Operators of online sports betting sites were soaring coming into 2022, but they are ending the year in a much more humble state.
There had been so much promise, too.
The launch of a major market to start 2022 was followed by a bold expansion in Canada and the passage of even more pro-wagering legislation in U.S. states that had been holding out. It was, seemingly, business as usual for the legal sports betting industry.
But then came the setbacks. Smaller operators began throwing in the towel, voters in another major market rejected the advances of online sportsbook operators, and the newspaper of record published a series that prompted politicians to rethink their past decisions.
It has been a tough time for an industry that has been walking on air since the 2018 U.S. Supreme Court decision that paved the way for its expansion. And while the seeds of a potential turnaround in 2023 have been planted, it’s clear that operators have some work to do. There may be more bettors than ever, but there is more unease about the availability of sports gaming than there has been in some time.
So, before plunging into the New Year, Covers is looking back at the 10 biggest developments for the sports-betting industry in 2022. These moments tell the story of the year that was and will continue to resonate in the years ahead. Here they are:
#1: New York launches online sports betting
The year began with a bang, as online sports betting in New York legally started on Jan. 8, 2022.
Overnight, the state became the biggest legal sports gambling market in the country, which makes sense, because it is the most populous state with legal online sports betting as well.
Still, the state’s nine online sportsbooks — including FanDuel, DraftKings, and BetMGM — are regularly combining to handle more than $1 billion in bets every month. More than $600 million in sports betting-related tax revenue has flowed to the state this year alone.
The impact of New York's new mobile sports betting market has been noticeable. That is especially true in nearby New Jersey, which has seen its wagering take a hit after its neighbor allowed mobile sportsbooks to set up shop in the state.
Nevertheless, operators have paid a hefty price to access the New York market, such as the state’s 51% tax rate on gross gaming revenue from sports betting. That has led some bookmakers to pare back their spending.
Furthermore, the New York Times series on sports betting in November prompted one New York lawmaker to propose legislation aimed at “predatory sportsbook bonuses,” a sign of the stricter regulation that operators could face in the future.
For now, though, New York remains the biggest market for legal sports betting in the U.S. Until something bigger comes along, of course.
#2: California voters reject sports betting
Everyone seems certain that someday there will be legal sports betting in California. It just won’t be today, tomorrow, or perhaps even the next few hundred days, as an extremely pricey ballot-measure battle ultimately came up short.
In November, California voters rejected not just one but two propositions that would have brought either retail or online sports wagering to the state. And the rejection was not some near-run thing either, as neither measure got even remotely close to the 50% support they needed to pass.
But it was the coalition of online sportsbook operators that was arguably the biggest loser in the California ballot battle.
It was the operators who poured tens of millions of dollars into trying to win support for online sports betting in an ultimately losing effort. And, what’s more, their main rivals, the Native American tribes with casinos on their lands, maintained their near-monopoly on legal gaming in the state, even if their competing retail sports betting ballot measure lost.
There is still a chance that some California legislator takes another run at passing a sports-betting bill, but, as the OSB operators learned, it will likely take a lot of buy-in from the tribes. At any rate, another effort at getting something legalized in California seems almost inevitable, but when that happens remains to be seen.
I believe this is what the kids call a "total beatdown" for the online sports betting measure in California pic.twitter.com/lGKq5hZWWY
— Geoff Zochodne (@GeoffZochodne) November 9, 2022
#3: Ontario launches a new iGaming market
It can be easy to forget, but the spread of legal sports betting is not just a U.S. story. Canada, in fact, is home to one of the biggest iGaming markets in North America.
The legal market for internet casino gambling and online sports betting in Ontario that opened in April is now home to more than 30 operators of gaming websites. Bettors in Canada’s most populous province are not lacking in choice at all.
Ontario’s launch of a regulated and competitive iGaming market in April follows federal lawmakers in Canada decriminalizing single-game sports betting in August 2021. The example set by Ontario and the looser gaming laws in the country could ultimately lead to other provinces adopting something similar to what Ontario has done, although none have publicly announced any plans to do so yet.
But there are issues in Ontario as well. The launch of the iGaming market crushed the province’s daily fantasy sports scene and the unique nature of Canadian law is keeping horse racing from being offered by Ontario’s online sportsbooks. The same legalities are at the heart of a lawsuit recently filed that aims to dismantle the iGaming market as it is currently constituted.
Potentially big for sports bettors: The Mohawk Council of Kahnawà:ke says it intends to challenge the legality of Ontario's reading of the Criminal Code's gambling provisions in court.
— Geoff Zochodne (@GeoffZochodne) November 29, 2022
Ontario used that reading to launch a new iGaming market in April.https://t.co/VriEAkUXg6 pic.twitter.com/koebmhqPz5
#4: New state launches
Let’s not let New York hog all of the spotlight, shall we?
Indeed, there were launches of online sports betting this year in Louisiana, Kansas, and Maryland. While they may lack the heft of the Empire State, they were wins for the sports-betting industry.
Maryland, in particular, took some patience.
Voters in the Old Line State approved legal sports betting in November 2020, and retail wagering began at casinos in December 2021, but the online component didn’t launch until November of this year. That was due in part to a sports-betting law that required regulators to pursue initiatives to ensure the participation of minorities and women in the industry.
Kansas was no small thing either, especially as regulators there managed a fast launch following the passage of legislation in April. Sports betting in the Sunflower State began in early September, just in time for football season.
#5: The New York Times takes on sports betting
Legal sports betting has been spreading across the U.S. since 2018, so it was probably inevitable that the country’s paper of record would take a look under the hood at some point. And, when the New York Times finally did in November of 2022, the fallout came quickly.
The series by the Times, appearing under the heading “A RISKY WAGER,” followed about a year of work by reporters “investigating how the sports-betting industry got so big, so fast — and what the consequences are likely to be for public health, taxpayers, the sports world and more.”
Among the findings were the sometimes-chummy ways of lobbyists, concerns about responsible-gaming efforts (or lack thereof), and questions about some of the data that supported the industry’s rise.
Although the Times’ work was panned by some — the American Gaming Association said there were “several mischaracterizations” in the series — the paper’s reputation and reporting were hefty enough to prompt reactions from regulators and politicians.
As unapologetic advocates for our industry, the AGA engages with the New York Times and any other outlet to share facts and perspectives. Despite these efforts, there are several mischaracterizations in the Times' recent reporting on the legal sports betting industry.
— American Gaming Association (@AmericanGaming) November 21, 2022
The “predatory” bonus crackdown bill in New York was one of those reactions but regulators elsewhere also seemed to perk up, such as in Ohio, where a company connected with Barstool Sportsbook was hit with a proposed fine before legal sports betting even began. In Massachusetts as well, regulators pushed applicants for sports-betting licenses hard in the wake of the Times’ series.
Some of the heat may die down over the holidays, but operators will face more scrutiny to stay onside in the months and weeks to come. There is also the possibility that more unflattering reporting comes down the pike. In that case, there could be additional responses from legislators.
We have reached the Barstool-related portion of today's Massachusetts Gaming Commission meeting, and the tone among regulators has taken a sharper turn. PENN wants sports-betting licenses for @PlainridgePark and @BSSportsbook, but the Barstool ties are clearly on the MGC's mind.
— Geoff Zochodne (@GeoffZochodne) December 20, 2022
#6: Legislative and regulatory momentum continues
Even if the sports-betting industry caught some flak this past year, it still scratched out further legislative and regulatory gains.
In Ohio and Massachusetts, the regulatory groundwork has been laid for legal sports betting launches in early 2023. In Ohio’s case, it is starting retail and online wagering at, literally, 12:01 a.m. on New Year’s Day.
One legislative tweak that came into effect in 2022 was the end of the in-person registration requirement for online sports betting in Illinois in March. The state has since seen its sports-wagering handle hit new highs.
Vermont, meanwhile, had a committee put together a report recommending the legalization and implementation of online sports betting in the state.
Maine lawmakers passed a sports-betting bill this past year as well, with implementation thus far proceeding at a leisurely pace.
The Ohio Casino Control Commission just sent out an email warning sportsbook operators about their advertising efforts a little more than a week away from the start of legal event wagering in the state.
— Geoff Zochodne (@GeoffZochodne) December 23, 2022
Among other things, the OCCC alleges operators have been skirting RG rules. pic.twitter.com/uTyVYvwIxm
There is the potential for more wins in 2023, including a major market the industry has yet to crack.
In Texas, for instance, one legal sports betting bill has already been pre-filed ahead of the start of the legislative session in January. A coalition of online sportsbook operators and professional sports teams is planning to find a backer for a pro-wagering bill of its own, too.
#7: Smaller players exit
Despite more and more states legalizing sports betting, there is not enough handle to go around for everyone. While winners such as FanDuel have emerged, other, smaller operators are beginning to cry uncle (financially, at least) and exit the industry.
One operator that had enough was TwinSpires, the digital-wagering business of Churchill Downs Inc. After trying to make a go of it in the online sports betting world, CDI decided to pull the plug in early 2022. Instead, the Kentucky-based company has become a retail sportsbook operator and backend provider of horse-racing content for other sportsbooks.
Other dominoes to fall this year were Fubo Sportsbook and MaximBet. Fubo had tried to tie its sports-streaming business with a wagering operation but said in October it was shutting down its online sportsbook after failing to find a suitable solution.
MaximBet had tried to use the brand recognition of the magazine Maxim to gain traction with customers. It didn’t work well enough, and in November, the bookmaker shuttered its sports-betting operations.
The closures confirmed what everyone seemingly knew already: that not every online sportsbook would make it. The shakeout could continue in 2023.
#8: New kids on the block arrive
Even with some smaller operators tapping out, others are stepping in to replace them, some of which have fresh ideas for how online wagering should work. A few of those new faces have yet to launch in the U.S., but they are on their way and may help deepen the choices for bettors.
One incoming operator is BetFanatics, the online sports betting arm of the sports-merchandise seller. Fanatics has been lining up licenses for itself in states such as Ohio and Massachusetts and plans on launching its wagering business in early 2023.
Another new face is Betr, the microbetting-focused company that plans to cater to a younger crowd. Betr has the backing of social-media star and boxer Jake Paul, and, like Fanatics, has been getting its regulatory ducks in a row for an early 2023 launch.
More innovation to the type of wagering people are doing is possible, too. Notably, Sporttrade, a Philadelphia-based sports betting technology company, launched its sports-betting exchange in New Jersey this past year.
#9: Mattress Mack keeps doing his thing
If you’ve made it this far into a story about sports betting, you probably know who Jim “Mattress Mack” McIngvale is. If not, he is the Houston-based sports bettor and furniture salesman whose whale-sized wagers coincide with generous promotions at his stores.
Mack has been doing this for a bit, but he racked up an approximately $75-million win this past year when the Houston Astros won the World Series. Such was the size of his winning wager that it weighed on the financial results of sportsbook operators and took a bite out of the tax revenue earned by at least one state.
McIngvale isn’t done either, as he’s already got a sizable bet down for March Madness. But will there ever come a day when operators decide they are done taking his action?
I do love @CaesarsSports! So excited that they let me be the person to make the first bet at their beautiful, new sportsbook in Lake Charles, Louisiana; a cool $1 million on our @UHCougarMBK to win it all. Go Coogs! @HorseshoeLC pic.twitter.com/oLFkmcApey
— @MattressMack (@MattressMack) December 12, 2022
#10: Data breaches
A darker storyline in 2022 was the data breaches reported by DraftKings, FanDuel, and BetMGM. Those cyberattacks have been elevated to law enforcement for a response but highlight the troubles that can come with a fast-growing and hugely digital business.
DraftKings recently reported that nearly 68,000 customers were affected by a data breach. Keeping customer information safe is paramount for sportsbook operators because a failure to do so could undermine any faith people have in depositing and playing.
"We are taking this matter very seriously and are working quickly to investigate it,” Adam Greenblatt, CEO of BetMGM, said in a press release. “The security of our platform and our patrons' data is a top priority for BetMGM. We regret any inconvenience this may cause.”
