The Online Sports Betting Opportunity

July 18, 2021
6 min read
Online Sports Betting ARK
By: Nicholas Grous

The History of Sports Betting

  • 1961 – The Federal Wire Act
    The law prohibited the operations of certain types of betting businesses in the United States. Up until 2011, the law was used to ban online gambling in the United States.
  • 1992 – Professional and Amateur Sports Protection Act (PASPA)
    PASPA effectively outlawed sports betting nationwide, excluding a few states.
  • 2011 – Department of Justice Gives Opinion on Federal Wire Act
    In assessing the Federal Wire Act, the Department of Justice concluded that the law applied only to online sports betting, not online casinos and poker. In essence, the opinion allowed states to self-regulate online casinos but maintained the ban on sports betting.
  • 2018 – The U.S Supreme Court Overturns PASPA
    The Supreme Court of the United States ruled that PASPA conflicts with the Tenth Amendment, which gave states the ability to self-regulate online sports betting.
  • Present – The Challenges That Remain
    Until an amendment to or repeal of the Federal Wire Act of 1961, sportsbook operators must establish sports wagering infrastructure in every state in which they operate, among other requirements.

The Online Sports Betting Landscape Today

Despite shortened seasons, canceled tournaments, and low sports programming viewership in 2020, online sports betting thrived in the U.S. According to reported figures, sports bets placed, or ‘the handle,’ soared by 39% on a year over year basis from roughly $13 billion in 2019 to $18 billion.

Sports betting in various formats is legal in 21 states and Washington DC, but online betting has accounted for most of the incremental growth. While only 15 states and Washington DC have legalized ‘online’ sports betting, in our view the market has burgeoned based on its convenience and entertainment value.

Since it legalized online sports betting in mid-2018, for example, New Jersey has seen its online handle soar to $15 billion, half of which took place in 2020. Today, 90% of all bets in the state are placed online, as shown below.
Online Sports Betting NJ
Online Sports Betting NJ and NV

Source: ARK Investment Management LLC, Data Sourced from New Jersey Division of Gaming Enforcement, Lineups, Nevada Gaming Control Board

Based on its $15 billion handle, New Jersey probably has enjoyed a $115 million tax windfall as sports betting companies have generated nearly $1 billion in revenue. New Jersey now rivals Nevada, home of Las Vegas, in total betting volume, as shown in the chart above. Potentially, every state could replicate New Jersey’s success with online sports betting.

Excluding New Jersey and Nevada, the latest data from states with the largest reported handles provides compelling evidence that consumers prefer mobile and online sports to onsite alternatives, as shown below.
Online Sports Betting Nevada and PA
Online Sports Betting Illinois and Indiana

Source: ARK Investment Management LLC, Data Sourced from Nevada and Pennsylvania Gaming Control Boards, Illinois Gaming Board, and Indiana Gaming Commission

Data from Pennsylvania and Indiana suggest that that the adoption of online sports betting today is in line with that before the COVID crisis halted all onsite sports betting activities for approximately two months. Since the summer of 2020, for example, the percentage of mobile or online sports betting handles in Pennsylvania, Illinois, and Indiana has been 75% or higher. While the share of online sports betting in Nevada, one of the largest in-person gambling destinations in the world, is lower, it still has topped 50% consistently.


Legalized online sports betting is presenting sport book operators and sports leagues with an opportunity not only to offer exciting interactive online experiences but also to capitalize on a highly efficient fan demand curve and generate new sources of revenues. A die-hard New York Giants fan who lives in Illinois but otherwise would be a season ticket holder, for example, can reallocate that capital to an online sports betting viewing experience. According to our research, during the next five years, as the handle for online sports betting scales 10-fold from roughly $18 billion to $180 billion, the three major sports betting categories combined could generate 31% revenue growth at a compound annual rate, increasing the online sports betting category from $9.5 billion last year to $37 billion in 2025, as shown below.

Sports Betting Opportunity Esports Fantasy

Forecasts are inherently limited and cannot be relied upon. For informational purposes only and should not be considered investment advice, or a recommendation to buy, sell or hold any particular security.

Source: ARK Investment Management LLC, data sourced from,,

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