average attendance rise from 8,852 to 11,467.
As a result, many consider the Great Depression to be the golden era of professional sports. During this time, many top players made a living solely from sports, most notably Joe Louis, who won the title of Light Heavyweight Champion of the World in 1935 and 1936, and who was paid a reported $25,000 per month in those years. In fact, many top players were paid a salary, which, at the time, was considered to be an enormous sum.
The Influence Of The Military
World War II had a significant impact on the growth of professional sports. While millions of Americans took up arms to fight for their country, many more turned to athletics to relieve their stress and stay fit. The U.S. Olympic Committee reported a 147% increase in participation from 1940 to 1944.
And it wasn’t just sports fans who got involved. According to the U.S. Census Bureau, there were more than 500,000 American men and women who worked in the defense sectors during World War II. So it was natural that many of them took up sports as a way to escape the stresses of work and life. Among the many professional sports teams that fielded military-related products during World War II were the Boston Braves and the Brooklyn Dodgers. And it wasn’t just baseball either. Many basketball players, including Bill Russell, enlisted in the military to help win the war.
The Cold War
During the Cold War, the appeal of sports grew even more as a new generation of fans were exposed to a more professional and combative atmosphere. Many teams, especially in the NFL, adopted an aggressive, “bounty” type of play – which encourages aggressive hits to the head and facemasks – in order to make up for the lack of entertainment that came with the era. This atmosphere continued throughout the 1980s and into the 21st century.
While the appeal of sports in general and professional sports in particular grew during this time, so too did the demand for legal gambling on sports. This was largely due to the fact that the Cold War affected many countries, including the U.S., where gambling was illegal. So, while the ability to bet on sports was constitutionally guaranteed, the ability to do so legally was not. As a result, underground bookmakers catered to the need for legal betting, often setting up shop in various locations, such as Las Vegas and Southern California.
The Information Age
The advent of modern information technology transformed sports in the 21st century. Live sports coverage became available via television and computer networks, increasing the number of people exposed to sports information. And with the increase in access to information came an increase in the desire to follow the exploits of elite athletes and maintain up-to-date knowledge of current events.
Additionally, the increasing prevalence of gambling and fantasy sports in online environments meant that people could now engage in sports activities from the comforts of their home. In 2011, approximately 14.7 million American adults gambled on sports, with 11.3 million participating in fantasy sports. Among adults aged 18 to 29, 26.6% reported participating in either type of wagering activity.
In the last decade, the industry has seen explosive growth as a result of expanding coverage, increasing competition, and decreasing regulatory restrictions. According to a 2019 PwC report, “The Global Esports Industry,” revenue was up 12% year over year to $13.5 billion in 2019 and is projected to hit $17.6 billion by next year.
The Present And Future Of Sports
Overall, the impact of sports on the American economy is undeniable. For decades, sports have been a source of recreation, competition, and, for some, a lucrative career. However, in a changing world, the industry is evolving and adapting to new challenges and opportunities. For instance, as more people get their sports news from digital platforms, they may become less interested in following sports events as they happen and more in engaging with statistics and analysis from past games and matches.
Additionally, expanding media coverage, increasing competition, and decreasing restrictions make it ever more likely that a sport will be introduced to a region or country for the first time. For example, mixed martial arts was only made available to the public in the U.S. in 2019 following a five-year grassroots introduction in 30 states. And rugby union was only made available to U.S. soldiers stationed in Australia in 2014, with a full club championship beginning in 2015 and expanding to all U.S. states within a year.
Overall, it’s clear that sports will continue to have a significant impact on the American economy and society at large. In 2022, the U.S. Census Bureau projects that the total number of Americans participating in sports will hit an all-time high of 69.9 million. It also projects that gate receipts at the professional level will hit a record $16.9 billion.
This is largely due to the industry’s ability to adapt to the ever-changing world around it. With the right approach, teams of all sizes can maximize their ROI and engage fans, participants, and the general public. Whether you’re the CEO of a professional sports franchise or the owner of a small sports bar in the Midwest, this is a market that you should be taking advantage of.