Online Sports Betting Tailwinds
There are a number of factors aligning right now that make investing in sports betting a smart move.
2020 will always be remembered for all the extra time people spend indoors. Luckily for sports clubs and eSports groups, that’s contributed to a massive upswing in audience numbers. At the same time, stimulus measures have put money in the pockets of nearly every American. With extra money and lots of time spent watching sports and eSports, it’s no surprise to see the steep growth curve in online sports betting. The growth in traditional sports betting also grew significantly after an initial drop in the early days of the pandemic.
Global consumers spent $900B more during 2020. Sports bettors were among those consumers. During 2019, before this growth, the global sports betting market was valued at $85B. $13B of that figure was wagered on sports in the US. As e-commerce has grown to capture more of the total retail spend, so too have other traditionally physical offerings. Betting has been moving online for a long time. After all, online betting platforms can deliver some piece of the casino experience from anywhere in the world.
US and Canadian Policy Changing
Depending on where you live, sports betting may or may not be legally accessible. In fact, sports betting is legal in 21 US states right now. That’s after a 2018 US supreme court decision that repealed the Professional and Amateur Sports Protection Act (PASPA), which was originally brought in by George H.W Bush in 1992. In the years following the PASPA repeal, online sports betting has surged in the US. There are more states that could legalize online sports betting to grow the market further, as the model is proven out.
In Canada, Bill C-218 could legalize betting on a what they call a “single sport event or athletic contest”. Sounds like just about every game on TV. It could be a game-changer for the online sports betting market in Canada.
A Proven Model
The United Kingdom has proven that legal sports betting can be effective. Sports betting has been legal in the United Kingdom since 1960. That’s a long track record. The government gets their cut too, of course.
Right now, there is a black market of illegal gambling of unknown size. With these moves in Canada and the US, the gambling revenue can begin to generate tax dollars. Remember, the trillions of dollars of stimulus ultimately need to come from somewhere. Legal online sports betting can help to bridge the gap between these large government spending programs and current tax inflows.
Not Just a Pandemic Hit
What happens after the pandemic ends? The timeline on a return to “normal” is unknown. At some point, we will be back in the stands of our local stadiums watching our local teams. When that happens, online sports betting can still win. Every fan in the stadium will have their phone in their pocket and the fans who have been betting online during the pandemic will continue to find it easy to bet using that exact same process.
The market could be huge. Some analysts are considering a 2025 North American online gaming market size of $22B+, implying a CAGR of 55%. If you’re looking to capitalize on policy changes in the US and Canada, benefit from growth in the case of a prolonged pandemic lockdown scenario and keep upside exposure from post-pandemic live sporting event betting, now is your chance.
Growth Beyond Traditional Sports
eSports is growing significantly as more young people turn to platforms like Twitch to watch their favourite gamers face off. In fact, 2018 wasn’t a big year just for the gambling industry and the repeal of PASPA in the US. Growth in eSports investments during 2018 surged from $490M in 2017 to $4.5B in 2018. The market is far from maturation and where competition goes, betting follows.
It’s not just the audience that’s growing and expecting to grow further. Revenue is forecast to surpass $1.6B by 2024. Note the forecasted revenue growth is larger than the audience growth. That would mean a more efficient capture of the value created by the businesses serving that audience.
So more people are betting on traditional sports right now due to extra time inside and the financial stimulus available to spend. At the same time, more states in the US (and Canada) are legalizing sports betting and growing the pool of potential bettors. In addition, an investment in this space is a smart way to get exposure in your portfolio to the growing eSports market. The eSports market can continue to grow more easily without fan-attended live events because players don’t need to be in the same room to compete. Any bettor will tell you there’s no such thing as a sure thing, but this market looks set to grow for some years to come.
Thank You For Your Loyal Readership.
The Financial Star Team.