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What's the Outlook for Online Sports Betting in 2023?

Legal online sports betting continues to expand across the United States, fueling a boom in sales for leading sportsbook operators such as Flutter’s Fanduel, DraftKings, BetMGM and Penn’s Barstool Sportsbook. But what’s the outlook for additional states coming online in 2023 and beyond?

Where is online sports betting legal today?

Sports Betting Legalization MapSource: Action Network, State Regulators, Roundhill Investments, 2023

Online sports betting is currently legal in 24 states and the District of Columbia, according to Action Network. Massachusetts is set to come online on March 10, marking the 25th state to legalize. Online sports betting currently covers 45% of the U.S. population and with Massachusetts, would increase to 47% of the U.S. population.

Of the 24 states and D.C. that currently have legal online sports betting, two—Wyoming and Tennessee—have only online betting legalized while the rest have both online and retail sports betting. 

Of the states that have legalized online sports betting, by total handle, the largest include New York, New Jersey, Illinois, Pennsylvania and Nevada, based on our analysis of state reporting. Noticeably, New Jersey’s handle is down from its peak levels prior to the launch of operations in New York, but it has recovered a lot of the lost ground and is back near its highs. These five states collectively accounted for about 60% of the reported online sports betting handle in 2022.

Online Sports Betting Handle By StateSource: Action Network, State Regulators, Roundhill Investments, 2023

Where could online sports betting go live next?

Aside from Massachusetts, which is scheduled to launch on March 10, Maine and Nebraska have already gotten legislative approval to launch services but have not announced dates to go live yet. These states would add another 1% of the U.S. population to the legal coverage.

What large states could legalize online sports betting?

California, Texas and Georgia remain the big states that have yet to legalize online sports betting, while Florida’s legal situation remains in flux. Combined, California, Texas and Georgia represent nearly 25% of the U.S. population alone, a massive opportunity for sportsbooks if and when they decide to legalize online sports betting.

Although California’s voters rejected a proposal to legalize online sports betting, it could still come back to the ballot at a future election or be approved by changes to the state constitution. Texas’ governor remains opposed to legalization but recent moves in the state legislature suggest that the tide is slowly moving in the direction of more support for legalizing online sports betting. Georgians support legalization but it’s to-be-determined if state officials act on it quickly.

Florida is also a unique case, representing nearly 7% of the U.S. population by itself. It for a brief moment had started offering online sports betting services but has since been turned off due to legal issues. In 2021, Governor Ron DeSantis struck a deal with the Seminole Tribe to launch online sports betting across the state so long as the servers were located on tribal land. 

But non-tribal gaming facilities in Florida sued saying this violated the Indian Gaming Regulatory Act and since then, the situation has been tied up in the legal process. It’s uncertain if or when these issues can be resolved or if it will take a ballot process initiative in the state to legalize online sports betting, which could take a few years.

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