Recently the American Gaming Association (AGA) made a number of announcements and comments about their efforts to seek the repeal of the Professional and Amateur Sports Protection Act (PASPA) and they have generally asserted that the time is right to make it happen.
While those in the sports wagering business have long thought all PASPA really did was protect illegal bookmaking, particularly as the demand to make a wager far exceeds the fear of making an illegal bet, the notion of PASPA finally being repealed provides giddy thoughts for legal bookmakers.
Setting aside the fact that no constitutional scholar worth their beans can argue the federal government even had the rights to inflict PASPA on the various member states of the Union to begin with, the climate is right for its repeal. The majority of the country sees nothing wrong with regulated sports wagering; thinks legalizing sports wagering is another blow to organized crime, and it would create jobs and tax revenue at both the state and federal levels. It just makes sense.
Though there have been assertions the size of illegal bookmaking is around $150 billion a year. The real opportunity for nationwide legal wagering is probably much greater. For example: Between permanent and visiting/tourist populations Nevada has on any wagering day a gross population of roughly 3,000,000 people. For the 12 months ended April 2017 gross sports wagering equated roughly $4.5 billion, indicating an average per population wager of roughly $1,500.
Extended to the full US population it would suggest the size of the legal sports betting market is roughly $450 billion annually.
Agreed, not everyone in the state or nation would or could wager, but in the absence of information as to the number of people who do wager, general population becomes an acceptable static constant for estimation purposes. (Translation: Some people bet a lot, some people bet a little, some people do not bet at all but the average per person works out to be around $1,500.)
With the opportunity to get tax collections on that size of market, very few state or federal officials would say no to getting a piece of that money.
Assuming it is not if Congress repeals PASPA but a when, what would it mean to Nevada and particularly Las Vegas?
During the most recent protracted recession there were only two material areas of gaming activity – baccarat and sports wagering – that actually grew at paces exceeding inflation. It was therefore no coincidence baccarat went from 157 tables in casinos back in 2007 to the current 379 and sportsbooks went from 174 locations to 191 in the same time period.
Sports wagering on a trailing 12-month basis grew by over 22% from 2007 to 2017. As with anything that does well, there is or will be increasing competition. For baccarat the national and international expansion of gaming along with continued inhibiting reporting requirements are starting to have their effect on Nevada’s share of the global market. For sports wagering, though, Nevada and more particularly Las Vegas has somewhat of a monopoly, at least until such time that PASPA is repealed.
When it is repealed there will no doubt be a rush by certain states to adopt legal sports wagering and some regional casinos will try their hand at directly managing/operating their own sportsbook operations. This of course would mean great career opportunities for a number existing Nevada sportsbook executives and employees.
However, once they start getting clobbered because of line manipulations and cross property and cross state line arbitrage opportunities, it will not take long for efforts to shift to permit local/regional casinos to combine or become satellites of existing larger Nevada sportsbooks for risk management purposes. Greater volume is the safety valve for a sport book, it provides greater opportunities to balance risk and assure profitability.
The only downside for Nevada/Las Vegas is that as sports wagering becomes an accepted practice elsewhere it is one less reason to come here. During March Madness, Super Bowl or any of the other major culminating sports tournaments, special events, groups of friends and people who just want to bet legally find their way here and have become important parts of the operating budget. But if sports wagering is readily available in or near their hometown it will of course reduce the desire and demand to travel here for betting purposes.
The real big winners though will be those companies that specialize in the provision of wagering systems, line-making services and of course providers of sports wagering information. For them the death of PASPA would be HUGE!