On May 14th 2018 many people already involved in some way in sports betting industry welcomed with a big smile on their face Supreme Court's decision to let states legalize sports betting. This decision brought down Federal Law from 1992 that prohibited sports betting regulations by states and cleared the way for one of the fastest growing industries in the world to the most potent market in the world. It is estimated that USA betting market could be worth up to 400 billion dollars in stakes and produce massive profits to betting industry (from local bookies to online giants) and USA (in tax money).
But, what could this mean to you, a possible sports enthusiast looking for a good business opportunity to invest your savings in. In this article we will break down consequences of this decision and ways how to profit from it.
What happens next?
After this decision is made, there are 2 possible scenarios how sports betting will be regulated, but one thing is sure: sports betting is coming to USA! There have been different groups of lobbyists cheering for this decision over the last couple of years. From General Clark as Pokerstars' consultant, to William Hill's management trying to force their way into Nevada's sports betting market. They all now have to wait if the decision to regulate sports betting will be made on Federal level or will be left on State level.
Option 1: Sports betting laws made on Federal Level
It makes more sense that the Government makes the same sports betting laws for all states. It provides comfort of transparency, security and same market conditions for all interested in starting/expanding their sports betting business.
In this case all companies will have the same starting point and same obligations which means the survival of the fittest, but also opens up business in all 50 states at once. It is known that there is currently around 20 States that declared to be interested in spurring their economy with sports betting. We are convinced that the majority of other 30 states would also come to their sense once those 20 start making serious money.
In terms of how companies get regulated, they could use either European model where betting companies apply for licenses and then have to fulfill certain conditions imposed by regulating body or their own model. Regulating body would have the power to cancel some bookmaker's license in case of unethical behavior of any kind from avoiding taxes, to being dishonest to their customers. They could also fine bookmakers for small violations or to arbitrage between customers and bookmakers.
This also means that players from any part of the USA can legally bet on any bookmaker licenced in the USA via online betting. In Europe, online betting is no longer inferior to land based betting shops in terms of volume, in fact, many betting shops have closed their business in last years due to an amazing increase of online betting.
What does it mean to local bookies?
This would spur online marketing of companies where you can bet online in form of affiliate marketing. Affiliate marketing means simply promoting bookmakers through different online sources such as social media, email campaigns and similar. Affiliates then receive a cut from customer's losses in a case customer signs up through this affiliate link (and loses money). Currently this market is projected to be worth up to 50 billions by the year 2020 and is a main way how to obtain new customers to majority of bookmakers.
Option 2: Sports betting regulated on States level
If sports betting is left to be regulated by states, it means that each state who imposes laws, will most probably have their own regulation body that give licenses. A lot of bookmakers will compete for licenses in the USA, but which of them will compete for Illinois or for New York is left to see. Most probably will be that conditions to obtain such license will be less tough in most States that if it was regulated by Federal Law. Also means that State's laws can either favorite some businesses or discourage businesses on many levels and out of several reasons.
This means a mess in online betting industry, but could encourage the growth of local bookmakers that have only several betting shops. It opens up possibility of sports manipulation, money laundry and similar activity in local areas as this industry has been and always will be attracting all kinds of people. In the long run it is more likely that only big bookmakers with betting shops based on franchise business will make most of the money – just like in almost every other business.
In terms of online betting, if a “Bookie Joe” licenced only in California has an online betting site and you are from Miami, then you shouldn't be able to register an account of “Bookie Joe” could have serious problems with the Law. But, there's another opportunity that solves this problem. If you are also from Cali, you can become a betting agent for “Bookie Joe” and have clients on behalf of who you place money. This is sort of a gray zone - not really following he Law and it's intentions, but could be very profitable and hard to prove on court or get caught with.
What does it mean for local bookies?
There are businesses that can be open. Many local bookies means more jobs as every one of these will need to have an office, cashiers, guys who drive printing parer and money, guys who put up odds etc. For those who will go online, they will need IT service, developers, webmasters, sports traders, content managers. There's also finance department, marketing department and similar jobs they will need to think about.
Also, owning a franchise betting shop of a major bookmaker could prove to be the ultimate solution for many people looking to invest a limited amount of money and grow slowly and steady. Online affiliates would then still be existing, but not in the volume like if there were Federal regulations for all bookmakers.
Owning the franchise business means that you don't have to pay for the sportsbook – odds, you don't pay for the software used, you don't pay for the marketing services. You will take the cut from the profits made and pay your employees, utilities and rent if you don't own the place. You will be able to personally decide which bets you are willing to take and which you want to reject, but you won't be able to alternate odds. Owning a bookmaker means you will pay all of these costs of running such business, but you will also take all the profits.
What kind of customers are USA players?
Having in mind that sports betting was forbidden for a long period, we can with confidence say that USA bettors are limited in their knowledge of sports betting. They may be knowledgeable about US sports, but they don't know how to bet in a profitable way and, judging by profit margins already established US bookmakers make, they lose a lot of money.
It is a normal thing because it takes years to learn this stuff and most of them don't learn and quit betting while it didn't cause them more harm than they can afford. Of course, there will be ones who won't quit on time and will develop an addiction. Gambling addiction can be as bad as alcohol or drug addiction and destroy your life. Therefore, some centers to cure such addiction and some regulating bodies in cooperation with bookmakers will try to recognize such behavior.
Our opinion is that once Americans learn how to bet, it will be smooth sailing for both, the customers and betting companies as customers will lose 5-10% in the long run, which isn't that much and companies will gain same amount without doing harm to the community.
Top USA bookmakers
There are already several bookmakers that accept USA players and are reputable enough for us to recommend using one of them. They operate under various licenses like The Kahnawake Mohawk Territory and similar. They are already well established in the USA and known to most sports betting enthusiast.
Conclusion is simple, there is still left to see in which way this will develop. One thing is certain, there are exciting times ahead for sports betting in the USA with many different business opportunities. Even if you are broke, there is an opportunity to get in this business and make for a living. This is also how I started. After I finished college, I found a job in my home town to work for one of the biggest betting companies in Germany. I continued to learn and grow and sports betting now pays all of my bills. I even still bet regularly and make some cash out of it as a customer. Basically I love sports and sports betting and it is my life from the moment I open my eyes until I fall asleep. I'm happy and proud of it.