Is US sports betting living up to the hype?

The results for the first two months of US sports betting are filed and the industry is getting excited. September saw solid staking and fantastic margins, while October saw further staking growth but a sharp decline in margins as NFL favourites covered the spread and a lot of games went ‘over’.

Personally, I was a little disappointed in the numbers. As someone who lived in Philadelphia for a couple of years, I know that in that sports-loving city the only thing you are closer to than an illegal bookie is a rat. From my front door I had seven bars within a five-minute walk where someone would book your action, usually the barman or one of his associates. In the City of Brotherly Love, anyone who loved sport was having a bet.

I thought as soon as sports betting was legal we’d see a huge uptake in wagering. Who wouldn’t prefer to get on digitally, with the far greater certainty of getting paid if you scored big and not having to leave your house or arrange cash collection or payment?

Yes, the numbers in New Jersey are decent. And they will get better. November is always the best month for handle, with a full slate of NFL games on offer, plus college football and the start of college hoops. And with bettors sitting on a decent tank after October’s punter-friendly results, turnover should be through the roof.

What will be interesting to see is what growth looks like through the NFL playoffs – when there are far fewer games to bet on – and then into March Madness. What European analysts tend to forget is that the American sports season, and in particular the betting action, is highly cyclical and massively skewed to football (the non-soccer kind). April through to July tends to be a ‘dead zone’ for gambling, with low-margin baseball dominating the calendar, so expect a few people to be surprised at the apparent slump in revenues in that period.

Normalising US sports betting

For now, I suspect a lot of the betting is coming from people who were already betting with offshore books or their local bookie. The challenge now is to get the people who play office pools, fill in brackets (think fantasy league with a little bit of money involved) or who are sports obsessed but didn’t want to send bitcoins to Costa Rica to have a bet to start engaging on a meaningful level.

That change may not be quick. Listening to NFL broadcasts this year, there has been a slight shift of focus to commentators mentioning at the end of the game that what looks like a meaningless field goal might be of interest to a large part of the audience, based on the point spread. But there have been very few overt mentions of the line or the total, which is a huge contrast to what we are used to when we watch football in Europe.

In the UK it took two generations for betting on sports to be normalised. When I lived in Massachusetts in the late 1980s, my colleagues thought that my trips to the off-track betting (OTB) parlours were akin to having a crack cocaine habit. The social mores may have changed but not that much, I suspect.

For me, the US will one day be the largest sports betting market in the world. But the challenge won’t be only about moving those who currently bet in the illegal market into the regulated market. The real task is how you make having a bet part of the enjoyment of watching any sporting contest.