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VIXIO Study: US Sports Betting and iGaming to Hit $24B by 2026
By Jeff Osienya Aug 07, 2022 IndustryNew Vixio research study projects that USA’s sports betting and iGaming market will be the largest in the world by 2026, with a $24 billion valuation. The estimated figure is three times the current market volume by revenue.A report released by regulation intelligence experts Vixio GamblingCompliance has estimated that the US sports betting and iGaming industry will most likely triple in the next three years. The sector, which now boasts collective gross gaming revenue of about $7.7 billion per year, is set to reach a phenomenal $18 billion by 2025 and $24.3 billion by 2026. If this prediction bears fruition, the US will, by default, enjoy the largest gaming revenue in the world.
The Coronavirus Gamechanger
Many businesses worldwide are still struggling to return to their feet after the prolonged pandemic period. However, the gaming industry, on the flip side, has seen growth that could only have been made possible by government-mandated lockdowns, smart devices, and access to the internet.
So, even though the pandemic hit the industry hard in the first months of its existence, it has been a vital driver of the current boom in online betting activities. As such, states are reporting billions of dollars in revenue, reaching and exceeding milestones that would have taken much longer to attain, as estimated by gaming analysts.
Meanwhile, the last year has been a busy one for legislators across the country as several gambling bills and laws have been tabled, and some passed, subsequently reaping historic benefits for state coffers. All this movement is thanks to the Supreme Court’s overruling of the 1992 PASPA law in 2018 to formally decriminalize sports betting. As a result, proponents of gaming expansion immediately switched to high gear. They fought to ensure their states got on board to cash in on the opportunity that had been waiting to be exploited for decades.
While several states were hesitant to leap legalization and regulation, the Covid-19 outbreak in 2020 seems to have provided some sort of push for most of the jurisdictions. Thus, four years down the line, over 30 US states have legalized some aspects of sports betting and other forms of gambling. Mind you, the legislative ball is still rolling at an astonishing rate. Just last month, Massachusetts joined other states in ratifying a bill that would see a sports betting market established in the Bay State.
Flexibility in American Gambling Legislation Good for Continual Growth
The report pointed out that despite carrying its share of challenges, the US state-by-state structure makes the states much more ‘prescriptive’ than their European counterparts. That’s because the US states define betting at a granular level, sometimes going to the extent of describing the types of events to bet on or bets to place – for instance, collegiate sports, esports, and awards.
Some states that had initially only approved gaming licenses based on affiliation to land-based casinos or retail gaming partnerships have also recently reconsidered their stance. Now they are licensing operators without physical properties or contracts with already-established gaming companies. The result has been a thriving market that does not seem like it will be slowing down any time soon.
The study by Vixio named a few big players that have hugely contributed to the continued rise in revenue from around the US. The operator with the largest market share is FanDuel, which controls just below 40% of the nation’s legal market. FanDuel is followed by DraftKings, BetMGM, and Caesars, ranking second, third, and fourth, respectively.
Earlier in the year, market research firm Technavio published findings from a study of its own and estimated that the US online gambling industry was slated for a $2.2 billion-dollar increase in revenue by 2026. The report also cited reasons for the expected growth, citing the easing of government laws, the availability of more alternatives to payment systems, and the impact of the Covid-19 pandemic on user behavior.
However, it was skeptical about the constant change in gambling regulations across the US, noting that this could ‘impede the market growth.’ Regarding the finality of the market projection, the Technavio report stated that:
Quote“The present interpretation of the law is also not considered permanent, and it could change again, which will have a direct impact on the online gambling market in the US and may even lead to a ban on all legalized websites once again.”
Technavio’s fears are not far-fetched as states have been known to constantly review and upgrade or completely change previously passed laws. Some examples include Arizona and Ohio, which are now in the process of reconsidering some terms that had worked to benefit specific stakeholders operating establishments on their turfs.
The LatAm Market is Following Suit
It’s easy to think of the forecasted figures as a long stretch especially given the current recession. However, when we look back at the year that has been and how much revenue has been reported in states that have legalized sports betting and iGaming as recently as January 2022, the picture starts to get a bit clearer.
A case in point is the state of New York, which has been making headlines following record-breaking results from its move to legalize mobile sports betting in January. Another market to watch closely is the fast-growing LatAm gaming market that has been attracting tons of interest from international gaming operators from as far as Europe.
According to another analysis by Vixio, investors have been flocking to South America ever since countries like Brazil, Peru, and Chile made clear their intentions to move toward legalizing some forms of online gambling. As a result, the forecast estimated that by 2026, the gross gambling revenue would increase to $4.4 billion from the current $1.2 billion.
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