Parlays and Poverty: The Rise of Sports Gambling

Sports gambling, or sports betting, has quickly become one of the favorite pastimes of college students across the country. The rise of sports gambling in the United States is a relatively new phenomenon, and the long-term effects of its legalization are yet to be fully examined. However, the US federal government should keep sports gambling legal while also putting guardrails in place to protect citizens from developing a gambling addiction.

Sports gambling is the act of betting money on the outcome of a game or the outcome of a player’s performance. Using expert analytics, a sportsbook sets lines, or the odds that a team will win or lose based on their ability relative to other teams. The payout for each bet differs according to the line set by the sportsbook; for instance, the gambler has to bet more money when wagering on a better team than a worse one. 

The past five years have seen an unprecedented boom in America’s sports betting industry: Nearly 20 percent of US adults reported betting on sports in the past year. This boom can be explained by the 2018 Supreme Court decisionMurphy v. NCAA. In this case, the Court partially struck down the Professional and Amateur Sports Protection Act (PASPA), a 1992 law that banned sports gambling nationwide. The Court ruled that this act violated the 10th Amendment of the US Constitution by exerting federal influence over the regulation of state-sponsored activities. 

The decision spurred sports gambling lobbies into action. The lobbyists for these largely profitable enterprises had an extremely easy sell to politicians at the state level. They presented politicians with data about the possible tax revenue generated by the legalization of sports gambling in their respective states. However, these tax revenue numbers did not account for the tax concessions that these politicians would later make to sports gambling industry giants. By using scare tactics and warning politicians of an amorphous underground sports betting industry, lobbyists pressured legislators into keeping tax rates on sports gambling low. As a result of these lobbying efforts, 33 states and the District of Columbia now have some form of legalized sports betting. 

As more and more states follow, sports gambling companies have jumped on the opportunity to maximize profits. Two of the largest companies in the sports gambling industry, FanDuel and DraftKings, began to shift their business model to account for state-level legalization efforts. FanDuel and DraftKings previously focused on fantasy teams creation, where users assemble a team of real-life athletes and then place bets on their performance, which is determined by how well each player does in actual games. However, after Murphy, these industry giants turned to sports gambling. With people being able to bet on the real result of games instead of aggregated player performances, these companies saw an explosion in revenue. 

As sports gambling sweeps across the nation, the debate over its legalization has come to a head. On the one hand, some experts argue that legalization has not produced a lateral shift of consumers from illegal to legal markets. Instead, it has increased access to sports gambling, creating an entirely new user base that would not have otherwise participated in gambling. In doing so, it has expanded the scope of people affected by the possibly negative health outcomes gambling creates for citizens; much like the arguments against cocaine, alcohol, and other drugs, lawmakers should not be encouraging an activity that they know has a negative, long-term impact on their constituents.

However, the government often allows citizens to participate in detrimental behavior. Penalizing people for sports gambling would be an overreach into citizens’ private lives. Thus, the US government should regulate the industry by implementing more barriers to participation and imposing taxes, using the funds generated via taxation to combat gambling addiction. For example, alcohol is addictive and harmful to people’s health, yet attempts to make it illegal were unsuccessful, as seen with the failure of the Prohibition amendments. Since then, the government has made the best of a bad situation by regulating the sale and production of alcoholic beverages as well as collecting taxes to reinvest in citizens. It should take a similar approach to sports gambling.

Another argument in favor of legalization is that Americans already have access to sports gambling markets via international bookies. VPNs allow users to access UK markets without facing any consequences. Thus, once again, it makes more sense for states to regulate the industry, rather than force people to use backdoor ways to gamble. States would also earn tax revenue from sports gambling companies, further incentivizing legalization. 

As the United States weighs the pros and cons of legalization, the United Kingdom, which has legalized sports gambling, provides valuable insight. Reports from the United Kingdom indicate that a startling 60 percent of winnings come from the top 5 percent of users. These reports also show that 8 percent of suicides in the United Kingdom are related to gambling debt. It is undeniable that the gambling industry employs predatory strategies to keep users hooked even as they lose money. Gambling entities have a financial incentive to keep addicts using the platform, which is diametrically opposed to a government’s role to protect its citizens. 

As a result, the British government has proposed some new safeguards for sports gambling that could provide an example for future US policy. The United Kingdom is considering imposing harsher checks on users who are under 18—of which there are around 36,000. Lawmakers might also implement an affordability check for users, which is a mechanism to ensure that users have the funds to be gambling—it is often the case that people take out loans, plunging them further into debt. In addition, the United Kingdom intends to cut down on gambling advertisement, weighing a provision that would prohibit Premier League soccer clubs from listing gambling sponsors on the front of their jerseys. 

These possible guardrails could serve as a model for future US policies aimed at curbing the addiction problem endemic to the sports gambling industry while still legalizing the activity. Ultimately, people should be able to sports gamble, just as they should be able to drink alcohol; however, the state should also provide resources to prevent and help those struggling with gambling addictions.

Sports gambling will continue to grow in the United States, and there is no way to stop it from accruing users along the way. However, the government has a responsibility to its citizens to at the very least control the spread of the industry. By providing safety nets such as loss caps and affordability checks, the government could help remedy the gambling addiction that comes with the expansion of the sports betting industry.