The Supreme Court's landmark decision on Monday to strike down PASPA (Professional and Amateur Sports Protection Act) -- the 1992 federal ban on legal sports betting in the United States -- lays the groundwork for the creation of a multibillion-dollar market. Like a buzzer-beater that covers the spread, the ruling immediately creates winners and losers.
Let's run through some.
New Jersey: The Garden State spent $8.6 million in legal fees during a six-year fight with the sports leagues. New Jersey got knocked down repeatedly and looked down and out when in June 2014 the Supreme Court declined to hear then-Gov. Chris Christie's first plea. The state regrouped, pulled off a stunning upset and now appears poised to reap the benefits. Gaming research firm Eilers & Krejcik's most conservative estimate has New Jersey generating $250 million in sports betting revenue a year.
Owners: Mark Cuban said the value of sports franchises doubled instantly when the Supreme Court released its ruling Monday. That seems a little bullish, but the next set of TV contracts will tell the story. With the NFL deals up after the 2022 season and the NBA deals up after the 2024-25 season, there's plenty of time for the betting market to mature. By that time, Amazon could become a broadcaster and a betting operator.
Sports data companies: Stat services have been the gambling play for sophisticated investors for years now, as the right information is the new oil. The companies that have relationships with the leagues and already understand what gamblers want are in a prime position. Sportradar, Perform and Genius Sports, for example, already have established partnerships with sports leagues. They also have the infrastructure in place to gather and disseminate data.
In the future, that data will be currency, with the speed and reliability of it adding to its value. Cuban, Washington Wizards and Capitals owner Ted Leonsis and Charlotte Hornets owner Michael Jordan are among the investors in Sportradar.
Gambling companies: Names like MGM, Boyd Gaming and Caesars Entertainment saw their stocks rise on Monday, as did British firms Ladbrokes, William Hill and Paddy Power Betfair. Since the latter have spent years in the legalized gaming business, they have a huge head start. American gambling companies are adept at risk management and are motivated to stay relevant.
The betting public: The majority of recreational sports bettors -- say, those who drop 20 bucks on a game for fun -- will have a recourse through gaming regulators that they don't currently enjoy in the underground market. They will be assured of getting paid when they win and won't have to mess with any of the hassle of shipping money offshore or sneaking it in an envelope to their local bookie.
Legal bookmakers: Americans aren't exactly killing it with their sports picks. Statewide, Nevada sportsbooks haven't had a losing month since July 2013. It remains good to be the house.
DraftKings and FanDuel: When daily fantasy only made it halfway around the country, investors of DraftKings and FanDuel knew the legalization of gambling was the next chance for them to cash in. DraftKings, for example, says it has an active database of 10 million Americans who like to stake money on sports predictions. That has tremendous value.
"The Supreme Court's decision, which paves the way for states to legalize sports betting, creates an enormous opportunity for FanDuel ..." the company said in a statement coinciding with the Supreme Court decision.
FanDuel investor Bradley Tusk told ESPN on Monday that he thinks the value of his investment doubled, with a chance for it to go up five times as sports betting reaches its full maturity.
States: Tax collectors across the United States are smiling. Eilers and Krejcik estimates that a full-blown, online 50-state U.S. sports betting market would attract as much as $245 billion in handle and generate as much as $15.8 billion in revenue.
Horse tracks: Left for dead, gaming has become a major component of horse track revenue. Consider this: In 2017, Churchill Downs grossed $87.2 million on its casino and $86.5 million on horse racing and its horse gambling business Twin Spires. Monmouth Park has said it hopes to be the first in New Jersey to offer sports gambling, and it could be up and running in a matter of weeks.
Twitter: Twitter has long been the platform that consumers rely on to deliver the news and highlights with unmatched speed, but it hasn't been able to generate revenue off of that advantage. That means there is a huge, valuable opportunity to sell things to sports fans, who are on Twitter more than others. Whether that's before the game (gambling offers to bettors in states where gambling is legalized) or leagues offering pieces of games for micropayments, there are now many more opportunities for Twitter.
App developers: While betting apps are fully up and running in Europe and Las Vegas, there is a void in the U.S. market. The seemingly guaranteed gold rush in sports betting should shift the focus of some app developers, who will either come aboard full time with gaming companies and maybe even teams themselves or give the entrepreneurial route a go and team up with a reputable company that will get an operator's license down the road. Either way, ease of use will be a key to winning the mobile app betting business in the United States.
NCAA: Student-athletes, you may have heard, are not paid (as professional athletes are), which makes them more vulnerable to being compromised. A Toledo running back once admitted to fumbling on purpose in a bowl game for just $500 as part of a gambling plot. Sure, any game can be compromised, but pro sports athletes -- and even the officials these days -- make enough for a shady character hoping to influence the outcome to have a tougher challenge.
The NCAA opposes sports betting and believes it is a threat to the well-being of the student-athletes, but now may need to ask for compensation from the legal market to handle any increased compliance costs. Asking for money from something you adamantly oppose is a difficult position.
Illegal bookmakers: There will always be an underground market, one that will be able to undercut the legal market, which has to deal with regulatory costs. And the ability to offer unsecured credit to bettors will always have value. But now federal and state authorities have more incentive to go after the black market. Taking down the guy operating out of the local country club may now become more of a priority.
Online sportsbooks: Reaction was mixed Monday from the offshore sportsbook world, which for decades has illegally served the majority of U.S. bettors. Some bookmakers who traded their U.S. residency to move to the islands and offer sports betting to Americans are worried about the future. Others believe legalization will add legitimacy to their product, and that they'll have plenty of time to capitalize on American bettors before the legal market works out any kinks.
Savvy bettors: The cost of regulation will likely be passed on to the bettor in some way or fashion, potentially hurting the odds that bettors receive. Maybe parlay payouts are lowered? Perhaps instead of the Cleveland Browns being listed at 200-1 to win the Super Bowl, books will reduce their risk and only offer 100-1? Or even worse, some believe bookmakers will be forced to up vigorish and cause bettors to have to lay $115 to win $100 instead of the more traditional $110 to win $100. The average bettor might not recognize the difference, but the wiseguys certainly will.
Mikhail Prokhorov, Les Alexander and Jerry Richardson: These are the last three guys to sell sports teams -- the Nets, the Rockets and the Carolina Panthers. Prokhorov sold 49 percent to Joseph Tsai, who has the option of picking up the rest in 2021. Alexander sold his team to Tillman Fertitta and Richardson is expected to sell his to David Tepper. While all sales are based on a valuation of over $2 billion, we agree with Cuban that there is infinitely more value as an owner of a sports team today than there was on Sunday.
Problem gambling centers: Funds dedicated to gambling addiction are minuscule compared with other vices. The National Council on Problem Gambling says it has been disappointed by the initial wave of sports betting bills, many of which do not specifically address problem gambling.