Legalized Sports Gambling? It’s About Time

By Ken Reed

The U.S. Supreme Court recently struck down a federal ban on sports gambling. My first thought was what took so long?

We can legally bet on soybean futures, the rise and fall of stocks, horse races, dog races, state lotteries, real estate investments, church bingo games, the roll of dice and various card games.

But not sporting events?

Americans love sports and a significant percentage of them like to bet on sporting events. Nearly two-thirds of Americans, and almost three-fourths of sports fans think sports wagering should be legal.

Prohibition clearly doesn’t work. The American Gaming Association estimates that $150 billion is currently wagered per year in the United States, up from $80 billion per year in 1999. Moreover, sports wagering is the fastest growing form of gambling today, thanks in large part to the proliferation of offshore sports books.

None of the arguments against legalized sports betting that I’ve seen hold much water.

Some argue that legalized sports gambling across the country will lead to more point-shaving scandals. The reality is legal, regulated sports books are a significant deterrent to point-shaving. Wagers on sporting events are closely monitored throughout Nevada, where sports gambling is already legal. Unusual betting activity is easily detected by the Nevada books and immediately reported to government authorities.

Legal sportsbooks also help protect gamblers from getting into the huge financial hole they can easily find themselves in with illegal bookies. In legal Nevada sports books, gamblers need to have cash up front, or deposited in sports book accounts, before wagering. Most illegal bookies allow gamblers free phone credit, no deposit required. In this scenario, many bettors get in trouble by “chasing” their losses (increasing the amount of wagers they make on credit, usually way beyond their means) in an attempt at making up previous losses.

Others believe legalized gambling would result in a substantial increase in gambling addicts. However, psychologists Igor Kusyszyn and Roxanne Rutter conducted a study and found that light gambling does not lead to heavy gambling. Moreover, the number of problem gamblers per capita in the United States vs. the United Kingdom and Australia (two countries where sports wagering is legal) is very similar.

Christine Reilly, executive director of the Institute for Research on Pathological Gambling and Related Disorders at Cambridge Health Alliance, a division of Harvard Medical School, says there is no evidence that problem gambling behavior has spiked in tandem with the rapid expansion of legalized gambling.

There are clear benefits to legalized sports gambling from a public good perspective. Replacing a $150 billion (some believe it’s closer to $500 billion) illegal sports wagering marketplace with legal systems will result in additional tax revenues for things like public education or parks and recreation. In California alone, State Assemblyman Adam Gray says “you could see tax revenue as high as a $100 million or $200 million a year to the state general fund if we authorize sports wagering.”

He said much of that revenue would be earmarked for schools and education.

That’s nice, but how about using sports gambling revenues for a Sports for All initiative in which recreation athletic facilities and youth and adult sports programs are funded? It would address our nation’s childhood obesity epidemic and increase national health rankings.

Tom Farrey, executive director of the Aspen Institute’s Sports & Society Program, suggests that sports gambling revenues be used in a similar way as they are in Norway (where sports gambling is legal): to fund community athletic facilities.

In fact, legalized sports gambling revenues could turn the sports funding pyramid on its head. In the United States, the majority of government money for sports goes to elite athletic organizations – pro sports and big-time college athletic programs — not average citizens. For example, professional sports franchises, headed by super-wealthy owners, benefit greatly from publicly-financed stadiums and arenas.

“There are fundamental problems in the provision of sports and recreation opportunities in our country,” says Farrey. “This is a huge chance to get our system right.”

In the end, here’s what we’re left with: If we all accept that gambling on sports is a fact of life that can’t be ignored or wished away, then the question becomes whether it is better to legalize it, regulate it, tax it, and actively police it, or leave it underground where it remains murkier and harder to detect and control.

I think the answer is clear.

— Ken Reed is sports policy director for League of Fans, a sports reform project. He is the author of Ego vs. Soul in Sports and How We Can Save Sports.