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The Impact of Legal Sports Betting: 60% of Now-Legal Bettors Had Never Wagered Before

Updated Apr 06, 2023   |   9-min read

Just a little over six months ago, sports betting in the United States was legal in one place only, Nevada, and it had been like that since 1949. 

A lot can happen in half of a year, though, and as it stands today, sports wagering is legal in one form or another in eight states total. New Jersey opened up the legalization floodgates in June 2018 after a Supreme Court battle and Delaware, West Virginia, Mississippi, Rhode Island, Pennsylvania, and New Mexico quickly followed suit. 

Depending on what state they call home, gamblers can now place fully legal sports wagers through an online sportsbook like DraftKings or at a brick-and-mortar casino, instead of navigating the murky waters of bookies and offshore websites. 

What kind of impact has legalized sports wagering had on bettors that reside in the aforementioned states?

LendEDU surveyed 886 Americans that can legally bet and are above the age of 21 to find out. 

Full Survey Results 

Observations & Analysis

Legalizing Sports Wagering Has Brought In a Ton of New Bettors

All 886 of the adult respondents that participated in this online survey have placed at least one legal sports wager since the law was changed in their respective state.

However, we quickly found out that many of these survey takers had never previously been involved in sports wagering and have joined in on the action since legalization. 

60 percent of adult Americans answered that they had never previously wagered on sports when it was still illegal through a source like a bookie or an overseas account. 30 percent of respondents were still betting even before it was permissible, while 10 percent opted not to say.

Aaron Gray of Sports Betting Dime offered some thoughts on the potential for legal sports wagering in the U.S.

First and foremost, legalization helps dispel the stigma that was once attached to sports betting. Sports betting’s image has gone through a major overhaul in the immediate wake of legalization. Before legalization, around 17 percent of Americans bet on sports each year, while a whopping 65 percent participated in some form of gambling. If sports betting can encroach on even a fraction of the percentage of Americans who gamble, millions of new Americans will be introduced to sports betting.

Aaron Gray, Sports Betting Dime

This question alone bodes well for entities such as DraftKings and FanDuel that are looking to dominate legal sports betting. One of the biggest challenges faced by sportsbooks upon legalization was drawing in new consumers and expanding their reach to become multi-billion dollar companies

This is why you can see sportsbook such as the ones mentioned above constantly offering sign-up bonuses and promotions to attract new customers that need to be prodded just a bit.

Furthermore, back in September, FanDuel opted to pay a bettor $82,000 even after there was a technology glitch that produced incorrect odds. FanDuel issued this quote: “Above all else, sports betting is supposed to be fun. As a result of a pricing error this weekend, it wasn’t for some of our customers.”

So, other than the concentrated effort by sportsbooks to draw in new players, why else might so many new gamblers be getting in on the action? 

Simply put, many present day customers, 35 percent, did not bet previously because they did not want to break the law. Additionally, 18 percent said they did not trust the system before it was legal, and 11 percent believed the act just did not feel right. 

The biggest disinterest in sports betting was the criminality of the bookmaker not the morality of it; thus, legalization of bookmaking will reinvigorate interest in sports betting.

Anthony Best, a partner at MasterStrategyInvestments.com who is well-known in the Las Vegas betting scene.

Interestingly, 10 percent of these respondents stated they did not get involved in sports betting pre-legalization because they could not find an outlet to take their wagers. Now with legal and legitimate sports wagering operations in their respective states, they should not run into that same problem again. 

If law-abiding sportsbook continue on this trend of converting and acquiring new customers that had previously not been gamblers, expect companies like DraftKings and FanDuel to explode with growth. 

Legal Sports Wagering Has Led to Less Profits

30 percent of our survey takers indicated that they have wagered both illegally in the past and legally in the present. 

Amongst these respondents, we wanted to see if there was a noticeable difference in their betting performances. 

As the above graphics depicts, there was quite a large difference in profits amongst those who gambled illegally and those who gambled legally. While 59 percent of respondents who gambled pre-legalization indicated they made a profit, only 37 percent of those who gambled under the law stated the same. 

According to Gray, it is hard to track wagering performance as it stands today: “As to whether more people are winning or losing, it’s difficult to say. Online sportsbooks are notoriously opaque with their data, and even the longest-tenured sportsbooks in Nevada play their internal numbers pretty close to the vest.”

Elsewhere, 19 percent of respondents reported losses on both sides, while more legal bettors broke even when compared to illegal bettors by 11 percent.

Why might the disparity in those who profited from sports wagering be so high?

As mentioned earlier, one of the big reasons consumers did not wager before it was legalized was because they had difficulty finding an outlet to take their wagers. Now that betting on athletic competition is permissible, customers can make any type of bet for any amount with the click of a button. Such easy access can lead to over betting, which almost all the time leads to negative returns. 

My personal opinion is the influx of new bettors means that the aggregate win percentage has probably gone down. The old axiom “the house always wins” rings just as true for sports betting as it does for traditional gambling mediums. It’s hard to win with any consistency when you’re betting on sports. Sports betting might be legal federally now, but the best oddsmakers in the business have been honing their craft for decades, and they’re only getting better.

Aaron Gray, Sports Betting Dime

Online Sportsbooks the Preferred Way to Wager, But Credit Card Usage Could Become a Problem

As it stands today, online sports wagering is operational in Nevada, New Jersey, Delaware, Pennsylvania, and West Virginia. 69 percent of our respondents were from states where they could place sport bets online. 

Further, 54 percent of those adult Americans indicated that they had placed legal sport wagers through an online sportsbook. We then asked these survey participants if they had a preference between wagering online or at a brick-and-mortar location. 

Not all that surprising for the times that we live in, but wagering through an online sportsbook was much the preference over going to a physical location, with 81 percent opting for the former and only 17 percent for the latter. 

However, it appears that a potential problem could arise from the heavy use of online sportsbooks for wagering. When we asked respondents how they deposited money into their online account, 12 percent of them stated a credit card, the third most prevalent payment method. 

Now, the online wagering companies will not charge a fee for depositing funds with a credit card, but there could be another problem that arises: interest. 

Amongst those poll participants that indicated they use a credit card to deposit money into their online sportsbook, eight percent of them answered that they did not pay off their credit card balance in full. Granted, 90 percent stated that they did pay off their balance, but there is still a potential problem.

Using a credit card to gamble and not paying off the balance is a whole lot different, and more dangerous, than say using a credit card to book a vacation and not paying off the balance in full. At least when a consumer does the latter, they are still almost entirely getting their money’s worth because they are still going on the vacation they paid for; they just have to pay a little extra due to interest.

On the contrary, if you place athletic wagers with credit card funds, lose the bet, and then carry a balance, you are not getting anything in return besides having to pay the additional charges. Couple this behavior with consistent losses from sports betting and you could find yourself in a serious financial hole with seemingly little leeway to escape. 

As the survey continued on this theme of questions, the results got more disheartening. 67 percent of those adult consumers that indicated they carried their credit card balance over also said that they plan to payoff their credit card debt with their winnings from sports gambling. To say this is a shaky investment strategy would be an understatement.

Further, amongst all survey respondents that used a credit card to deposit funds, 69 percent of them stated that they will likely do the same thing at a later date when they are looking to wager on sports, while only three percent said they would not repeat this method.

Methodology 

All data that can be found within this report derives from an online survey commissioned by LendEDU and conducted online by online polling company Pollfish.

In total, 886 adult Americans above the age of 21 were surveyed for this particular poll. Additionally, all respondents were from the following states: Nevada, New Jersey, Pennsylvania, Delaware, West Virginia, Rhode Island, Mississippi, and New Mexico. These particular poll participants were found through Pollfish’s location feature in which you can select individual states. Respondents were also screened to ensure that they have placed at least one sports wager in their respective state since it has been legalized.

This survey was conducted over an eight-day span, starting on January 16th, 2019 and ending on January 23rd, 2019. All respondents were asked to answer all questions truthfully and to the best of their ability. 

See more of LendEDU’s Research