Legal Sports Gambling Must Be Regulated and Policed More Stringently

By Ken Reed

I’m a proponent of legalized sports gambling in the United States. I think it’s a better alternative than the shady sports gambling world we had for decades prior in this country.

That said, I am strongly against the excessive – and in some cases, dangerous — ads and promotions for legal sports gambling companies we are constantly bombarded with today.

But first, why should sports gambling be legal? To start, I would answer that question with this question: How does it make sense to allow citizens the freedom to bet on soybean futures, the rise and fall of stocks, horse races, dog races, state lotteries, real estate investments, church bingo games, and — in numerous states — poker, craps, and other casino games, but not sports?

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.

Until the Supreme Court struck down a federal ban on sports gambling in May of 2018, sports betting in the United States was controlled by illegal neighborhood sports bookies, gambling operations driven by crime syndicates and, more recently, offshore sports books with questionable ethics and rules.

The American Gaming Association estimates that Americans wagered $150 billion illegally on sports in 2018 (the year the Supreme Court tossed the ban on sports wagering), up from $80 billion per year in 1999.

Prohibition clearly wasn’t working.

In an interview I did with veteran Sports Illustrated journalist Frank Deford before the Supreme Court overturned the ban on sports gambling and before he passed away, he told me this:

“The reality is that gambling is here to stay. States already can have lotteries and horse racing. I just don’t see how you can run a society by saying it’s okay to have lotteries, it’s okay to have casinos, it’s okay to have this particular form of gambling, whatever it is, but only in the state of Nevada can you bet on sports.

“I’m very much a realist when it comes to gambling. I’ve been in London so many times where betting on sports is legal and having sports betting parlors doesn’t seem to be destroying the British civilization there.”

Here are a few additional reasons why I believe legalized sports gambling is a better alternative to the underground sports betting world we had prior to May 2018.

· The chances for point-shaving scandals are less with legal, regulated sports books. Wagers with legal sports books are closely monitored and unusual betting activity (e.g., an unusually large bet on a particular team) is easily detected by the books and immediately reported to government authorities. It’s important to realize that nobody wants clean sporting events more than sports books. Wagers at illegal and offshore sports books are much harder for government entities to monitor.

· It’s harder for gamblers to get into a huge financial hole with legal sports books than with illegal bookies. With legal sports books, gamblers must deposit money into their accounts before wagering. Most illegal bookies allow bettors free phone credit, no deposit required. In this scenario, many bettors get in trouble by “chasing” their losses (increasing the size of their wagers on credit, often way beyond their means) in an effort to make up previous losses. When that doesn’t happen, they have a huge debt to pay off. (Unfortunately, with some legal sports betting operations today, gamblers are being allowed to make deposits with credit cards. That needs to stop. More on this in a bit.)

· The evidence isn’t that strong that legalized sports gambling leads to more problem gamblers. In fact, the number of problem gamblers per capita in the United States vs. the United Kingdom and Australia (two countries where sports wagering has long been legal) is very similar. Moreover, psychologists Igor Kusyszyn and Roxanne Rutter conducted a study and found that light gambling does not lead to heavy gambling. And 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.

· Finally, there can be clear benefits to legalized sports gambling from a public good perspective. Replacing $150 billion (some believe it was closer to $500 billion) in illegal sports wagering with legal sports wagering is resulting in additional tax revenues for things like public education and parks and recreation.

Now, all that said, there are significant problems with the way the legalized sports gambling system is operating in the United States today. Following the Supreme Court’s decision, states began legalizing sports gambling in a hodgepodge way. Each state implemented different rules, regulations, and restrictions, resulting in different problems in different states. As a result, the sports gambling industry is currently in a Wild, Wild West phase of development.

Ideally, every state would have the same rules and regulations when it comes to sports gambling, but that’s not likely to happen as states’ rights advocates will push back hard on that. At any rate, in order for legalized sports gambling to work most effectively for all stakeholders, it must be effectively and efficiently regulated, taxed, and policed.

To that end, a lot more guardrails need to be implemented. A good place to start is to examine what has worked and not worked in Nevada and the numerous countries across the glove that have had legal sports gambling for decades. Nevada and countries like the United Kingdom (legalized sports gambling since 1961), Australia, Spain and Italy, where sports gambling has been legal longer than in the United States, have much more stringent rules and regulations than the majority of states that have implemented legalized sports gambling in the United States.

· The advertising and promotion practices of legal sports books need to be regulated much more strongly than what is happening today. Promotions like “free bet” offers should be banned because they entice neophyte betters, especially younger people, with “easy money” messages. Free bets, and similar promotions, are banned in countries that have had legalized sports gambling for a long time. Legal marijuana companies in the United States aren’t allowed to offer “free joints” and legal sports books shouldn’t be allowed to offer free bets.

There currently are no rules or regulations regarding advertising and promotions by the sports betting industry at the federal level. States regulate how sportsbooks can operate, but some states give companies wide latitude when it comes to advertising and promotions. This is contrary to the constraints placed on other industries where there is the potential for addiction, like tobacco, alcohol and marijuana.

“I never imagined it would get to this point,” says New Jersey Assemblyman Ralph Caputo, who along with colleagues made New Jersey the first state outside of Nevada to legalize online sports betting.

“I wanted them to be successful, but not at the cost of negative effects on our public and youth. These ads have gotten really insane. You can’t turn on the TV without seeing them.”

· As is the case in the U,K., sports betting ads should be banned or severely restricted during broadcasts of sporting events. Millions of minors watch these sporting events. Furthermore, sports betting ads shouldn’t be allowed in venues where sporting events take place. The ubiquitous sports betting ads we see during games today are not only annoying they are also potentially dangerous for vulnerable parts of society.

· Colleges and universities should absolutely not be in the business of promoting sports gambling. That simply doesn’t fit with the mission of higher education. Nevertheless, numerous colleges and universities have cut deals with sports gambling companies to promote sports gambling on campus. That practice needs to stop.

· There needs to be tougher penalties for sports gambling operators who break established rules and regulations. To date, rule-breaking and regulation-bending by sports gambling companies has been virtually ignored by state government entities. There has been only light enforcement. For example, in most jurisdictions, sports gambling customers aren’t supposed to be able to use credit cards to fund their betting accounts. However, in some cases, and in some states, sports betting companies have been allowing customers to use credit cards or interest-free loans to fund their accounts. States shouldn’t be allowing debt for gambling purposes.

· There should be a national self-exclusion list for citizens who want to block themselves from online or snail mail sports gambling solicitations, for whatever reason, including concerns they may be prone to problem gambling behavior.

· Unbelievably, some states are allowing sports betting operations to deduct their advertising and promotion expenses on their taxes. That can’t be allowed to happen. American taxpayers shouldn’t be put in the position of helping to promote gambling.

· State governments should require that legal sports gambling operations allot more money for problem gambling initiatives as a condition of being licensed to operate. Currently, the industry funds – at a pittance level – a self-run “responsible-gambling” initiative. In addition, there needs to be a public health initiative established for addressing the potential risks of sports gambling.

In the end, here’s what we’re left with: If we 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. Sports gambling should be legal. However, it also must be effectively regulated and actively policed in order to protect consumers.

— Ken Reed, Sports Policy Director, League of Fans