2021 will be a crucial year for sports betting sites like DraftKings and FanDuel.
Nineteen states will decide whether to legalize sports betting this year, either through a voter referendum or through law through legislators. If every state votes yes, it would more than double the number of legalized states – making 2021 a crucial year for industry leaders’ financial prospects.
“This is a big year,” said Jason Robins, CEO of DraftKings, in an interview. “We have about 20 states that are supposed to vote on legalization. What percentage of them say yes – that will steer things in either a positive or a negative direction for us.”
Investors are planning a lot of permits, adding value to DraftKings and Flutter, the owner of FanDuel. States can tax legalized sports betting and generate income from historically illegal activities.
“It’s hard to say which states will vote in favor of legalization and which will not,” said Robins. Still, some seem more likely than others. Massachusetts and New York have been legalizing sports betting for several years. Maryland and Wyoming passed mobile device bills in their state houses this week, pending Senate approval.
Other states like Kentucky may have a better chance in 2022 if the state legislature meets for more than 30 days. California – the biggest sports betting prize – is also likely to wait until next year, when state Senator Bill Dodd has vowed to set a benchmark for the vote in 2022.
Referendum or state legislation
States have two paths to legalization – a nationwide referendum, which typically takes place as a November vote, or a law passed by the state parliament. Most of the 19 states don’t need to take voting steps to be legalized, said Matt King, CEO of FanDuel.
Of the states that will decide this year, Texas and New York are the most important, Robins said. Both would become the largest state legalized by valued users. Illinois became DraftKings’ biggest revenue generator in 2020 after the state changed its laws during the pandemic to allow people to register online rather than at a personal casino. It’s unclear whether Illinois will continue to expand mobile registration once most of its citizens are vaccinated against coronavirus.
The biggest determinant of legalization could be a state’s desperation for additional tax revenue, King said.
Even so, King said while 2021 would definitely be a landmark year in the sports games industry, he cautioned that it often takes three years for bills to pass from the time they were launched.
“I’ve spoken to a lot of government officials and they say a bill may or may not come out in the first year,” King said. “The second year, the same people who sponsored the bill are trying again. And the third year goes by. So if some of these states fail in 2021, at least there is a higher chance a bill will pass the year after that. “”
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