The odds on the United States’ gambling landscape changing beyond recognition are looking pretty good this week after the state of New Jersey won a landmark ruling from the U.S. Supreme Court. The Professional and Amateur Sports Protection Act (PASPA), a 25-year-old law that forced states to keep sports gambling bans on the books, was declared unconstitutional, paving the way for other states to join Nevada in allowing people to place bets on individual games. While the case was brought by New Jersey, it had the support of more than a dozen other states, both red and blue.

Mississippi, West Virginia, Pennsylvania and New York have all indicated that they will be making swift moves to begin to allow sports gambling now that, as one sports law expert put it, the Supreme Court ruling has “open[ed] up the floodgates.”

Vast potential profits

It’s not hard to see why states are clamoring to take advantage of the opportunities that legalized sports betting can bring. Most obviously, despite the cliché that “the house always wins” in gambling, the state can also benefit from the industry through collecting considerable tax revenue. Eilers & Krejcik Gaming, a market research company that tracks state-by-state gambling legislation, has said that this newly-minted market could be worth as much as $6 billion.

And if all 50 states started sports betting operations, the sector could be worth $7.1 billion to $15.8 billion, resulting in what the firm’s managing director described as a “financial windfall for sports betting operators, sports leagues and media and state governments alike.”

Scarred by the 1919 Black Sox scandal, which saw a handful of unscrupulous players throw the World Series, America’s major sports leagues were historically reluctant to endorse sports betting due to fears that it could incentivize athletes to fix games.

They now, however, are gradually coming around to the idea that gambling could also galvanize interest in sports from new quarters. Major League Baseball’s (MLB) commissioner Rob Manfred has said that it is “incumbent” on him to revisit the league’s official opposition to legalized gambling. Meanwhile, the National Basketball Association’s (NBA) commissioner Adam Silver noted that he had warmed up to sports betting after observing legal wagering in Europe and seeing how it added an extra layer to fans’ enjoyment of their favorite game.

Despite all this enthusiasm, state and federal governments still have their work cut out for them, as they have to nail down exactly what legalized sports betting will look like: a great many details still need to be ironed out and myriad issues need to be considered. For one, it’s unclear whether Congress will pass a federal regulatory framework for the nascent sports betting industry or leave this up to the states, each of which may have very different visions for the gambling industry they wish to enact. It’s also unclear what role professional sports leagues may have in regulating betting and what steps they may need to take in order to protect the integrity of their respective games.

Europe as an inspiration

But as federal and state governments navigate this new sector, they can draw inspiration from a number of role models—not just Nevada, but across the Atlantic, where two tiny European territories have carved a niche for themselves in this area.

The British Overseas Territory of Gibraltar, for example, is recognized as the online gambling equivalent of Las Vegas. No matter where in the world you’re placing a bet, there’s a better than 50/50 chance that the bookie resides on The Rock. Some 30 gaming companies have their base there and control 60 percent of the gambling market, generating 3,252 jobs and an estimated €30 billion a year for the narrow peninsula. This, of course, may all change when Britain finally withdraws from the European Union in March 2019.

Depending on what kind of deal the UK and the EU manage to hammer out, Gibraltar may be left without access to other European economies it currently enjoys, placing its thriving gambling industry in jeopardy.

However, Gibraltar’s loss would be Malta’s gain. The EU’s smallest member state also has developed a robust betting industry, in part due to its government’s continuous efforts to facilitate a sector that has become increasingly important to its economy. The industry’s regulator, the Malta Gaming Authority (MGA), has gained a reputation for being at the cutting edge of gambling regulation—from strengthening player protection by creating a dedicated player support unit to testing how blockchain and cryptocurrency technology can be applied and regulated in the sector.

Those hot topics, which first became well known for their possible applications in the finance industry, could also play an important role in keeping gaming safe and fair. So-called “smart contracts," for example, could swiftly and automatically pay out winnings according to a publicly visible and verifiable algorithm.

The betting sector is a complex and swiftly evolving one, and it requires the sort of granular level of attention to detail that Gibraltar and Malta’s regulators have demonstrated. And, while many states will be eager to rush into allowing legal bets, they need to prepare for the full range of consequences legalizing sports betting will bring.