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  • Writer's pictureNicc Lewis

US Gambling Floodgates are open?

US Gambling Floodgates are open?
Will we see a tidal wave of online betting in the US?

May 14, 2018 - this is the date that the US Supreme Court opened the door for sports betting in the US. In this landmark ruling many are citing that the floodgates are open or at the least the large underground industry will become legitimate overnight.

The entire previous statement is wrong! There certainly will not be a deluge of new sports betting services across the US and where it will apply, it certainly will not be overnight.

How the US works

To understand what the ruling means, you need to understand Federal versus State legislation. The US is similar to the EU in many respects. The individual States have governance over their state and collectively there is a Federal legislative. One of the key factors is that any taxation from gaming or gambling belongs to the individual State. The Federal Government does outlaw many activities that cross state lines and up until May 14, sports betting in any State. It was this last part that New Jersey challenged (and won) in the Supreme Court; they removed the Federal ban on gambling allowing each State to decide how to legislate for itself. So, intra-state gambling is permissible and each State can decide for themselves. Inter-State gambling is still not permitted, so you need to be present within the state you wish to gamble in - you cannot connect from New York to bet in New Jersey. With no taxation incentive for the Federal Government, it is unlikely this will happen any time soon.

When will the first online bets happen?

The following States already have legislation in place: New Jersey, Delaware, Mississippi, New York, Pennsylvania & West Virginia. When the Cannabis Federal restrictions were lifted, it took more than 2 years before the first legal sales. Some of the reasons for the delays were because there was no infrastructure in place. With major Sports Betting companies ready and waiting, this will be less of an issue. However, some States will require some amendments to the legislation, which is notoriously slow. Even without this, the licensee application process is also very slow. On top of this, the major sports are still a road block. It is important to note that the major sports have been the biggest lobbyists against online betting for many years fearing loss of revenues from their own products like fantasy leagues. The NBA is reported to be requesting 1% fees from all wagers on basketball. Each state will likely have to come to agreements on fees and more importantly monitoring and governance in collections.

Bottom line: from the first 6 states, we can expect the first online bets in around 18 to 24 months at the earliest.

There are a number of other States looking at legislating. This is a slow process that even on a fast track requires a bill to offered, negotiated, re-written, appealed and finally ratified. An good estimate of 18 months at the quickest to pass a bill and another 18 months before the first licensee has their license and can open makes this at least 3 years for a State without current legislation to go live. In a State with an intention only to legislate at this time, it might be quicker to land a person on Mars.

So, no floodgate and no overnight. The question remains that if two strong States can or have the will to challenge inter-State ban on gaming.

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