Gaming has been an interesting subject not just in the US, but in the whole of North America for many years. Typically, it has only been allowed at brick-and-mortar or at the track for horse racing, but that is slowly changing.
A number of states in the US over the past couple of years have begun to pass legislation that aims to legalize different forms of gaming. The likes of New York for example have just legalized online sports gaming, and places like Colorado have done
But why is America moving their sights to the gaming industry as a profitable business? Well, let’s take a look at who is profiteering and why?
gaming wouldn’t be getting legalized if it wasn’t for local governments passing the relevant legislation. But why have they been so keen on making these changes when for years, the activities around have been so restricted, and in part, have even been frowned upon?
Well, governments across the US have all felt their purse strings tightening, with wages rising to meet the increased cost of living, as well as a rise in the costs of services they provide. Not to mention the costs incurred with the COVID-19 pandemic and the lockdowns around them that saw many businesses close, people losing jobs, and an unprecedented amount of benefits handed out to help citizens get by.
Therefore, a new source of revenue was needed. And looking at how profitable the gaming industry is for other countries such as the UK, it was an untapped market in the US. With one of the largest populations on the planet and a large percentage of that population over the legal age of gaming, the potential for profits was great.
But the profit comes from a number of areas for the Government. Firstly, legalizing forms of gaming, online and offline will lead to the creation of more jobs. This means reducing unemployment and in turn, will increase tax revenues for the IRS. Then, you have the taxes on company profits and other rates they pay, another form of revenue.
Finally, unlike many other countries, winnings from playing this are taxable too, so no matter who wins when making a bet, the bettor or the sportsbook, the government gets a cut of both slices of the pie.
Whether it be from new sports betting apps or companies launching new online gaming in the USA, businesses from all over have been getting in on the action. Many famous names such as Caesars, FanDuel and Sports Illustrated have all been getting in on the action as they look to increase their own profits and watch their companies grow.
Caesars already had established itself as one of the biggest names in the industry, with resorts in the likes of Las Vegas. FanDuel is one of the biggest names in fantasy sports. And Sports Illustrated, well, they’re more famous for the swimsuit editions of their magazines, but even they are looking at trying to get a cut of these new industries.
It just shows how much money there is to be made that we’re seeing so many existing companies looking to get involved. And the likeliness is that things will only continue to grow. If we take a look at New York again as we mentioned earlier. They legalized online sports betting in January 2022, and in the five weeks since the launch of the first betting companies who managed to meet regulatory guidelines and be awarded the relevant operational licenses, we saw $2.4 billion in wagers being made.
Now New York has already put itself right up there as the number one state in the US in terms of growth and money transactions being made. But, think for just a minute how many other states there are in the US. The possibilities are huge for betting companies.
Sure, not all of them have legalized it, but once they see how much money is being made, it won’t be long before more follow suit. It may just take time so they can see which states implement the best guidance around how the industries should operate.
It therefore wouldn’t be unrealistic that in the next couple of years, we could see the money operating in the industry hitting the trillion-dollar mark. With more companies getting involved, the industry developing existing and new technologies, and more states to still legalizing its outright, or even just certain aspects such as online gaming, it’s essentially like drilling for oil. It may take time to drill down and find everything, but once you hit it, you’ve struck gold.
What other benefits are there?
There is one last way that legalizing gaming in the US is helping. That is by reducing the number of operations of illegal ‘bookies’. People, usually loan sharks who lend people money at extortionate interest rates and threaten violence to reclaim their debts, operate illegal sportsbooks underground. Because they’re so secretive, the true figure of how much they make is unknown.
But legalizing various forms of gaming reduces people’s need to rely on them. Putting many out of business. Which then has an impact by relieving stress on police forces tasked with investigating and tackling these illegal operations. This then rolls back round to help lower costs for the local government who fund the police forces, and means they can also focus more on crimes that local people believe need more support tackling.
Well, there is only one way for the time being. Up!
As more markets open up, the number of people looking to place wagers will be increasing. This means more customers for existing and new companies to battle for, and will likely lead to increased profits all around. The question is, how long can they keep innovating to ensure growth continues on that upward trend?