Nineteen states will decide whether to legalize sports betting this year, either through voter referendum or state legislature statute. If every state votes yes, that would more than double the amount of states that have legalized — making 2021 a pivotal year for the financial prospects of the industry leaders.
“This is a big year,” said DraftKings CEO Jason Robins in an interview. “We’ve got about 20 states set to vote on legalization. What percentage of those decide yes — that’ll swing things either in a positive or negative direction for us.”
Investors are planning on a lot of approvals, leading to a surge in value for DraftKings and Flutter, the owner of FanDuel. States can tax legalized sports betting and generate revenue from what has historically been an illegal activity.
“It’s hard to say which states will vote to legalize and which won’t,” said Robins. Still, some seem more likely than others. Massachusetts and New York have been working on sports betting legalization for several years. Maryland and Wyoming passed mobile legislation bills in their state houses this week and are now waiting for 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 sports betting prize — will also likely wait until next year, when state senator Bill Dodd has vowed to put a measure of the 2022 ballot.
Referendum or State Legislature
States have two paths toward legalization — a statewide referendum, which typically occurs as a November vote, or a law passed by the state legislature. Most of the 19 states won’t have to put a measure on ballots to legalize, said FanDuel CEO Matt King.
Of the states set to decide this year, Texas and New York are the most important, Robins said. Either would become the largest state to legalize by estimated users. Illinois became DraftKings’ biggest revenue generator in 2020 after the state changed its laws during the pandemic, allowing people to register online instead of at an in-person casino. It’s unclear if Illinois will continue to extend mobile registration once most of its citizens are vaccinated for coronavirus.
The biggest determining factor for legalization may be a state’s desperation for additional tax revenue, said King.
Still, King said while 2021 would definitely be a seminal year in the sports gambling industry, he cautioned that bills often take three years to pass from the time they’re introduced.
“I’ve spoken to a lot of government affairs officials, and they say, year one, a bill may or may not get out,” said King. “Year two, the same people that sponsored the bill try again. And year three, it passes. So, if some of these states don’t pass it in 2021, there’s at least a higher chance a bill will pass the year after.”