2021 is an important year for sports betting sites like DraftKings and FanDuel.
Nineteen states will decide this year to legalize sports betting, either through the referendum or through state legislation. If every state votes yes, it would more than double the number of states that have legalized, which would make 2021 a crucial year for the financial prospects of the industry leaders.
“This is a big year,” DraftKings CEO Jason Robins said in an interview. “There are about 20 states that need to vote on legalization. What percentage of those decide yes – it will turn things around for us in a positive or negative direction.”
Investors are planning a lot of approvals, leading to an increase in value for DraftKings and Flutter, the owner of FanDuel. States can tax legalized sports betting and earn revenue from the historical illegal activity.
“It’s hard to say which states will vote to legalize and which will not,” Robins said. Some still seem more likely than others. Massachusetts and New York have been working for several years to legalize sports betting. Maryland and Wyoming passed mobile bills in their state houses this week and are now awaiting Senate approval.
Other states, such as Kentucky, may have a better chance in 2022, when the state legislature meets for more than 30 days. California – the biggest prize for sports betting – will probably also wait until next year, when state Senator Bill Dodd promised to measure the vote in 2022.
Referendum or State Legislature
States have two paths toward legalization – a nationwide referendum, which usually takes place as a vote in November, or a law passed by the state legislature. Most of the 19 states do not have to do ballot to be legal, said FanDuel CEO Matt King.
Of the states deciding this year, Texas and New York are the most important, Robins said. Both would become the largest state to be legalized by estimated users. Illinois generated DraftKings’ largest revenue in 2020 after the state changed its laws during the pandemic, allowing people to register online instead of at a personal casino. It is unclear whether Illinois will continue to expand the registration of mobile devices once most citizens are vaccinated for coronavirus.
The biggest determining factor for legalization may be a state’s desperation for additional tax revenue, King said.
King said 2021 would certainly be an important year in the sports gambling industry, but he warned that it would usually take three years to take bills from the date they were introduced.
“I’ve talked to a lot of government officials and they say, ‘A year, a bill may or may not come out,'” King said. “Year two tries the same people who sponsored the bill again. And year three passes it. If some of these states do not pass it in 2021, there is a greater chance that a bill will pass the year after.”
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