How pro sports teams are casting casinos aside over sports betting

This year a couple of interesting trends have emerged in the sports betting legislative landscape: the influence of professional sports teams is on the rise, while the clout of the land-based casino industry has waned.

In just a few short years, the teams and sports leagues have gone from casting doubts about sports betting to casting nets to see how much sports betting dollars they can scoop up. It’s an inevitable business decision. Just like lawmakers have come around to supporting gambling regulation as a way to raise tax dollars and protect consumers, it’s easy to see why the teams and leagues are now seeking to capitalize on an activity that centers around their core businesses.

Washington DC and Illinois were two of the first jurisdictions to let teams in on the action by allowing a retail sportsbook in a sports venue, and also a limited zone for mobile betting. But it is remarkable that in 2021 these sports businesses have now positioned themselves to be in control of statewide online sports wagering licenses.

Virginia, Arizona, Maryland all have laws in the books that grants sports venues the express authority to get a sports wagering license and then partner with a sports betting operator to run the business. Similarly, legislation recently introduced in North Carolina opens the door for state-based sports teams to enter into a commercial agreement with online sportsbooks.

Opportunity knocks

Adding sports teams to the mix of potential licensees has increased market-access opportunities for sports betting companies, while providing greater choice for consumers and the potential for states to benefit from a competitive market.

Arizona is a great example of how this works to increase the market. There are only tribal casinos in Arizona, so allowing sports teams and venues (including PGA Tour and NASCAR event locations) to be hosts for state-wide mobile sports betting operations has effectively doubled the size of the market. Arizona could see up to 20 online sportsbooks, 10 tribal, and 10 controlled by the teams/venues. This is the same logic behind the approach in Texas. Because the state has no commercial casino industry, the sports teams themselves have successfully inserted themselves into what has typically been viewed as the role of a land-based casino.

In these instances, lawmakers have looked past concerns about having the sports teams so closely connected to betting enterprises.

While local sports teams’ online sports betting opportunities are expanding, in a surprising development, local land-based gaming companies’ guaranteed access to the market has eroded. The most startling example is how New York cut out the commercial casinos from having direct access to mobile sports betting, despite already being authorized to offer it on a retail basis. Governor Cuomo pulled out the rug and cast the casinos aside calling them “middlemen” who would just get in the way of the state making revenue.

In my view, a hybrid approach is the equitable solution. It makes sense to set aside retail and mobile licenses for existing gaming entities already regulated by the state. I don’t have a problem with sports teams leveraging their brand to create a sports betting partnership. The final piece of the puzzle is for states to directly license online sportsbooks.

The first few years of sports betting legalization have been marked by states picking winners and losers. 2021 seems to be changing that trend, and there is a push toward equilibrium. There are some kinks to be worked out, but policy is heading in the right direction. ­

John Pappas is the founder and CEO of Corridor Consulting. For nearly 15 years he has been a leading advocate for regulated internet gaming in the US.