In the five years since limits on the sports betting industry were struck down in a court case that reached the Supreme Court, legalized betting on sports has seen exponential growth.
There are three factors driving the growth. First, technology has opened up the opportunity to bet on sports to everyone. Instead of going to a casino, anyone can place bets on sports on their smartphone. That means a potentially much larger customer base.
Secondly, the number of states where betting on sports is now legal has grown explosively, from as few as four states when the Supreme Court first passed down its decision to well over 30 states as of late 2023, with still more in the process of moving toward legalization. Third, with major sports leagues and broadcast networks embracing legalized sports betting, the pastime has become more popular.
The numbers seem big, and constantly growing, but what is the overall impact of legalized online sports gambling on the U.S. economy?
How Big Is Online Betting?
According to recent analysis, legalized sports betting has grown to a market size of more than $167 billion in 2023. That represents an annual growth rate of more than 10%. Those seem like large numbers, but it is a small sliver of not just the U.S. economy but the overall sports industry. In other words, the money from people betting on games is still dwarfed by the overall money spent on tickets, sports cable TV packages, jerseys, and other merchandise related to teams and athletes.
The $167 billion betting figure represents the total amount wagered. Obviously, many of those bets are won and money has to be paid out. When we narrow that down to the amount of revenue generated by sports betting, the total is expected to be just over $7.5 billion this year.
By comparison, the total sports industry generated revenues of between $500 billion and 1.4 trillion worldwide. So we’re talking about betting representing between half a percent to just over 1% of the sports industry.
Nothing to Scoff At
That isn’t to imply that the sports betting industry has a negligible impact. It’s a fast-growing, important part of a much bigger entity. And its economic benefits exceed the balance sheet totals. Here are some of the ripple effects that come out of the growth of sports betting.
Advertising
If you’ve watched a sporting event, you can probably name some of the leading sports books in the United States. From DraftKings to Caesars to FanDuel, all of which had ads during this year’s Super Bowl or Super Bowl pregame show, gambling sites are putting on an ad blitz to make sure they’re the first to come to mind when you’re looking to put down your sports betting dollars.
In addition to providing revenue for networks and teams—since the ad blitz extends to in-stadium sponsorships as well—it also provides opportunities for endorsements, as Jamie Foxx and J.B. Smoove would attest.
New Jobs
From bookmakers to programmers, customer service reps to marketing managers, the rise in online sports betting has created job opportunities in the industry. By most estimations, legalization has resulted in creating more than 100,000 new jobs. That also extends to media jobs, since a greater interest in betting on sports means a collective hunger by the market to read articles, listen to podcasts or watch videos of analysis, information and tips on upcoming events, in order to try to get an edge.
Taxes
If there’s money to be made, you can bet Uncle Sam is reaching out for his cut. Tax revenue from online sports betting has been one of the key drivers to many states in their push for legalization.
In 2022, three states—New York, Pennsylvania and Illinois, topped the $100 million mark in tax revenue collected on sports betting, and the total tax revenue across the US from the industry was about $1.5 billion. That’s expected to grow along with the industry and some estimates say it may reach about $7 billion —the current total revenue figure for the entire industry— when it reaches maturity.
Bottom Line
Online sports betting is still growing at a tremendous rate and will continue to be an important part of the sports industry, which, in turn, is an important part of the economy. Betting’s explosive growth also fuels several down-line effects that help the bottom line for teams, media companies, employees, and governments.
