AGA sees US sports-betting in ‘two-to-four years’

AGA sees US sports-betting in ‘two-to-four years’

Thursday, February 16, 2017
Analyst note says AGA is “most excited” about sports

The American Gaming Association (AGA) is “most excited” about the potential for sports-betting to be legalised in the US according to analysts at Morgan Stanley who suggest that following neutral comments from President Trump the prospects for further liberalisation are positive.

In comments made to the news media ahead of the recent Super Bowl, when asked about the potential for legalised sports-betting in the US Trump said “what I’d do is I’d sit down with the commissioners.”

“I would be talking to them, and we’ll see how they feel about it. Some would not want it, and probably others — and I’ve read others maybe do. But I would certainly want to get their input and get the input from the various leagues, and we’ll see how they feel about it. I’d also get the input from lots of law enforcement officials, because, obviously, that’s a big step.”

Given this somewhat non-committal response, the Morgan Stanley team reported that Geoff Freeman, the chief executive of the AGA, believes that meaningful progress on sports-betting could be made within the next two-to-four years.

They speculate that the repeal of PASPA - the Professional and Amateur Sports Protection Act which limits sports-betting to Nevada and Delaware – is the likeliest route to future liberalisation, opening up potential intra-state markets.

“Repealing PASPA is generally viewed as having a much greater likelihood to pass Congress, which would keep sports betting intra-state,” the analysts state. “As we have learned from the roll-out of online gambling in the US (which has a real threat of being abolished, without grandfathering of existing states), state by state growth limits the scale of the opportunity.”

The M Stanley team note that New Jersey, New York and Pennsylvania are among the estates that have recently made noises with regard to potentially opening up legal sports-betting.

The AGA made much at the time of the recent Super Bowl LI match-up between the New England Patriots and Atlanta Falcons of the amount that was likely to be wagered illegally on the game, suggesting a total of $4.5bn. Of this, the AGA suggested a mere $138m would be wagered legally in Nevada.

The Morgan Stanley note pointed to the evidence for a declining TV audience for NFL – the average figures fell 6 percent in 2016 – and said the AGA was suggesting sports-betting could provide part of the answer. “According to the AGA, on average fans who bet on NFL games watch 19 more football games per year than those that don’t.”

As for the potential size of the market, the AGA estimates that a 7 percent hold rate would suggest a market worth $10.5bn in net gaming revenue. The Morgan Stanley team noted that a state-by-state rollout would likely limit the size of the market, but added that the wider adoption of in-play betting could enlarge the market.

In terms of who would benefit, the note suggests that William Hill and Paddy Power Betfair – which both have operations in the US in Nevada and New Jersey respectively – could be long-term winners along with regional casino operators such as Penn National Gaming, Boyd Gaming and MGM Resorts International.

Totally Gaming says: There is certainly more chatter around the potential for legal sports-betting in the US than was previously the case. Notably the report doesn’t mention the issue of daily fantasy sports which arguably has done more (perhaps unconsciously) to bring the sports-betting debate to the fore in the US. The AGA’s estimated timescale of two-to-four years seems about right, but as anyone who has followed the state-by-state poker debates in the US knows full well, the likelihood is that the timings of any moves will almost undoubtedly be significantly stretched out.

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