Top 5 Most Important Gambling Stories to Follow in 2023

Online Casino Legalization Gains Momentum, But… 

Sports betting is becoming a victim of its success. With 35 states already taking the sports betting plunge, there aren’t many opportunities for legalization. 

While the two most prominent targets, Texas and California, are still up for grabs, they are very complicated and unlikely to come off the board in 2023. If the industry wants to keep winning, it must turn its attention to the sports betting adjacent vertical, online casinos. 

It will be in 2023 that first-time online casino legalization receives the attention it deserves. That’s the good news. The bad news is that it will be a lot of bark with a little bite. Online casinos (and online poker) are complex and, for whatever reason, more controversial than sports betting. 

As such, they have historically taken multi-year efforts to pass as lawmakers are educated and their concerns addressed. Another issue is that statehouses have a lot of churn, with two-year election cycles. 

Going from passage to launch is also time-consuming, generally taking 1-2 years to accomplish. That’s a long way of saying that if a state starts discussing online poker and online casino in 2023, in most circumstances, it will take about five years for these sites to go live. If a state is lucky enough to pass an online gambling bill in early 2023, the sites should be live sometime in 2024.

Roadblocks Remain in Key Sports Betting States

It’s safe to say that if a state hasn’t legalized sports betting yet, it has some serious structural issues and might not legalize it for the foreseeable future. As noted in the previous header, the best candidates have significant hurdles to overcome.

It took a herculean effort to get bills across the finish line in the three states that passed legislation in 2022: Massachusetts, Kansas, and Maine. MA sportsbooks are likely to go live first in 2023. Then there were the close but no cigar states, Missouri, Minnesota, and North Carolina. And, of course, the boondoggles that are Florida and California. 

Bottom line: there are no more soft targets.

Federal Laws Under the Microscope

One area the industry should pay very close attention to is federal laws.

Federal gambling laws are antiquated. Almost all were enacted pre-internet, and we have seen each major law challenged in very interesting ways over the past decade.

The Professional and Amateur Sports Protection Act (PASPA) went down in a heap at the Supreme Court in 2018. The repeal of PASPA opened the door to legal sports betting, and some three-dozen states and counting have jumped at the opportunity. 

Before his death, Las Vegas casino owner Sheldon Adelson led a charge to rewrite the Wire Act – which has seen several different Department of Justice interpretations over the past two decades. Many believe Adelson’s crusade against online gambling and the DOJ’s flip-flopping on the Wire Act curbed interest in online casino legalization.  

A key section of the Indian Gaming Regulatory Act (IGRA) is also playing out in the courts, with the Seminole Tribe challenging the “on tribal lands” clause, arguing that online bets occur at the server location. Not to mention Indian Country’s love-hate affair with the IGRA. 

There is also the possibility (however slight) of Congress creating an umbrella law to govern online casinos, poker, and sports betting. Such a law could set minimum responsible gaming policies states would need to follow, create a funding apparatus for problem gambling programs, and perhaps earmark the current .25% tax on sports betting handle for gambling-related programs. 

Of course, letting the camel’s nose under the tent can go sideways fast.

Inflation and Recession

Not everything that impacts the gambling industry is gambling-related. There are many outside forces exuding pressure on the sector. The industry is dealing with the remnants of the COVID pandemic (and the ever-looming threat of its return) that have left us with a shaky economy, record-level inflation, severe supply chain issues, and the constant threat of a full-blown recession.

Here is a short list of the economic factors that could have a negative impact on the industry:

• Thousands of flights were canceled during the holiday travel week.
• A still-unresolved rail strike could make already scarce items even scarcer.
• Prolonged inflation is cutting deeper and deeper into disposable income.
• Heating costs are expected to rise more than 25% this winter (a byproduct of the pandemic and the war in Ukraine).

Sports Betting Exodus

For several sportsbooks, the U.S. online sports betting market wasn’t all it was cracked up to be. Maxim Bet, Fubo, and Churchill Downs called it quits in 2022, and a few other companies, Bally’s, Unibet, Wynn, and Las Vegas Sands, dialed back their U.S. sports betting plans. 

This is likely just the tip of the iceberg. 

The U.S. sports betting market is consolidating around four operators, with a small trail pack of five or six jockeying for a bigger piece of the pie. 

The problem is there are more than 50 individual sports betting brands in the country, with a couple dozen with national aspirations.  Bottom line: many of these operators will fail. Some will go out swinging. Others will quietly disappear into the night.