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July 23, 2020

‘Play Ball!’ Means Business for Eager Sports Betting Industry

So far, sports betting in Colorado truly has been a “small ball” affair.

That’s because table tennis captured the highest percentage of wagers in May, the first month of legal sports betting in the state. Table tennis generated $6.6 million in wagers, just over a quarter of the $25.6 million wagered in Colorado, according to the state Department of Revenue.

That will change with the return of big-league sports and games. Major League Baseball’s truncated 60-game season launches Thursday with a Covid-19-delayed opening night, starting with a matchup between the New York Yankees and the world-champion Washington Nationals followed by a game between the San Francisco Giants and the Los Angeles Dodgers on the West Coast.

Nationwide, casinos and online wager providers say the return of major sports will spur a significant increase in sports betting, with its associated tax revenues. After baseball, the scheduled return of the NBA on July 30 and the expanded NHL 24-team playoff will bring back a bigger and broader base of bettors.

“The return of sports is obviously going to be huge for sports books around the country, as they’ve been operating for months without major revenue drivers,” said Dave Forman, senior research director at the American Gaming Association, which lobbies on behalf of the gaming industry.

“People that have great affinity to a sport like baseball are typically much more fervent fans, thus creating more interest in general but also in betting,” said Max Bichsel, vice president of U.S. business for Gambling.com. “Fans love to follow baseball pitch by pitch” compared to “point by point” such in the case of table tennis, he said.

Sports gamblers will find “futures” betting very enticing, said Dustin Gouker, head of content for multiple sports betting websites including Play NJ, a website that promotes legal gambling in the Garden State. Pent-up demand and truncated seasons will shorten the wait for payouts on “down-the-line” bets on awards, champions, and win totals, driving a surge in betting as major sports resume, he said.

After posting record-breaking numbers in January and February, virtually every state with legal sports gambling saw revenue well below forecasts once the virus shut down nearly all live sports and casinos. Every state with legal sports gambling fell short of last year’s marks.

In Colorado, which imposes a 10% tax on casinos’ gaming proceeds, the $25.6 million in wagers is a far cry from forecasts that the industry could see as much as $6 billion in wagers annually. Betting activity generated $96,538 for the state, with wagers on mixed martial arts, non-MLB baseball and soccer, golf, and motor sports lagging those on table tennis.

Still, even with the pandemic, the total amount wagered is an encouraging predictor of the potential sports betting landscape, especially as more live sports return, said Dan Hartman, director of the Colorado Division of Gaming.

New Jersey, Pennsylvania

Elsewhere, excitement about the return of major sports could be responsible for a rise in betting in New Jersey and Pennsylvania. Steady monthly revenue gains in both major betting states indicate they could see a leadoff home run come opening day.

New Jersey reported $165 million in handle—or amount wagered—for June, which was a 40% gain from May, according to Play NJ. Pennsylvania’s June $89 million handle was a 15% rise from May, according to PlayPennsylvania. Both states saw an increase compared to April.

“The growth in online gambling as well as betting on non-traditional sports are industry bright spots,” Gouker said.

Betting platforms are launching promotions to celebrate the return of major games. FanDuel gave certain fantasy sports or online sportsbook account holders an extra $10 site credit—worth $80 million total on the site—to spur bets on MLB, NHL, and NBA games.

“We are excited for the return of sports and wanted to give all of our customers a chance to get in on the action for free,” said Mike Raffensperger, FanDuel Group’s chief marketing officer in a statement.

Sportsbooks also are making other adjustments to adapt to the new, Covid-19 normal, said Forman from the American Gaming Association. For example, under normal circumstances when a starting pitcher in an MLB game gets scratched or removed from the lineup, operators refund the bettor or offer adjusted odds.

With the threat of a player suddenly getting sick or needing to quarantine, oddsmakers are experimenting with baseball games you can bet on without a starting pitcher tied to the line, Forman said.

In Colorado, bets can be placed in person at Golden Mardi Gras Casino in Black Hawk, which has a partnership with DraftKings, and at Wildwood Casino in Cripple Creek.

Century Casino in Cripple Creek, which is partnering with Circa Sports to run its sports betting operation, recently reopened for slots and other games, but isn’t planning to have an in-person betting parlor for sports gambling, said Eric Rose, the gaming hall’s general manager.

Still, since its revenue-share arrangement for sports betting with Circa brings in some money, it’s looking forward to major games coming back, Rose said. “In the last few months I personally have watched more NASCAR than I usually do,” he said.

To contact the reporters on this story: Tripp Baltz in Denver at abaltz@bloomberglaw.com; Sam McQuillan in Washington at smcquillan@bloomberglaw.com

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