Everyone loves the idea of free money. That’s how sportsbooks make their payday. As sports gambling has become increasingly popular in the United States, the presence of sports gambling ads during games has become almost common place. Generating over $1 billion in revenue in 2020 alone, it’s time to take a realistic look at the sports gambling industry as a legitimate revenue generator.

As more and more states legalize placing wagers on popular sports games (the list is up to 25 states now, as well as the District of Columbia), sports betting has established itself as a part of the sporting ecosystem. “What the public thinks is going to happen in a game, which team is going to cover the spread, has become part of the larger narrative of sports,” says Mike Raffensperger, chief marketing officer at FanDuel. 

Fanduel’s partnership with TNT essentially bookmarks odds for fans before the game, and even lets fans “bet” against color analyst Charles Barkley’s predictions for free. Additionally, ESPN tailor-made a “wagering” broadcast earlier this year for an eastern conference showdown between the Philadelphia 76ers and the Brooklyn Nets, providing fans with play-by-play live wagering advice (yes you can bet on the games while they’re happening.)

As the industry grows, more and more states are drooling at the potential revenue they could acquire from folks sitting on their couch placing wagers on nightly sporting events. “This is not a moneymaker for private interests to collect just more tax revenue,” Andrew Cuomo, governor of New York said earlier this year. “We want the actual revenue from sports betting.”

Andrew Cuomo enjoying the Kentucky Derby

Eilers & Krejcik Gaming, a boutique research and consulting firm, projects the $1 billion generated by sports gambling in 2020 to increase by sixfold come 2023. That’s millions of dollars states could use to help re-generate local economies still suffering from the repercussions of Covid 19. Andrew Cuomo elaborated on the potential impact claiming, “New York has the potential to be the largest sports wagering market in the United States, and by legalizing online sports betting we aim to keep millions of dollars in revenue here at home, which will only strengthen our ability to rebuild from the COVID-19 crisis.”

With most states imposing tax rates anywhere between 5-20% on sports wagering profits, the source of additional state revenue is there for the taking. On top of that, there’s licensing fees associated with opening up a sportsbook – money that also goes back to the state. For instance, in 2020 alone, Pennsylvania and Illinois generated over $10 million in licensing fees, a great source of passive income for a recovering economy. 

The industry is ready for the boom, too. According to advertising information company, Media Radar, sportsbooks spent upwards of $200 million on advertisements last year – a whopping 82 percent increase from the previous year. That number is expected to increase yet again by at least 50% by the end of 2021, as sports gambling bills are pending in an additional nine states this year. 

It’s not just state officials looking for their piece of the pie though. The country’s three biggest sports organizations, the MLB, NBA, and NFL have all partnered with gaming services in hopes of generating lost revenue from the pandemic. According to Sports Pro Media, the MLB lost a reported $3 billion in revenue from Covid 19 implications, while the NFL lost almost $4 billion. That money needs to be made up for somewhere, and organizations have proven they aren’t afraid to turn to gambling. Individual teams like the Chicago Cubs and the Philadelphia Eagles have each cornered partnerships with sportsbooks this offseason worth north of $100 million. Catherine Carlson, Philadelphia Eagles Senior VP of Revenue and Strategy, voiced her support of such partnerships stating, “The sportsbook partnership category has evolved significantly over the past few years. The overarching objective for all of them to partner with us is to build their customer base and make money.”

The fact that the industry has gotten off to such a hot start since states were granted the right to legalize sports gambling in 2018 proves sports gambling can bolster economies in new markets. Stigmas aside, it’s time to take the industry seriously. Look at the marijuana industry. The first year of legal marijuana sales racked in $3.4 billion in 2014. That number increased steadily every year until sky-rocketing to $17.5 billion in 2020. Who’s to say that’s not the same case with sports gambling? They’re both industries that have an out-dated stigma attached to them that is just simply diminishing as millennials take the reigns of the country’s social etiquette. Gone are the days of “The War on Drugs”, and in are the days of embracing change. So why not use a once scorned hobby as a means for economic growth? Only time will tell, but the numbers are trending in the right direction.