Jockeying begins for inevitable growth in U.S. sports betting
In a recently announced transaction, 888, a Gibraltar-based global gambling organization, acquired online sports betting platform BetBright for £15 million ($19.8 million). The acquisition of BetBright’s online sportsbook will help grow 888’s presence across the burgeoning U.S. sports betting market, which is still in its infancy in the wake of the U.S. Supreme Court striking down the Professional and Amateur Sports Projection Act (“PASPA”) in 2018 in Murphy v. NCAA.
Sports betting, which initially took hold in the U.S. during the turn of the 19th century in the form of horse betting, came to the forefront with the creation of professional baseball in 1876. At the beginning of the 20th century, despite being illegal, sports betting was vastly popular. The infamous 1919 Chicago Black Sox scandal (where eight players were bribed into throwing the World Series) brought unfettered professional participation to a halt and left an indelible mark on the industry, still felt today.
Nevada subsequently legalized sports betting in 1931 while the remaining states generally remained silent on the issue. New York crime families quickly filled this market, offering numbers games and sports wagering services in states from coast to coast. The participation of the mob in sports betting led to Congress passing the Interstate Wire Act of 1961,1 which promised jail time for anyone who used a wire communication facility for the transmission in interstate or foreign commerce of bets or wagers on any sporting event or contest. Such legislation ultimately pushed sports betting further underground and led to Nevada, and in particular, Las Vegas, being viewed as the only legitimate places to bet on sports in the U.S.
In the 1970s, Congress lowered the 10% tax on sports bets that bookmakers were required to pay, and within a few years, states like Delaware, Oregon and Montana all legalized some form of sports betting. Such legislation prompted Congress to find a legal means to halt sports betting across America. In 1992, Congress enacted PASPA, which banned sports betting in the U.S. unless a state had previously legalized it. Congress then pursued sports betting on the internet through the Unlawful Internet Gambling Enforcement Act of 2006, which made it unlawful for a “person engaged in the business of betting or wagering” to accept funds via credit, EFT transfer, a money transmitting business, or other methods. For nearly 25 years, PASPA was valid law until the U.S. Supreme Court struck it down last year, finding that Congress could not simply commandeer the legislative process of the states by directly compelling them to enact and enforce a federal regulatory program.
The transaction described above, a direct result of the liberalization of the U.S. sports betting market, gives 888 full ownership of BetBright’s technology and product development across four key gaming verticals—sports, casino, poker, and bingo. 888, an online gambling pioneer, which is listed on the London Stock Exchange and owns several online gambling brands that operate predominantly across Europe, was originally founded in 1997 as one of the earliest operators in the online gambling sector. 888 branched out in 2008 as it created 888Sport, the sportsbook arm of the company.
888Sport is currently available in Nevada, Delaware, and New Jersey, three of the states that currently allow sports betting in the U.S. (the others being Mississippi, West Virginia, Pennsylvania, and Rhode Island).2 A number of states intend to join the action in the not so distant future as twenty five states are actively engaged in various stages of the legislative process contemplating enacting legislation to authorize sports betting.
BetBright, the acquiree, currently operates its online sports betting platform in the U.K. and Ireland. Rich Ricci, a former director of corporate investments for Barclays Bank and a prominent European horse racing owner, reportedly invested $9 million in BetBright in 2016. “The Group will begin the integration process of BetBright’s technology into 888 as a soon as practically feasible,” 888’s press release states. “The Group aims to begin a phased and market-by-market roll out of its proprietary sports book solution once integration is completed.” Itai Pazner, CEO of 888, is “confident that this acquisition will increase the Group’s long-term prospects and differentiation in the growing global sports betting market.” Such long-term prospects seem bright as U.S. state legislatures race to legalize sports betting.
Retired Utah Senator Orrin Hatch, an architect of the now defunct PASPA, had sought another federal mandate on sports, as he promised new legislation just days after the U.S. Supreme Court overturned PASPA. However, Hatch has since retired, half the states in the U.S. are racing to pass legislation legalizing sports betting, and Congress has not yet drafted a bill in response to NCAA v. Murphy. As such, the future of sports betting will likely include state by state legalization unless and until something significant enough happens that persuades Congress to act.
[1] A 2001 George W. Bush Administration Department of Justice Memorandum declared that the Interstate Wire Act of 1961 covered all forms of online gambling while a 2011 Barack Obama Administration Department of Justice Memorandum clarified this position, limiting it to only cover interstate sports betting.
[2] This list does not include a single property in New Mexico taking bets and Arkansas approving a state constitutional amendment to authorize sports betting during the 2018 midterm elections.