It was a big week for sports fans. On one hand, the baseball season started and the World Series was back. On the other, a record-breaking amount of sports bets were placed. More specifically, the week before the season started saw a massive surge in betting, which continued throughout the season. Then, seemingly out of nowhere, the betting stopped.
It’s difficult to pinpoint the exact reasons why sports betting came back with such ferocity in theUnited States in the latter half of September 2019. However, it’s fair to assume that the Covid-19 pandemic, and subsequent state and federal governments’ interventions, played a significant role. In fact, one could argue that the safety net provided by the government and the resulting economic stimulus saved a large segment of the sports betting industry.
An Evolving Sports Betting Market
Whether or not the pandemic had anything to do with it, the sports betting industry had evolved over the course of the last two years. In the summer of 2018, the American Gaming Association (AGA) estimated that there were 430,000 legal sportsbooks in the U.S. That same year, the Nevada Gaming Control Board (NGCB) reported that there were 573,000 active sportsbook accounts in the state. In other words, there were more people playing at sportsbooks than there were places to play. The situation was the same way in other states, as well.
But things began to change in the latter half of 2019. First, the NGCB barred the majority of the U.S. states’ sportsbooks from operating during the pandemic. Second, many sportsbooks closed down, citing fears of being unable to pay their taxes and bills.
As a result of these measures, the numbers of people playing at illegal online sportsbooks and esports wagering platforms increased. In other words, people were willing to break the law in order to continue betting. This, in turn, created a lucrative black market.
Furthermore, the spread of recreational betting throughout the U.S. meant that people who previously wouldn’t have considered themselves sports fans were now taking a keen interest in the outcomes of their favorite sporting events. In fact, according to the AGA, the number of adults in the U.S. who regularly place bets on sports increased from 22.2 million in 2018 to 24.9 million in 2019. That’s an increase of 19%.
Why did CSGOLOUNE Stop Betting on Sports?
In the summer of 2019, shortly after the NGCB barred the states’ sportsbooks from operating, CSGOLOUNE, the largest legal online betting operator in the U.S., announced that it was ceasing its operations. In a statement, the company said that it had made the decision in order to “focus its energy on U.S. operations and the large number of new customers it has gained in the last year.”
However, it wasn’t just CSGOLOUNE that closed down. Several other major sportsbooks suspended operations during that time. For instance, CGV and Pinnacle also said that they were closing down in order to focus on taking care of existing customers. In fact, around the same time that CSGOLOUNE halted its sports betting operations, Pinnacle announced that it was acquiring several smaller, more specialized sportsbooks. So it appears that the industry as a whole decided to stop taking on new customers, in order to save as much money as possible.
However, things changed once the world started improving and the governments started easing up on their stay-at-home orders. First, the NGCB lifted its ban on sportsbooks in the summer of 2020. Second, several major sportsbooks, including CSGOLoune, eventually decided to reopen for business. Third, and perhaps most significantly, the NCAA and the major professional sports leagues decided to get back to sports. In other words, they started preparing for the upcoming baseball, football, and basketball seasons. All three sports contributed billions of dollars in economic value to the United States last year.
The Impact of COVID-19 on Sports
It’s difficult to overstate the influence that COVID-19 had on the U.S. sports betting industry in the months and weeks leading up to and including the start of the 2020 season. Like many other industries, the sports betting industry took a significant hit during the pandemic. In the summer of 2019, just before the seasonal spike in sports betting, the industry was valued at around $15 billion per year. At the time, it was reported that there were 430,000 legal sportsbooks in the United States. However, following the pandemic, and in order to comply with the federal regulations and limits placed on businesses and organizations during the pandemic, that number was significantly reduced.
Some of the major legal sportsbooks, such as CSGOLoune, ceased operations during the pandemic. So, too, did several smaller, specialized sportsbooks that were bought out by bigger, more established companies, such as Pinnacle. Ultimately, around 4,400 legal sportsbooks, which are permitted to open in the U.S., remain. Furthermore, the spread of COVID-19 and the resulting economic pressures and uncertainties played a significant role in motivating people to place bets during the pandemic. In fact, the American Gaming Association reported that the number of adults in the U.S. who regularly placed bets on sports increased from 22.2 million in 2018 to 24.9 million in 2019, a jump of 19%.
While the world focused on the ongoing pandemic and the resulting economic and social fallout, the United States started preparing for the upcoming baseball, football, and basketball seasons. In early March, just three months after the start of the pandemic, Major League Baseball, the National Football League, and the National Basketball Association announced that they would begin their season. Since then, all three major sports have taken their toll on the sports betting industry. As of early June, the number of active sportsbook accounts in Nevada was 27,500, a decrease of 16% from the peak in the spring. Similarly, the American Gaming Association’s forecast for the 2020 baseball season, if it were to start now, would see just under 500,000 active accounts, a decrease of 25% compared to spring 2019.