Welcome to Thoughts on the Market.
I'm Mike Cypress, Warren Stanley's head of U.S. brokers, asset managers, and exchanges research.
And I'm Stephen Grambling, head of U.S. Gaming, Lodging, and Leisure.
Today, we'll talk about sports betting and how prediction markets can disrupt it.
It's Wednesday, March 19th, at 10 a.m. in New York.
Sports betting used to be against the law in most of America outside of Nevada.
That changed in 2018 when the U.S. Supreme Court declared a federal ban on sports betting to be unconstitutional.
As a result, many American states legalized sports betting.
Over the last seven years, it's become even more popular and profitable.
The American sports betting industry posted a record $13.7 billion of revenues last year.
That's up from 2023's record of $11 billion, according to the American Gaming Association.
Now, prediction markets are set to potentially disrupt this industry.
Stephen, to set the stage, how is the U.S. sports betting industry currently organized and regulated?
Well, as you mentioned, Mike, with the overturning of the Professional and Ambitur Sports Protection Act in 2018,
legalization of sports betting turned to the states.
The Patel legislation varies by state with different constituents to consider beyond even the local government,
you know,
Senate and Congress, but also tribal casinos, commercial casinos, sports teams, leagues, etc.
We now have 38 states plus D.C. and Puerto Rico offering legal sports betting in some format,
collecting billions of dollars in taxes in aggregate.