2022 Marcom Trends - Magazine - Page 11
in-person betting collecting less than 6.5% of sports bets in 2021.
Granted, the COVID-19 pandemic made it difficult or impossible
for users to place bets in person, so in-person revenue certainly
suffered as a result, but the ability to place a bet from anywhere has
a definite impact on the total amount wagered in a given state. It is
a small wonder, then, that New York began allowing online betting
starting this year.
Where the Future Is Online
James Johnston, Partner, email@example.com
Louis P. DiLorenzo, Associate, firstname.lastname@example.org
Although the U. S. Professional and Amateur Sports Protection Act of 1992 (PASPA)
previously prohibited most states from legalizing sports betting, the Supreme Court found
in 2018 that PASPA was unconstitutional, clearing the way for states to legalize sports
betting. Now, sports betting is legal in a plurality of states, though the regulatory scheme
looks dramatically different from state to state.
The State of the Industry Today
Up until PASPA was struck down, Nevada was the only state that
offered any form of sports betting. Within weeks of the Supreme
Court’s decision that PASPA was unconstitutional, New Jersey and
Delaware legalized sports betting, and, within a year, five different
states followed suit.
In an era of budget shortfalls due to the COVID-19 pandemic, states
are eager to find new ways to bring in tax revenue. With a total
of $4.29 billion in revenue in 2021 alone — up from $1.5 billion
in 2020 and $328 million in 2019 — the sports betting industry
has proven to be a lucrative one that offers significant potential tax
revenue for states that opt in.
Today, the stats are much different:
• 30 states plus Washington, D.C. have launched legal
sports betting operations in some manner;
• Three states have legalized but not yet launched
• Most of the remaining states are considering or have
considered legalized sports betting in some way,
shape or form.
10 DAVIS+GILBERT LLP
As states continue to authorize sports betting, there are a number of
differences in how the industry can operate in each state.
The biggest divide is whether or not the state enables online betting,
or whether betting needs to be conducted in-person at licensed
casinos or other betting operations. As the chart on the next page
shows, those states that allow online sports betting are able to
derive significantly more tax revenue than those that allow users
to place bets in person only, with the ten states that only allow
There are other differences that affect how the industry operates in
a given state. For example, Delaware’s sports betting is controlled
by the Delaware State Lottery, which licenses sports betting to thirdparty providers and retains 50% of revenue. Some states also have
limits on the number of licenses that they will grant; for example,
New York launched online sports betting earlier this year, but only
offered nine licenses. Most states also have restrictions on betting
for college sports, with some states prohibiting betting on in-state
college teams and others allowing the practice but prohibiting
propositional bets for in-state college teams.
For businesses operating within the sports betting ecosystem,
including marketing agencies and other service providers, by far
the biggest consideration is whether to register with the state’s
regulators. Some states — including New Jersey and Pennsylvania
— broadly require all companies that provide services to gaming
licensees to register. In contrast, some states — like Illinois —
In-Person Only ($3.7 B)
What Businesses Can Do Now
• In just three years, sports betting has grown from a kernel
of opportunity to a $4.29 billion industry, and the revenue
potential will continue to draw in more and more states.
• The opportunities for agencies, publishers and others seeking
to jump in the mix are seemingly a jackpot in waiting, and will
only grow in the coming years.
In addition, many states have imposed content–based restrictions
on advertising for sports betting. Most states require advertising
to include a toll-free number for problem gamblers to seek help,
as well as disclosures indicating that gambling is only available for
individuals who are 21 years of age or older. In addition, a number
of states prohibit certain misleading advertising claims regarding
Online Betting Available
have specifically indicated that advertising companies do not need
to register. In yet others, marketing “affiliates” — publishers or
other companies that drive traffic to sports betting sites — need
to register, though the states differ about whether various revenue
models (for example, cost per acquisition, cost per click, cost per
thousand impressions, etc.) make a third party an “affiliate.”
TRENDS IN MARKETING COMMUNICATIONS LAW 11