In 2022, it was illegal to gamble on sports in most of the United States. Today, you cannot check a score, watch a game, or get near a stadium without being flooded by ads encouraging you to bet. The New York Times recently published an excellent series of articles about the rise of the sports gambling industry in the United States, and the following are some of the key takeaways from their reports.
Gambling companies and sports leagues easily own over state lawmakers.
The impetus for the rise of sports betting was a 2018 Supreme Court opinion that legalised online betting. In turn, lobbyists in the sports betting industry threw massive parties, gave out millions in donations, and spent, spent, spent until they got lawmakers on their side. But their main arguments – which the lawmakers could then use to justify their decisions – were based on suspect data. These lobbyists promised lawmakers that their states would be inundated with tax revenue, but according to the Times, those numbers are not even close to accurate. Part of the blame is on the lawmakers themselves, who gave these gambling companies excessive tax exemptions. These exemptions, in turn, effectively subsidise the gambling companies to lure customers in with promises of free bets and to-good-to-be-profitable promotions. For example, The Times found that companies have paid at least eight universities to let them promote gambling on campus. In a deal between the betting company PointsBet and the University of Colorado Boulder, for example, each time someone downloads the PointsBet app and uses a special promotional code, the university pockets a $30 fee.
State regulators have often found themselves outmatched and overwhelmed.
The federal government doesn’t regulate sports betting. A Times survey of states that have legalized such betting found that the enforcement of rules has been haphazard, that punishments have tended to be light or non-existent and that regulators are counting on the industry to police itself.
The more people bet, the more states collect in taxes. While also seeking to protect consumers, regulators have the incentive to help gambling companies get up and running quickly. Some states let them begin operating before regulators complete comprehensive licensing reviews.
The sports-betting industry has been creative in devising ways to persuade people to keep betting even after they lose money, but tools to make it easier to quit — some run by gambling companies, others by states — do not always work. In Indiana, for example, people who sought the government’s help to prevent them from gambling found that they were still able to place bets. Dozens did so.