Question of the Day - 14 February 2019

It’s too soon to say.

We contacted both David G. Schwartz and the University of Nevada-Las Vegas’ Center for Gaming Research and Jeremy Aguero of Applied Analysis, and neither had seen any data on the subject. Meanwhile, Nevada’s sports betting market is quite robust. 

True, New Jersey has seen more than a billion in wagers since the inception of sports betting last year, but Nevada saw a handle of $581 million in November alone. Of Las Vegas’ 42 million visitors, those who come strictly to bet on sports are now likelier to stay closer to home, that still leaves millions who are wont to lay down a bet or two on a game or two as long as they're in Sin City.

Also, sports betting outside Nevada is presently confined to a strip of states on the East Coast: Rhode Island, New Jersey, Delaware, the District of Columbia, Pennsylvania, and West Virginia; Mississippi is the odd state out. New York is expected to join the fray this year (as are 34 other states), but the effect in the Empire State is likely to be dispelled by the clawing back of business currently going to Atlantic City. Such cannibalization may already be taking place in Pennsylvania.

Also, states with significant numbers of tribal casinos could find that to be a complication in legalized sports betting. Both New York Governor Andrew Cuomo and Michigan’s Gretchen Widmer want sports betting, but if their states’ private-sector casinos are going to get it, it will also have to be in a form that's consistent with myriad tribal compacts negotiated long before sports betting was a gleam in anyone’s eye. What placates one tribe may be a non-starter with another.

The situation is most extreme in California, home of the second-largest number of tribal casinos. The state’s multitudinous card rooms might want sports betting. Ditto the tribes. But inter-tribal grudges have kept Internet gambling stymied in the legislature for years. The need to reconcile all those tribal compacts with a one-size-pleases-everyone regime for sports betting is another negotiation that could take more years to resolve.

While you might think that casinos would lust for sports betting, the most eager beavers have been state governments, with visions of massive tax windfalls. And why not? Delaware has a 50% tax rate and Rhode Island's is 51%. It has yet to sink in with states like these that there’s not a lot of trickle-down to the bottom line. Nevada gets only 0.5% of its state budget through sports-betting revenues and that billion-dollar handle in New Jersey brought a little more than $8 million to tax collectors in Trenton.

So right now, there’s a fever to legalize sports betting across the United States, but it’s not the golden goose that many politicians seem to believe it is.