Measuring The Impact Of Legal Sports Betting On Its Illegal Cousin

Consumer spending in the U.S. with traditional illegal bookmakers declined 25% last year, according to AGA research.

Consumer spending in the U.S. with traditional illegal bookmakers declined 25% last year, according to American Gaming Association research that was released this week.

Legal sports betting – including mobile wagering – rose 12%.

Bettors who have made a shift away from “the dark side” most often cited confidence that bets will be paid out (25%), awareness of legal options (20%), a desire to use a regulated book (19%), promotions offered by legal operators (19%), and reading news about legal sports betting in their home state.

“We’ve known for a long time that Americans like to bet on sports,” AGA President and CEO Bill Miller said in a statement. “This research affirms their interest in moving toward the protections of the legal market.

“Giving consumers convenient alternatives to the illegal market, like regulated mobile offerings and competitive odds, is key for getting bettors to switch to legal channels,” Miller added.

Nearly three-quarters of those surveyed agreed with the statement that “it is important to only bet through legal providers.”

Illegal markets still hanging on

Yet the survey also found that 52% of sports bettors participated in the illegal market in 2019 – an issue largely driven by confusion about online operators. Just over half (55%) of consumers who placed most of their wagers with illegal operators believed they bet legally.

Illegal offshore sportsbooks also saw a 3% increase in states with legal sports betting and a 24% increase in money wagered in states that have not yet approved the activity.

“Illegal, offshore operators continue to take advantage of unknowing consumers,” said Miller. “This only worsened during the [pandemic-related] sports shutdown, with unregulated bookmakers offering odds on everything from the weather and shark migration patterns to whether your friends’ marriage will survive the pandemic.”

One of the ongoing issues is the willingness of even the most reputable media organizations such as Reuters, Yahoo! Sports, and The Wall Street Journal to quote those offbeat odds, in many cases due to journalists who don’t know or don’t care about the illegality of the offshore sportsbooks offering those numbers.

To help educate bettors, the AGA’s interactive sports betting map features a comprehensive directory of licensed online and retail sportsbooks in states where sports betting is legal.

So far, 18 states and the District of Columbia are offering legal sports betting and four others have approved but not yet implemented it. Another eight states have legislation pending to legalize sports wagering.

The AGA has published a set of sports betting principles designed to help lawmakers in states where the gambling is up for discussion build consumer-friendly regulatory frameworks, ensure healthy competition in the marketplace, and promote convenience of the product offerings to further encourage a migration away from offshore sportsbooks.

Americans have legally wagered more than $22 billion on sports nationwide since the May 2018 U.S. Supreme Court ruling that opened the door for all states to offer Las Vegas-style sports betting. That has produced about $200 million in tax revenues that illegal sportsbooks do not pay.

The fine print

Heart + Mind Strategies conducted the survey on behalf of the AGA between December 2019 and January 2020. The survey included 3,451 interviews among American adults over 21-years-old of various subgroups.


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