The Politics of a Booming U.S. Industry: Sports Gambling

From a Washington Post story by Olivier Knox headlined “Biden could step into debate on booming sports gambling”:

It’s not the standoff with Russia over Ukraine, the stubbornly high covid death toll or North Korea’s latest missile tests. But a little story out of Arizona last week caught my eye and made me ponder the uncertain politics of a booming U.S. industry: sports gambling, notably online.

President Biden could play a significant role in shaping its future, with potentially wide-ranging repercussions for the dozens of states that have embraced the practice — some to make up pandemic-era tax shortfalls — and others turning to it to lift public finances in the future.

White House press officials did not say whether Biden believed online sports gambling — set to make billions this year from a potential wagering pool of more than 100 million Americans — should be regulated at the federal level.

But New Jersey formally asked the Justice Department in June 2021 to confirm online gambling is legal. Congress has looked at the matter and could still decide to act. There was even a time when NFL Commissioner Roger Goodell asked lawmakers to do so to protect “the integrity of our sport.”

The story that grabbed me was this Arizona Republic piece from last week by Ryan Randazzo, who looked at how gamblers in the Grand Canyon state, home to 12 mobile sports books, had lost $51 million betting on sports in November. Overall, they have “wagered more than $1.2 billion on sports after three months of legal betting.”

The state collected about $3.2 million in fees for the month. That number would have been $1.8 million higher if not for the provision allowing sportsbooks to deduct free bets and promotions from their liability,” Ryan reported.

“Still, November’s fees to the state were substantially higher than September and October….

Growing market. State government potentially increasingly dependent on revenue. Little federal regulatory structure. Even if a couple million dollars for Arizona’s state government doesn’t sound like a lot of money, it has the makings of an interesting political story.

And if you’ve somehow escaped the flood of celebrity-packed advertisements for various online or mobile betting services — it may be easier to avoid presidential ads in New Hampshire every four years — those resources are, as Vice President Biden might have put it, “a big [honking] deal.”

My colleague Rick Maese surveyed the landscape in mid-January: “When the federal ban on sports wagering was rescinded in 2018, there was a sprint to the marketplace, with states eager to leap headfirst into the gambling business. And since then, there has been a steady trickle of new states opening their doors to gambling operators such as Caesars and MGM. Some 112 million Americans — more than a third of the population — can now legally wager on sports without leaving their couch….

Big and bigger

It’s big, Rick noted: “More than $87 billion has been legally wagered on sports since the Supreme Court struck down the law, according to industry site LegalSportsReport.com, and some 40 million Americans were expected to place bets on the NFL regular season that ended last weekend.”

It’s going to get bigger, Rick reported. “New York launched mobile betting last week. Bettors in three states, including Ohio, should be able to start placing wagers this year, joining 29 states where sports betting is already legal. While Florida continues to iron out legal wrinkles, efforts by lawmakers in Georgia, North Carolina and Massachusetts are expected to heat up. And the matter could finally go before California voters by the end of the year.”

There’s another wrinkle: gambling using cryptocurrencies, making it enormously more difficult for state regulators, leagues, and even betting facilitators to know where the money is coming from and to whom it is flowing. And cryptocurrencies are coming: Crypto.com is paying a reported $700 million to put its name on what used to be the Staples Center.

“The leagues are all in on sports betting,” Jane McManus, director of the Marist Center for Sports Communication, told The Daily 202. “Whereas five years ago Roger Goodell was lobbying Congress for regulation, the NFL recently sent out a press release to announce they would educate fans to bet responsibly.”

And, sure enough, the league runs ads during games urging fans “Stick to your game plan, always bet responsibly.”

But, McManus said, “in reality the league is also teaching fans to bet. These ad campaigns are functioning to change American attitudes and normalize betting. Without independent oversight, there is plenty of opportunity for revenue, but also for malfeasance.”

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