Let's Get It Started
March 22, 2017

It is Time to End the Prohibition on Sports Betting.

In 1919 Congress banned the manufacture, transportation and sale of intoxicating liquors with the ratification of the 18th Amendment. With no legal avenue to buy alcohol, those looking to catch a buzz resorted to illegal means. What followed? An increase in illegal production and sale of liquor (or “bootlegging”), the proliferation of speakeasies, and a rise in gang violence led by legendary organized crime figures like Al Capone and Lucky Luciano.

Prohibition drove otherwise law abiding citizens into the shadows of the criminal underworld just to have a drink. Today, federal gambling laws are doing the exact same thing to those taking part in the massive worldwide sports betting industry valued at up to $3 trillion. Rather than allowing bettors to wager legally through highly regulated casinos, the Professional and Amateur Sports Protection Act (PASPA) passed in 1992 forbids sports betting in the U.S. and drives money straight into the hands of bookmakers and shady offshore betting operations that are fronts for organized crime.

Take for example this year’s NCAA Men’s Basketball Tournament, currently under way in all it’s chaotic glory. According to the American Gaming Association, the leading casino industry trade group, an estimated $10.4 billion will be wagered on this year’s tournament games, with $10.1 billion of flowing through illegal offshore website sites and bookies. That bracket you filled out in your office pool like 40 million other Americans? Not a problem as long as it was free. Wagering on your busted bracket is technically illegal under PASPA.

While the NCAA Tournament encompasses 63 Games across three weekends, Americans wagered an estimated $4.7 billion on a single game in particular, Super Bowl 51. The AGA estimated that an astounding $4.5 billion of that total, or 97%, was wagered illegally. Factor in the dozens of other sports, hundreds of events, and thousands of games spread-out over the rest of the year and the AGA expects Americans to have wagered $154 billion on sports betting last year alone, nearly all of it illegally.

The numbers are truly staggering, as is the disconnect between current laws against sports betting compared to other types of legalized gambling in the U.S. Casino gaming, in various forms, is legal in 40 out of 50 States, including tribal lands that lie within a given state. Traditional sports wagering, however, is only legal in Nevada while Delaware allows a more limited form of legal sports betting (multi-game parlay bets on NFL games).
For those keeping score, that is 40 states with table games, slot machines, and/or bingo to 2 where you can bet against the spread. The state of New Jersey, passed an amendment to its constitution to allow sports betting, but is currently battling it out in the courts with the professional sports leagues and the NCAA who oppose it. Ironically, several leagues including the MLB, NBA, and NHL have invested in the recently embattled daily fantasy sports industry, which several states across the country now consider illegal gambling.

There are two arguments opponents of legalized sports betting often make. The first, it encourages gambling, which can have negative effects such as addiction. I previously mentioned about 154 billion reasons that prove the betting public is already feeling pretty “encouraged”. As for gambling addiction, yes, it is a very serious issue and to think otherwise is absurd, but the question becomes: who is more capable of identifying an addict and getting them the help they need? I’ll bet (no pun intended) on a highly regulated casino to identify the issue before the bookie or loan shark whose livelihood is based on said gambling problem.

The second argument is the threat to the integrity of the game. Research conducted by the AGA ahead of last year’s Super Bowl 50 shows that those making the integrity argument are in the minority. According to the AGA:

• 65 percent of Super Bowl viewers believe transparent, regulated wagering will either strengthen the integrity of games or have no impact on game outcomes.
• 72 percent of Super Bowl viewers believe allowing states to regulate sports betting will make it safer for consumers.
• 80 percent of Super Bowl viewers want to change current sports betting law.

Overwhelmingly, fans are in favor of pulling sports betting out of the shadows and into the mainstream. Moreover, with legalization comes regulation and the ability to better track betting patterns using new technologies that were not available when the federal ban was passed in 1992. Criminals looking to fix a game would have no more incentive than they currently have, but it would make it easier to spot and address suspicious activity. Additionally, in the states and tribal lands where casino gambling is legal, the infrastructure already exists for highly regulated sports betting locations. If an online option were to be considered, the state of New Jersey’s online poker website system is a great model for online sports betting to follow.

Perhaps the most important finding of AGA’s survey came from the 66% of Super Bowl viewers who believe states should decide whether or not to legalize sports betting. In the state of New Jersey, the voters amended their constitution to legalize betting, but were blocked based on a federal law that is doing more harm than good. Despite its best intentions, the law is funneling a massive source of potential tax revenue into a criminal black market that it has created.

Given the increasing popularity and scrutiny of daily fantasy sites, the increasing adoption of regulated, legal casino gaming, and a possible decision by the Supreme Court to hear New Jersey’s case, the time is ripe for a larger, more comprehensive discussion regarding legalized sports betting. It’s time for casino industry leaders, tribal leaders, law enforcement, and state and federal legislators to sit down and work together to find a common sense, practical way forward.

Legalization and regulation would create jobs, and billions in tax revenues for states that desperately need it, while potentially dealing a major blow to one of organized crime’s most valuable revenue streams. In the end, the statistics, fans, voters, and, in my humble opinion, common sense all point to the same outcome. It is time to end the prohibition of sports betting.

Read More