Well, the previous chapter touched on the overall legality of sports investing, but now I would like to talk about my favorite place to invest, which is online. For myself and members of my VIP Members area, nothing is easier than looking at our daily alerts, logging on to our favorite apps and making a quick investment. In the fast moving world of sports trading these apps are truly a godsend. I mean, who has time to actually go to a brick and mortar location every day and place a trade? Now, for me, trading online only adds to the freedom and convenience my life has already.
In Tokyo for the weekend? No problem. I just log on and monitor my investments and place the trades I want, when I want, wherever I am.
Simple, easy and lucrative. I wish the same type of life for all my VIP Team Members and readers of this book. So, before going any further, let’s understand the legalities of online investing when it comes to sports, then dive into the revenue this new and exciting industry is producing. Then, we’ll talk about who is doing this and how fast this industry is growing.
What is the Interstate Wire Act?
The Interstate Wire Act of 1961, often called the Federal Wire Act, made it illegal to place or receive wagers on sports events using “wire communication.”
In theory, the Wire Act affects anyone and everyone who bets on sports. However, the way the act is worded is left up to interpretation. The opening text of the act stated, “whoever being engaged in the business of betting or wagering.”
The key word used here seems to focus on one thing; BUSINESSES. The act was designed to target people and organizations that were involved in sports betting as a business – i.e. bookmakers/organized crime.
Now, we are talking about 1961. This act was designed for telephones and Morse code, but the principles could certainly be used today, considering the internet is just a bunch of really high tech wires sending a signal from point A to point B.
There have been numerous occasions when federal authorities have cited the Wire Act when arresting people for online betting services. For example, in 2006, the chief executive of betting site BetOnSports was arrested and charged with participating in an illegal gambling enterprise. Later that same year, the chairman of SportingBet was arrested for similar charges. Several more arrests have followed, but in the research done by myself and my staff, we were unable to find a consumer who was arrested. Only those who chose to do this as a business as the act is written have been charged to date. The act was NOT created to target individuals who bet on sports for recreation.
With that being said, we recommend following your state’s guidelines for sports wagering.
Online seems to be the way
According to data available, wagers placed via smartphones have quickly brought New Jersey neck-and-neck and beyond with Nevada in the race to be the nation’s biggest sports-betting market.
In what I found to be the most interesting fact, people who wager online now account for about 80% of all legal wagers on games in New Jersey, which surpassed Nevada for the first time in May in monthly sports bets, according to figures released by the two states. Mobile sports betting is already widely available in the form of gray-market apps and offshore websites, but some are losing popularity with states taking control and taxing the activity.
Under the Supreme Court’s ruling, each state can set up its own online wagering system if they choose, but bets across state lines aren’t permitted. Mobile apps can now use a method known as “geofencing” to keep betting action within a state’s borders.
Using New Jersey as our case study, sports bettors wagered a total of $3.2 billion in the first year, with $2.4 billion of that coming in through mobile phones and computers, according to state data.
It is truly astonishing how big the industry has become so fast, yet how much room there is to continue to grow. When asked about the recent legalization and the current boom, DraftKings Chief Executive, Jason Robins, is quoted as saying, “This should grow our business many times over—not double, not triple—this should turn us four or five or 10 [times] the size we are now, and those numbers depend on which states and how quickly those states adopt this.”
So, who is doing it?
Who will be participating in sports wagering? A report by L.E.K. Consulting found that legalized sports wagering is mostly attractive to sports fans who already gamble in some capacity (47% compared with 23% of casual gamblers and 29% of non-gamblers). They theorize that legalization could lead to an 84% rise in sports gambling participation, from 10% of sports fans at present to an astounding 18% post-legalization. So for every 5 guys who are watching a game together, 1 will have a capital investment.
According to their survey, they estimate that both current sports gamblers and those likely to start wagering reported a similarly strong anticipated rise in sports engagement (roughly 37% and 39%, respectively).
As predicted, sports fans surveyed report that interest will be driven primarily by televised sports viewing (73%), along with recap videos (40%) as well as sports articles and related content (36%), which is great news for what we do. Casual fans betting on their favorite team create favorable odds that methods like ScoreMetrics and the systems we produce can take advantage of.
So what does all this mean? Well, at first glance it will most certainly mean that with more markets opening up due to the rush in legalization, we’ll see an enormous increase in the amount of capital that will be moved back and forth between gamblers and bookmakers. Experts are all predicting a boom with investment firm Morgan Stanley and many others saying that the U.S. market will generate between $7 billion and $8 billion in revenue by 2025, up from $833 million this year. Morgan had estimated only $5 billion less than a year ago, so they are watching the legalization and seeing the sky as the limit.
While those numbers are most likely going to be staggering, for ScoreMetrics that growth brings opportunity. Similar to the boom seen when marajuana was legalized, there will be a rapid expansion that will allow those with a better business plan to succeed while others fall by the wayside. I am totally confident in the product we have produced, and I truly believe that if you follow our methodology you can capitalize on this new gold rush.
What truly matters for us, and this is VERY important, is the volume of uneducated and casual gamblers that will soon become part of the market, unaware of the advantages that ScoreMetrics Data Lab can provide. Their lack of analytics and historical back-testing plays right into our systems. With this upcoming growth pattern in revenue we are predicting even bigger gains for our VIP Members and for those of you that can successfully create qualifying systems.
In summary, this is not only a market that is fresh and untapped, it is one that is about to absolutely explode.