Sports Gambling Should Be Legal
Approximately how much money do you think is wagered on the Super Bowl each year? 100 Million? Would $1 billion surprise you? How about $5 billion? If you're like most football fans, you would not have guessed that bettors at casinos, illegal books, and office pools altogether wager over $8 billion per year on just one game.
Even if they don't realize it, most sports fans come into contact with gambling information on a regular basis. When sportswriters for newspapers or other media outlets talk about favorites and projected point differences, they've obtained that information from Vegas' oddsmakers. Many of the analysts' picks on popular TV networks are based on what the oddsmakers say. Gambling is a crucial part of sports' larger infrastructure, especially for football.
Just how big is the sports gambling industry? The legal side of the industry is large, with about $4 billion bet in Las Vegas annually (almost half of that is on football). The illegal side, however, dwarfs its sanctioned counterpart: between $80 billion and $380 billion per year is wagered through offshore/online books, office pools, and local bookmakers, according to The Washington Post. Some estimates put the figure at closer to $500 billion. Sports betting accounts for 13% of the humongous global gambling market. The fastest growing segment of sports betting is online, where gross win (i.e. the amount the book wins in pure profit) has doubled in the past 3 years.
These are the facts, the starting point for considering whether sports gambling should be legal. What these numbers make clear is that the industry will persist, and likely thrive, even under moralistic legislation. There is simply too much money to be made for sports gambling to disappear.
The question then becomes, "What are the costs and benefits of legality and illegality?" Before I assess these, however, I'd like to briefly address the logic in the current legislation on sports gambling and fantasy sports. This logic has transmuted into the conventional wisdom for many sports fans.
Under the 2006 Unlawful Internet Gambling Enforcement Act (UIGEA), fantasy sports are exempt from the definition of a "bet" or "wager" because they require a certain level of skill. Fantasy promoters tout this exemption as the green light for their entire industry. They are wrong to do so, since state laws vary on the degree of chance necessary to render a fantasy game illegal. In other words, the UIGEA does not protect pay-to-play fantasy sports companies without qualification; their games must meet specific requirements. But the bigger issue here is the law's implication that sports gambling does not call for skill in the same way fantasy does.
Fantasy sports and sports gambling results are, in fact, commensurate with skill. The Department of Justice and NFL have argued as much. If I have skill as a fantasy player, I'll know who to draft, when to draft him, and why. If I have skill as a sports bettor (a handicapper), I'll be able to find betting lines with positive expected value. With enough wit and dedication, I could make money (or at least break even) over the long term. There are opportunities in sports gambling that appear more like trading stocks than picking winners. Identifying these opportunities and executing on them takes skill and, just like in fantasy football, will yield positive results.
Understanding the specious distinction between fantasy sports and sports gambling, let us turn to the costs and benefits of widespread legalization versus the status quo. Right now, there are only four states where sports betting is legal (Nevada, Oregon, Delaware, Montana); New Jersey is fighting a battle in court to win legality and help its sluggish economy and weakened casino industry. Professional sports leagues spend millions of dollars every year lobbying against legalized betting. In November 2014, however, NBA Commissioner Adam Silver supported a federal framework to allow betting on pro sports.
If legalized, sports betting immediately gives states an additional revenue stream. Reuters estimated that New Jersey could see $10 billion of the American gambling market. Phyllis Kahn, a member of the Minnesota House of Representatives, proposed a bill to use legal sports betting to help her state. By boosting the economy, creating taxable revenues, and subsidizing the costs of expensive new stadiums, sports betting is a clear financial win for states.
But the states aren't the only ones who benefit. The fan experience improves with the legalization of sports betting. With little oversight, the financially powerful gambling industry can do a lot of harm to its patrons and the sports it covers. Offshore books are notorious for their fraud and terrible customer service. As California State Senator Roderick Wright summarizes nicely, "This process gives bettors assurances that they are on a fair playing field with proper legal recourse. It also allows the state to bring in millions—in the long run, billions—that would have otherwise gone to those engaged in criminal enterprise." States win; consumers win.
The most common counterargument involves the alleged social costs of additional gambling outlets. According to opponents of legalized sports gambling, problem gamblers (i.e. those gambling compulsively or otherwise to their own detriment) will jump on these opportunities immediately, hurting themselves, their families, and their communities. Yet common sense suggests that anyone with a gambling problem has already found their way onto one of the hundreds of online sportsbooks. Legalization will not exacerbate this problem; if anything, it will allow for more oversight and less stigma for those in need of help.
With the football season fast approaching, you will see spreads, favorites, and propositions all over your favorite media. These are the shadows of a massive sports gambling industry that has gone untapped by the American government. It's time for states to reap the benefits of enterprising sports fans and for fans to enjoy the comfort of legality and regulation.