Placing a wager on whether or not you’re going to watch this week’s Super Bowl might be the easiest money to make all year. More people watched last year’s Super Bowl than any other television show all year. An estimated 110+ million viewers tuned in to watch the Patriots win their fourth ring and they did so in dramatic fashion. You can bet those numbers will be up again this year as the Super Bowl 50 kicks off on Sunday, February 7th between Peyton Manning’s Denver Broncos and Cam Newton’s Carolina Panthers... and rest assured, Bud Light will be present.
It’s estimated that Americans will spend over $4 billion gambling on the Super Bowl this week. Now get this, less than 3% will be legally wagered through casinos’ sports books in states where gambling is legal. That means around $120 million of $4 billion will be legally placed, so let’s focus there.
In 2003, the amount of legally placed wagers was approximately $71 million which climbed steadily until 2009. As you would expect, the amount dropped during the financial crisis but not as much as you might think. In 2006 legal wagers tallied $94 million, and in 2009 it came to $81 million. Last year, $116 million was legally wagered which has more than doubled since the mid-90’s when only about $55 million worth of bets were placed. While plenty of this money was likely lost, it's important to note that gambling winnings are taxable. Technically, they're supposed to be taxed whether the winnings are legal or illegal, but IRS agents probably have a hard time pinning down the winnings that are off the books.
According to CBS Sports, someone has actually bet over $600,000 on Carolina winning. Considering this is a legal bet through William Hill, if they win they're looking at some significant taxes. If they lose, of course, then they'll be out $600,000. Now if they had invested that money in a Roth IRA, based on Wes Moss' $1,000-Bucks-A-Month Rule, after age 62 this gambler could have comfortably drawn over $2,000 a month out of that account for the rest of their retirement. Sure, this gambler might hit it big if things go well for Carolina, but would you be willing to bet part of your retirement on a single game? Don't get us wrong, we certainly appreciate a good wager, but no matter how much of a die-hard fan you might be, we don't suggest you bet your retirement savings on your favorite football team.
Gaming experts say that nailing down the actual amount wagered on the Super Bowl is impossible but the point is, it's a huge amount. Yuuge! And most of the action is placed off the radar. Either in illegal books or in private pools. And this is just for the Super Bowl. Imagine the dollar amount for the whole season or across multiple sports. It’s an area that has potential to drive new revenue streams for organizations like the NFL. They have a goal of doubling revenue by 2027 (Wela covers this on What The Finance this week) this is an area they could stand to benefit from if they encouraged more states to allow for legal betting... and then facilitated some of the action themselves!