Sports betting and gambling in general are very popular pastimes in most countries. In the United States, the situation is more difficult as sports betting operators struggle to find successful ways to be profitable in the country.
There are a number of reasons behind this difficulty and challenge that sports betting operators are facing. The biggest reason is the difference in gambling legislation and regulations from one U.S. state to another.
For example, in some states like New York and New Jersey, sports betting is now legal. Mobile sports betting has also been recently legalized which makes it a lot easier for sports betting operators.
For example, DraftKings is successfully attracting new customers by offering advantageous promo offers. However, in a state where mobile sports betting is still illegal, it is much harder for sports betting operators to attract new or longtime bettors.
This article will present some of the states in which mobile sports betting is illegal and the number of ways in which it is impacting the gambling industry.
The History Of Gambling In The United States
Gambling has a long and complex history in the United States, dating back to the early colonial period. Many forms of gambling and betting were brought to the United States by immigrants from European countries.
In the early days of the country, lotteries were the most popular form of gambling. By the 19th century, horse racing was one of the most popular forms of sports betting in the country.
However, by the mid-19th century and late-20th century, attitudes towards gambling began to shift. Gambling and betting was soon banned in the majority of states.
However, many organized crime syndicates began to profit from illegal gambling operations, particularly in major cities like New York and Chicago.
Indeed, the ban did not stop bettors and players from taking part in gambling activities. The Prohibition era in the 1920s and 1930s only led to an increase in illegal gambling, as people turned to underground venues, salons, and small gatherings to place bets and gamble.
In 1931, Nevada became the first state to legalize casino gambling. Other states soon followed it, with many legalizing some form of gambling, such as horse racing, lotteries, or charitable games.
However, for several decades, casino gambling remained largely restricted to Nevada and a few other states. In 1988, the Indian Gaming Regulatory Act was passed, allowing Native American tribes to operate casinos on their lands.
This led to a significant expansion of the casino industry, particularly in states like California and Florida with large Native American populations. In 2018, the Supreme Court overturned PASPA, a federal ban on sports betting.
This decision allowed states to legalize and regulate the gambling and betting industry. Since then, several states have legalized sports betting, and the industry has grown rapidly.
Despite ongoing debates about the social and economic impact of gambling, it remains a popular and profitable industry in many parts of the country.
Which U.S States To Authorize Sports Betting?
Not all US states allow sports betting. Some states allow certain forms of sports betting but not mobile sports betting yet.
The differences in what some states allow, and others prohibit, have shaped the industry and negatively impacted many sports betting operators.
Here are some of the most famous states that have legalized sports betting and therefore have a legal and regulated betting industry:
- New York
- New Jersey
- Washington DC
- Ohio
- Nevada
In total, there are about 30 states with a legal and regulated sports betting industry. Some states like North Carolina, New Mexico, and Wisconsin offer sports betting via tribal casinos but these remain very limited.
Readers will note that some of the most famous states like California, Texas, and Florida have not legalized sports betting.
Why Are Sports Betting Operators Struggling?
There are a number of reasons why sports betting operators are actually struggling to be profitable in the United States.
Limited Market
As mentioned before, one of them is how restricted they are. Some states do not allow for land-based sports betting venues, land-based bookmakers, or online bookmakers to legally establish themselves within the state.
This means that sports betting operators are losing out on big markets in the country.
High Tax Rate
Another important reason is the high tax rates that sports betting operators are faced with. For example, in the state of New York, each sports betting operator is forced to pay a 51% tax rate to the state for 10 years.
However, in other US states, this tax rate is usually about 19%. So why is the tax rate so high in New York?
Everything is more expensive in New York as it is a world-renowned city that attracts millions of tourists each year. The exposure that sports betting operators have in New York is much higher than in the majority of other US states.
The high tax rate on mobile sports betting has been very profitable for the state of New York. At the end of 2022, Governor Hochul announced that the state of New York had collected over $500 million USD in tax revenue from the sports betting industry.
Final Thoughts
This article offered an overview of the US’s gambling history and the two key reasons why sports betting operators are struggling to keep afloat in the US market.
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