America’s Bad Bet on Sports Gambling

From a story on compactmag.com by Christopher Caldwell headlined “America’s Bad Bet on Sports Gambling”:

Central Michigan’s Chippewas faced the mighty Cowboys of Oklahoma State to open the college football season on Thursday night. Their last meeting, in 2016, produced one of the most heart-stopping endings in recent college football history. Down 27-24, with no time left on the clock, quarterback Cooper Rush completed a pass to Jesse Kroll at the 9-yard-line, where he was immediately smothered by a tackler. But not before he had flung a quick lateral to junior wide receiver Corey Willis, who began a footrace to the end zone alongside an Oklahoma State defender, wrestling his way along the goal line, falling sideways for a touchdown and a 30-27 victory, as the crowd in Stillwater looked on in shock. It was an upset—the Chippewas’ first win against a ranked opponent since the George H.W. Bush administration. It probably put Rush (now a Dallas Cowboy) in the National Football League.

But apparently it wasn’t up to scratch, as football thrills go.

For years now, anyone who watches sports on TV or the internet has been bombarded with advertisements that insist you aren’t really enjoying the game unless you are betting money on it. FanDuel, an online sports betting firm, promises that you can “make every moment of the game mean more” by laying a so-called prop bet on whether Tony Gonsolin’s next pitch will be a strike, or Jordan Spieth will birdie the 11th, or Rhamondre Stevenson will gain 30 yards or more in the second quarter. DraftKings, a decade-old sports-betting concern now moving into casino gambling, also has a bunch of products that will help you, in its odd phrase, “celebrate all the moments out there.” Back in the 2016 football season, many “moments” beside that Central Michigan game were ruined for lack of a multinational corporation to place bets with. How could any fan possibly have enjoyed the Patriots’ 25-point fourth-quarter comeback against the Falcons if he didn’t have “skin in the game”?

The floodgates have opened since then. In 2018, the Supreme Court decision in Murphy v. NCAA overturned a law limiting sports betting to four states that had had it before. Now other states have rushed to legalize it, three dozen as of this summer. The NFL and Major League Baseball used to raise moral concerns about the influence of gambling on their sports. They used to suspend players for being on the premises of an establishment that offered gambling. But now they have entered into partnerships with bookmakers. The New Orleans Superdome has been renamed Caesars Superdome, after the Las Vegas casino brand. The logo of the gambling corporation MGM is painted across the middle of Fenway Park’s storied left-field wall. Athletes with a particular reputation for continence and probity—Drew Brees, Peyton and Eli Manning, Wayne Gretzky—now anchor TV ads for sports-gambling products. College sports weren’t left behind. So when the 18- and 19-year-old Chippewas came back to Stillwater Thursday night, they were carrying not only their school pride, but also the hopes of thousands of online wagerers.

There is enormous potential for profit where on-field heroics, verifiable statistics, and gambling addiction meet sophisticated computer algorithms. The American Gaming Association says $58 billion was wagered on sports last year. Such sums are putting massive pressure on sports, politics, and even journalism.

Before sports betting took off, the sociologist Natasha Dow Schüll, in her groundbreaking 2012 book, Addiction by Design, described the way big casinos engineer their games to make them inconvenient to exit. Internet-age slot machines “smooth” the experience; there is less inserting of money and pulling of levers. On an old one-armed bandit you could play 300 hands an hour. Now you can play 1,200.

Gambling companies are following a Costco model of profiting from volume instead of price, Schüll believes. But they are doing something else, too. They are eliminating the pauses in which a self-reflective person might ask: “Why the hell am I doing this?”

This is very much in harmony with contemporary tech life. When you finish listening to or watching something on YouTube or Spotify or Netflix, the app doesn’t just let you go your own way. It starts a new activity that you can exit only through a fresh act of will. Innovative apps and interfaces are presented as ways of “democratizing” this or that, or of “breaking down borders.” The message of Robinhood and other investment apps is that your kitchen table is just as appropriate a place for buying and selling stocks as the floor of the New York Stock Exchange. A British legislator resigned this spring when he was discovered watching pornography on his cell phone on the floor of the House of Commons. And now your bed, in the moments after your wife has fallen asleep, is just as appropriate a venue as Caesars Palace for putting $100 on the Red Sox to win. There is no such thing anymore as the wrong time or place.

“In its perverse way, gambling is the purest of all businesses.”

For the past half-century there has been a belief—unique in American history—that gambling is a good way for the state to raise revenue and create jobs. Clinton-era New Democrat governors like Zell Miller of Georgia and Ed Rendell of Pennsylvania discovered that if you earmarked for “education” the tax receipts from a new money-generating scheme, voters would be almost indifferent to what the scheme was. That is how most of the country’s slot resorts and riverboat gambling parlors got built.

But the revenue always fell a bit short of what was promised, and the early reports about sports betting show the states’ take to be quite lame. The Arizona Mirror reported in May that, over the preceding six months, $2.8 billion in bets had been made in the state, bringing $225 million in earnings to sports teams and gambling dens, and $8.5 million into the state’s coffers. And in this age of stratification, $8 million dollars is pretty much nothing. In 2019 there were 1,456,336 households in the United States with more than $10 million in net worth, according to the Federal Reserve’s Survey of Consumer Finances.

When the state of Kansas passed sports gambling in May, it dedicated $5 million of the anticipated revenue to attract professional sports teams in general — and in particular to lure the Kansas City Chiefs, who play in Arrowhead Stadium in Missouri, across State Line Road into Kansas. Again, in the context of multinational corporations, this is like a kid selling his little red wagon to keep the bank from foreclosing on Pop. We will leave aside that using government revenues to bribe businesses into moving across town is the virtual definition of a zero-sum game.

The boosterish American Gaming Association claims sports gambling has produced $1.3 billion in local taxes since 2018. Great. But President Biden conjured a thousand times that in “emergency” spending in his first month in office. And jobs? Well, these are virtual businesses, matters of trademarks and accountants and intellectual property lawyers. You don’t need construction workers, because an online “sports book” doesn’t have a building. It doesn’t really even have a product.

In its perverse way, gambling is the purest of all businesses. It uses an arbitrary event to redistribute money. It could be a harmless business, over the long term, except for two problems: the house and the addict.

The house is the gambling establishment, which takes a cut. If you and your friend Joe are betting $10 each over who is going to win the Mets-Braves game, you have a pool of $20, and the right guesser wins it. As long as you aren’t betting all your money you can gamble with your friend Joe forever. It can be your hobby. But if you are betting at a casino, or on an online sports book, the house must take something for its pains. Let’s say it’s a dollar on a $10 bet. Now you and Joe are each betting $10 over a pool of $18. This is a totally different kind of transaction. Now you can’t win over the long term. Carried out with sufficient frequency, this is an activity capable of bankrupting both of you.

And any kind of government gambling program to “do good” requires a house. It is out of the house profits that all the taxes must come for the education that the state has promised voters. (Oh, they’ll get an education, all right!) The more you follow through on your education-money promise, the more you screw the gamblers to whom you claim to be offering innocent fun. The more efficiently you want to raise gambling money, the more you are drawn into outright partnership with the multinational corporations skilled at that line of work. And this becomes a special difficulty because of the second problem with gambling.

Gambling is, according to the fifth edition of the Diagnostic and Statistical Manual of Mental Disorders, addictive. Estimates are that about 2 percent of the people who do it wind up in extraordinary trouble. This spring, I sat in a sports bar in King of Prussia, Penn., with a former gambler who had opened his laptop to explain how betting sites work. It was a slow sports day, and suddenly there popped up on his screen a solicitation to bet on Argentina’s “B” Soccer league. “If you’re sitting here in the dark on a beautiful Saturday afternoon placing prop bets on the Argentine B league,” he said, “I don’t think you need the DSM-V to tell you what the problem is.”

Sports leagues go to great lengths to fudge the addictiveness of their new product. For the past year the NFL has been airing, in collaboration with the National Council on Problem Gaming, an ad in which former 49ers head coach Steve Mariucci chalks out on a blackboard:

SET YOUR LIMITS. STICK TO THEM
ALWAYS TRACK YOUR BETS
ONLY BET WHAT YOU CAN AFFORD

The league can pretend it is dealing not with an addiction but with a simple problem of disobedience. But that won’t lessen the social and criminal problems that will arise inevitably from the product the league itself has helped develop.

“Sports gambling … has the look of a corporate cause masquerading as a popular cause.”

You can see an element of bad faith and guilty conscience among those state lawmakers who open the door to sports betting. In the latest major state to legalize it, Massachusetts, there was skepticism in the state Senate, and its new law has some admirable features as a result. It bans making bets with credit cards, for instance. But it has one exceedingly weird feature. The two chambers deadlocked over college sports. The upper chamber worried about rinky-dink athletic programs getting corrupted by big wagerers. To be a bit less euphemistic, they were worried about thrown games. Of course the senators were right to worry: If Americans will bet on the Argentine B League, they will bet on Division II college basketball. State representatives’ attitude, by contrast, was: C’mon, man! March Madness! The Brackets! So the two chambers arrived at a compromise: Bets on colleges would be acceptable—but not on colleges in Massachusetts … except during March Madness, when in-state bets become okay.

The law puts one in mind of the tergiversation about slavery in the US Constitution: The rationale is as easy to understand as it is impossible to avow. The optimal state gambling program involves in-state companies profiting off of (and undermining the families and communities of) out-of-state bettors. But betting threatens to damage college education, and anything that does that is going to threaten university-rich Massachusetts more than its neighbors. If that’s not the problem, then why the hemming and hawing? Massachusetts college students and athletes are mostly of legal age—why not let them get in on the “fun” that advertisers and politicians keep insisting that sports betting will provide?

Stop Predatory Gambling, a national foundation led by former Massachusetts legislative aide Les Bernal, has published a list called the Hypocrite Hall of Fame. It doesn’t accuse gambling supporters of loose morals—on the contrary. It shows that, of the most prominent gambling advocates in the Bay State, virtually none gambles himself.

Sports gambling, in short, doesn’t have the look of a popular cause. It has the look of a corporate cause masquerading as a popular cause. This spring, noting that betting receipts in Indiana had risen by 62 percent in the past year, Indianapolis Star sportswriter Gregg Doyel speculated that perhaps it had something to do with all those QR codes offering free bets at various casinos. “Now Caesars has a direct line into your phone,” Doyel wrote, “but what could possibly go wrong?”

Indeed, those who follow the economics of sports betting closely have begun to suggest that we may not yet fully understand what kind of business empire the industry is consolidating. It has something to do with data. TheAmerican Prospect ran a series last spring called “Rollups,” dedicated to the proposition that a lot of technologies nowadays get monopolized before ordinary citizens have even heard of them. In one installment dedicated to big data and sports betting, Ravi Naik, an Oxford expert in data law, noted ways that big companies kept a grip on their clientele. “Even if you recover from a gambling disorder,” Naik said, “your shadow profile held by data brokers will always have you labeled as an addict and companies will use it against you.”

For now, online sports betting has a structural problem: It is a market that burns out its best customers, who are lost when they go bankrupt or start attending Gamblers Anonymous. Consequently new customers must constantly be groomed and recruited. This builds up resistance among parents. It also requires that gambling corporations make tremendous expenditures on advertising and marketing. The experience of certain first-mover casino states, like Connecticut, which saw huge profits shrink or even dry up as soon as their neighbors legalized casino gambling, too, is common across different forms of gambling. Sports betting may be profitable as a monopoly, but not as a competitive market.

That is why the most disturbing aspect of sports betting is the collusion of the power structures defending it. The industry requires close ties between corporations, politicians, media, and sports leagues, ties of a seemingly new kind. Of course, there is the usual corporate-government revolving door. Former Massachusetts senatorial candidate Martha Coakley went to work at DraftKings. Then-President Donald Trump invited sports-gambling impresario Dave Portnoy of Barstool Sports to the White House. (Perhaps due to the ex-casino mogul Trump’s lock on Republican affections, sports betting is one of the few projects of the Washington establishment that meets little populist opposition.)

But other, more novel relationships have developed. The media have a strong interest in betting. The Boston Globe and the Boston Red Sox share an owner. CBS has William Hill as its “official sports betting partner.” The gambling analyst and former gambler Harry Levant has written eloquently of how sports leagues have learned to market their proprietary statistics and their proprietary telecasts to make constant prop bets possible.

Are sports and sports betting “complementary” goods (enhancing one another, like red wine and steak) or “substitute” goods (competing with one another, like red wine and public speaking)? The leagues now claim the former. But this is an outright falsehood. All you had to do to realize it was to tune in the Central Michigan–Oklahoma State game on Thursday, which brought redemption for the Cowboys after six years. People were still talking about the end to the 2016 game; no one was talking about what happened to his betting account that afternoon six years ago. College football, like most things, turns out to be for people who care about it, not for people who wish they were doing something else. The best kind of skin to have in the game is the game.

Christopher Caldwell is a Compact columnist, a contributing editor of the Claremont Review of Books, and the author, most recently, of The Age of Entitlement: America Since the Sixties.

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