Gambling Propensities and Market Viability After PASPA

Sports betting, gambling, USA

With the recent repeal of the Professional and Amateur Sports Protection Act (PASPA), which outlawed sports betting outside Nevada, many are asking the same question - what’s next? The legal battle that was started by New Jersey, a state with a vibrant gambling economy, has much broader implications for the rest of the United States. Delaware and New Jersey have already opened up sports betting, and Pennsylvania, Mississippi, and West Virginia are preparing to enter the sports betting arena as well.1

Like many other legal vices, sports betting has incredible tax revenue potential for numerous states. This begs the question; which state will be the next domino to fall in the face of tremendous tax revenue? And more importantly, where will casinos and other sports betting services find that they would be most profitable?

After analyzing the U.S. state by state, it becomes clear that certain states have a greater affinity for casinos and online gambling than others, whereas others may be less prone to gambling, but are so populous that there is still a tremendous amount of people who enjoy gambling -- which would warrant investment by casinos and other sports betting institutions. In order to find the best balance between the two, we leveraged and weighted data points from our Fall 2017 SimmonsLOCAL study, which provides deep insights by state, city, region, zip code, and more.

When respondents were asked if they “like gambling on vacation,” 12.6% of the general American populace answered in the affirmative. When breaking down gamblers by state (below), it becomes clear that citizens of certain states have a greater affinity for gambling than others.

These findings can certainly help inform profit-seeking casinos and other gambling sites where their services may be most desired. However, another potentially more important measure is the projected size of the gambling market. For instance, just because North Dakotans are 15% more likely to enjoy gambling than Wisconsinites, it doesn’t change the fact that Wisconsin’s potential gambling market is nearly 7 times larger than that of North Dakota. When ranking states by their potential gambling market size (below), we get a very different picture than the one painted above.

As we can see, the most populous states in the country understandably have the greatest amount of potential gamblers and are somewhat different from the states with the greatest affinity for gambling. Thankfully, Simmons data allows for us to utilize other questions and metrics to further refine the process of identifying the best markets for casino and gambling expansion.

Now that we have sorted states by their affinity for gambling and their market size, we can add another two related data points that would be of interest to a casino or sports betting site:

  1. Which states are more likely to have the most active online gamblers?
  2. Which states have the most active online gamblers?

The answers to these two questions, as expected, follow the same trends as the first two questions, and combining these multiple variables is a great way to create an informed market strategy for sports betting institutions and a compelling case for states to legalize gambling and sports betting in the wake of PASPA’s repeal.

For our ranking system, we scored each state, including Washington D.C, on a scale of 1-51 by the four metrics below. This resulted in four different rankings (e.g,. California is #1 in market size so its market size score is 1), which were then weighted accordingly to create a master ranking system that takes all four metrics into account.

  • Market Size of “I Like Gambling” - 30%
  • Index value for “I Like Gambling” - 20%
  • Market Size “Gambled Online Last 30 Days" - 30%
  • Index Value for “Gambled Online Last 30 Days” - 20%

After weighting those four data points, we were left with the following weighted scores (below) by which we can rank the propensity of the residents in each state to gamble. The lower scores represent the more viable gambling markets.

Although taking the aforementioned rankings is a great way for sports betting institutions to decide where they should consider expanding in an ideal situation, any gambling institution must also take into account the legal reality on the ground. Fortunately for sports bettors, a number of states either have passed legislation allowing for sports betting or have fast-tracked such legislation, including Pennsylvania and New York. A number of states are also introducing legislation to legalize sports betting, including a number of highly attractive markets for gambling including California, Michigan, Illinois, Indiana, Missouri, and more.2

When coupling the aforementioned shift in legality with our national weighted ranking (one of numerous potential weighted-ranking methods) for gambling propensity, sports betting institutions are able to formulate an incredibly informed expansion strategy. These insights are a prime example of the power that having multiple representative data points gives any business. In the modern business landscape where a plethora of demographic data is easily attainable, being able to leverage multiple truly representative data points that lead to informative insights is essential to creating a successful market strategy for any business, especially sports betting institutions.

Many sports-betting sites and services are already in the process of preparing for their impending expansions into new markets, while other sports-related sites such as fantasy sports site Draft Kings are primed to leverage their existing infrastructure and user base to include sports betting as one of their online services. For the many sports betting institutions preparing to compete aggressively in the many states legalizing sports-betting, combining internal data and custom target personas with SimmonsLOCAL data on unexplored markets can be the best way to gain market share in what will be an incredibly competitive market.

Having the ability to model your proven proprietary customer personas and insights to new and unexplored markets through data fusion will be what sets apart many sports-betting services. When a number of sports-betting institutions are vying for market share in a competitive space, the ones who can modify their proven strategies to fit new, unexplored markets in a custom manner will certainly give them a leg up. When you add the ability of being able to prioritize certain states and regions based on potential revenue and gambling interests; sports betting institutions will be able to know WHO is worth targeting and HOW to target them. Having this advantage saves precious time and marketing dollars while increasing marketing effectiveness and penetration -- which will be what separates the wheat from the chaff that is sports betting sites.

David Cohen
David Cohen
David Cohen serves as marketing coordinator for Simmons Research. In his role, he is responsible for lead generation, content creation, campaign management and more.