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The legal sports-betting market in the U.S. was worth an estimated $270 million in 2017 — with another $2.5 billion to $3 billion in black market betting, according to research firm Eilers & Krejcik Gaming, LLC. Accordingly, the recent Supreme Court decision in Murray v. NCAA that effectively lifts the federal ban on sports betting, allowing states to make their own laws and regulations, has captured the attention of businesses and entrepreneurs across the nation.
Current gambling operators are racing to take advantage of the potential windfall headed their way, but experts say it could be a long time before new ventures can benefit from this decision. That’s because most of the existing state bills already circulating specifically limit the number of companies that can work directly with casinos or race tracks.
“This means companies with past experience in the gambling marketplace, ready-to-go infrastructure and strong brand reputations will almost certainly gain selection for these mega-contracts,” says Marc Edelman, a professor of law at Baruch College who consults extensively on sports and gaming law.
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Edelman notes that none of the state bills proposing to allow and regulate sports gambling propose a true free market solution. That means even startup entrepreneurs with creative business ideas won’t be able to simply enter the marketplace, he says.
Until now, only Nevada has allowed betting on individual games, while Delaware, Oregon and Montana have allowed limited betting. The Professional and Amateur Sports Protection Act (PASPA), enacted in 1992, exempted out those states. Now, however, all states will be allowed to pass their own laws related to sports betting, and there’s also the potential Congress will attempt to enact new legislation that would govern all states equally.
As the court case has been working its way through the system the past few years, New Jersey, Pennsylvania and West Virginia have been preparing for the possibility of enacting new legislation post-PASPA. Sports Illustrated recently tracked the status of legislation in all 50 states, showing many are considering opening the door to sports betting.
Eilers & Krejcik Gaming has estimated that as many as 32 states will enact new legislation allowing sports betting within the next five years. It estimates the resulting market would be worth $6.03 billion in annual revenue — $7.1 billion to $15.8 billion if all 50 states allowed regulated sports betting.
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You won’t have to be one of the big gambling operators to take advantage of the new market, however. There are numerous opportunities for data analytics, content creation and more.
Tyler Wyatt, an independent handicapping expert who runs Three For The Money, is preparing for hundreds, if not thousands, of new companies to enter his space in the market.
“Gambling data and gambling news will initially become a commodity. Companies that can track the movements of both betting lines and the amounts of money wagered will have a product they can offer at a premium.”
Currently, Wyatt’s site offers bettors the ability to submit a request about a particular game and receive back a detailed analysis with over 1,500 data sets and a projected outcome of the game. He says it’s not something just anyone can jump into and make a name for themselves immediately.
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“I’ve purchased data that I didn’t have, scoured the internet to find data I was missing, and spent countless sleepless nights to compile the data sets and put together the program that we have at Three For The Money.”
While those with deep pockets might be able to simply buy the data, Wyatt says the blue sky in the market is elsewhere.
“There will be niche segments of the sports wagering market that can be capitalized. Apps that provide up-to-date player data, betting line movements, trends and more all in one place will be valuable.”
If you’re one of those entrepreneurs looking to take advantage of the new opportunities, Edelman warns that you be careful to manage your risks.
“There are no shortage of gaming lawyers who will tell you exactly what you want to hear,” he says.
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“The best lawyers will push back on ideas and encourage [you] to refine them in such a way that you are able to maintain the core elements of your business plan but at the same time encourage changes to make sure to keep your risk level manageable.”
Edelman says you should choose counsel that is mindful of the developments in state law.
“The future of your sports-gambling or interactive fantasy sports business will be driven very much by your ability to operate within the framework of state laws, and many of these laws do not yet even exist.”
In other words, it’s not only entrepreneurs who will be trying to cash in on the new marketplace, but attorneys and other business advisors as well.