Many banks are still cautious with sports betting transactions in the U.S. while the sports betting market continues to expand. By now, half of the U.S. states have legalized sports betting or are currently in the process of legalizing.
U.S. Banks Remain Cautious of Payments Related to Sports Betting
Although sports betting continues to grow in popularity and more U.S. states are passing bills for legalizing it, many banks are yet to embrace the idea of dealing betting payment transactions. One of the main concerns that many banks are having is financial crimes related to sports betting. As many banks are trying to avoid punishment by federal authorities, it seems that the temporary solution they found is to block such payment transactions.
Another concern that banks are having is the possible enhanced anti-money-laundering laws which may be rolled out by the new Biden administration. Despite the worries by banks and possible regulatory hiccups, the growth of the sports betting industry in the U.S. remains extraordinary.
According to a report by VIXIO GamblingCompliance titled “U.S. Sports Betting Tracker, September 2020,” it is expected for the sports betting revenue to reach $1.44 billion by the end of 2020. Next year, the experts from VIXIO predict that the market may be worth $3.2 billion. Moreover, considering that the sports betting market will continue to grow, VIXIO projects that the market estimate by 2024 may be between $6.3 and $8.4 billion.
Legalized Sports Betting Reaches 25 U.S. States
A lot has changed since the 2018 Supreme Court ruling on PASPA (Professional and Amateur Sports Protection Act). Introduced back in 1982, PASPA restricted sports betting to Nevada only. Once ruled as unconstitutional in 2018, effectively each U.S. state was allowed to pass its sports betting legalization bill.
Although the process is lengthy, many states are on the road to legalizing sports betting and some already have. By now, some 25 states have either legalized sports betting or are currently in the process. With that in mind, sportsbook operators like FanDuel and DraftKings continuously expand their presence entering new states.
The Legalization Leads to Reduction of the Black Markets
Besides entertainment for the fans and profits for sportsbook operators, the legalization of sports betting in more states reduces the share of the illegal gambling markets. Only recently, FanDuel’s CEO Matt King revealed that on its way to growing on the U.S. legalized market, the company will “put out of business” illegal market competitors.
Furthermore, a legalized sports betting market brings valuable tax revenue to each state’s coffers which may prove to be beneficial, considering the recent economic impact by the COVID-19 pandemic. Currently the question whether more banks would start processing betting transactions is yet to be answered. However, considering the significant growth of the sports betting industry in the U.S., it is likely for more financial institutions to get involved soon.