The COVID-19 pandemic has turned our lives upside down and sideways. The sports betting industry has been able to pivot in ways that few expected and companies are taking notice. In the future, we will look back at the COVID-19 pandemic as a major turning point for the sports betting industry.
With things constantly in flux, we summarize the items covered over the past several months. The industry which had almost zero regulation prior to 2018, is now heavily regulated in many states… with many more to come.
Mobile Sports Betting Is The Most Important Asset To Gambling Companies
Gambling companies have struggled since COVID-19 swept the world in March. Major gambling companies stock hit sudden and scary drops that put many on notice. For instance, we saw Penn National Gaming’s stock plummet from $33 per share to $5 per share in March.
Since then, the retail casino outlook is not getting much brighter, with Wynn’s Encore Casino in Boston being forced to close earlier this week due to the pandemic. This could very well continue too with COVID-19 cases spiking across the world.
This all leads to major gambling companies pivoting their priorities to mobile betting. We saw Caesars Entertainment make a $3.7 billion purchase of William Hill, one of the largest sports betting companies in the country. In 2019, William Hill reported that three million customers gambled online. This will increase now that many states are introducing legal online sports betting during the COVID-19 pandemic.
Gambling companies have rebounded since the COVID-19 pandemic swept the industry but that is in large part due to mobile sports betting. Companies that are prepared for mobilization are able to pivot to that platform.
Penn National Gaming has rebounded from $5 per share to well above $50 per share at close on Tuesday. Their mobile platforms are undoubtedly leading to this optimism that has seen them become one of the largest casino companies in the country. Other companies will need to replicate this model if they have any hope of competing in this market.
State Governments Are Making Mobile Sports Betting A Priority
Mobile sports betting is only going to go as far as states allow it to go. The most sought after benefit from legal sports betting is tax revenue. We have seen huge numbers in wagers from states like New Jersey, Nevada, and Pennsylvania. Furthermore, Colorado, Tennessee, and Illinois have adopted mobile sports betting in their states in 2020.
With many more states pushing for legal sports betting, expect legislation to rapidly increase. For instance, Michigan legalized live in-person wagering on sports in April of 2020. This is nearly impossible for fans to use because most casinos have severely decreased capacities or totally closed. Moreover, casinos were closed for several weeks from March-May to attempt to stop the spread of COVID-19.
There has been plenty of traction for Michigan to officially launch mobile sports betting in their state. Expect that this could happen in late 2020 or early 2021. This will be a theme in 2021 as well with states like New York, California, and Florida potentially bringing in huge amounts of sports bettors.
The potential for tax revenue will be massive in states with that kind of population.
Esports Will Be A Major Betting Attraction As It Gains Popularity
In March, sports leagues like the NBA, NFL, and NHL were forced to come to a halt. With no sports eligible to be bet on, Esports burst onto the scene. Sportsbooks quickly jumped in on the continuously growing market.
The market exploded during the 2020 pandemic where we saw players across the country for competition. Sportsbooks such as DraftKings Sportsbook, William Hill, and FanDuel having extensive offerings for Esports.
Major corporations that are outside of the gambling industry are interested in Esports as well. Recently, Amazon purchased the streaming company Twitch for $1 billion. Throughout the country, we are seeing gamers make millions of dollars through streaming platforms, Twitch, Discord, and other streaming platforms. Players have the option to sell different types of gear on Twitch, as well as gain ad revenue from their videos.
The money that has been pushed into Esports was a huge development during the COVID-19 pandemic. The New York Times reported that the Esports betting industry is now worth $160 billion. Sports betting director Marco Blume is excited for Esports exclaiming, “Esports is king now.”
Marco explained that every major sportsbook will be offering Esports betting because of the COVID-19 pandemic.
Esports may have burst onto the scene during COVID-19 but it is here to stay.
Major Gambling Companies Want A Big Piece Of The Pie: Mergers and Acquisitions
We have talked about casinos working hard to pivot out of their retail operations, with major gambling companies like Caesars Entertainment and Sands Las Vegas moving away from their retail casinos. Caesars recently sold their Bally’s Atlantic City location to Twin River Holdings. They also sold Tropicana Evansville and are expected to continue to sell underperforming retail locations. However, they did buy William Hill for $3.7 billion in September where they expect to ramp up the online sportsbook.
Sands Las Vegas (NSDQ: LVS) is one of the largest gambling companies in the country with nearly a $40 billion market cap. They have recently looked to sell a few of their retail casinos in Las Vegas. An extremely frustrating set of circumstances for the massive corporation might see them sell-off some of the best resorts in their company.
Perhaps Las Vegas Sands is looking to get into mobile sports betting in response to the COVID-19 pandemic. Pivoting in this industry is crucial to the sustained success of these companies. Penn National Gaming recently launched the Barstool Mobile Sportsbook which helped their Quarter 3 earnings beat projections across the board.
Online Poker Increases In Popularity
When sports were forced to cease operation, online poker took a piece of the action. During the COVID-19 pandemic, only four states had legal online poker playing. These states include New Jersey, Delaware, Nevada, and Pennsylvania.
Each of these four states reported record-high online poker revenues. Furthermore, Nevada reported a 90% increase for March of 2020 compared to March of 2019.
The online poker market was valued at around $45.8 billion in 2017. By 2024, experts expect that the market will be worth nearly $95 billion with the expectation that it will increase by 11.5 annually until 2027.
The most frustrating part of the industry is the legalization obstacles that companies face. The Wire Act of 1961 has forced online poker to be illegal in many states. The Wire Act forbids the use of communication via gambling that does relate to a sporting event or contest.
Online Poker has an uphill battle to gain legalization from the rest of the states throughout the country. It will require significant changes by lawmakers who interpret the law in specific ways.