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Five Years Post-PASPA: The Spread of Legal Sports Betting in the USA

Published

8 months ago

January 15, 2024

Five years ago, the Professional and Amateur Sports Protection Act (PASPA) was repealed by the Supreme Court, kicking off one of the fastest periods of gambling legalization ever seen in the USA.

The repeal of PASPA, which had prevented all but a handful of states from regulating sports betting, started a revolution in real money betting that has forever changed the US gambling industry.

Five years later, it’s time to look back at how the market has developed and the legal, economic, and social effects of this monumental change.

The Context: The Downfall of PASPA

PASPA was a federal law that came into effect in 1992. It included all states except Nevada, Oregon, Montana, and Delaware, which were excluded because their laws already had sports betting provisions.

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PASPA outlawed sports betting in all other states, effectively banning it nationwide. This didn’t mean that sports betting wasn’t happening; it was just an underground, offshore activity.

PASPA remained in force until May 2018, when the Supreme Court ruled it unconstitutional. This was thanks almost entirely to the efforts of New Jersey, under the leadership of Governor Chris Christie, who brought the legal challenge after trying to legalize online sports betting in 2011 and 2014. New Jersey argued that part of PASPA violated the anti-commandeering doctrine (the tenth amendment), which, in overly simple terms, prevents the federal government from coercing states to adopt or enforce federal laws.

The District Court first heard New Jersey’s case, then the Third Circuit, with both ruling against them. However, upon appeal, the case was heard by the Supreme Court (SCOTUS) on May 14th, 2018. SCOTUS agreed that PASPA violated the anti-commandeering principle, rescinding the entire act and stating that PASPA was meant to work as a whole, meaning that if part of it was not legally viable, the whole act must be struck down.

Legal Outlook: 38 States Legal, 12 To Go

With PASPA gone, each state now had the right to decide whether to legalize sports betting, with a majority opting to. As of November 2023, 38 states have said yes, passing new laws that allow retail sports betting. Online sports betting is also available in 26.

There are 12 states left to legalize. Three of them (South Carolina, Alabama, and California) face strong opposition, and the remaining nine are looking to introduce bills in the 2024/2025 legislative sessions. North Carolina and Minnesota are tipped to be the next to join the fray, and Oklahoma introduced a new proposal two months ago.

The legal landscape remains complex, with different rules, regulators, and taxation regimes in each state. On top of this, in certain locations, the presence of tribal gaming compacts has conflicted with commercial interests (the ongoing case of Florida sports betting and tribal opposition in California serve as perfect examples).

Growth of Online Casinos – Not Going As Planned

While there was no guarantee, many industry experts and commentators hoped that the legalization of sports betting would soon be followed by online casino regulation. However, thus far, only six states have legalized online casinos: New Jersey, Delaware, Pennsylvania, Michigan, West Virginia, and Connecticut, the latest to join the ranks, passing HB 6451 in 2021. Since then, there’s been no further movement for online casinos.

Players outside the mentioned states may only use land-based casinos or free social gaming sites where available. Sweepstakes casinos are also available across the country, Idaho and Washington aside. As a legitimate gaming option, sweepstakes are taking the US by storm, but just like with real online casinos, players should use a review site to find the best options.

As sweepstakes casinos don’t require a license in the USA, expert advice such as Casino Cabbie’s Wow Vegas Online Casino Review highlights any security issues and the benefits and pitfalls of each site as well before players sign up, making them an invaluable resource.

Economics: More Than $220 Billion Spent On Sports Betting Since 2018

One of the biggest drivers of sports betting legalization is the promise of potential tax revenue. The US sports betting industry is enormous, and since 2018, more than $220 billion has been spent on wagers, contributing over $3 billion in state taxes. The revenue earned by states has been instrumental in funding local projects and new initiatives, as well as responsible gambling research and support.

More in-depth and up-to-date research focusing on the exact economic contribution of sports betting is thin on the ground, and the last comprehensive study by Oxford Economics was published in 2017. At the time, it detailed that the entire sports betting industry created over 216,671 jobs.

Due to the lack of current data, we’re left to turn to figures charting the impact of the entire gambling industry, which includes casinos and sports betting. According to statistics from the American Gaming Association in 2022, US gambling is a powerhouse industry, creating, in total, 1.8 million US jobs, with $104.2 billion in wages (these figures include the entire supply chain).

There can be no argument that over the last five years, US sports betting has been a substantial economic contributor, helping state governments recover from COVID-19, creating jobs, and stimulating economic growth.

Social: 77% of American Adults Support Legalization in their State

Legally and economically, things have changed rapidly in the States since the repeal of PASPA, but what about the social impacts?

Research shows that 85% of Americans think the removal of PASPA was correct, with 77% now supporting sports betting legalization in their state. Moreover, the number of Americans open to placing sports bets has grown by 24 million since 2019. With many enjoying the newly legal betting options available to them, public attitudes towards gambling as a whole have seemingly softened.

With many states also benefiting from increased government budgets brought through sports betting tax revenue, it’s important to recognize the benefits this has made to social provisions. Many states have used the influx to contribute more money to education funds and other social causes, like reducing homelessness.

A proportion of the money is also used to fund state problem gambling assistance, with many running state-based hotlines and counseling services. Nonetheless, in many cases, this funding is not enough to offset the increased rates of gambling harms caused by legalization.

Future Outlook: Challenges and Concerns

Looking forward, the US online sports betting industry has a projected compound annual growth rate (CAGR) of 17.33% for 2023-2027, meaning there’s much more to come. However, this rapid growth will lead to some challenges.

Offshore gambling has been a considerable issue for the legal sports betting market. In 2022, The American Gaming Association estimated that Americans wagered $63.8 billion with illegal bookies, costing $3.8 billion in lost gaming revenue and $700 million in state taxes.

While offshore gambling is reducing, the latest data shows that 77% of online sports bets are now placed through regulated operators, compared to just 44% in 2019. However, things are not all rosy, and 48% of those who bet offshore believe they are placing legal wagers.

Gambling addiction also poses a considerable threat to the sustainability of the entire US gambling industry, with some states recently reporting problem gambling rates over 6%, which is three times the national average (to contextualize this figure better, the UK has a problem gambling rate of 0.2%). High rates of problem gambling twinned with rapid growth potentially represent a ticking time bomb that could rock the entire US industry.

It’s undoubtedly been an incredible five years for US bettors and sportsbooks; as a newer gambling market, the US must now look to more mature gambling jurisdictions to see what player protection methods work best and implement them sooner rather than later.

Related Topics:Latest-News PASPA Post-PASPA

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Gambling in the USA

Detroit Casinos Report $112.5M in August Revenue

Published

7 hours ago

September 12, 2024

Niji Narayan

The three Detroit casinos reported $112.5 million in monthly aggregate revenue (AGR) for the month of August 2024, of which $110.8 million was generated from table games and slots, and $1.7 million from retail sports betting.

The August market shares were:

• MGM, 48%
• MotorCity, 28%
• Hollywood Casino at Greektown, 24%

Monthly Table Games, Slot Revenue, and Taxes

The casinos’ revenue for table games and slots for the month of August 2024 increased 5.9% when compared to the same month last year. August’s monthly revenue was 4.2% higher when compared to the previous month, July 2024. From Jan. 1 through Aug. 31, the Detroit casinos’ table games and slots revenue increased by 0.9% compared to the same period last year.

The casinos’ monthly gaming revenue results all increased compared to August 2023:

• MGM, up 8.9% to $53.86 million
• MotorCity, up 0.1% to $30.76 million
• Hollywood Casino at Greektown, up 7.4% to $26.18 million

In August 2024, the three Detroit casinos paid $8.97 million in gaming taxes to the State of Michigan. They paid $8.47 million for the same month last year. The casinos also reported submitting $17.3 million in wagering taxes and development agreement payments to the City of Detroit in August.

Monthly Retail Sports Betting Revenue and Taxes

The three Detroit casinos reported $9.61 million in total retail sports betting handle, and total gross receipts were $1.7 million for the month of August. Retail sports betting qualified adjusted gross receipts (QAGR) were up by $1.4 million in August when compared to August 2023, and up by $2.1 million when compared to July 2024.

August QAGR by casino was:

• MGM: $521,529
• MotorCity: $930,952
• Hollywood Casino at Greektown: $241,045

During August, the casinos paid $64,015 in gaming taxes to the state and reported submitting $78,241 in wagering taxes to the City of Detroit based on their retail sports betting revenue.

Latest News

Casino Club Online Launches Konami Gaming Real-Money Slots Across Five Argentine Provinces

Published

7 hours ago

September 12, 2024

Niji Narayan

Casino Club announced the launch of Konami Gaming Inc. online slots to all five Argentine provinces served by its official online platform: Casino Club Online. As the largest casino company in Argentina, Casino Club has long delivered proven Konami slots to its land-based gaming destinations. Today players can also enjoy Konami favorites like Cobra Hearts, Lion Festival Boosted Celebration, and Volcanic Rock Fire Twin Fever with convenient access by online device. These games and more are featured on Casino Club Online through Konami Gaming’s owned remote gaming server (RGS), with HTML5 delivery across smartphones, tablets, and desktop devices.

“The launch of Konami slots on Casino Club Online further propels our entertainment offering, giving players a comprehensive destination for digital real-money gaming. Whether playing online or in-person, our guests have access to Konami slots that are recognized and celebrated around the world,” said Federico Rutt, gaming manager at Casino Club Online.

Nearly a dozen Konami slots are now live on Casino Club Online, as part of the initial launch. Players in the provinces of Rio Negro, Chubut, Santa Cruz, La Pampa, and Misiones can enjoy real-money Konami slot gaming online through Casino Club’s dedicated digital casino. Additional Konami games are planned for future roll-out, including linked progressive jackpot games.

“We are excited to expand our longtime partnership with Casino Club through this successful launch to online patrons. Konami Gaming values the chance to serve Casino Club Online, and demonstrate ongoing commitment to introducing new and novel entertainment to this important online platform,” said Eduardo Aching, vice president of international gaming operations at Konami Gaming Inc.

Latest News

How to Organise Customer Support Services Effectively?

Published

9 hours ago

September 12, 2024

George Miller

How to Organise Customer Support Services Effectively?

When launching an iGaming project, every operator faces a dilemma of how to organise its customer support services effectively. Should it be managed in-house or outsourced? SOFTSWISS, an international tech provider with over 15 years of iGaming experience, offers a cost comparison to help resolve the issue.

Through years of delivering high-quality customer support to its Casino Platform clients, SOFTSWISS Managed Services has earned strong recognition among industry leaders. In 2023-2024, the solution received several awards for its outstanding contributions to responsible gambling practices and excellence in customer support. Based on their profound experience, SOFTSWISS experts share their insights on organising customer support services.

In-House vs Outsourced Services: Pros and Cons

Cost savings, flexible payments depending on the project scope and workload, increased operational efficiency and access to specialised expertise are undeniable advantages of outsourcing customer support services. What is more, an outsourced support team eliminates the need for investing in recruiting, hiring, training, and managing staff, allowing businesses to focus on core operations while reducing overhead costs.

The key advantage of the in-house model and something outsourcing typically lacks is greater control over a project. At the same time, outsourcing frees up time and human resources, enabling operators to prioritise high-impact strategic initiatives instead of being tied up with routine service management tasks.

When it comes to customisation, experts generally do not classify it as a distinct advantage or disadvantage of either model. At SOFTSWISS, when launching any iGaming project, the team requests operators to complete a specialised questionnaire. The responses are then used to customise customer support services to the unique needs of each project.

Crucial Customer Support Services

When setting up a back office for an iGaming project, the first step is to determine the ‘must-have’ services to be provided. Based on the SOFTSWISS expertise, the golden standard comprises the following:

First-Line Support. To ensure a smooth project flow, an operator needs at least five in-house specialists to provide comprehensive player support. With the player base growing across various locations, additional specialists will be needed to offer multilingual support.
Anti-Fraud Support. In some projects, a single professional may be able to handle all necessary tasks. The challenge is the high cost of such experts, which can vary depending on the country of recruitment.
VIP-Player Support. VIP players generate around 60-80% of the project’s revenue and need an exceptional approach.
Ongoing Retention Support. Developing marketing strategies and clear action points for increasing player loyalty and retention takes a lot of time and requires profound industry experience.

The costs for setting up an in-house service to address the above functions start at 25,000 euro, whereas outsourcing can reduce these expenses by nearly half.

Enhanced Customer Support Services

Several additional services play a critical role in increasing player loyalty, engagement, and lifetime value. SOFTSWISS experts highlight the following:

Initial Retention Setup. It is a one-time service for preparing player segmentation and setting up welcome letters, bonuses, and promotional campaigns, allowing the project to start operating fully from day one. This service does not require ongoing attention.
Player Reactivation. Experienced professionals help manage failed payments, and reactivate dormant players.
Content Management. This service ensures a seamless user interface, up-to-date content, and a robust communication system. A clear and user-friendly website helps attract users and convert them into active players.

The minimal costs for additional services stand around 7,500 euro and differ only slightly whether organised in-house or outsourced. The challenge is independently setting up numerous unfamiliar processes from scratch, especially without prior experience. Additionally, some specialists may not be needed full-time, and arranging part-time work can often be inefficient.

Artyom Rudakov, Head of SOFTSWISS Managed Services, summarises: “The choice of the appropriate model for the customer support organisation depends on the specific needs of a business. It should rely on the project’s life cycle stage, forecasts, management capabilities and a business approach tailored to geographic geography and local labour market opportunities.

In some cases, a hybrid model, combining both in-house and outsourced support, can offer the best of both worlds. At the same time, the outsourced model allows the team to focus on project development and business growth.”

The SOFTSWISS will take part in the SBC Summit Lisbon on 24–26 September. To get more insights, partners can book a meeting at stand B-160.

About SOFTSWISS

SOFTSWISS is an international technology company with over 15 years of experience in developing innovative solutions for the iGaming industry. SOFTSWISS holds a number of gaming licences and provides comprehensive software for managing iGaming projects. The company’s product portfolio includes the Online Casino Platform, the Game Aggregator with over 23,500 casino games, the Affilka affiliate platform, the Sportsbook software and the Jackpot Aggregator. In 2013, SOFTSWISS revolutionised the industry by introducing the world’s first Bitcoin-optimised online casino solution. The expert team, based in Malta, Poland, and Georgia, counts over 2,000 employees.