Regulated sports betting industry booming five years after PASPA’s repeal

Patrick Everson

FOX Sports Betting Analyst

Exactly five years ago, on May 14, 2018, the world of sports betting in the United States changed forevermore. On that day, the Supreme Court – in a case brought by the state of New Jersey – struck down the Professional and Amateur Sports Protection Act, more commonly known as PASPA.

The 1992 law was repealed on the basis of it violating the state’s rights, specifically with regard to allowing legal, regulated sports betting. And the aftermath has been swift.

At the time of the decision, Nevada was the lone state offering legal, regulated sports betting – at least in the form most of us are familiar with. Five years later, more than three dozen nationwide jurisdictions offer some form of sports betting.

It’s been an interesting five years. But as multiple sports betting industry leaders note, the U.S. is just getting started. Let’s take a look back and at the future of regulated sports betting in America.

How It Began

It was 10 a.m. ET on Monday, May 14, 2018. For several weeks, the Supreme Court had been in the process of releasing decisions from cases heard in late 2017. Finally, on that mid-May morning, came the decision so many had longed for in the gaming/sports betting industry.

“It was a crazy day for everybody, a whirlwind of a morning,” said Casey Clark, senior vice president of the American Gaming Association. “We were prepared and had content ready to activate, whichever way the decision went. It was a great day. But it was like the dog that catches the parked car: What are you going to do with it?”

Fortunately, the AGA had a game plan in place. Clark said the AGA – a national trade group representing the casino/gaming industry – felt confident that the Supreme Court ruling would be favorable. As such, the organization had already been in discussions with leagues and teams impacted by the decision. Of course, the AGA was also working with state legislators and regulators, who were linchpins in getting sports betting off the ground.

Those efforts led to a speedier liftoff for sports betting beyond Nevada’s borders. Post-decision, New Jersey was the first to market, launching retail sports betting just one month after the ruling, on June 14, 2018. Later that summer would come the rollout of mobile/online betting in New Jersey, and ever since then, one state after another – along with Washington D.C. – legalized and launched sports betting.

“Obviously, we were very pleased with the Supreme Court outcome, and it’s proven to be more than what we expected it to be. The expansion was faster than anybody anticipated,” Clark said. “It’s beyond our best-case scenario. To go from one market five years ago to 38 states and D.C. now is exponential growth over a really short period of time.”

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Fantasy to Reality

For DraftKings – along with its longtime fantasy sports rival FanDuel – the Supreme Court ruling has been monstrously positive. The decision helped facilitate DraftKings and Fan Duel entering the sports betting space. And it led to Johnny Avello — longtime respected Las Vegas oddsmaker — making the jump from the Vegas Strip to the new world of sports betting expansion.

A world that, quite frankly, he never thought he’d see over his 33 years as a bookmaker up and down Las Vegas Boulevard.

“I never thought we’d get to this point,” Avello said, now 38 years into his career. “I actually thought that it was gonna happen when we got close, three to five months before the Supreme Court decision. I was optimistic. But prior to that, I was not. I thought it was a huge underdog.”

Perhaps as big an underdog as Avello leaving the Las Vegas sportsbook scene, as DraftKings doesn’t yet operate in Nevada (the operative word there is “yet.”). But that’s what Avello did in October 2018, leaving the Wynn Las Vegas behind to take over as DraftKings’ head of sportsbook operations.

Now, DraftKings is in 22 jurisdictions and is a market-share leader in the space. Avello marveled at the growth, not just for DK, but the industry as a whole.

“I’m kind of surprised at how big it is,” he said. “I thought it would grow, but I didn’t know how fast it would grow. At DraftKings, we’re moving at the speed of light.”

And not just in terms of expansion, but all the types of markets offered – even some beyond typical sports betting.

“Who ever thought that there would be markets on pickleball, cornhole, the Academy Awards and the hot dog-eating contest?” Avello said.

Just as important, those new markets and all the ones we know and love – particularly the NFL, which drives the sports-betting bus in America – now offer the protections of a legal, regulated market.

“What that’s done is it’s kept the illegal bookies at bay,” Avello said. “Now, people know they’re gonna get their money.”

That’s obviously a goal of the AGA, along with of course an overall responsible gaming message.

“Sports betting isn’t new to Americans,” Clark said, alluding to the countless number of people who’ve bet with offshore bookmakers or local bookies for decades. “We’re migrating that activity and those bettors into the protections of the legal marketplace. We’ve seen that happen faster than we expected.

“Everyone involved has a role to play in creating a safe, sustainable marketplace for adults to legally sports bet. I’m really proud of the work that ecosystem has done on responsible gaming. It’s really about how we’re going to continue to grow a sustainable business.”

Part of that sustainability will be the continued convenience and access – along with protections – that American consumers now have with sports betting.

“It’s just given the country a whole lot of options,” Avello said. “You don’t have to travel to Vegas anymore. You can stay put.”

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Exchange Rate

So what lies ahead for sports betting? One intriguing element that’s rolled out over the past year is sports betting exchanges. It’s more like playing your wagers as you would stock purchases, with the goal of buying shares on a position that has value – real or perceived – and being able to sell at any point.

Obviously, the hope is to buy low and sell high. But just as important is the ability to sell out of a decision that’s going the wrong direction, before that market bottoms out. For example, last season’s NFC Championship Game. With entities such as SportTrade and Prophet Exchange – which both operate only in New Jersey at the moment, but aim to expand – a consumer who bought into the San Francisco 49ers pregame could’ve sold out of that position once Brock Purdy got injured, to lessen the amount of the loss. The Philadelphia Eagles went on to a 31-7 rout.

Alex Kane, CEO of SportTrade, got the idea for a sports betting exchange during the 2016 Masters. He recognized the potential for being able to buy into and sell out of positions over the course of a tournament. His idea evolved into a fortuitous decision in 2018.

“The week that PASPA was repealed is when we formed the corporation. It was a total coincidence,” Kane said. “So my first thought after the repeal was that SportTrade went from a complete pipe dream to something that could have legs. From that day, it wasn’t until September 2022 that we launched.”

Now, SportTrade offers many of the same markets of the more traditional sports betting operations: single games, with spreads, totals, moneylines, etc.; proposition bets; in-game trading; and futures markets. The company takes a 2% commission on transactions that have a net win but takes 0% on net losses.

Perhaps the best thing about futures markets at SportTrade is that the offering is Yes/No. You can bet against something happening rather than only having the Yes option.

Kane offered a hat tip to Circa Sports, a sportsbook that also offers Yes/No futures options and generally caters to a smarter consumer. But Kane also acknowledged the efforts of all sportsbook operators since the PASPA ruling came down.

“Operators have done a great job of bringing in new customers over the past five years. But the market is starting to get more sophisticated,” Kane said. “SportTrade is really well-positioned for a customer looking for fair odds and cashouts. The first five years was the opening act – the sheer excitement of, ‘Oh my God, I can actually bet.’ Now, it’s more about what experience can I get out of the bet.

“The next act will be about the product and the customer experience – giving the customers the most seamless experience at the best price.”

And by all means, that experience has to be accessible from the palm of your hand or your computer.

“Over time, kind of like water on rock, people are going to start to gravitate to the biggest menu or the easiest app to sign into, or being able to track bets with you and your friends,” Kane said. “They’re gonna stay with an app for product reasons. SportTrade will have been successful if people begin to look at zero delays on in-play betting, fair limits and fair cashouts.

“Remember when you had to have the spinning wheel when you made a bet on your app? Thank God we don’t have that anymore. How great will it be when every operator provides the expectation to the customer that the odds won’t change on their bets?”

Built for the Future

The AGA agreed with Kane that user experience and mobility will be the hallmarks of the next five years. Specifically, books must work on tailoring experiences to specific customers.

“Sports betting is a highly customizable entertainment option, whether in a retail sportsbook or on a mobile app,” Clark said. “You can’t replicate the Las Vegas experience. But adding to the entertainment portfolio, rather than competing with it, allows different generations of consumers to engage in the ways they enjoy most. It’s not a static thing. We have to continue to evolve and change in this nascent sports betting market.”

Just given how far sports betting has come in five years, Clark said it’s impossible to pinpoint exactly what’s around the corner. And that’s a good thing.

“What’s exciting for consumers is that we don’t know what we’re gonna see next,” Clark said. “But we know we’re gonna meet consumers where they are and with how they want to engage. We’re just getting started.”

Patrick Everson is a sports betting analyst for FOX Sports and senior reporter for VegasInsider.com. He is a distinguished journalist in the national sports betting space. He’s based in Las Vegas, where he enjoys golfing in 110-degree heat. Follow him on Twitter: @PatrickE_Vegas.

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