Sports betting is taking the nation by storm.
Just a couple years ago, you had to be somewhere in Nevada if you wanted to place a legal bet on a sporting event.
Today, thanks to a 2018 Supreme Court ruling, 21 states and the District of Columbia have moved to allow gamblers to bet on events ranging from college basketball and UFC fights to MLB and even professional table tennis, spurring investors to cash in on a fast-growing market opportunity.
In the legalization drive's latest big step forward, New York Gov. Andrew Cuomo signed a bill in April that will permit online betting in the Empire State. In New Jersey, where 80% of bets are made through sportsbook apps and websites, gamblers have wagered $13.5 billion since sports betting went live in the state.
The market would see even larger expansion as legalization spreads to other big states. Florida, the third most-populous state, struck a deal in April allowing sports betting exclusively at Seminole Tribe-owned casinos. California has yet to give its own green light, but a voter initiative on the issue could be on the ballot next year.
Sports betting platforms allow gamblers to place single-game and parlay bets on user-friendly platforms, and charge a fee or take a percentage of winnings.
Since 2018, there have been 10 notable private equity deals in the sports betting market, accounting for over $700 million in capital raised, according to PitchBook data. On the venture capital side, investors have deployed $579 million across 19 deals since 2018.
In April, William Hill, a betting giant and large purveyor of sportsbooks in the US and UK, was acquired by Caesars Entertainment for $4 billion.
Industry giant DraftKings went public through a reverse merger last year with Diamond Eagle Acquisition, a blank-check company. Separately, a group of investors including Franklin Templeton and Wellington Management injected $304 million in a private investment in DraftKings at the time of the IPO.
FanDuel, a direct competitor of DraftKings, was acquired by Irish sports betting firm Flutter Entertainment for $4.17 billion in December.
Sports betting, once reviled by professional sports leagues, has also won over many sports franchises in a sign of the new normal for the industry.
The NHL's Las Vegas Knights became the first major US professional team to join forces with a sports betting platform, reaching a deal with William Hill in 2018, and many others have followed. In the NFL, the New York Jets teamed up with MGM Resorts. The Baltimore Ravens and Las Vegas Raiders are now linked with Caesars. Dallas Cowboys owner Jerry Jones was an early investor in DraftKings.
Entire professional sports leagues have struck partnerships as well. In 2018, the NBA made MGM its "official gaming partner," MLB followed suit with MGM later that year.
Private equity investors aren't new to the gambling scene, and not every investment has been a winner.
In 2008 Apollo Global Management and TPG Capital acquired control of Caesars, then known as Harrah's Entertainment, for more than $27 billion in an investment that quickly turned sour during the financial crisis. The firms eventually sold their stakes, but not before enduring a lengthy legal dispute with creditors.