The odds are long that you already know the expression "It’s an ill wind that blows no good," which first appeared in John Heywood's 1546 collection of proverbs.
And even if your home library doesn’t include any calfskin-bound books from the 16th century, you’ll be interested to learn that the economic turmoil we currently live in might turn out to be not so bad for the gambling industry.
Economy in the Trump 2.0 Era
Living in President Donald Trump's era is like betting –you have no idea what will happen next– but economic analysts are much more confident about sports betting than car manufacturing.
When Trump announced wide-ranging tariffs a few weeks ago on what he called “Liberation Day,” stock markets started to nosedive, with gambling stocks among those free-falling. FanDuel's parent company, Flutter Entertainment, fell just under nine percent in 24 hours, and DraftKings received a similar beating.
On Wednesday, April 23, as part of a strategy to repurchase as much as $5 billion in shares, Flutter announced it would acquire and cancel its own ordinary shares as part of a share buyback program to strengthen the company’s market position.
Tariffs Expected to Have Small Long-Term Impact on Sports Betting
Tariffs are generally placed on goods, not services, so analysts think gambling remains relatively recession-proof compared to other sectors.
Said one: “Sports betting is a low-spend form of entertainment, close to home (or in-home), ed by year-round content, leading us to believe sports betting will see little impact in a recession.”
As a rule, gamblers budget a bit less than one per cent of household income on betting, so even if there’s a recession, wiggle room exists, as opposed to spending an extra 10K on a truck that’s suddenly had a tariff slapped on it.
So, while a tariff-driven recession could make higher-end entertainment options like a Taylor Swift concert, a Super Bowl ticket, or a trip to Vegas out of reach, the ease of use and lower betting price make it likely to hold up during a recession.
Kids, we’re not going to Disney, but Mom is taking you all to the movies while I stay home and spend a hundred bucks on the Sixers.
How Tariffs Might Actually Help
If the economy slows significantly, revenue generated by some forms of taxes also goes down. But that doesn’t lessen the appetite of state governments to spend money. What is the solution for those states not yet on board? An acceleration of legalized sports betting.
“If states need revenues, particularly here in the United States, they could lean more towards gaming legalization if they start to have bigger state deficits.” So, Chad Beynon of Macquarie Legal Sports Report has said there could be a silver lining. “That’s what we’ve seen in the past. The biggest times when states have legalised or permitted gaming are around recessionary or deficit periods. So that could be one positive outcome.”
Experiences. Sports.
Forbes Magazine has also weighed in on the advantages of investing in things not loaded in containers and shipped across an ocean, labelling as “insulated” sectors such as tech services and sports properties, things that don’t have to go through customs.
“Tariffs tend to be on goods,” wrote Forbes. “They don’t hit sports teams. They don’t hit musicians. They don’t hit tech services. That’s why you’re seeing capital migrate into these areas.”
Not Totally Immune
Analysts caution, though, that online sports betting won’t be completely unaffected by a pullback in consumer spending, which is bound to result from companies being forced to on higher tariff costs to customers.
But investment bank Stifel likes what it sees at gambling companies. It also argues that people could turn to sports betting when they’ve reduced spending in other areas, pointing to the relatively small wagers and the convenience of online betting.
“…concerns centered on problem gambling and online betting eating into bricks-and-mortar betting shops have been a challenge to further legalization,” said a Stifel report. “But historically, the need for tax revenues trumps other concerns when states contemplate gambling expansion.”
Sports betting is legal in 39 states and Washington, D.C.
That number is bound to grow, heard attendees at the East Coast Gaming Congress in Atlantic City last week.
“If you’re a legislator, do you want to raise taxes on your constituents?” Shawn Fluharty, the Democratic minority whip of the West Virginia House of Delegates, asked at the convention. “No. You can flip a switch, partner with your brick-and-mortar counterparts, and increase revenue.”
