January Sports Betting Index (SBI)

In the chart below, we present our RubinBrown Sports Betting Index (SBI). The SBI is based on our proprietary index of the leading sports betting states in the U.S. To continue to best reflect current market conditions, we’ll occasionally adjust the components of the index. To better compare competitive conditions, our index numbers focus in on a group of mature, competitive states. Therefore, a state with an index score of 1.15 had a raw index score of 15% greater than the average, while a 0.90 index score shows a 10% lower than average result.

LEARN MORE ABOUT THE RUBINBROWN SBI

In January, sports betting operators experienced a boost in revenues as bettor outcomes became less favorable throughout the month. Many states surpassed the 10% hold mark, signaling a return to more typical industry conditions. With the NFL season entering its playoff stage and the NBA's daily schedule offering a higher volume of betting opportunities, basketball emerged as the primary driver of sports betting handle.

The NFL Playoff’s impact was highlighted by the record-setting handle in Kansas as the Chiefs made their way through the post-season. Kansas bettors, along with their border crossing brethren in Missouri, put over $300 million through the regulated books, not only setting a new state record but garnering the top spot in our index rankings for the first time. We did not see the same bump in handle from their Super Bowl opponent in Pennsylvania.

Overall, the rebound in hold from December lows can be largely attributed to parlays. Only a handful of mature, competitive market states report parlay-specific data, but for these states, parlay hold percentage was at least 20% for the month. Colorado, Illinois, Indiana, Louisiana, and Maryland report some form of parlay data as shown below:

Crypto.com, Kalshi, and the SEC/CFTC

The distinction between sports betting and financial markets is becoming increasingly blurred, drawing scrutiny from the Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC). Kalshi, a federally regulated financial exchange, began offering sporting event-based binary options contracts, while Crypto.com leveraged blockchain to facilitate decentralized betting. These developments raise pressing questions about whether such betting markets should be classified as financial instruments or gambling. The CFTC has already rejected Kalshi’s proposal to trade on U.S. elections, citing risks to public confidence, while the SEC continues to monitor sports-related activity for potential securities violations.

The rapid growth of fintech and cryptocurrency has further complicated regulatory oversight for betting activities. The result of these new developments has traditional sports betting operators and financial institutions looking for regulatory clarity. As these platforms appear to challenge existing state-level frameworks, conflicts over jurisdiction may follow.

The reputation of each state and its regulatory bodies remains of paramount concern. Other regulatory concerns include taxation, consumer protection, responsible gaming, and AML/KYC. Allowing federally regulated or decentralized platforms would likely reduce state tax revenues, while arguments have been made by both sides on the effectiveness of controls protecting consumers from harm and risk. Other considerations include insider trading risks, particularly if regulators classify event contracts as securities or derivatives. Players, coaches, referees, team employees, and even owners, could face potential legal liability that hasn’t been discussed to this point.

As sports betting platforms evolve, regulators at all levels face the challenge of balancing change with consumer protection and market integrity. These merging sports betting platforms represent the latest manifestation of consumer demand for sports betting. These market innovations are largely driven by the desire for new ways to wager on already popular events. No matter the outcome of this latest debate, the market will likely continue to see the emergence of novel products designed to meet demand.

Super Bowl Data

Looking ahead to the February numbers, Super Bowl LIX proved to be a success for sportsbooks, evidenced by GeoComply's report of a 14% increase in active player accounts compared to the previous year. Notably, nearly 725,000 new accounts were created in regulated states, indicating a significant influx of customers. This data underscores the growing appeal of regulated sports betting, attracting both new bettors and those transitioning from unregulated platforms.

The New York Gaming Commission reported a 41% hold for sportsbooks on the game, resulting in nearly $63 million in Gross Gaming Revenue (GGR), demonstrating significant operator profitability. While results may vary across jurisdictions and operators, a 41% hold represents an exceptional outcome for the sports betting industry.

Published: 03/17/2025

_{^{Readers should not act upon information presented without individual professional consultation.}}

_{^{Any federal tax advice contained in this communication (including any attachments): (i) is intended for your use only; (ii) is based on the accuracy and completeness of the facts you have provided us; and (iii) may not be relied upon to avoid penalties.}}