So you bought a book on how to use sports as an investment and you have read this far into the book, but you probably have a million questions. 

You do have questions, right?

The most important question should be; “is this legal?”  I am not sure I need to tell you this, but I would never encourage someone to do something illegal or to break any laws.  Laws are in place for a reason and should always be followed. Without laws, we would live in anarchy. 

So is it legal?  

Well, the good news is that, as of the time of this writing it’s been nearly two years since the Supreme Court struck down the federal ban on sports betting, allowing states to legalize it if they wish. The Supreme Court of the United States lifted the federal ban on sports wagering on May 14, 2018, blowing up a 25-year-old federal law  called the Professional and Amateur Protection Act (PASPA) that prohibited the action outside Nevada.

In an overwhelming 7-2 decision, the land’s highest court ruled that the federal ban on state-sanctioned sports betting is unconstitutional. While sports wagering has been going on for decades behind closed doors, this decision finally gives states the green light to allow wagering on amateur and professional sports.  

While this is a historic development in the sports industry, it is important to understand the distinction and it’s worth repeating. This is not allowing sports wagering in all states, but moving the decision to the state level so that each state can decide.  While we will outline some states that have legalized betting at the time of this writing, we highly recommend that you look at what the laws are for your state and follow them to the letter.  

This decision is amazing news though, as many had doubts that the Supreme Court would ever rule against the federal government’s earlier decision. I personally think the courts made the right decision. It goes along with my belief that the federal government should never rule on things that can be governed by the individual states, but that’s a story for another day.

 “The legalization of sports gambling requires an important policy choice, but the choice is not ours to make,” said Supreme Court Justice Samuel Alito, “Congress can regulate sports gambling directly, but if it elects not to do so, each state is free to act on its own.”

This is huge news and hopefully it won’t be lost on some of you that this is an opportunity of a lifetime. Let’s be honest; some of you will have purchased this book with no intention of ever doing anything with it.  Some won’t ever read it and will then miss my intelligent reparte as well as the lessons being taught here. That would be a huge mistake, because the door is open for a new investment market and my opinion is that it won’t last long.  No, the government won’t change their mind, but within 5 years enough people will be doing this that the oddsmakers will have to adjust or change their strategies.

As of today, sports wagers can be made legally in 13 states, with 6 more states already legalized, but not yet running. This is moving fast because, as of now, about one-third of the nation’s population live in a state where legal sports wagering is happening or about to happen.  

Who is participating
In 2019, the first legal sports bets outside of Nevada were made in Arkansas, Indiana, Iowa, New York and Oregon, joining eight other states where betting was happening.

In Colorado it went to a vote by the people that legalized it. As a side note, Colorado has also legalized recreational marajuana, making it one of the most progressive, fun states in the Nation. 

In Illinois, Montana, North Carolina, New Hampshire and Tennessee, lawmakers also legalized betting  this year, but the launch of the programs has not happened yet. The same is true in the District of Columbia and Puerto Rico. A bill that cleared the Michigan Legislature this month also is expected to be signed into law and most likely will be by the time you read this. 

Who is next? That could be New Hampshire. The state’s lottery commission approved having DraftKings, one of the biggest players in both fantasy sports and sports betting, set up mobile wagering as soon as January. 

As another side note, it appears that both FanDuel and Draftkings are set to go public sometime soon, which could be massive.  I mention this because this is the type of revenue they are expecting to have and understanding that makes you grasp the amount of money that is in this industry.  

Strangely enough, the states with the most people — California, Texas and Florida — have not legalized sportsbooks yet. Not sure what they are waiting for.  This is like the gold rush. First ones there will make the most money.  

Another big state, New York, has legalized sports wagering, but bets can be made only in person at four upstate casinos located nowhere near densely populated New York City. It’s still debatable as to whether those four casinos can add online betting without an amendment to the state constitution, but as of right now they have not attempted to do so. My guess is that the casinos will fight it, unless they have some exclusivity.  

In Florida they disagree about whether legalizing sports betting would require voter approval or if they can just do it legislatively, while in the great state of Texas, it appears that a constitutional amendment would be needed, adding a ton of red tape and months or even years to the timeline.

LEGAL (19 TOTAL STATES + WASHINGTON D.C.)

Arkansas

Only physical sportsbooks

Sports betting in Arkansas is all at the sports books.  There’s no mobile wagering whatsoever. 

Colorado

Recently legal; no action happening yet

It appears that the state’s operators, which are controlled 100% by Native American tribes, will begin taking wagers sometime around May 2020. 

Delaware

Only physical sportsbooks

Was the first legal state after the Supreme Court’s ruling, beating New Jersey to the punch.  The state lottery runs the show here. 

Illinois

Recently legal; no betting yet

Illinois gives casinos, racetracks and sports venues an 18-month head start over online-only operators such as FanDuel and DraftKings. The licensed brick-and-mortar operations can offer mobile betting right away.

In what seems like the strangest part of the bill, sports stadiums such as Wrigley Field, the United Center, Soldier Field etc could apply to have betting kiosks.

Indiana

Physical sportsbooks + mobile are legal

Iowa

Physical sportsbooks + mobile

Mississippi

Physical sportsbooks + mobile

Has mobile betting, but it is only permitted while inside a casino. I am not sure if you get free wifi with that or not.

Montana

Recently legal; waiting for launch date

The state lottery will oversee everything. You will be able to place a wager inside licensed bars and restaurants via kiosks or on your phone, but mobile betting will not work outside of those bars and restaurants. 

Nevada

Physical sportsbooks + mobile

If it’s fun, you can do it in Nevada

New Hampshire

Recently legal; no betting yet

New Jersey

Physical sportsbooks + mobile

 Both residents and non-residents can place wagers on  their phones, as long as they are inside the state’s borders.

New Mexico

Only physical sportsbooks

This one is strange also, because no bill was actually passed. Native American tribes have however interpreted that their sportsbooks are legal under their state tribal gaming compacts.

New York

Only physical sportsbooks

See the details in the attached chapter

North Carolina

Recently legal; no betting yet

While the  current bill does not permit mobile wagering, the state has announced plans to launch a gaming commission to study the potential expansion of betting online. 

Oregon

Physical sportsbooks + mobile

No bill passed, but Oregon was one of four states to be grandfathered into legal sports betting prior to the Supreme Court ruling

Pennsylvania

Physical sportsbooks + mobile

My home state loves sports and gambling has always been a secret, yet accepted thing. Now legal, they must be having a blast. 

Rhode Island

Physical sportsbooks + mobile

Legal betting age is 18. The state launched its own mobile betting product.

Tennessee

Recently legal; no betting yet

Washington D.C.

Recently legal; no betting yet

West Virginia

Physical sportsbooks + mobile

Mobile betting was temporarily suspended in West Virginia for almost six months, but it’s back now after making deals with FanDuel and DraftKings in the state in late August. Insert sound of money being paid out to someone.

Michigan

Passed legislature, awaiting the governor’s signature

Illinois, which has legalized sports betting but isn’t operational, has set costs for a license as high as $10 million for retail casinos for the first 18 months. Michigan is expected to follow this same pattern.  Online only casinos, like FanDuel and DraftKings, would be charged up to $20 million. That is some big money.  

COMING IN 2020 (10 total states)

Kansas

Waiting for next legislative session

Kentucky

Waiting on next legislative session

Louisiana

Possible referendum required

Maine

Passed legislature, but currently no further action taken

Massachusetts

Still being considered by government 

Missouri

Still under consideration by government 

North Dakota

Tribal gaming conflicts may prevent this from getting done before this time

Ohio

Still under consideration by legislature

Virginia

Waiting for next legislative session but expected to follow West Virginia’s format

SHOULD GET DONE IN 2021 (8 TOTAL STATES)

Alabama

Still under consideration by legislature

Arizona

Tribal gaming conflicts

California

Possible referendum required but sure to happen. That state will tax anything. 

Connecticut

Tribal gaming conflicts

Florida

Tribal gaming conflicts

Georgia

Under consideration by the legislature

Maryland

Possible referendum required

Texas

Waiting for next legislative session

NOT GONNA HAPPEN (13 TOTAL STATES)

Alaska

Little to no action

Hawaii

Little to no action

Idaho

Little to no action

Minnesota

Tribal gaming conflicts – The Tribes don’t want it. That’s how much money they make already. 

Nebraska

Possible referendum required

Oklahoma

Tribal gaming conflicts

South Carolina

Possible referendum required

South Dakota

Tribal gaming conflicts

Utah

Little to no action

Vermont

Little to no action

Washington

Little to no action

Wisconsin

Tribal gaming conflicts

Wyoming

Little to no action

In the end, this will come down to tax dollars.  Watch as more states release reports with massive numbers on tax revenue collected and politicians everywhere will want a piece.  Going back to what I mentioned about Colorado is relevant here. Once other states realized how much money they were collecting from Marajuana, a lot more found it to be something they could get behind, no matter their personal feelings about the plant. It’s all about the money.  

How much money? This year alone has been staggering. From July (the start of most states’ fiscal years) through October alone, sports wagering generated over $50 million in state tax revenue across the country according to an analysis of data from the states. That is just the taxes collected on winnings, not an overall total of how much was actually wagered.  This projects out to be well over $200 million in taxes in the coming year.  

Tax rates range from state to state. Iowa and Nevada less than 7% of the book makers winnings on the low end, while Pennsylvania collects 30+% on the high end!. Talk about greed.  But if you think that is high, in states like Delaware and Oregon, where the lottery owns sports betting, the state’s share is even higher.

With all the options available to Sports Traders like us, a common question I get asked is: “What is my favorite way to invest and how can someone like me, who is constantly traveling, keep up with the high paced Sports Trading world?” I will go over that, along with very important information on the Interstate Wire Act of 1961, and then touch on who is jumping into this exciting new marketplace just as it is on the verge of major expansion.