Wes Burns from BettingUSA.com writes about why Legalization is the best approach to sports betting
With sports betting legal or soon-to-be legal in more than half of US states, the horse has mostly left the barn on whether or not legalization is a good idea. Legal sports betting has all the momentum in its favor as lawmakers consider similar legislation in the remaining states.
Still, the debate continues. Even if legalization is largely inevitable at this point, some people raise valid points regarding the wisdom of proceeding down this path. Their concerns are legitimate, but legalization is still the best approach for addressing those concerns.
Sports Betting Will Continue Whether or Not It’s Legal
Sports betting is here to stay, whether we like it or not. Short of massive censorship and unconstitutional invasions of privacy, there is no way the government can stop people from betting on sports online, let alone in-person with neighborhood bookies.
Congress passed the Professional and Amateur Sports Protection Act (PASPA) in 1992 to prohibit sports betting everywhere in the United States except Nevada. The law was a failure in every regard until its repeal in 2018.
PASPA’s 26-year life coincided almost perfectly with the explosive growth of online sports betting in the United States. Rather than effectively stopping sports betting, PASPA oversaw the launch of the world’s first offshore betting sites, operations that began as hastily assembled call centers in Costa Rica and grew to become multi-billion-dollar organizations.
The futility of stopping sports betting is not an ironclad argument that the government should actively endorse the activity, but it does raise a valid follow-up point. Legalization brings sports betting out of the shadows and into the light of regulation.
Regulation provides numerous advantages:
- State and federal governments can tax sports betting revenue
- Regulators can monitor spending habits at the macro level to determine the financial impact of gambling on the populace
- Sportsbooks, sports leagues and law enforcement can work in tandem to identify suspicious betting patterns that may be indicative of corruption in sport
- Customers who are going to bet on sports regardless can now do so with sportsbooks that are reputable, licensed and subject to US law
We will discuss some of these issues in greater detail below, but the larger point is that if sports betting happens regardless of its legal status, the government might as well regulate it, tax it and provide consumer protection measures.
Legal Sports Betting Supports Responsible Gambling
Problem gambling is perhaps the most persuasive argument against legalization. Problem gambling is a very real and very disruptive disorder. It destroys lives, breaks apart families and may harm public health through missed work and criminal behavior.
However, prohibition is not the answer to problem gambling. Prohibition only pushes the activity underground to offshore providers who are not obligated by law to intervene if customers display signs of problem gambling (such as a sudden increase in spending).
If done correctly, legalization and regulation obligate sports betting operators to monitor spending habits, provide easy access to problem gambling resources and contribute a portion of revenue to state problem gambling programs.
In some states, the law requires licensed online sportsbooks to provide simple methods by which customers can set daily spending and deposit limits. Unregulated sportsbooks are under no such obligation and have little incentive to take any action that could decrease customer spend.
The counterargument to the above is that legalization lends legitimacy to sports betting, induces more people to bet on sports via advertising and makes it easier for bettors to fund their gambling accounts.
There is a glimmer of truth to all of those counterpoints. However, there is conflicting data about whether legalization increases problem gambling rates, even when accounting for online betting.
Thus, it is hard to justify the pursuit of an unenforceable betting ban. How effective it would be at reducing problem gambling is unclear. The smarter choice is to regulate sports betting, implement responsible gambling mandates and set aside funding for problem gambling resources.
Legalization Supports the Integrity of Sports
Any argument that contends legalization leads to corruption in sports is misguided. Regulation is the best way to protect the integrity of sports in the United States.
The reason is simple. Sports betting is ubiquitous, whether it is legal or illegal. When it is unlawful, gamblers visit local bookies or offshore betting sites that operate outside the confines of US law. Illegal operators are under no obligation to report suspicious betting patterns or verify customers’ identities to prevent access to coaches, players and other insiders.
Regulation addresses sports integrity head-on. In states with legal sports betting, the law requires operators to maintain records of all wagers placed and provide assistance to authorities investigating corruption.
State law also requires licensed mobile sportsbooks to confirm every customer’s identity to prevent access to insiders who could potentially throw a game after placing a bet.
The regulation of sports betting in the United States has made possible the launch of services that specialize in integrity. One such service, U.S. Integrity, collects data from multiple operators to monitor betting patterns, detect anomalies and even detect when referees veer away from their standard officiating behaviors.
Here’s U.S. Integrity in its own words:
“At U.S. Integrity, our goal is to help ensure that every sporting competition is fair and transparent. We partner with some of the largest professional sports leagues and collegiate conferences in the U.S., as well as licensed sports-betting operators and regulators, to ensure sports betting integrity in every play, every game, every sport.”
Legalization Generates Tax Revenue
For as long as sports betting remains illegal, the United States misses the opportunity to tax an activity many Americans already participate in every day. If sports betting is happening regardless of the law, we might as well regulate and tax it.
Sports betting is not a high margin activity, but it is a high-volume business that can generate significant tax dollars. According to the American Gaming Association, Americans bet $13 billion on sports via legal providers in 2019, the last year for which a full year’s data was available. Of that amount, the 14 states with legal sports betting in 2019 collected $118 million in tax revenue.
Tax revenue will only grow from there. Pennsylvania and New Jersey broke sports betting handle records multiple times throughout 2020. Other major markets such as California, New York, Florida, and Texas have yet to come online. The $118 million states collected in 2019 is just a preview of things to come should the legalization trend continue.