How big will the market be for betting on sports?

The Supreme Court on May 14 struck down a 25-year federal ban on sports betting outside of Nevada.  The big question on many minds – particular state officials and companies like MGM Resorts and DraftKings looking to cash in – is how much money is at stake. Many of the articles on the decision cite the same eye-popping figure: Americans wager an estimated US$150 billion in illegal sports bets every year.

As a macro economist, I am used to dealing with big numbers. Still, $150 billion struck me as much too high. To put it in perspective, that’s 14 times more than Americans spend going to the movies, twice as much as they put into grooming and feeding their pets and about the same as they pay for fruits, vegetables and dairy products.

The figure comes from the American Gaming Association, which represents the U.S. casino industry and works to reduce restrictions on gambling. It says it based this number on a 1999 government estimate of about $80 billion in illegal sports betting. The group, which describes this as “the most conservative estimate,” then adjusted it to 2017 dollars using GDP growth.

I’m not the first to find fault with these figures. A 2014 article in Slate questioned an even higher estimate, $380 billion, drawn from the same report. An examination of the underlying study showed that such estimates were not based on serious research.

While the figure has no real basis, it does have real impact. Numerous states need more tax revenue. If the potential dollars are big enough, then many states will rush to allow sports betting – as almost 20 are already doing, including New Jersey, which was behind the lawsuit that resulted in the high court ruling.

Real-world examples

As I know from my work in economics, there are better ways to make estimates than pulling numbers out of thin air.

The first thing you do in such cases is look for a real-world example. In this case, data from the U.K., which has allowed sports gambling for decades, with thousands of betting parlors offering odds on everything from Premier League matches to when royal babies are born.

The U.K.’s Gambling Commission tracks betting statistics and issues an annual report. The one released in January shows that Brits placed about 10 billion pounds in bets in the latest fiscal year.

To get a comparable estimate for the U.S., that figure needs to be adjusted by population and currency. The U.K. has only about 66 million people, compared with 327 million in the U.S. And the pound was worth $1.36 on May 14.

After making both adjustments, this suggests that if people in the U.S. are allowed to make bets at the same rate as in the U.K., the size of the industry would be about $67 billion a year. While enormous, that’s a far cry from $150 billion.

Will legal sports gambling be big business? Yes, but not as big as its proponents want you to believe.

======================================

This post also appeared in TheConversation and can be read here.

71 thoughts on “How big will the market be for betting on sports?

  1. As I am a Mphil Thesis writers in Karachi and I belong to the education which helps the peoples to educated themselves and gives awareness and explains how to live your life and prevented end us to do bad things, so I will never support the bidding and never promoted betting. Betting is destroying sport and especially players so please don’t do it.

  2. Interesting post. I was wondering about this, so thanks for posting. Pretty interesting post. It’s really nice and useful.
    In previous years, iPhones were not compatible with certain web browsers like Google Chrome, Safari, Opera or Firefox due to Apple’s restrictions with their own software.
    I have a special bonus just for you! You could be the next Big Winner!
    Win up to $1,000,000 JACKPOT ! to get the bonus
    Features over 200 games accessible through our fun and easy software. Play for fun or for real money, with the chance to win one of our multi-million dollar jackpots. why play anywhere else? JOIN ‘the only place to play’ today!
    FESTIVE BONUS BOOST $250 Daily Freerolls Progressive jackpots $12,744,673.91
    It would be nice if this could be used as an investment direction. But everything is so changeable in this area …
    Your blog is very good, especially with the topics that you provide are very easy to read. You understand a lot of things that I had a hard time finding myself, but after I read your blog I got a little bit of the ending. You are willing to provide suggestions about the blogs I have created, and I really hope you can visit my blog to advise me.

  3. Kiralık bahis sitesi kiralama işlemini yapan kişiler ücretini ödedikten sonra 1 aylık kullanım hakkı kazanmıştır yani bahis sitesini 1 aylığına kiralamıştır. Bu saatten artık sitenizi sahip olduğunuz özelliklerce kullanabilir ve gelir elde etmeye başlayabilirsiniz.
    Kiralık Bahis Sitesi Kiralamak İçin Tercih Edeceğiniz Yer Hangi Özelliklere Sahip Olmalı?
    Sizinde bir bahis sitesi olsun isterseniz bu alanda kiralık bahis sitesi için bağlantıya tıklayınız.

  4. Kiralık bahis sitesi kiralama işlemini yapan kişiler ücretini ödedikten sonra 1 aylık kullanım hakkı kazanmıştır yani bahis sitesini 1 aylığına kiralamıştır. Bu saatten artık sitenizi sahip olduğunuz özelliklerce kullanabilir ve gelir elde etmeye başlayabilirsiniz.
    Kiralık Bahis Sitesi Kiralamak İçin Tercih Edeceğiniz Yer Hangi Özelliklere Sahip Olmalı? En iyi ve kaliteli ucuz bahis sayfası ve kiralık bahis sitesi makalelerimizi okuyunuz.

  5. ارتوپدي چيست؟
    ارتوپدي تخصص پزشکي اختصاص داده شده به تشخيص ، درمان ، توانبخشي و پيشگيري از صدمات و بيماري هاي سيستم عضلاني اسکلتي از بدن انسان مي باشد که شامل استخوان ها ، مفاصل ، رباط ها ، تاندون ها ، عضلات و اعصاب است که اجازه مي دهد يک فرد حرکت کرده و فعال باشد. در حال حاضر ارتوپدي به بيماران در همه سنين از نوزادان با کجي يا پيچيدگي پا تا ورزشکاران جوان که به جراحي آرتروسکوپي نياز دارند ، اختصاص داده شده است. بهترين دکتر ارتوپد در کرمانشاه کيست همچنين به درمان شکستگي استخوان ها نيز مي پردازد.

  6. Scubanautic, one of the best diving in Mallorca spots for divers on different levels.  If you’re a group of friends with varying levels of diving expertise, this is a terrific site for everyone to enjoy. Our Scuba Diving Mallorca, the most famous underwater tunnel located approximately 25m in depth, is the most excellent feature you will see here.

  7. Find your idealDive Center Mallorca . PetroDivers specializes in adrenaline-pumping cave diving Mallorca . In summary, cave diving Mallorca allows you to experience unique surroundings full of adventure. And to be a part of a group with similar interests. So, what are you waiting for? Book immediately online or with the assistance of our local experts.

  8. Hii!! I’m Fahmida an artist and a writer in a well known company
    Best Assignment help Website and what my perspective is that online Sports Betting Market analysis have current study and addition to the potential feature of the market primarily depends upon the facet of the business which compete on the current market, high factors and appropriated analysis.

Leave a Reply

Your email address will not be published. Required fields are marked *