Super Bowl: How sports betting operators are poised to benefit

Yahoo Finance sports reporter Josh Schafer joins the Live show to break down how sports betting companies are positioned to benefit greatly ahead of this year's Super Bowl and rising sports bets.

Video transcript

SEANA SMITH: All right. Well, this might be the biggest Super Bowl yet for the gambling industry. Lots to look forward to this weekend. The American Gaming Association releasing its predictions for Super Bowl 57, estimating that about 50 million Americans will bet roughly $16 billion on this year's game. That's more than double last year's total. But our own Josh Schafer has been looking further into this number, what it really means for the Sportsbook operators. What do you got for us, Josh?

JOSH SCHAFER: That's right, Seana. So that $16 billion number is obviously a massive number. But not all of that is going to go right to the Sportsbook. So for starters, that number includes both bets placed legally and illegally. It's also an estimate. And if we take a look at last year's estimate, 7.61 billion translated to just 950 million of legal handle. That's according to the AGA's assessment of state data. So less than 15% of last year's estimation ended up as legal handle.

Now the total amount bet-- at legal books. And then if you have to think about how these sportsbooks make money, right? So you take that handle, that legal handle, that $950 million, and then you subtract what's known as the gross winning margin, or you multiply it by that gross winning margin, which is only 10% on average. Then when you multiply those, you end up only getting $95 million as the total legal handle, or sorry, the gross gaming revenue, which is what goes back to the sportsbooks.

That's the number that ends up getting taxed. And that can be taxed, guys, at about an average of a 20% rate. So there are $95 million then taxed at 20%. It's just not quite as big as that $16 billion number we like to talk about all the time. But it is still a huge week, Dave. The stocks have been roaring headed into the Super Bowl, the three or four of the gambling stocks here over the last month. So it certainly is an exciting time.

DAVE BRIGGS: You just took an extra large pizza and boiled it down to one slice. But--

JOSH SCHAFER: But that slice could be delicious. That slice could be absolutely delicious.

DAVE BRIGGS: And it's still a pretty solid slice. It's a New York sized slice. But the game is not in New York. It's in Arizona. And that's the first time we've ever had a legal sports gambling state host a Super Bowl. What does that mean? What are the implications?

JOSH SCHAFER: Well, it means that people can bet well they're sitting in the stadium. And that's the biggest thing that we're going to be watching. And really, what I want to point out here too is the tax rate. So Arizona taxes mobile betting at a 10% rate. And why I'm watching that number is because Arizona is probably going to have a higher handle this Sunday than they normally would. They're going to get a 10% rate on that. They're going to get a lot of state revenue, guys. And I'm curious how that leads moving forward as we continue to see gambling grow.

Are more states going to want the Super Bowl to bring in a lot of gamblers, get people excited for the game, and get more state revenue? It seems like a decent deal to me.

DAVE BRIGGS: Where's the game next year? Vegas, baby. I mean--

JOSH SCHAFER: Not a bad place for gambling.

DAVE BRIGGS: That seems like it'll work out well. Great stuff.