The legal sports betting that is now available in 18 states is turning Americans away from illegal bookmakers, according to a study commissioned by the American Gaming Association.
The Washington D.C. trade organization said Tuesday that spending with illegal bookies fell 25% in legal sports betting states last year, while legal online and mobile betting spending increased by 12%. However, illegal offshore operators saw a 3% increase in states with legal wagering.
The study was conducted by Heart + Mind Strategies on behalf of the AGA between December 2019 and January 2020 and included interviews with 3,451 American adults.
Among the other findings, the primary reasons sports bettors who had shifted from the illegal to legal market gave for the switch was confidence that the wagers would be paid (25 percent), awareness of legal options (20%), and the desire to use a regulated sportsbook (19%).
Since the U.S. Supreme Court overturned the Professional and Amateur Sports Protection Act in May 2018, 17 states have joined legacy Nevada in launching legal and regulated sports wagering. Four more states have laws in place and could launch later in 2020.
“We’ve known for a long time that Americans like to bet on sports. This research affirms their interest in moving toward the protections of the legal market,” said AGA CEO Bill Miller.
The findings were announced a day before Miller is set to testify in front of the U.S. Senate Judiciary Committee in a hearing that will have a section on sports betting. Miller will discuss how legal, regulated sports betting protects consumers, athletes, and all levels of competition.
The hearing, titled “Protecting the Integrity of College Athletics,” was first reported by ESPN last week. It is expected to focus on possible federal legislation regarding student-athletes’ rights to use their name, image, and likeness for purposes of compensation while playing college sports.
Sen. Richard Blumenthal (D-Conn,), a committee member, told Sports Illustrated the hearing would be split into two parts, with the latter portion devoted to sports betting. Sen. Lindsey Graham (R-S.C.), is chairman of the committee.
Since the Supreme Court ruling, Americans have legally wagered more than $22 billion on sports nationally, including $13 billion in 2019.
Before COVID-19 shut down nearly 1,000 commercial and tribal casinos nationwide and silenced professional sports leagues and college sports, 2020 was set to become another record-breaking wagering year. The AGA said $3.5 billion had been legally bet in January and February on sports, up from $1.9 billion for the same two months of 2019.
According to the AGA-based study, 74% of all sports bettors said it was important to wager with a regulated and legal sportsbook operator. However, 52% of bettors said they participated in the illegal market in 2019.
“Giving consumers convenient alternatives to the illegal market, like regulated mobile offerings and competitive odds, is key for getting bettors to switch to legal channels,” Miller said.
The study also found that illegal sports betting is driven largely by confusion about online operators. More than half (55%) of consumers who placed most of their wagers with illegal operators believed they were betting legally.
“Illegal, offshore operators continue to take advantage of unknowing consumers,” Miller said.
The AGA found that the coronavirus pandemic increased the use of unregulated bookies by sports bettors who were wagering on “everything from the weather and shark migration patterns to whether your friends’ marriage will survive the pandemic.”
Miller said the AGA is focused on educating customers on how to wager legally and the dangers of the illegal market.
Legal sportsbooks are hoping to receive a boost with Major League Baseball scheduled to begin play an abbreviated 60-game season this week. The NBA is expected to relaunch its season later this month, and the NHL’s modified Stanley Cup Qualifiers schedule begins Aug. 1.
Howard Stutz is the executive editor of CDC Gaming Reports. He can be reached at hstutz@cdcgaming.com. Follow @howardstutz on Twitter.
