2021 is a pivotal year for sports betting such as DraftKings and FanDuel.
Nineteen states will decide whether to legalize sports betting this year, either through a voter referendum or through the statute of the state legislature. If every state votes yes, it would be more than double the number of states that have legalized – making 2021 a pivotal year for the financial outlook of the industry leaders.
“This is a great year,” said Jason Robins, CEO of DraftKings in an interview. “We have about 20 states going to vote on legalization. What percentage of that is deciding yes – that will turn things in a positive or negative direction for us.”
Investors are planning a lot of approvals leading to an increase in value for FanDuel owner DraftKings and Flutter. States can tax legal sports betting and generate income from what was historically an illegal activity.
“It’s hard to say which states will vote to legalize and which won’t,” Robins said. Still, some seem more likely than others. Massachusetts and New York have been working to legalize sports betting for years. 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 sports betting prize – is also likely to wait until next year, when Senator Bill Dodd has vowed to set a benchmark for the vote in 2022.
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 don’t need to impose a measure on the ballots to be legal, FanDuel CEO Matt King said.
Of the states that will rule 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 became DraftKings’ largest revenue generator in 2020 after the state changed its laws during the pandemic, allowing people to register online instead of at a in-person casino. It is unclear whether Illinois will continue to expand mobile registration once most of its citizens have been vaccinated against the coronavirus.
The biggest determinant of legalization may be a state’s desperation for additional tax revenue, King said.
Still, King said that while 2021 would certainly be a groundbreaking year in the sports gambling industry, he warned that it often takes three years to pay bills from the time they are introduced.
“I’ve talked to a lot of government officials and they say there may or may not be a bill in the first year,” said King. “Year two, the same people who sponsored the bill are trying again. And year three, it passes. So if some of these states don’t make it in 2021, at least there is a higher chance that a bill will be passed the next year. is assumed. “
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