March Madness: Next Big Chance For Legal Online Sports Betting

March Madness: Legal Online Sports Betting

March Madness has a new flavor this year: legal online betting.

The annual NCAA men’s Division 1 basketball tournament will attract an estimated $8.5 billion in bets from some 47 million consumers in the U.S., according to the American Gaming Association. Most of those bets will be illegal. But about 18 million of those bettors will place their money – an estimated $3.9 billion – on their favored teams via sportbooks, either in person or online, with other bookies or just with friends. And about 4.1 million will place bets at casino sportsbooks or via legal mobile apps.

The NCAA men’s basketball tournament stands as the largest sporting event since the Feb. 3 Super Bowl on which bettors have been able to place legal online wagers. That’s thanks to the U.S. Supreme Court, which in May 2018 struck down a 1992 law passed by Congress that made it illegal for most states to legalize sports betting within their borders. The decision came down 6-3, representing a victory for several states that would like to tap into sports gambling as a way to generate revenue and bring in tourism.

New Jersey was the ringleader of the effort, though it did enlist support from 17 other states and three additional state governors. According to the latest data from the state’s gambling regulator, consumers in New Jersey have placed more than $780 million worth of online bets since that decision, and $1.25 billion in total – and those amounts don’t include figures from the Super Bowl.

College Basketball Betting

Digitally-focused firms are hoping to seize the opportunity for college basketball.

That includes DraftKings, which operates a fantasy sports app. Its new sportsbook app reportedly lets gamblers “place bets on sporting events when (they) are in New Jersey, which legalized wagering on sporting events online and on mobile devices as well as at physical locations last year.” For the NCAA tournaments, the company says “people can bet on individual games as well as submit brackets for $20 that makes them eligible for a chance to win $100,000. There's also a free bracket people can play nationwide that offers smaller prizes.”

The service only goes so far. To be accepted by DraftKings, tournament bets must come from people physically located in New Jersey – even if they drove in from a neighboring state – and as of yet, there is not enough revenue potential for DraftKings to accept legal online bets for bracket challenges regarding the women’s NCAA tournament or the NIT tournament. Gamblers can place bets only on individual teams for those tournaments.

Payments and Wagering

The NCAA tournament will no doubt help influence and advance the role of payments in the world of sports betting. For instance, the issue of faster payments is receiving increased focus in the ecosystem, as PYMNTS recently documented via an interview with Tom Cregan, CEO and managing director at EML. The general idea? Use reloadable cards and instant access to funds to keep gamblers happy and loyal to a particular gambling operation.

But clouds remain over the emerging world of online sports betting as the NCAA tournament kicks off.

At issue is the Federal Wire Act, enacted in 1961.

That law – obviously passed when the internet was merely an idea of science fiction and computer scientists – prohibits betting via electronic forms of communication. A new interpretation from the DOJ “now makes the Wire Act applicable to any form of gambling that crosses state lines, including online gambling and online lottery,” according to an account. That new view of the Wire Act reportedly follows a long lobbying effort by Las Vegas casino owner Sheldon Adelson.

As that issue remains unresolved, at least eight states have some form of legal online sports betting, with more states moving toward that goal. Legal online sports gambling is providing business opportunities not only to payment services providers, but also to companies that sell digital ID authentication services. That’s pushing companies like casino site to invest in automated authentication processes, according to Russell Medley, 888’s director of fraud and risk management, according to PYMNTS research.

For now, though, legalized sports betting in the U.S. faces its second big test – and enjoys its second biggest opportunity – since the Super Bowl.



The How We Shop Report, a PYMNTS collaboration with PayPal, aims to understand how consumers of all ages and incomes are shifting to shopping and paying online in the midst of the COVID-19 pandemic. Our research builds on a series of studies conducted since March, surveying more than 16,000 consumers on how their shopping habits and payments preferences are changing as the crisis continues. This report focuses on our latest survey of 2,163 respondents and examines how their increased appetite for online commerce and digital touchless methods, such as QR codes, contactless cards and digital wallets, is poised to shape the post-pandemic economy.