It’s coming up on two years since the Supreme Court repealed PASPA and made sports gambling legal at a Federal level. That means many states, anxious to cash in on the business, now over a $40 billion dollar a year industry, moved quickly to legalize it at a state level. Then, in early 2020, everything changed in a short period of time for the sports betting industry.
But while other industries and the economy as a whole argues in the media over the shape of the economic recovery as restrictions are lifted, the sports betting industry is already looking at a “V” shaped recovery.
The Shapes of Recovery
There are three potential shapes of economic recovery after a quick, and unexpected worldwide downturn. They are V, W, and worst case scenario, L.
- The “V” is a quick recovery to near pre-event levels in a short period of time. Many still feel this will be the shape of the recovery as things return to normal, although for many businesses there will be some permanent changes.
- The “W” is a two pronged recovery and may depend on if there is a second wave of COVID cases. This is a return to almost normal levels, followed by another fall, and then finally a return to normal or near normal economic activity.
- The “L” is where the economy falls to a low level and stays there. Early indicators show that this is a highly unlikely outcome, and this is the worst case scenario.
Many countries where restrictions have been eased, like China, are really experiencing a slow “V” shaped recovery.
The shapes above not only apply to the overall economy, but they can be applied to individual industries as well. For example, the airline industry and travel industries might experience more of a “W” or even an “L” shaped recovery due to the nature of their businesses. But suppliers of cleaning and sanitation products and services have experienced a surge rather than a downturn. So how does that apply to betting on sports?
While the cancelation of events like March Madness had a huge initial impact, both gamblers and gambling sites turned to online sports tournaments and more unusual things to bet on. With more gamblers at home with extra time on their hands, the sports betting industry surged back in a big way, showing a true “V” shaped recovery.
As restrictions ease, when it comes to legal betting sites, it is unlikely that a “W” will occur. In fact it seems much more likely that a “V” will continue, perhaps even to higher than pre-COVID levels.
The Economic Impact
Even if you are not a gambler, the industry does have an impact on you. Legal betting contributes over $8 billion in taxes to local economies. The overall impact to the U.S. economy is over $40 billion annually and contributes over $22 billion to the Gross National Product.
Growth in this area would contribute to the national financial recovery in potentially a large way. And as long as people need the entertainment and outlet that gambling offers, the industry will continue to have high relevance and economic impact both locally and nationally.
A Necessary Business?
During this time, there has been a lot of debate over what a necessary business is and how it is defined. The state of California, along with other states, actually has a list, but there have been exceptions made on those lists.
Many have included things like liquor stores and in Colorado, marijuana dispensaries. For many individuals, online gambling is much the same way, as sports betting is their outlet and emotional release. The more restrictions ease, and as sports resume even playing to reduced crowds or empty stadiums, the sports gambler will have even more options to turn to.
No matter what your feeling toward the sports betting industry, it has a huge economic impact and provides entertainment and recreation for hundreds of thousands of people every single year, not to mention the jobs created and the taxes raised.
It’s likely, for this industry at least, the “V” shaped recovery will continue as the world adjusts to a new normal.