The boardwalk in Atlantic City, New Jersey, looks like a forgotten film set. Scant tourists look in vain for its Prohibition-era glory. The windows of the Central Pier Arcade are grey with dirt. The nearby Trump Plaza stands empty. Snarkier non-residents call the town “America’s armpit”.
But Franco Guerrero, who has worked in Atlantic City’s casinos for 29 years, says that after dark days following the 2008 recession, the town — its resorts and railroad once the inspiration for the US version of the Monopoly board game — has new hope courtesy of the legalisation of one activity: sports betting.
“A lot of people lost a lot of money and they moved out . . . but now there are more jobs and opportunities,” says Mr Guerrero. He moved from one of the boardwalk’s oldest surviving casinos, Harrah’s, to work at the Hard Rock resort’s sportsbook — the US answer to a bookmaker’s shop but with big live sports screens and alcohol on sale — which opened in June last year.
Atlantic City is the frontier town for a new American gold rush. The gambling hub of New Jersey was the first state to adopt legislation allowing sports betting after the US Supreme Court overturned a federal bill banning the practice in May 2018. A host of European and American operators have since built sportsbooks in its casinos.
The mistrust of betting is buried deep in the DNA of many US states — an historical attitude that went hand-in-hand with fears of mob violence and corruption in sport. Increasingly stringent legislation was adopted during the 20th century as match-fixing and other scandals prompted public outcries. The 1992 Professional and Amateur Sports Protection Act outlawed sports betting in all but a handful of scenarios.
The Supreme Court’s decision opened up a fresh market, unhampered by the public and media clamour against problem gambling in mature markets such as the UK. Peter Jackson, chief executive of Flutter, which owns the Irish betting company Paddy Power Betfair, describes the opening up of the US as the most exciting development since the advent of online betting.
A combination of population size and the passion for sport could make it one of the most lucrative sports betting markets in the world, analysts say. Now legal in 14 states, five others have legislation pending.
Estimates for the size of the potential market vary wildly. Gambling Compliance, an industry research firm, values the market at up to $8.1bn in revenue terms by 2024. If the American Gaming Association’s $150bn estimate for the illegal sports betting market is accurate, it could be much bigger.
But as with any gold rush, the glut of fortune-seekers makes competition tough and the depth of the mine is unclear. European gambling companies last circled the US market more than 10 years ago but had their fingers burnt when several executives were arrested for providing online sports betting into the US from bases in the Caribbean.
Mark Blandford, then chief executive of Sportingbet whose chairman Peter Dicks was one of those detained in 2006, remembers being “totally shocked”. “He was handcuffed to a murderer,” he says. Sportingbet paid US prosecutors $33m to settle the case.
But for newcomers, it is too good to be true. “It’s a once in a lifetime opportunity,” says Jason Robins, chief executive of fantasy sports company Draftkings, which has the second-largest share of sports betting revenues in New Jersey. “[Here is] a market that is going from unregulated to regulated in the largest economy in the world.”
Chart showing On-site and online market share of gambling in New Jersey
Since 1992, Americans wanting to bet on sports in the US have had three options: go to the Las Vegas sportsbooks in Nevada, seek out a local bookie in a bar, or bet via offshore websites.
The Supreme Court has fundamentally changed that. Many in the industry say its 2018 ruling was the work of one man: Dennis Drazin, a New Jersey lawyer who is also chairman of Monmouth Park racetrack in New Jersey. Looking to boost revenues in the state’s fast-failing horseracing industry, he figured that if Monmouth Park could host a sportsbook, punters would come. Mr Drazin fought a series of legal battles to allow sports betting in New Jersey on the basis that it should be a decision for the states, rather than the federal government.
“People said I was tilting at windmills like Don Quixote . . . But at the end of the day, I made a lot of people very rich,” Mr Drazin says. The fight took him seven years.
His efforts were boosted by the emergence in the 2010s of daily fantasy sports games in which people choose fantasy teams across various sports but win points based on the real-life performance of the players. For many, it was a way to take punts on sport in a legal grey area outside of PASPA’S reach.
Draftkings and Fanduel, the two biggest daily fantasy sports sites, came to the attention of regulators in 2016 after advertising by the two companies caused a backlash. Some asked whether fantasy sports were merely sports betting under a different guise but the companies successfully argued that fantasy sports are games of skill, not chance and therefore did not constitute gambling. Their combined customer base of more than 13m players, however, showed that there was an appetite for the betting-like activity they offered.
The 22-window sportsbook at Monmouth Park is run by William Hill, the UK bookmaker which has had a presence in the US since it bought a Las Vegas counterpart for $50m in 2012. Late on a Saturday afternoon at the tail-end of the racing season, few punters are watching the horses. Yet the sportsbook — where they can bet on everything from basketball to golf — is packed.
