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What’s propelled the overwhelming growth of the US online sports betting industry? What risks stem from the sector’s largely unchecked expansion? How will sports betting evolve?
The US online sports betting industry, now legal in 38 states, has grown exponentially in recent years due to increased digital accessibility and changing societal norms. Critics say the sector’s unchecked growth is fueling Americans’ gambling problem and increasing the potential for money laundering.
Below, we’ll look at the rise of online sports betting and the dangers that come with it.
The Online Sports Betting Industry
The online sports betting industry is on the rise. More than 1.77 million new users signed up for legal online betting accounts in the two weeks leading up to this year’s Superbowl. Wagers surged just minutes before kick-off, with nearly 15,000 transactions recorded per second. But as scores of would-be gamblers rush to place their bets on sporting events, are they considering the pitfalls of the booming sector?
Online Sports Betting Background
Five years after the Supreme Court’s 2018 legalization of sports betting, this dynamic industry helped drive the commercial gaming sector’s record earnings of $66.52 billion. US sports betting alone generated an unprecedented $10.92 billion in revenue.
Sports gambling, now legal in 38 states, is becoming increasingly mainstream. Supporters of sports betting legalization say it’s brought additional tax revenue for states and provided a regulated alternative to offshore gambling sites.
Catalysts of the Sports Betting Boom
Experts attribute the sports betting industry’s explosive rise, in part, to increased accessibility. Digital platforms like FanDuel and DraftKings have enabled users to place bets from the convenience of their smartphones.
Many online gambling companies are leveraging the popularity of digital sports betting to expand their revenue streams by branching into other forms of online gambling. For example, DraftKings recently acquired an app for online lottery ticket sales, and also hosts an online casino, targeting the average iGamer who spends upwards of $5,000—five times that of typical sports bettors.
Uncontrolled Growth: The Downside of Limited Regulation
However, not everyone’s a fan of the sports betting boom. Critics argue that limited state regulations and the lack of federal oversight are allowing the industry to grow unchecked, creating a host of problems.
- Calls to the National Council on Problem Gambling’s hotline have increased 15% since 2018.
- The glamorization of betting through advertising can encourage addictive behaviors, mislead viewers with false promotions, and exploit psychological triggers to encourage habitual betting.
- The US Treasury Department has also raised the alarm about the danger of money laundering in sports gambling.
Looking Ahead
Experts say the future trajectory of online sports gambling hinges largely on how many states choose to legalize it and the degree of caution they exercise in doing so. Its growth potential remains robust, with states like California and Texas yet to jump on the sports betting bandwagon.
Analysts foresee changes in both the types and nature of sports betting:
- As app-based wagering gains popularity, gamblers will shift from traditional predictions about final game scores to high-risk, high-reward parlays, which combine various bets.
- Alongside these changes, new developments like microbetting are emerging. They allow players to make quick, successive wagers on specific events within a live game, creating a dynamic blend of live sports viewership and wagering based on real-time developments.
Moreover, some anticipate that industry growth will spur comprehensive partnerships between sports teams, leagues, and stadiums with betting operators, media companies, hotel chains, and beverage companies.
However, critics caution that with growth comes responsibility, arguing for federal regulation and advertising restrictions to mitigate sports gambling’s harmful effects and protect consumers. Notably, even the American Gaming Association has urged the US Treasury to establish guidelines for new forms of legal gaming, such as sports betting, under the anti-money laundering law and the Bank Secrecy Act, and to regulate illegal offshore gambling platforms.
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