How Innovation and Regulation Can Spawn a Multi-Billion Dollar Industry

How Innovation and Regulation Can Spawn a Multi-Billion Dollar Industry Sports betting has been around for as long as sports have, but it hasn’t always been legal. In the early 1990’s, sports leagues in the U.S. lobbied Congress to pass a nationwide ban on sports gambling, and that’s been the rule of law ever since. That is, until May 2018. In May, the Supreme Court ruled in Murphy v. National Collegiate Association that states have the freedom to legalize sports gambling if they wanted to. Up until this point, legal sports betting has only been available in Nevada, but studies suggest that Americans have been shirking the law and making bets anyway – to the tune of an estimated $150 billion a year.1 The potential market opportunity and the potential for new tax revenues is sizable. Seven states including New Jersey and West Virginia seized on the rule change, legalizing sports betting within months of the ruling.2 But, the feature of this whole story that has interested us the most isn’t the Supreme Court ruling or the seven states that have legalized sports betting. It’s the idea that innovation and regulation can work together to create an entirely new multibillion-dollar industry opportunity, essentially overnight. At Zacks Advantage, this idea that innovation can single-handedly drive economic and technology trends is fundamental to our investment philosophy. --------------------------------------------------------------- [Give Yourself Every Investing Advantage]( At Zacks Advantage, we believe knowledge is an investor’s greatest advantage. Our comprehensive Savvy Investors Guide provides investing insight that we think will help you make better investing choices. You’ll learn about: - The Impact of Fees on Investments - Actively Managed Investing vs ETF Investing - Determining the Value of an Advisor - The Primary Trait That Successful Investors Have in Common [Download your copy of The Savvy Investor’s Guide.3]( --------------------------------------------------------------- The sports gambling innovation we think has the most unique market potential is mobile and online betting. The popularity of fantasy sports leagues has seen exponential growth over the years, and let’s face it – sports fans and Americans alike love watching sports, talking about sports, and participating in fantasy leagues online and on their smartphones. The United Kingdom – where sports betting is already legal – offers some useful data. According to data from Gambling Compliance, an industry research firm, “revenue from online wagers has more than doubled over the past five years and now represents 60% of the market, whereas revenue from in-person betting has fallen 12% over the same period.”4 We increasingly live in a world where communication, consumption, and participation happens online or on the phone. The Supreme Court ruling could be the tip of the iceberg for a new strong growth area in the U.S. economy. Though seven states have already opted to legalize sports betting, only three of them have provisions that allow for mobile betting.5 The future in that space could be even more expansive, considering what we know from the U.K. and also considering that online wagering already represents one-third of all wagers made in Nevada. According to research firm Eilers & Krejcik, mobile betting “could increase total U.S. sports gambling revenue by $9 billion to $16 billion total, if all 50 states adopt it.”6 The United States is the wealthiest country in the world and our marriage to sports is arguably one of the strongest in the world. It would not be unfounded to consider that one day the U.S. could become the largest sports betting market in the world. And since Day 1 of sports betting essentially took place in the summer of 2018, the implication is that there could be many big growth and industry opportunities ahead for those who look. Bottom Line for Investors Of course, gambling is not for everyone and many investors and readers may have a moral objection to investing in the sector. One of the features of the Zacks Advantage platform is working with investors to customize investment portfolios to potentially include or exclude certain sectors that have special meaning to people. This industry opportunity could be one of them. For others, this particular intersection of innovation and regulation has great appeal. Companies like Buffalo Wild Wings are already purportedly exploring opportunities in the sports gambling space, and MGM has already committed $100 million to establishing a presence in the space. It should also perhaps come as no surprise that they intend to build a headquarters in a U.S. technology hub. At Zacks Advantage, we believe in innovation. That’s why we have innovated with new financial technologies and now offer an actively managed robo advisor that: - Automates the advising process - Invests exclusively with ETFs - Uses technology to recommend the appropriate mix of equities and bond ETFs to help achieve your investing goal and specific risk tolerance. - Lowers fees and expenses For further information, we recommend you read our report: The Savvy Investor’s Guide [Get your copy of The Savvy Investor’s Guide9.]( © Zacks Investment Management | [Unsubscribe]( DISCLOSURE 1 The Wall Street Journal, Aug. 3, 2018, 2 The Wall Street Journal, July 13, 2018, 3 Zacks Investment Management may amend or rescind the “Savvy Investor’s Guide” offer for any reason and at Zacks Investment Management’s discretion. 4 The Wall Street Journal, July 13, 2018, 5 The Wall Street Journal, 6 The Wall Street Journal, July 13, 2018, 7 The Wall Street Journal, Aug. 13, 2018, 8 The Wall Street Journal, July 30, 2018, 9 Zacks Investment Management may amend or rescind the “Savvy Investor’s Guide” offer for any reason and at Zacks Investment Management’s discretion. 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