History Of Online Gambling Expansion Raises Questions For Sports Betting In 2019

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Following the May decision by the US Supreme Court that found PASPA unconstitutional, the sports betting floodgates are officially open.

This season has seen its share of action at the country level, with early adopters passing legislation and launch regulated industries.

Within six months, the number of sports gambling states grew from one (Nevada) to eight:

NevadaDelawareNew JerseyWest VirginiaMississippiNew MexicoPennsylvaniaRhode Island

A ninth state, Arkansas, is in the early stages of launching its legal industry.

Building on that momentum, sports gambling is expected to be a topic of conversation in statehouses across the US in 2019. But as anyone who supports legal internet poker understands, legislative interest doesn’t necessarily lead to legislative action.

The spigot which has given us nine states with sports gambling could well remain open. But don’t be surprised if it turns into a slow trickle or is closed off.

Every expansion of gambling has first mover(s)

Throughout history, expansions of gambling tend to follow a pattern that is similar:

One or more first-movers gets the ball rolling;other states show some interest but wait to see that the first movers’ results;a second wave eventually manifests, but it’s similar to a ripple lapping the shoreline; and,the growth is normalized and continues to spread across the nation.

First movers’ number is usually modest. The one exception to this was daily fantasy sports (DFS).

The uncommon legislative momentum of DFS

After being thrust into the public eye in the fall of 2015, DFS came from the gate in a sprint and never slowed down.

In total, 19 says have passed legislation legalizing and regulating DFS. Most of that legislation (16 laws) arrived in 2016 and 2017, with two”fantasy sports” legislation predating the 2016-17 legislative dash, and one coming in 2018.

So how did DFS achieve in a short time?

DFS didn’t have to deal with a diverse group of stakeholders. It was basically the two DFS firms along with a contingent of DFS operators whose disagreement was in taxation and licensing. Sports betting legislation is going to have far more hamburgers — commercial casinos, tribal casinos, horse racing, the lottery — get the best deal on sports and Each looking to protect their business.

AGs that DFS was a game of skill and DFS managed to convince state legislatures. As I will explain further down this column, that classification eliminated a number of legislative headaches.

DFS was never explicitly prohibited in most states. As such, lawmakers avoided of legalizing something which was 16, the process. Instead, they were able to market it as regulation of an existing business.

Noticeand a DFS law, however, that only one state have passed since the 2016-17 wave. Things have slowed to a crawl, even though it had a large group of movers.

Less urgency for Internet gambling expansion

By comparison:

Online poker and casino

Online gambling had a wave that is smaller than DFS. Three states — Nevada, Delaware and New Jersey — comprised the first group to pass online gambling laws in 2013.

The next wave was small and slower than DFS. A condition, Pennsylvania, legalized online gambling.

The lack of progress has not been for a lack of trying. Bills were introduced in a dozen or so states from 2014-18.

Online lottery

Lottery falls between DFS and internet poker/casino.

Lottery legislation began appearing around the same time as the latter, and like gambling, there were few early adopters in the first couple of years:

Illinois (March 2012)Georgia (November 2012)Minnesota (February 2014; sales were repealed 2015)Michigan (August 2014)

But like the other kinds of expansion, the next wave saw momentum slow. In the four years lottery legislation has been passed in just three other locales:

Kentucky — KY online lottery went live April 2016Pennsylvania — PA online lottery went live June 2018New Hampshire — NH online lottery went live September 2018

In both cases — lottery and online gambling — there were a couple of first movers followed by a period of little action.

Will sports betting be more like DFS or gambling?

DFS proved to be something of an outlier in regards to the first wave, but even it followed the S.O.P. of gambling expansion as it reached its next wave.

The major question for sports betting is this: will the calendar tick over into the start of a second wave, or Will its wave spill over into 2019?

At this time, it looks like sports gambling will match or even exceed the rapid legalization of DFS

Having said that, it might also run into a few obstacles than DFS. States that passed on sports gambling in 2018 did so for a reason, and those reasons remain for 2019.

Questions like:

What are the stakeholder dynamics?Does the leagues are cut on by the country in with a royalty/integrity/data rights fee?Should sports gambling be retail-only or online?Should the country consider online gambling and/or DFS with sports betting?Is sports gambling an expansion of gambling which requires a constitutional amendment?

These are questions that came up during DFS debates, any one of which is capable of derailing sports gambling legislation.

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