When it comes to wagering on sports, gamblers will soon be betting in many other places besides Nevada, which is about to lose its crown as the country's sports betting capital.
Until the U.S. Supreme Court overturned the Professional and Amateur Sports Protection Act, which barred states from authorizing sports wagering, Nevada was where the sports betting action was. Last year, $4.8 billion was wagered on sports in the state, and a record $249 million was won by sportsbooks, the eighth consecutive year a record was set.
That's a significant percentage of the total $11.1 billion in gaming revenue generated in the state last year, and it was all part of a lucrative and growing business. But now, with Delaware and New Jersey accepting wagers on sports, and other states soon to follow, Nevada will see its sports wagering action decline, and sportsbooks' win totals there will fall.
A shift in focus
According to data from GamblingCompliance, a provider of business intelligence for the global sports betting industry, the Supreme Court's ruling is going to expand sportsbook revenue to as much as $5.2 billion by 2023, with the Northeast becoming the industry's focal point. In the betting industry, revenue is the amount the sportsbooks retain after winnings are paid, while the total amount bet by gamblers is called the "handle."
New York State is expected to become the industry leader with some $700 million in revenue, nearly three times more than Nevada's take last year. And New Jersey and Pennsylvania are forecast to bring in upward of $300 million each. Massachusetts is also expected to surpass Nevada.
Right now, only Delaware and New Jersey are accepting sports wagers, having both passed enabling legislation in June following the Supreme Court decision. And their preliminary reports for the month show sports betting has some big potential.
New regional winners
After only two weeks of accepting wagers, New Jersey regulators said the handle for sports betting hit $16.4 million, with the state's three legal operators reporting revenue of almost $3.5 million. MGM Resorts' (NYSE:MGM) Borgata was one of only two licensed operators when the state went live on June 14, and it took in $987,000 in revenue, second to Monmouth Park racetrack with $2.2 million. The Ocean Resort Casino, which opened on the last day of the month in the former Revel casino, collected almost $193,000.
The Meadowlands Racetrack, adjacent to MetLife Stadium, where the National Football League's Giants and Jets play, went live with sports betting on June 14, while several other casinos will come online in August.
By the end of 2018, states including Mississippi, New York, Pennsylvania, Rhode Island, and West Virginia are all expected to have approved a regulatory framework for accepting sports bets, and Nevada's demise as the epicenter of U.S. sports gambling will have begun.
It's easy to see why New York and the surrounding region will take the lead in a short time. With some of the richest, most storied franchises across all sports (like the Yankees, Giants, and Knicks in New York, as well as the Red Sox, Celtics, and Patriots in Massachusetts), along with huge populations concentrated in small areas, the potential for explosive growth is real.
The investor takeaway
Which casino operators will benefit most from the spread of sports wagering remains to be seen, but William Hill (NASDAQOTH:WIMHF), a global sportsbook operator affiliated with both Monmouth Park and Ocean Resort, and Boyd Gaming (NYSE:BYD), the regional casino giant that has the biggest sportsbook in Nevada, are seen as clear favorites.
The largest regional casino operator, Penn National Gaming (NASDAQ:PENN), could also be a winner because of the reach it has with dozens of properties around the country, including two smaller casinos and racetracks in Pennsylvania. But management has stated that the organization is taking a go-slow approach to sports betting at present.
The rise of sports gambling gives many states a chance to attract gamblers who otherwise might have gone to Las Vegas to place their bets, or not wagered at all. Nevada's time atop the heap will soon expire, and the New York metropolitan area is set to become the new champion.