In Q2 2023, most bettors are continuing to face tremendous economic pressure. Surveys confirm that many Americans have had to reconsider their everyday expenses. Also, locals are expressing their concern that if the situation does not improve, they will simply be unable to pay their bills in 2024.
Remarkably, despite the economic crisis, there are no unemployment problems that often arise out of rising inflation. The number of jobs has hardly decreased, and wages continue to steadily rise as well—which is something that happens very rarely amid such economic hardship.
Implications of the current economic situation for the sports betting market
The current situation has refuted the claim that sports betting and other forms of gambling are immune to economic problems. Statistics indicate that in the second half of 2022, the number of bettors who make wagers on their phones dropped from 19% to 11%.
When talking about reducing discretionary spending, we initially think of giving up eating out, cutting vacation time, and canceling streaming subscriptions. That said, many bettors have to give up sports betting as well.According to experts, the sports betting market will see steady growth over the next few years. By 2026, the market will be estimated at $144 billion. Nonetheless, 2024 could be quite problematic because of uncertain economic prospects. Unless inflation begins to ease, Americans will continue to cut on discretionary spending (including betting on sports).
What should operators do in this situation?
The current state of the U.S. economy is causing some difficulties for sportsbooks and online casinos. In particular, there has been a notable rise in problem gamblers who keep making bets despite their financial difficulties. In order to reduce the number of such customers, casinos and sportsbooks need to review their current responsible gaming strategies for identifying problem behavior.
Furthermore, operators need to adjust their marketing strategies. They should start attracting customers who are not affected by the economic downturn. Another way to survive the current headwinds is to switch from customer acquisition to long-term player retention.
All current bettors who are continuing to wager at sportsbooks can be sketchily divided into three categories: high-rollers, mobile bettors, and non-sports bettors. High-rollers remain the most lucrative group. They enjoy a higher level of income compared to other player categories, so they have virtually no need to reduce discretionary spending.
How sports betting legalization will affect the betting market
In 2018, the U.S. Supreme Court allowed states to individually legalize sports betting. This decision quickly changed the American gambling industry. Many states decided to make betting on sports legal to generate additional revenue through gambling taxes.
The latest state to legalize sports betting is Massachusetts. Local government and the Legislature made the decision to fully legalize this form of gambling in August 2022.
Today, sports betting in the U.S. is one of the most profitable and fast-growing industries across the country. Experts estimate that by 2029, the betting market size will reach $167.66 million at a CAGR of about 10.26%.
This rapid development is largely due to the increased prevalence of online gambling and latest technological advancements. It is now easier than ever for Americans to place bets on favorite teams and sporting events.
Despite the significant revenues generated for local budgets by sports betting, in some states, the legalization is out of the question. One such state is Utah where Mormons in the government are dead against sports betting and other forms of gambling. For now, locals have to travel to neighboring Colorado, Arizona, or Nevada to legally make wagers.
Currently, the sports betting market in the U.S. is in an uncertain state. The economic downturn forces Americans to reduce their discretionary spending, including spending on sports betting. However, the market is expected to stabilize in the coming years and show significant growth by 2026.