Pennsylvania’s Sports Betting Boom

Ryan Conway gives us an insight into the state of Pennsylvania and it’s new online sports betting laws, taking note of the positives and negatives to date.

The state legislature’s 2017 decision to legalize sports betting answered the prayers of many Pennsylvanians. While the rollout of legal sports gambling was a slow one, it has proven itself an excellent decision by PA lawmakers.

Casinos have long been present in Pennsylvania. Many of them, such as Rivers Casino, Parx Casino, and Mount Airy Casino to name a few, are well-known, universally loved institutions amongst gamblers. Even before the full legalization of sports betting, Pennsylvania was second only to Nevada in casino revenue. Now, with heavy tax rates on sports betting income, Pennsylvania has turned the industry into an effective driver of its economy.

In 2019, the first full year of legal sports betting, Pennsylvanians placed a whopping $1.5 billion in wagers. This generated around $30 million in revenue for the state. Overall, wagers placed in PA lag well behind New Jersey by around $3 billion. However, Pennsylvania’s higher tax rate has yielded the state similar revenue to its neighbor.

What is most interesting is not that Pennsylvanians are betting on sports. Who wouldn’t put a little money on the Eagles to beat the Cowboys? Instead, it is where they are placing wagers. Of course, brick and mortar sportsbooks at PA casinos are a popular place for diehard sports bettors. Despite that, these locations account for fewer than 15% of bets. The majority of bets went to online sportsbooks. Pennsylvania’s growing cohort of online sportsbooks includes national brands such as DraftKings, BetAmerica, and FanDuel. Not to be left out, PA casinos like Parx and Rivers released sports betting sites and companion applications. These applications allow bettors to place wagers from their mobile devices or computer, which has undoubtedly led to an increase in bets placed.

Even with its early success, legal sports betting in Pennsylvania is still in its infancy. The heavy taxation has slowed the initial growth of the industry. Regardless, one can expect wagers and revenue to skyrocket in 2020. Play Pennsylvania has projected PA bettors to place anywhere between $4-6 billion in wagers in 2020, doubling the state’s gaming revenue.

Of course, sports betting is a volatile enterprise beholden to many factors. If bettors win more than they lose, the sportsbooks take in less revenue. This ultimately decreases Pennsylvania’s ability to fund state programs. Conversely, if bettors lose too much, that could lower their chances of betting again. PA is, in a way, taking as much of a risk on sports as the bettors are.

On top of this is the obvious COVID-19 pandemic. With many American sports postponed until late July and early August, sports betting revenue has been cut nearly in half. Brick and mortar sportsbooks have taken a hit as well. This has led some bettors to take advantage of online options, seeing them bet on German Bundesliga, English Premier League, and other European soccer matches. While this broadening of sports horizons has kept some money rolling into online sportsbooks, it is not at the level it would be in PA if the Eagles, Steelers, Sixers, or Penguins were playing their seasons as scheduled.

Despite these tangible challenges, there is little doubt that sports betting in Pennsylvania will grow rapidly. PA bettors have anxiously awaited the return of the major American sports leagues. When the NHL, NBA, and MLB seasons restart, fans will jump at the opportunity the bet on their favorite teams. The online sportsbooks will be especially popular with bettors and the shift to online wagers is sure to continue. As a result of the growing number of sports bets, Pennsylvania will be able to collect enough tax revenue to fund important programs. Therefore, PA’s calculated risk will certainly pay off.

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