Authored by Eren Ucer
Professors Reis and McBride
Current State of the Sports Betting Industry
The online sports betting industry has been extremely lucrative in its first few years of operation. Currently, 38 states allow sports betting in some capacity. With New York State being the biggest player in the market. According to the American Gaming Association (AGA), sports betting revenue for the 2023 fiscal year reached a mark of $10.92 billion, which represented a whopping 44.5% increase over 2022’s mark of $7.5 billion, and a staggering 250% increase from 2021’s total of $4.33 billion. The total handle, which is the amount of money that American sportsbook companies processed in 2023, was $119.8 billion, up 27.5% from 2022’s figure, according to the American Gambling Association.
This growth has been aided by the fact that in 2023, five new states legalized online sports betting. Kentucky, Maine, Massachusetts, Nebraska, and Ohio – the latter of which has been most successful- bring in $936 million in revenue within their first year of operation. Currently, New York leads the nation in total revenues from sports betting, reaching $1,697 billion in 2023, while New Jersey and Illinois trail behind at just over $1 billion in net revenue each. It is important to note that national valuations and profit figures for the sports betting industry exclude America’s three largest states participating in wide-scale sports betting: Florida, California, and Texas. A caveat should be made for Florida, however: it technically allows sports betting as of December 2023, but is limited to only one sportsbook operator: Hard Rock Bet, owned by the Seminole Tribe. Florida is unique in that any negotiations over gambling rights must be approved by the Seminole tribe, rather than solely by the state of Florida, because the casino and its online servers operate on the Seminoles’ native land. Despite its relatively late entry, state economists predict that by the end of the decade, Florida will generate around $4.4 billion in net revenue from sports betting. Estimates from Flutter, the parent company for FanDuel Sportsbook (one of the largest operators in the US), for the total value of the addressable US betting market (i.e., including all states) would be north of $40 billion by 2030, nearly a 4x increase over its current annual revenue.
As for the most profitable companies that operate sportsbooks in the US, notable names include DraftKings, FanDuel, Caesars, WynnBET, and BetMGM, among many others, all of whom have annual revenues of several billion dollars. However, these operators do not have unrestricted access to consumers, as they must negotiate with individual state governments to gain licensing rights to operate. In New York State, 9 sports betting operators have been granted licenses, many of which are among the top companies in the market, such as FanDuel and DraftKings. If you are a New Yorker, you’ve likely seen an advertisement for at least one of these companies over the past 2 years. A major driver of increased user adoption of these companies is the various “sign-up promos” they offer new customers. Deals like “Bet $5 and get $150 in free bets” or “First bet covered up to $1000” are commonly plastered on billboards in Times Square or on TV broadcasts during games. Prominent sports media personalities like Pat McAfee and JJ Redick, whose weekly shows garner millions of views and downloads, have signed extremely lucrative deals with sportsbook companies to advertise to their viewer bases; the former inked a four-year, $120 million deal with FanDuel Sportsbook. It’s common for these sportsbooks to associate themselves with former athletes or sports personalities to help bring in usership. Players like Eli Manning, Charles Barkley, Shaquille O’Neal, and Wayne Gretzky are a few Hall of Famers in their respective sports who’ve appeared on commercials for various sportsbooks.
