March Madness canceled, dealing $4 billion blow to sports betting industry

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With coronavirus COVID-19 concerns and precautionary measures continuing to mount, it was only a matter of time before the NCAA Tournament was canceled. That time came Thursday afternoon, when the NCAA announced March Madness would not take place. Even before the decision came down, sportsbook operators were bracing for it and the impact will be extensive.

Nevada Gaming Control Board senior research analyst Mike Lawton told Covers that basketball betting handle for March 2019 was a whopping $498.7 million. In previous years, it’s been estimated that 70 percent of March basketball handle was on NCAA Tournament games, which would equate to $349 million last year.

Sportsbooks held $36.5 million of the total March 2019 hoops handle, or 7.3 percent, which is a solid if not spectacular number. If there’s no March Madness, recovering from such a blow would be difficult.

“I think we were all expecting the tournament to be canceled at this point,” said Jay Kornegay, who oversees operation of The SuperBook as vice president of race and sports for Westgate Resorts. “It’s one of the biggest, if not the biggest, events of the year for us. It’s really difficult to quantify what it means to us, because there are so many parts of that revenue stream.

“There are so many incremental benefits of the tournament, not just for sportsbooks, but for the entire city.”

Indeed, Las Vegas as a whole gets a huge boost from March Madness traffic. Sportsbooks are the focal point, but food and beverage, shows, and all the other casino gaming options reap benefits from those traveling in to wager on the NCAA Tournament.

And with the expansion of legal, regulated sports betting, 15 other states are impacted, as well. That would include Illinois and Michigan, which just went live this week and anticipated heavy March Madness turnout.

The American Gaming Association is closely monitoring the situation, not just from a sports betting perspective but across the broader gaming industry. At this time, though, the AGA does not have impact estimates.

However, a 2019 AGA survey found that 47 million American adults would wager a total of $8.5 billion on March Madness. While the majority of that sum – $4.6 billion – was in the form of bracket pools, that still left a hefty $3.9 billion wagered through either legal sportsbook operators or online, with a bookie or with a friend.

Coronavirus implications extend far beyond the NCAA Tournament. The NBA suspended its season Wednesday night (two players have tested positive), the NHL followed suit Thursday, and Major League Baseball announced Thursday that it is delaying the start of the season – initially March 26 – by at least two weeks. If the NBA and NHL don’t resume, that adds to the impact on sportsbooks’ bottom line.

But the NCAA Tournament is far more significant, even more so than the Super Bowl, as the tourney stretches across three weekends. The 2020 Super Bowl between the San Francisco 49ers and Kansas City Chiefs posted Nevada handle of $154.7 million, and annually the game is the largest single-day sports betting event by a mile. But as Nevada Gaming Control board statistics show, March Madness handle dwarfs the Super Bowl number.

Kornegay stressed that while March without the Madness is hugely disappointing, there are much more important matters at hand as coronavirus is dealt with at the local, state and national levels.

“Just like everybody else, we’ve really enhanced our safety protocols,” Kornegay said. “It’s unfortunate what we’re dealing with. But at this point, it’s really about protecting our guests and team members.”

Patrick Everson is a Las Vegas-based senior writer for Covers. Follow him on Twitter: @Covers_Vegas.