US online sports betting market

Even though Las Vegas, the most famous gambling destination in the world, is located in Nevada, USA, online sports betting is relatively young in the country because none of the states legalized it before 2018. Nevada introduced sports betting in 1931, and for decades, it was the only place where you could legally place a bet outside of Nevada. Don’t get us wrong, people were betting on sports and events way before it became legal. If there is a game, there will be bets placed.

Match fixing before legal betting era

Even before legalization, there was a case from 1921 where the baseball commissioner, Kennesaw Mountain Landis, permanently banned eight Chicago White Sox players for collaborating with gamblers and throwing the 1919 World Series. The case was dismissed but was memorialized in the movie "Eight Men Out." One of the oldest known cases in U.S. sports history is also a baseball incident from September 1865 between Eckford of Brooklyn and the New York Mutuals. Mutuals catcher Bill Wansley was approached by gambler Kane McLoughlin to throw the game for $100. Wansley included two more teammates, and they shared the $100 among the three of them.

Can gambling legalization prevent match fixing?

We mentioned two cases from before the era of legalization, but there has also been a significant amount of match-fixing during the modern era of legalized betting. However, legalization has helped integrate many underground bettors into the system, where their identities are verified, and they are known to the bookmaker. Licensed bookmakers in a state also have an obligation to combat match-fixing and report any suspicious behavior to the authorities. While this approach reduces the incidence of match-fixing, it may not eliminate it entirely.

Benefits of legalizing betting

In addition to the already mentioned reason of preventing or reducing illegal activities, there are numerous other benefits for a state to legalize betting. For the government, it can be highly profitable, with tax revenue reaching billions worldwide. The legalization of betting can also create employment opportunities for a significant number of people. In the UK alone, there are 100,000 people working in the gaming sector.

Legalizing sports betting in the United States

It wasn't until 2018 that sports betting outside Nevada became legal. Many wonder why the states waited so long before legalizing sports betting. In 1992, President George H. Bush signed The Professional and Amateur Sports Protection Act of 1992, also known as PASPA or the Bradley Act. The Act was intended to define the legal status of sports betting throughout the United States. This Act banned sports betting in most states, with a few exceptions. Some sports lotteries were exempt, such as the Delaware, Oregon, and Montana sports lotteries, and, of course, the licensed sports pools in Nevada. In a May 2018 decision in Murphy v. National Collegiate Athletic Association, the Supreme Court of the United States ruled that PASPA conflicts with the Tenth Amendment.

First online bets

Since the Act of 1992 was declared unconstitutional in May 2015, DraftKings launched its first online sportsbook in New Jersey in August, and the first online bets were accepted. In 2020, Michael Jordan invested in the company and became a board advisor.

Draft Kings

In October 2023, a total of 178 bets from 137 customers were placed, amounting to $4,182.00, with a liability of $575,436.00, which DraftKings requested to void. The Massachusetts Gaming Commission has not yet decided on the outcome. The operator claims that incorrect lines were offered and “obvious error” occurred so the bets should be voided.

What are obvious errors?

In this particular case, the third-party odds provider sent incorrect lines to the sportsbook. Quarter lines were transmitted as full-time lines, creating a significant advantage for the customer. For instance, LeBron James's full-game over/under totals were listed as 8.5 points, 2.5 rebounds, and 6.5 assists. These over/under totals should have been designated as first-quarter totals. Incorrect totals were provided for several athletes involved in the matchup.

Conclusion

This occurred in other states and countries where DraftKings operates. However, unlike in Massachusetts, they were able to void the bets without requiring a commission hearing first. Therefore, as a bettor, it's crucial to be aware of the laws in your jurisdiction before placing bets and signing up with a sportsbook.

Market structure in the States

In 2023, the revenue in the online sports betting space is estimated to be $7.62 billion, according to Statista.com. The projection for 2027 is expected to reach $14-15 billion, with approximately 50 million users placing bets online with an average revenue per user of $245,00.

Sports popularity

The most popular sport in the US is football, and ironically, the shortest league duration-wise is also the one with the largest fan base and popularity. Despite being played only from September to February, it traditionally holds the title of the most popular sport in the US.

We don't have to speculate about these claims; we can simply examine the viewership data throughout the season or during the finals played at the end of the season. On average, the NFL Super Bowl is watched by 113 million viewers in the United States, with the NBA championship finals following closely with an average of 12.4 million viewers in the United States. 65% of sports fans in the US watch NFL live, followed by NBA with 51% and Baseball with 42% of fans watching it live.

“Where there is sports there will be betting!”

The number of viewership reflects betting, and the sports the American bettors choose mostly is NFL. Per data from 2022 81% of the bettors placed bets on NFL, while around 54% bettors placed bets on NBA.

An interesting finding from the collaboration between Variety Intelligence Platform and CRG Global was that, proportionately, most sports bettors who are fans of the NFL bet on it unlike other sports fans.

The same source claims that 72% of NFL fans bet weekly on NFL, 50% of NBA fans weekly bet on NBA, followed by MLB with 39% and College Football with 31%.