Sports Betting: A Gaming Industry Instant ReplayBy Ken Adams, CDC Gaming ReportsJanuary 6, 2018 at 11:21 amThere is no instant replay in real life as there is in sports, regardless of how much we would like to see something one more time. However, observers in the gaming industry may be on the verge of a replay. The Supreme Court is considering the legality of a New Jersey law authorizing sports betting. If the court rules in New Jersey’s favor, it will probably unleash a tidal wave of legalization. Nearly every state with legalized casinos will at least consider legalizing sports betting. The spread of sports betting will look very much like the spread of casinos, except it will happen faster. It took seventy years for gaming to expand into nearly every state in the country; for sports it could happen in two or three years. The spread of sports betting will not mirror the spread of casinos exactly, but it will give us one more chance to watch the impact of expansion in one state on the existing industry in other states. The process may begin as soon as this summer. New Jersey and Delaware are already lining up their ducks.Delaware wants to be the first by using its unique legal status. It is one of four states with an exemption to the Professional and Amateur Sports Protection Act (PASPA) of 1992. The law prohibited sports betting, but carved out exemptions for Nevada, Montana, Oregon and Delaware. As a result, Delaware already has a limited form of sports betting. If the high court strikes down the PASPA, the state wants to get started as quickly as possible. Governor John Carey believes it can be done administratively and thus faster than other states. His team hopes Delaware will have a year or so advantage before other states can pass legislation and develop the necessary infrastructure. The Delaware director of finance said, “If we can get to market faster than some of our neighbors there could be some real upside.”The strategy may work in the short-term. But other states will follow Delaware as fast as their legislative processes allow. Some of those states are too far away to impact Delaware, but the spread into neighboring states will quickly take away that advantage. It will be a repeat of the impact that casinos in other states had on the Delaware’s racinos. Since 2005, the combined table and VLT revenue at the racinos has fallen from a high of $343.8 million annually to $253.8 million in 2016. A monopoly on sports betting could generate some instant cash for the racinos as customers will come from all over the region. But in time those gamblers and their cash will go back home.Delaware will not be alone in that respect. New Jersey also plans on legalizing sport wagering as soon as it can. Its success will be contingent on the absence of legal sports wagering in Pennsylvania and New York. The process will repeat itself over and over as each new jurisdiction comes on line. When most states have sport betting, it will add very little revenue to any one state. Sports books like casinos will be dependent on the population within a few miles. That is why I am viewing the impending spread of sports betting as a replay of the spread of casinos. Regardless of the rhetoric in the halls of lawmaking, sports betting will not change the gaming landscape in any one jurisdiction. Any initial advantage will dissipate over time.Certainly, sports wagering will bring some new customers into casinos. But casinos will have to compete with illegal opportunities online for those customers. The online sites offer convenience and because of the large number people betting online they can offer better odds. To be more attractive and able to compete with online gambling may be the biggest challenge for legalized sports books everywhere. The rhetoric around legalization of sports gaming will sound very good. We should not be easily fooled as we were with each new wave of gaming expansion. We have already seen the game and know the final score. Of course, some casinos such as Resorts World Queens will have a huge market and should do very well. Those will be the exceptions. For the individual states, except Nevada, sports betting will add slightly to the tax base. And for most casinos it will help a bit by adding a little extra revenue. It will not be a gamer changer for anyone. In the end sports betting will be entering a very crowded market place. It will have to fight for its share of people’s disposable income with all of the other options consumers have.