The U.S. sports betting industry has explosively grown into a $10 billion behemoth, fuelled by the 2018 Supreme Court decision legalizing the practice in individual states. However, significant expansion could still be on the horizon, according to analysts at Goldman Sachs Research.
“We expect growth to be driven by a combination of new state openings and a higher share of the consumer wallet being spent on sports betting over time,” says Ben Andrews, head of leisure and travel research for Goldman Sachs Research in Europe.
Drawing on a model that assesses states’ propensity for legalizing sports betting and consumer spending potential, Andrews forecasts an annual spend of $45 billion by Americans on legal sports betting when the market reaches maturity.
“We’re in the middle innings of the market’s development,” adds Noah Naparst, who evaluates sports betting companies for Goldman Sachs Asset Management.
“Currently, around half the states have legalized mobile sports betting. The product is constantly improving, with more sports being offered and promotions becoming less frequent. Existing markets are still experiencing rapid growth. So, while we’re not yet mature, we’ve definitely moved beyond the wildcat days of the market.”
Rise of parlays
Interestingly, the rise of app-based betting has significantly changed the types of wagers people place. While traditional sports betting often focuses on predicting final scores, parlays, which combine multiple bets into one, have become increasingly popular.
Bettors find their lottery-like potential appealing, while operators appreciate their high margins.
“The rapid rise of parlays has been a distinctive feature of sports betting’s growth in the US,” Andrews remarks. “We expect parlay penetration to continue increasing alongside improved in-game betting products and greater personalization across user experience, offered bets, and promotions.”
Naparst highlights the rise of in-game betting as another development with considerable implications for media companies.
“The future of sports betting lies in the convergence of media, sports, and betting,” Naparst predicts. “Imagine watching a basketball game within your betting app, and right before a free throw, odds for the shot appear on screen, with the app asking if you want to place a bet. That’s the direction the industry is headed.”
Looking ahead to the upcoming Super Bowl, Naparst acknowledges its significance in terms of customer acquisition and visibility.
However, he emphasizes that, being just one game, it doesn’t hold major revenue significance. This diversification across various sports and events ensures that a single event’s negative outcome doesn’t significantly impact the industry in the long run.
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