By Jared Gans
The estimated range of illegal sports betting in the United States is anywhere from 80 to 380 billion dollars annually. The illegal status of sports betting fails to prevent these wagers from occurring, but does prevent the government from profiting from possible tax revenues. The two major statutes that govern sports betting are the PASPA (Professional and Amateurs Sports Protection Act of 1992), which makes sports betting illegal (with some exceptions), and the Federal Wire Act, which makes sports betting via the Internet illegal. The legalization of sports betting is currently the epicenter of attention as a result of the emergence of daily fantasy sports betting, the NBA’s endorsement of it, and New Jersey’s continued legalization efforts.
After decades of opposing legalized sports betting, the NBA has taken a different position. Adam Silver, the current Commissioner of the NBA endorsed the legalization of sports betting in the United States. In addition, the NBA has partnered and invested in Fanduel (a daily fantasy sports betting website). Allowing these wagers to take place would presumably heighten interest in sports.
The emergence of daily fantasy betting has displayed the potential of a sports betting market. Sites like Fanduel and Draftkings have managed to prevail under the theory that they are not gambling, but rather a competition that requires skill. “We look at it and say, ‘It’s not gambling,'” said Matt King, FanDuel’s chief financial officer, “It’s an entertainment product.” However, this argument does not go uncontested. “Of course it’s gambling,” said Joe Asher, CEO of the sports gambling company William Hill US. “You’re risking money on something of an uncertain outcome, and to me that sounds like gambling.” Fantasy sports betting, because of its similarities to general sports betting, may soon be found illegal.
There are many public policy justifications for keeping sports betting largely illegal including tribal gaming issues and the potential for gambling addiction, but at the heart of the issue is the susceptibility of sports to corruption. This is exemplified by the 2007 NBA scandal, which involved a ref, Tim Donaghy, who placed wagers on games he was officiating. This is understandably a huge problem, but it is clear that the regulations on sports bets are not preventing illegal activity from occurring. If all sports bets were made illegal and heavily enforced, this issue may be resolved, but that is not what is happening. Since the betting is occurring either way, the U.S. should seize the opportunity to make a profit.
The assumption that legalizing sports gambling would enable corruption seems to lack a foundation. As reported by the New York Times Magazine, “Stefan Szymanski, an economist at the University of Michigan, who has researched sports and corruption, said that, despite all the chicanery spurred by gambling, legalizing it would actually help crack down on cheating.” Further, “[n]ot only are illegal bookies more likely to fix matches, they also can’t go to the authorities if they suspect they’ve been wronged.” Heavily regulated bookkeepers would have an incentive to keep honest. If they don’t, less people will bet. Analogously, the English Premier League, which made betting legal, no longer suffers from betting scandals. In addition, situations like “deflategate” and the replacement refs scandal give rise to another problem regarding possibly incorrect scores. Fines to players or fired officials do not make up for improper results in a game that somebody has wagered on. This is obviously a significant issue to consider, but then again, if you are betting on sports you may have to accept that bad calls are just a part of the game. As states like New Jersey and organizations like the NBA continue to fight this battle, we must wait and see what kind of headway they make.
Sources from this Article
http://govinfo.library.unt.edu/ngisc/reports/2.pdf
http://sports.espn.go.com/nba/news/story?id=3509440
http://www.nytimes.com/2015/01/25/magazine/risk-factor.html?_r=0
http://www.nytimes.com/2015/01/29/sports/happy-to-air-their-views.html