Second wind: A new betting season approaches

As the NFL and college football season kicked off recently, the busiest time for sports betting also commences. In Nevada, the state with the most tenured history of legal sports betting, football and basketball (both college and professional), account for around 70% of total betting volume on average.

So, with the start of a new season, now is a great time to review what we have learned about US sports betting and prognostications for the future.

Of the early adopter states (NJ, DE, MS, WV), New Jersey provides the most insight because of its attractive demographics and population size (seven million adults plus NY Metro area) and it was the earliest adopter of both retail and digital betting.

For the first twelve-month period ended in May, sports betting in NJ generated $195m of revenue on almost $3bn worth of handle, a 6.6% hold percentage and $28 in revenue per adult.

Spectrum Gaming Sports Group expects per adult estimates in NJ to reach $70-$90, which is equivalent to $500-$600m, upon stabilization. New Jersey legislators authorized retail sports betting at the state’s casinos, all residing in Atlantic City and at racetracks.

On the retail side, Meadowlands Racetrack in Northern NJ and Monmouth Park Racetrack in central NJ generated 67% of retail revenue in the state. Retail sports betting in Atlantic City’s casinos generated only 33% of the state’s overall retail earnings.

This can be attributed to the fact that the two racetracks (Monmouth Park and Meadowlands) are more centrally located, making them more accessible to Northern NJ and New York patrons.

On the digital side, 75% of total handle was generated via online and mobile devices, suggesting that digital sports betting is the ultimate form of convenience. In fact, similar percentages exist in the largest sports betting markets in Europe (UK, Spain, France and Germany).

Newly legalized states, new insights

Season two of sports betting will feature several new states with unique characteristics that will be implementing differing business models. Market factors and regulatory schemes will play a significant role on the relative size of each market.

Iowa and Indiana commenced sports betting in time for the start of the football season. Online is set to come to Indiana in time. In Iowa there are no professional sports teams, which could have an adverse impact on market size. In a market like this it will be interesting to see if that translates into a smaller per capita market share.

Indiana beat its neighboring state Illinois in kicking off sports betting at its casinos, has a large appetite for gambling and is well known for its sports fandom. I expect that Indiana’s casinos will attract more Illinois gamblers than ever before.

Tennessee will be offering digital sports betting exclusively at some point during the NFL season and will serve as a template for sports betting in non-casino states. Specifically, I will be analyzing the degree to which Tennessee can capture its fair share by offering only digital betting.

New Hampshire is another non-casino state that is taking a different approach to sports betting. Legislators there have authorized digital betting (up to five licensees) and up to 10 retail locations statewide.

The state is unlikely to go live until summer 2020, but it will be interesting to analyze the revenue generated from retail and digital as compared to NJ.

Finally, Washington DC and Illinois authorized sports betting at or adjacent to stadiums. Placing a bet right before going through the turnstiles will certainly make for an interesting fan experience that I, for one, am eager to experience.

David Isaacson is vice president of Spectrum Gaming Capital