May 20, 2022, 9:38 a.m. EDT

Americans have bet $125 billion on sports in the past four years as legalization push continues

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By Weston Blasi

Over the weekend, Americans celebrated the four-year anniversary since the Supreme Court ruled that the Professional and Amateur Sports Protection Act (PASPA) doesn’t make sports gambling a federal crime, clearing the way for individual states to offer legal wagering.

After  the Supreme Court ruled  that the Professional and Amateur Sports Protection Act doesn’t make sports gambling a federal crime

Since the ban was lifted, Americans have bet more than $125 billion on sports — as of May, 30 U.S. states and Washington, D.C. now offer some form of legalized sports betting, according to the latest tally from the  American Gaming Association

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In just four years, betting transformed from a taboo topic on sports television to the open discussion of gambling odds during halftime shows of games.

Ray Lesniak, the now-retired state senator from New Jersey who filed the first lawsuit against the federal government in an effort to legalize sports betting, said he acted to provide money for states, and protect consumers.

“I made a good bet for New Jersey and for America,” he told the Associated Press , metaphorically speaking.

See also: Do you have to pay taxes on sports betting? If you bet in 2021, the taxman may be coming

New Jersey is routinely one of the states with the most money wagered on sports each month, frequently passing long-time betting hub Nevada for the top spot on the list.

Over $1 billion was legally wagered on this year’s Super Bowl , and about $3 billion was estimated to be wagered during this year’s March Madness college basketball tournament, both numbers more than doubled totals from the year before.

“When PASPA was repealed, I don’t think any of us would have expected how big the industry would be just four short years later,” Karol Corcoran, general manager of FanDuel’s online sportsbook, told the AP .

“It would have seemed impossible just a few years ago to reach such height,” Dustin Gouker, lead analyst for PlayUSA.com, wrote to MarketWatch in an email. “But with the expansion of sports betting over the past year it is inevitable that legal wagering will soar.”

DraftKings president and co-founder Matt Kalish said: “I got into this industry because I was always the kind of kid who liked to predict things, to compete with my friends and make predictions. For people that like to do that, sports betting has become far and away the No. 1 thing.”

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The $125 billion wagered figure is nearly three times how much Elon Musk agreed to buy Twitter /zigman2/quotes/203180645/composite TWTR +2.25% for, and represents a bigger number than the total market cap for technology giant IBM /zigman2/quotes/203856914/composite IBM -0.05% . In layman’s terms, it’s a lot of money.

After expenses, sportsbooks generally keep less than 10% of the total amount of bets they handle. Over the first four years of legal betting, their revenue figure is $8.8 billion, according to the American Gaming Association (AGA).

A major rationale for the push to legalize sports betting was to protect customers from being victimized by unlicensed bookmakers, particualary those who operate outside the U.S. State regulations include robust consumer protections, with watchdog regulators ready to pounce when they see violations.

Sports betting has been, and still is, pitched to state lawmakers as a source of new tax revenue, a particularly tempting option in the trying financial times of the COVID-19 pandemic. It has generated $1.3 billion in state and local taxes since 2018 according to the AGA, but the amount many states keep is a  mere drop in the bucket  compared with their overall budget. Some states, like New York, tax mobile sports betting revenue at 51% — a rate that operators say is not sustainable in the long run. DraftKings CEO Jason Robins even posited that the introduction of sports betting to California could help address problems surrounding “ homelessness and mental health.”

See also: DraftKings Golden Nugget merger to provide ‘revenue uplift,’ CEO says

Bettors who used sportsbooks like DraftKings /zigman2/quotes/213120645/composite DKNG +0.86% , Caesars /zigman2/quotes/205281174/composite CZR +0.60% or FanDuel had limited betting options when legal wagering was first introduced — like picking the outcome of a game or player performance before the event started. Since then, the array of potential bets has spiked due in large part to a surge in live-game betting, where gamblers can react to events as a game unfolds and bet accordingly.

“The live-betting has been pretty popular since day one,” former FanDuel CEO Matthew King told MarketWatch in 2021 shortly after the product debuted.

And while the more established sportsbooks look to increase their share of the market, the amount of money it takes to enter the industry and compete continues to grow, to the point where many executives of leading companies say they expect some lesser competitors to either merge or stop doing business.

FanDuel’s Corcoran said the near-term future is about growing the industry and its individual companies.

“We feel fortunate to have access to about 38% of the American population,” he said. “But there are still millions of people that don’t yet have legal sports betting. We’d love to be able to operate where they are.”

The Associated Press contributed to the this report.

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