This current moment, one week away from the midpoint of 2020, is not a particularly profound time for assessing the health of legal sports betting in America. The COVID-19 pandemic has suspended all U.S.-based team sports action for more than three months and halted most in-person wagering, rendering sports gambling handle and revenue data relatively insignificant.
So when we look at the state-by-state rankings for betting action across the last couple of months, there’s only so much we can extrapolate about what to expect when this “new normal” gives way to something resembling our former normal.
We’re also in the midst of something of a tipping-point moment in terms of new sports betting launches, with major states Illinois and Michigan going live just as the coronavirus shutdown began, Colorado joining them a couple of months later, and Virginia and Tennessee among the many jurisdictions currently plotting start dates.
The landscape is set to shift. So let’s project out. Let’s look ahead to a time when, we can reasonably expect, all the major sports will be back. Let’s look ahead to a time when several major sports will be in the midst of regular-season action. Let’s look ahead to a time when the new 2020 sports betting states will be approaching maturity.
Let’s look ahead to December 2021. That’s 18 months from now. That is, theoretically, a month with NFL, college football, NBA, NCAA basketball, and NHL games kicking, tipping, and facing off regularly.
How will the sports betting states rank, in terms of wagering handle, in December 2021?
Start with a head count
The first step toward making that prediction is to simply look at each state’s population. For the purposes of this exercise, we’re only seriously considering nine states. We’re excluding those (like New York) that have no realistic expectation of legalizing online sports betting in the near future, those that have established a sports betting operator monopoly, and those (other than Nevada) that are simply too small to challenge for a top spot.
Here are the populations for the nine states in the mix:
Population is just one variable, but it does provide a useful baseline in most state assessments. The exception, of course, is Nevada, where Las Vegas acts as a tourist attraction and draws many of the “whales” who tend to place the largest wagers seen in any U.S. market.
The US Bets list
In order to arrive at a rankings projection for this article, we polled eight US Bets staffers for their individual December 2021 predicted rankings and combined those lists to create a master ranking. The staffers: John Brennan, Jill Dorson, Brian Pempus, Eric Raskin, Gary Rotstein, Matt Rybaltowski, Adam Small, and Brett Smiley.
Here’s how the top six ultimately shook out:
- New Jersey
Some staffers made the case for either Virginia or Indiana in their top sixes and those two states wound up tied for seventh place, with Tennessee ranking ninth.
Pennsylvania vs. New Jersey for the top spot
Seven of the eight staffers polled picked one of the two current East Coast sports betting powers to be the No. 1 state come the end of next year, and it was by the slimmest of margins that the Keystone State ultimately prevailed in the poll.
Prior to and during the pandemic, NJ has held a lead over PA. In February, the last “normal” sports wagering month, New Jersey saw $494.8 million in handle. Pennsylvania bettors produced $329.8 million in handle — 66.7% of NJ’s figure. In May, with sports betting way down everywhere, New Jersey’s handle was $117.8 million. Pennsylvania posted $77.5 million in handle — 65.7% as much as NJ.
So the evidence suggests Pennsylvania still has a sizable gap to close and, over the last few months, hasn’t made any progress on closing it. Pennsylvania has already surpassed New Jersey in terms of online poker and has been quickly gaining ground in online casino revenue. Awareness of sports betting and online gaming in PA is a work in progress — one sped up by the pandemic. With a population 44% larger than New Jersey’s, it’s a matter of when Pennsylvania gets there, not if.
“[New Jersey] can’t quite overcome the sheer numbers,” said Brennan, a New Jersey native who projects his home state to be No. 3 at the end of 2021, behind the more populous Pennsylvania and Illinois. Even though “New Jersey gets at least a 10% boost from frustrated New Yorkers who cross the border to bet,” Brennan believes Pennsylvania’s two major sports markets — Philadelphia and Pittsburgh, both boasting popular and likely contending NFL teams — will push the state over the top.
Small disagreed slightly, placing Pennsylvania No. 2 behind Jersey. “As long as there’s no local option, New Jersey will be the default place for New York City residents to place their bets. That, along with the highly competitive and relatively well-developed market, puts New Jersey in the best position for the foreseeable future,” he opined.
Nevada: The state that needs out-of-staters
Throughout the 2019 football season, Nevada remained the No. 1 sports betting state — by a modest margin over New Jersey. But the pandemic exposed the challenges associated with the Silver State relying on tourist traffic and with the state’s in-person requirement to open a mobile sports betting account. April gaming numbers in Nevada were dismal — so dismal, in fact, that regulators redacted the sports betting figures in the monthly report.
Still, Nevada, which received one first-place vote in our staff poll, comes in third for December 2021, based largely on the assumption that travel to Vegas sportsbooks will be somewhere in the vicinity of past numbers in another 18 months, which should be enough to hold off the emerging states.
“I see it taking time for the new markets of Illinois and Michigan to ramp up and catch the unofficial big three of New Jersey, Nevada, and Pennsylvania in terms of the handle,” Pempus said.
He warned, however: “If Nevada has to reclose its casinos in late 2020 and/or in early 2021, then it likely slides down the handle rankings, compared to the more mobile-friendly states.”
How quickly can Illinois and Michigan ascend?
Though some staffers agreed with Pempus that Illinois and Michigan need more than 18 months to power up the rankings, three respondents did rank Illinois — almost in a dead heat with Pennsylvania for most populous state in the mix — in the No. 2 spot.
Certainly, if we were trying to project out further — say, another 12 months to December 2022 — the rankings would look different. Rybaltowski pointed out that Bank of America created projections for 2030 on each state’s share of the national sports betting market and has Illinois and Michigan second and third overall, at 8% and 6%, respectively. “Only California is higher,” Rybaltowski noted.
But in 2021, both new sports betting states face question marks.
“Illinois’ position in the top tier come December 2021 may, ironically, be dependent on how soon FanDuel and DraftKings can find a full-fledged entry into the market,” Smiley said. “The so-called 18-month ‘penalty box’ keeping them from entering online under their own brands will expire right around that time. But the FanDuel-DraftKings tandem is combining for over a 50% online share in both New Jersey and Pennsylvania, the biggest non-Nevada markets.”
Dorson echoed Smiley’s sentiments. “Mobile sports betting is likely going to be a slow rollout in Illinois despite Gov. J.B. Pritzker temporarily removing the in-person registration requirement,” she said. “There was a lot of disagreement about how things should roll out in Illinois when the law was being written, and things there continue to be contentious. Because of that, it could be a good long while before the potentially biggest players in the market, DraftKings and FanDuel, can launch, and without them, handle will suffer.
“In the longer term, I think Michigan will surpass Pennsylvania and Colorado, but for the next 18 months, handle will suffer because mobile is not yet launched, and I think it won’t be until early 2021.”
Colorado and the dark horses
Not all respondents ranked the recently launched betting state of Colorado ahead of predecessor Indiana and upcoming challenger Virginia, but the majority did — despite the Centennial State’s smaller population.
The reason? The state’s competition-friendly sports betting laws and the early enthusiasm from heavy hitters like FanDuel and DraftKings to make a splash in the market.
“Other than New Jersey, Colorado has probably the most open, competitive, operator-friendly marketplace,” Dorson asserted. “The state can have up to 33 retail sportsbooks, and at least that many mobile options. Just seven weeks in, at least six commercial mobile platforms have already launched. Consider that Pennsylvania has only nine mobile platforms with a cap at 13. Colorado also will own the Mountain region, at least in the near future, and is home to four major professional sports teams.”
“With nearly every industry heavyweight ready to open shop, Colorado has been compared favorably to the robust online market in New Jersey,” Rybaltowski added. “Operators will also benefit tremendously from the state’s customer-friendly remote registration policy.”
Interestingly, Small and Pempus left Colorado out of their top six and squeezed other states in — Indiana for Pempus, Virginia for Small.
“While states like Colorado, Indiana, and Tennessee kind of blend together for me in terms of potential, Michigan and Virginia stand out as having a bit more potential,” Small said. “This is largely due to population size, but Virginia also stuck out to me because its [mobile] launch date appears to be coming a little sooner than Michigan’s and the state has a relatively high per capita income.”
Smiley agreed that “Virginia could be a possible wild card, especially if legalized sports betting is launched in late 2020 or early 2021.”
But his top wild card is a state that hasn’t even passed sports betting legislation yet.
“If Ohio avoids a lottery-run monopoly model, as in Oregon and New Hampshire,” Smiley said, “it can make a run at the top with a population approaching Pennsylvania and Illinois.”
In all likelihood, though, that’s more of a conversation for 2022 or 2023. Even without Ohio, there’s going to be fierce competition for the top spot at the end of 2021 — provided we’re seeing fierce competition on the football fields and basketball courts by then.
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