You’ve got to give it to them: 2023 was a fantastic year for US gambling operators as the sports betting sector continued to exceed revenue growth expectations, topping over $10.9 billion last year – up 44.5% from 2022 – according to the American Gaming Association‘s annual report.
The continuous year-on-year growth of the sports gaming industry not only fostered further optimism from within the financial sector – it also presents unparalleled profit margins for many of the gambling outfits themselves, with industry experts predicting revenues could potentially exceed $50 billion in 2024.
The boom in iGaming revenues, of course, all stems from the 2018 Supreme Court ruling that authorized legalized sports betting, which paved the way for this astonishing growth and, hypothetically speaking, uncapped earnings.
Yet, these figures aren’t a true indication of the sector’s revenue potential.
That’s because currently, only 38 states and Washington, D.C., have so far embraced the Supreme Court’s verdict to legalize sports betting, which, if others follow suit, will only swell this industry’s multi-billion-dollar valuation further.
Naturally, economists point to Texas and California as the two prime absentees, which, to date, have refrained from granting gambling outfits the chance to operate in their states.
However, with both states combined representing a staggering 20% of the US population, should the inevitable eventually happen, it would act as an instant catalyst to further boost the industry’s revenue.
The Mechanics Fuelling Revenue Windfalls
One aspect that seemingly lies behind the swell of sports gambling revenues is the growing popularity of Parlay bets.
Parlays are essentially low-stakes, high-reward bets that are insatiably popular amongst bettors, as winning combinations result in a massive payout that can rival some lottery jackpots. Nevertheless, parlays are considered lucrative cash cows within industry circles, as the infrequency of payouts ensures consistent profits for gaming operators.
Another key tool in every sportsbook’s arsenal is the continued surge of in-play betting.
Here, betting operators profit from fans employing mid-game wagering tactics as they capitalize on perceived shifts in a team’s momentum or try to predict ensuing scoring plays. Despite the relatively consistent payouts, the house’s in-build margins mean they ultimately still win regardless of the result.
Real-time betting adds an exciting new dimension to watching sports, and for gambling operators, the chance to accept wagers right up to the final whistle – a clear shift from the traditional betting system where wagers had to be made before kick-off.
All this, of course, is aided by mobile sports betting apps, which allow fans to simultaneously bet while watching a sporting event – albeit whether they’re watching the game live in the stadium, at a sports bar, or simply sitting at home on the couch.
Sports Betting Growth Fuelled by State-to-State Adoption
Impressively, even though states like Texas and California continue to abstain from legalizing sports betting, the prospect of the industry smashing the $50 billion ceiling is, in all likelihood, set to be broken in 2024 without them.
Sure, the allure for holdout states to profiteer from tapping into the accelerating popularity of betting will be harder to resist.
If not driven by the growing numbers of voters with a personal interest in gambling themselves, but perhaps more importantly – the promise of the substantial tax revenue dollars it would generate for the state.
After all, the top three states alone have already individually broken the $1 billion annual revenue marker, with New York banking close to $1.7 billion, followed by New Jersey ($1 billion) and Illinois ($1 billion).
Other states, including Pennsylvania and Michigan, have also consistently posted increasing sportsbook turnover results and may soon join the ranks of those reaching ten-figure revenues.
Even the five newest states, including Ohio, Kentucky, and Maine, who all opened the door on legalized sports betting in 2023, contributed to nearly $1.5 billion as a whole last year alone, demonstrating sports snowballing wagering popularity in other states.
Looking ahead, the public appetite for betting on sports extends far beyond the marquee events such as the Super Bowl, the World Series, and the NBA Finals. Instead, the growth in the market continues to be more widespread, with wagering liquidity expected to grow on regular season games, too.
When population-dense states like California and Texas eventually release the shackles, betting revenues will inevitably receive an unprecedented cash injection, but in the meantime, if the explosive popularity of legalized sports gambling maintains its current year-on-year growth – breaking the $50 billion barrier looks like a sure bet for 2024.