Following the May decision by the US Supreme Court that found PASPA unconstitutional, the sports betting floodgates are officially open.
This year has seen its fair share of activity at the state level, with several early adopters passing legislation and launching regulated industries.
Within six months, the number of sports betting states grew from one (Nevada) to eight:
A ninth state, Arkansas, is in the early stages of launching its own legal industry.
Building on that momentum, sports betting is expected to be a topic of conversation in statehouses across the US in 2019. But as anyone who supports legal online poker knows, legislative interest doesn’t always lead to legislative action.
The spigot that has given us nine states with legal sports betting could very well remain open. But don’t be surprised if it turns into a slow drip or is shut off entirely.
Throughout history, expansions of gambling tend to follow a similar pattern:
The number of first movers is usually small. The one exception to this was daily fantasy sports (DFS).
After being thrust into the public eye in the fall of 2015, DFS came out of the legislative gate in a full sprint and never really slowed down.
In total, 19 states have passed laws legalizing and regulating DFS. Most of that legislation (16 laws) arrived in 2016 and 2017, with two “fantasy sports” laws predating the 2016-17 legislative dash, and one arriving in 2018.
So how did DFS accomplish so much in such a short time?
First, DFS didn’t have to deal with a diverse group of stakeholders. It was basically the two major DFS companies and a contingent of smaller DFS operators whose only disagreement was in licensing and taxation. Sports betting legislation will have a lot more cooks — commercial casinos, tribal casinos, horse racing, the lottery — Each looking to protect their existing business and get the best deal on sports betting possible.
DFS also managed to convince most state legislatures and AGs that DFS was a game of skill. As I’ll explain further down this column, that classification eliminated a number of legislative headaches.
Third, DFS was never explicitly illegal in most states. As such, lawmakers avoided the more messy process of legalizing something that had been illegal. Instead, they were able to sell it as regulation of an existing industry.
Notice, however, that only a single state has passed a DFS law since the 2016-17 wave. Even though it had a large group of first movers, things have slowed to a veritable crawl.
Online gambling had a much smaller first wave than DFS. Three states — Nevada, Delaware and New Jersey — comprised the first group to pass online gambling legislation in 2013.
The second wave was also small and even slower than DFS. A fourth state, Pennsylvania, legalized online gambling in late 2017.
The lack of progress hasn’t been for a lack of trying. Bills were introduced in a dozen or so states from 2014-18.
Online lottery falls somewhere in between DFS and online poker/casino.
Online lottery legislation started appearing around the same time as the latter, and like online gambling, there were few early adopters in the first couple of years:
But like the other forms of gambling expansion, the second wave saw momentum slow. In the ensuing four years, online lottery legislation has been passed in just three other locales:
In both cases — online gambling and online lottery — there were a few first movers followed by a period of little legislative action.
DFS proved to be something of an outlier when it came to the first wave, but even it followed the S.O.P. of gambling expansion when it reached its second wave.
The big question for sports betting is this: Will its first wave spill over into 2019, or will the calendar tick over into the start of a second wave?
At this time, it looks like sports betting will match or even exceed DFS’s rapid legalization
That said, it could also run into a few more obstacles than DFS. States that passed on sports betting in 2018 did so for a reason, and those reasons remain for 2019.
These are questions that rarely came up during DFS debates, any one of which is capable of derailing sports betting legislation.