The online sports betting industry in the United States has experienced unprecedented growth in recent years, transforming from a banned activity in most states to a thriving market worth an estimated $7.2 billion in 2020.
This growth has outpaced all other segments of commercial gaming and is expected to continue its upward trajectory.
Expansion of Online Sports Betting Market
According to Statista, the projected revenue for the Online Sports Betting market is estimated to reach US$7.62 billion by 2023. This revenue is expected to grow at an annual rate of 17.32% from 2023 to 2027, resulting in a market volume of US$14.44 billion by 2027.
Furthermore, the number of users in the Online Sports Betting market is expected to reach 49.26 million by 2027. The user penetration rate, which is the percentage of the population using online sports betting, is anticipated to be 9.2% in 2023 and is projected to increase to 14.3% by 2027. The average revenue per user (ARPU) is estimated to be US$244.90.
What Drives the Expansion of Online Sports Betting?
The legalization of sports betting at the state level, technological advancements, and investment opportunities have been the primary drivers of this remarkable expansion.
One of the key factors contributing to the growth of online sports betting is the legalization of sports wagering at the state level. The lifting of the federal ban in 2018, known as the Professional and Amateur Sports Protection Act (PASPA), paved the way for individual states to legalize and regulate sports betting within their borders.
Since then, 33 states and the District of Columbia have embraced this opportunity, with online betting being permitted in 22 of these jurisdictions.
State-level legalization has created a flourishing market, with more states considering legislation to tap into the potential benefits. Kentucky and Tennessee have chosen to allow online betting exclusively, which has contributed to the rapid growth of the digital betting industry in those states.
Advancements in technology and the availability of innovative features have also contributed to the expansion of the online sports betting industry. A frictionless user experience has been a significant draw, with 86% of sports wagers now being placed online.
Mobile betting applications have made it convenient for users to place bets anytime and anywhere, further driving the industry’s growth. In-play betting, which allows users to place bets during live events, has gained popularity, creating a more interactive and engaging atmosphere.
The integration of artificial intelligence (AI) and machine learning (ML) has enhanced prediction accuracy, while digital sportsbooks have utilized customer behavior data to create predictive models. Furthermore, the availability of mobile applications for live streaming has attracted more users to online betting platforms.
According to Visual Capitalist, the rapid growth of the online sports betting industry has created investment opportunities for those looking to capitalize on the market’s potential. Major sportsbooks like DraftKings and FanDuel dominate the online betting market, with over 70% of bettors using these platforms.
Investors can consider sports betting exchange-traded funds (ETFs), such as $BETZ from Roundhill Investments, to gain exposure to the industry’s leading players and front-line market participants.
Challenges and Responsible Gambling Measures
However, the online sports betting market also faces several challenges that require attention and proactive measures, including concerns related to problem gambling, regulatory uncertainty, and cybersecurity measures to protect users.
By investing in responsible gambling initiatives, maintaining open communication with regulators, and implementing robust cybersecurity measures, operators can create a safe, responsible, and innovative environment for both new and seasoned bettors.
Collaboration between operators, regulators, and other industry participants will be crucial to ensure sustainable growth and the long-term success of the online sports betting market.
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