Legalized sports betting: Good for sportsbooks, great for bettors
In case you haven’t heard, the US Supreme Court decided on Monday to allow gambling across the US. The ruling is great news for all Americans who love sports betting, whether they are the sportsbooks or bettors themselves.
Sports betting has been around in the United States long before thoroughbreds ran in the Belmont Stakes for the first time in 1867. Since that time Congress has passed numerous pieces of legislation aimed at curtailing betting on sports, culminating in the 1992 passing of Professional and Amateur Sports Protection Act (“PASPA”), which effectively banned sports betting in all states outside of Nevada. On Monday, May 14, 2018, everything changed.
On May 14 the US Supreme Court struck down PASPA, setting the table for each state to individually regulate sports betting. Early estimates show that 20+ states have either enacted law, are studying a bill, or are expected to introduce a related legislative effort in this calendar year. There is clear momentum supporting a state-by-state legalization and regulation of the sports betting industry. The elimination of PASPA is good news for all sports betting companies that have been operating overseas, hoping to one day break into the lucrative US market or expand beyond their presence in Nevada. William Hill (LON:WMH) shares were up 12.6% on Monday, 888 Casino (888.L) rose 16.6% on the day, to name only two. It is as of yet uncertain whether or not foreign sports betting companies will face extra tariffs or be free to compete on a level playing field with domestic operators. Nevertheless, there is an estimated $150 billion wagered on sports every year in the US, with a small fraction of that being legal in-state sports betting. The elimination of PASPA allows sportsbooks like those mentioned above to increase their American footprint and potentially take bets from Americans living in states that pass legislation aimed at regulating sports betting.
A question posed to me yesterday, as I was celebrating the news was, “why does this matter? If Americans were making bets anyways, why does making it legal make a difference?” The real answer is trust. Before May 14th, Americans wanting to place a bet on a single sports game had two options: 1) they could call a bookie in a jurisdiction that allowed gambling, have the bookie place the bet on their behalf, and then watch the results play out (and hopefully pay out) online; or, they could use a sportsbook that was brazen enough to offer betting to Americans and hope that the sportsbook paid out and that their bank would not ask too many questions. If for some reason the sportsbook made an error and decided to not honor a bet, or only pay out part of the bet, it would be difficult to seek recompense when the bettor was located so far from the sportsbook, and was not legally a legitimate customer.
These concerns are now lessened (though not eliminated, as discussed below) by allowing Americans to bet on sports in their home state. Now the question is, why can’t these concerns be eliminated completely?
As I have mentioned before, sports bettors deserve more. They deserve more than having to place bets with offshore operators with whom their incentives are not aligned, more than sportsbooks who void bets only if you win after betting an incorrect line, and more than a 5% margin built in to every bet. I believe that FansUnite can, once legislation is passed in appropriate states, provide the improvements to Americans that they have deserved for so long. By utilizing a public blockchain to immutably store bet information and outsourcing the resolution of bets to an independent network of Oracles, bettors are assured that their bets are paid out as entered, no matter what. Due to the transparency of data stored on the blockchain, market information will be made available to all network participants allowing operators to better price markets and offer lower margins — a huge win for consumers. . In addition, by not using traditional payment processors, FansUnite can pass along savings directly to bettors, operating with only a 1% margin. The Supreme Court lifted one barrier to betting for Americans and FansUnite will eliminate the other two. Now, we are left with two questions with definite answers:
Will American Sportsbooks benefit from the repeal of PASPA? Yes.
Will American sports bettors be the real winners? Absolutely.
You can read the FansUnite whitepaper here or start a conversation by joining their telegram here.
Graeme Moore is the CFO of FansUnite Entertainment Inc. FansUnite is changing the way sports betting operates through the decentralization of sports data.
