Nearly everyone wants a piece of the sports betting craze that has captured the United States. Now, we should expect even more hands reaching out, considering the latest estimations on the industry as a whole.
Investors and sports betting companies recent put a $7 to 8 billion valuation on the sports betting industry, based on updated estimates. However, not everyone with their hands out will get something in return.
At the NYC Sports Betting Investor Summit on Monday, panelists said the industry is growing even more quickly than they had initially anticipated. This coming a year and a half after New Jersey won a United States Supreme Court ruling that allowed it and the rest of the country to legalize sports betting within their borders as they see fit. As of now, 14 other states have joined the movement since then.
Investment firm Morgan Stanley predicts the United States market will take in more than $7 billion in revenue when the year 2025 hits. Last year, the same company put a $5 billion valuation on the sports betting market.
This same amount would represent about 16.8 percent of the $41.7 billion taken in by commercial casinos in the United States during the year of 2018. Regardless, this current estimation is mind-boggling when put in comparison to the revenue stream that did not exist at this time last year.
At the NYC Sports Betting Investor Summit, executives from MGM Resorts, Hard Rock and Mohegan Sun all had similar estimates in the $6 to 8 billion range. The research firm Eilers & Krejcik Gaming, which focuses on sports betting regulation and revenue, said those figures are “very close” to its own estimates of the market size in the future.
Not All Rosy
Panelists at the forum did warn that while the industry is growing quickly, the high cost of acquiring customers and promoting a new business could eventually lead to some current operators failing in their business venture.
“It’s a war out there,” said Seth Young, chief information officer for PointsBet. “At the end of the day, there’s going to be a lot of carcasses out there on the road.”
Then again, there’s some more positive thinking – or something, of sorts.
“It is a growing market here in terms of revenue, but it’s a very tough market,” added Scott Butera, president of interacting gaming for MGM Resorts International. “Everybody wants to be here. Ultimately, I think we’ll see some shaking out.”
Operators still spend heavily when trying to attract new customers, who still need to go through all sorts of steps when depositing funds into their accounts because most major credit cards still won’t finance gambling transactions.
Kresmir Spacjic, senior vice president of online gaming and sports betting for Hard Rock International, said that 80 percent of sports betting transactions in Europe are used with credit cards, while only about 30 percent of those are used in the United States.
Morgan Stanley, which hosted the NYC Sports Betting Investor Summit, gave the high-end estimate of $15 billion generated by sports betting in 2025 if every state has it legalized. Their worst-case scenario was a $2.5 billion valuation, with only 22 states legalizing sports betting.