FROST: Sports Betting Is Important For Racing

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Tim Frost

WILMETTE, Ill. — The sports-betting industry in the United States is growing with relative speed. Still, wagering was impacted by the pandemic.

The forced lockdowns of physical buildings caused on-site casino revenue to drop substantially. Most laid off thousands of employees and closed ancillary operations for hotel rooms, restaurants and convention business. Recently, there had been consolidation of the major operators as they sought scale in a competitive, capital-intensive and low-margin business.

Sports betting was given the green flag when the Supreme Court repealed the Professional and Amateur Sports Protection Act in 2018.

Individual states have rapidly passed legislation that allowed sports betting. Licenses were granted to online operators such as DraftKings and FanDuel, along with established casino companies, including Caesar’s and Penn National.

By working with established entities, officials could ensure that games and events were offered in a safe and responsible manner, along with monitoring the social problems associated with gambling.

Currently legal in more than 20 states and expected to reach 40 states by 2022, officials are looking to generate tax revenue and capture black market activity dominated by bookies. States require operators to pay steep licensing fees and tax rates.

When evaluating the data behind sports betting, there are several key metrics: handle — the amount wagered; revenue and hold — amount and percent kept by the sports book; and tax revenue for the state.

The largest sports book by handle is still led by Nevada, followed by New Jersey and Pennsylvania. The rapid growth of New Jersey is primarily due to its proximately to dense populations. Sports gambling in the Garden State is expected to reach $1 billion in monthly handle and become the nation’s leader.

On a percentage basis, sports books in Delaware retain the highest hold, followed by Michigan and Mississippi. Home to Dover Downs and Dover Int’l Speedway, all betting in Delaware must be done on-site since online and mobile betting are not allowed. Most operators retain between six and eight percent of the cut as higher amounts may drive bettors to more favorable jurisdictions.

State tax revenue has been rising. During challenging economic times, states need all the money they can get to fill budget gaps. Tax rates for sports betting typically range between eight and 10 percent. There are a few states that charge up to 25 percent.

NASCAR and the American Gaming Ass’n have established a program — “Have a Game Plan — Bet Responsibly.”

The goal is to enlighten fans on responsible sports betting. One theme will be “Know When to Pit.” NASCAR is the American Gaming Ass’n’s first league partner, underscoring a commitment to allowing fans to engage with their favorite drivers and race teams.

This supports NASCAR’s existing relationships with Sportsradar as the sanctioning body’s integrity partner, BetGenius as its data provider and Penn National and BetMGM as gaming operators.

NASCAR’s comprehensive approach to gaming will lay the foundation for other series to follow. It also allows for sponsorship and activation opportunities that are unique to motorsports.

Facility operators may also consider redevelopment as Atlanta Motor Speedway unveiled a $1 billion resort project with Foxwoods Casino that would include a casino and hotel along with a water park and concert venue.

The lack of live sports games and races during the early part of the COVID-19 shutdown sent bettors to foreign markets in search of opportunities.  At the same time, operators moved their marketing budgets online.

Led by NASCAR, sports got back on track and wagering resumed, amassing record numbers.