A slim, elegant older gentleman took a seat on his patio overlooking Lake Mead on Monday morning, turned on his phone and began to parse his wagers for the day. Would he bet on the Rockets, who were favored by one point over the Warriors? Would he take his hometown Vegas Golden Knights, underdogs in Winnipeg?
This is how Vegas Vic starts almost every day.
Thanks to a common-sense ruling, soon you can too. Finally.
“It’s idiotic you had to go to ‘Tony Two-Toes,’ and ‘Joey Four-Fingers’ and all the guys in those east coast cities, the gambling capitals of the world where the mob is running things,”‘ Vic said.
Within months, if not weeks, if you live in a state that wants to legalize sports gambling you won’t have to phone your bookmaker. In most states you’ll just open an app on your phone.
The U.S. Supreme Court on Monday declared unconstitutional the law that prohibited most states from legalizing sports gambling, bringing into light a black market estimated to handle at least $150 billion in bets annually. The law was called the Professional and Amateur Sports Protection Act (PASPA), and it was sponsored former New Jersey senator Bill Bradley, a basketball star at Princeton and with the Knicks. The bill passed in 1992 with the blessing of the professional leagues eager to safeguard against game-fixing.
Which was like killing a fly with a bazooka.
On Monday, the 6-3 decision ended decades of hypocrisy by leagues who solicited deals with casino owners while purporting to shun the gambling industry.
It was New Jersey — yes, Bradley’s state — that petitioned the court to hear the case, and it likely will be the first to benefit. Some experts believe that, within two weeks, the London-based William Hill sports book could add sports betting to its racetrack at Monmouth Park, N.J. Pennsylvania also has in place a law that could quickly add sports gambling in its casinos and “racinos,” as does West Virginia. Industry experts believe NFL fans in several states will be able to bet on games when the season begins in September.
“If we do this the right way, the only losers will be the illegal bookies that have been operating a massive black market,” said Joe Asher, CEO of William Hill’s operations in the U.S.
Ever since the court agreed to hear the case DraftKings, the daily fantasy sports company based in Boston, has been seeking a casino partner in New Jersey and working on a digital platform to quickly launch a sports betting operation.
“This is really our bread-and-butter,” said DraftKings CEO Jason Robins, whose company claims as many as 10 million users. “A lot of our customers report they already bet on sports. We’ll be able to deliver that better than anyone else out there.”
Massachusetts also has legislation in place to make sports betting happen fast, and DraftKings has expanded its offices there. As many as 20 other states are considering legislation that will legalize sports betting.
Everybody wants a piece of this action, even the leagues. Each issued pledges Monday to police the “integrity” of their sports, but betting has been legal in the United Kingdom for years and that society has not crumbled. Eagles owner Jeffrey Lurie, Phillies owner John Middleton and Sixers owner Josh Harris, who also owns the New Jersey Devils, all declined to comment on the new law, but Dallas Mavericks owner Mark Cuban might have spoken for them all when he told CNBC that the value of every major sports franchise doubled Monday.
NBA commissioner Adam Silver has supported legalized betting for almost four years. This winter, in anticipation of a favorable court ruling, he began a campaign to extract a one-percent “integrity fee” from gross revenues realized from betting on NBA games. Major League Baseball followed suit. That number would likely shrink to around 0.25 percent, since bookmakers generally only make about 5 percent profit.
The next hurdle is determining how the pie gets sliced. Pennsylvania’s existing legislation, signed into law in October, carves out a 36 percent tax rate for state and local coffers, which is prohibitively high, as well as a $10 million licensing fee. West Virginia, for comparison, will tax at 10 percent with a $100,000 licensing fee. Mississippi hasn’t set a number yet, and New Jersey’s current bill would tax between 8 and 12.5 percent. Nevada taxes at around 7 percent.
Robins, with DraftKings, was extremely concerned with how the laws will be written and how the industry will be regulated because the profit margin is so slim. He believes he can help regulators shape workable rules, since regulators came after his daily fantasy sports business with stiff regulations two years ago. He already has lobbyists in every state who are familiar with each state’s regulatory profiles.
Once the kinks are worked out, Vic and Robins agreed, back-alley bookies will largely wither and die. Some might hold on by lowering the “vig,” or service charge, from the standard 10 percent to as little as 5 percent, and few bettors might want to shun the tax man.
“Maybe some (gamblers) will want to continue because they’ll be able to avoid taxes, but I think most people don’t think that way,” Robins said. “Most people, if there’s a legal means to do an activity they enjoy, they’re more than happy to shift to that.”
The decision also will turn tech-heads ever more toward their devices. In states where sports betting is legalized online as well as in casinos, there will be in-game betting from your couch, or even from your seat at the arena. There already is, said Vic, at Knights hockey games, and there will be more when the Raiders arrive in two years. Estimates range that between 20 and 50 percent of sports wagering in Vegas occurs online. Spurred by an ongoing surge in mobile sports betting, which was legalized in the state in 2011, Nevada sports books collected a record $248.7 million from $4.8 billion bets placed in 2017.
“Mobile and online will be 60 to 70 percent of the monies that are taken in from sports books,” predicted Vic, himself an early adaptor.
One thing’s for sure: Fewer and fewer gamblers will be calling Tony Two-Toes or Joey Four-Fingers.
“I don’t think the Gambinos and the Five Families in New York are too happy right now,” said Vic. “But I guess they have other stuff to keep them busy.”