2021 is a crucial year for sports betting sites like DraftKings and FanDuel.
Nineteen states will decide whether to legalize sports betting this year, either through a voter referendum or through the status of the state legislature. If every state votes yes, this would be more than double the number of states that have legalized – which will make 2021 a pivotal year for the financial prospects of industry leaders.
“This is an important year,” Jason Robins, CEO of DraftKings, said in an interview. “We have about 20 states that are going to vote legalization. What percentage of them decide yes – that will change things either in a positive or negative direction for us.”
Investors are planning a lot of approvals, which leads to an increase in value for DraftKings and Flutter, the owner of FanDuel. States can tax legalized sports betting and generate revenue from what was once an illegal activity.
“It’s hard to say which states will vote for legalization and which won’t,” Robins said. However, some seem more likely than others. Massachusetts and New York have been working on legalizing sports betting for several years. Maryland and Wyoming have passed mobile bills in their state houses this week and are now awaiting Senate approval.
Other states, such as Kentucky, could have better chances in 2022, when the state legislature meets for more than 30 days. California – the biggest prize in sports betting – will also wait until next year, when state Senator Bill Dodd has promised to put a measure to the 2022 election.
Referendum or state legislature
States have two paths to legalization – a statewide referendum, which usually takes place as a November vote or a law passed by the state legislature. Most of the 19 states will not have to put a measure on the ballots to legalize, said Matt King, CEO of FanDuel.
Of the states to rule this year, Texas and New York are the most important, Robins said. Whatever becomes the largest state legalized by estimated users. Illinois became DraftKings’ largest revenue generator in 2020, after the state changed its laws during the pandemic, allowing people to register online instead of going to a personal casino. It is unclear whether Illinois will continue to expand mobile registration after most of its citizens are vaccinated against coronavirus.
The biggest determinant for legalization may be a state’s desperation for additional tax revenue, King said.
However, King said that while 2021 will certainly be a seminal year in the sports gambling industry, he warned that bills often take three years to pass from the time they are introduced.
“I’ve talked to a lot of government officials and I’m saying in the first year that a bill may or may not come out,” King said. “In the second year, the same people who sponsored the bill are trying again. And the third year, it passes. So if some of these states do not adopt it in 2021, there is at least a higher chance of passing a bill next year. “
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