US Sports Betting Update – industry revenues forecast to hit $24.3 billion by 2026
Soaring demand for legal sports betting will help the industry triple in size by 2026, according to new projections from Vixio Gambling Compliance. Licensed U.S. sportsbooks generated a record $7.7 billion in gross gaming revenue last year after several new states rolled out regulated industries. That figure will be shattered in 2022 thanks to the arrival of legal online sports wagering in New York, Louisiana and Kansas. Vixio Gambling Compliance now expects revenues to hit $24.3 billion by 2026, which would make the U.S. the world’s largest market for legal sports wagering.
The UK currently has the largest legal sports betting industry in the world, but the U.S. is on pace to seize the crown this year. By 2026, it will be double the size of the UK, according to the forecasts from Vixio Gambling Compliance. Sportsbook supplier BtoBet commissioned the regulatory intelligence firm to compile the forecasts as part of an industry report called “United States Betting Focus.”
The report notes that the overall U.S. gaming industry – including retail and online casino gaming – generated a record $29.16 billion in the first half of 2022. That represents an 18% increase compared to H1 2021, and it leaves the industry poised to smash through the $50 billion mark in annual revenue for the first time. Sports betting revenue increased by 58.7% in the first half of 2022, benefiting from the rollout of legal online sportsbooks in New York.
Online Sportsbooks Set to Dominate
Analysts at Vixio Gambling Compliance expect online sports betting to account for 86% of revenues by 2026. Only 52.2% of the gross revenue came from digital channels in 2019, but that shot up to 72.5% in 2020 and 82.5% in 2021. The pandemic has hastened the digital transformation, so most Americans now place wagers via mobile apps or websites.
“It’s been a boom for consumers, really,” said David Forman, senior director of research at the American Gaming Association. “I mean, prior to 2019 consumers had to either pay to fly to Vegas to place your bet, which most people are unable to do or are unwilling to do, or you had to be with an illegal bookie or with an offshore site. They jumped at the chance of online sports betting.” He added that revenue growth is coming from new markets opening up and more consumers gaining access to legal, secure sportsbooks.
California Could Dampen Those Projections
However, it is worth noting that the projections rely upon sports betting being legalized in additional states by 2026. The report also cites data from H2 Gambling Capital, which estimates that California will account for 13.3% of industry revenues by 2025. It also expects Florida to make up 4.9% and Texas to generate 2% of the gross regulated sports betting win.
California, Texas and Florida are the three most populous states, but there are major obstacles to overcome in each of them. Next month, Californians will go to the polls to vote on two rival ballot measures: Proposition 26, which would permit only retail sports betting at tribal casinos and racetracks; and Proposition 27, which would roll out online sports wagering statewide. The proponents of these rival ballot measures have engaged in a fierce war of words, while investing heavily in ads discrediting one another, and experts now expect both to fail, as voters have been left confused after being bombarded with conflicting messages.
The San Francisco Chronicle reported that the campaign group behind Prop. 27 is vastly scaling back its television ad buys this fall. That sort of move is typically an ominous sign for a campaign. The backers of Prop. 27 – FanDuel, DraftKings, BetMGM, Wynn, Penn National, Bally’s and Fanatics – have already spent $169 million on TV advertising, while the rival group behind Prop. 26 has invested $200 million on its own array of ubiquitous ads, sparking a great deal of bewilderment for Golden State voters.
Most industry insiders now expect an 0-for-2 result. Nathan Click, a spokesperson for the sportsbooks backing Prop. 27, admitted that the war of words has not helped either side. “Clearly, the saturated television market is not benefiting either side, so our campaign is putting those dollars toward additional direct communication with voters in order to pass Prop. 27 – the only sports betting measure that provides real solutions to communities and nonprofit organizations in California,” he said.
No Clear Path for Legal Sports Betting in Florida and Texas
Meanwhile, there is no clear roadmap for legal sports betting to return in Florida. The Sunshine State introduced legal sports betting last year. However, it only lasted for 34 days. U.S. District Judge Dabney Friedrich ruled that the gaming compact between the state and the Seminole Tribe violated the Florida constitution and the federal Indian Gaming Regulation Act. She ordered the Seminoles to pull their Hard Rock Sportsbook app – which was handed exclusive rights to offer sports betting in Florida – from the market. Appeals have failed, and legal sports betting is unlikely to return until 2025 at the earliest.
In Texas, any attempts to legalize sports betting have been killed off by a powerful group of lawmakers led by Lt. Gov. Dan Patrick. The Texas Sports Betting Alliance sent out a release earlier this month urging legislators to let voters decide. “The state should allow Texans the freedom to decide whether or not to participate in sports betting and protect those who do so,” said spokesperson Cara Gustafson. “Football will continue to dominate the Lone Star State and sports betting will only grow along with it. It’s time to honor Texas’ core value of individual freedom and legalize sports betting.”
However, the odds are against Texas legalizing sports betting any time soon. Ohio, Maryland and Massachusetts are poised to introduce legal sports wagering within the next few months, which will help the industry grow. However, sportsbooks will need to significantly grow their customer bases in existing states if that revenue target of $24.3 billion by 2026 is to be reached.