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The sports gambling explosion

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This is a good piece by Jack Meserve on the problematic boom in sports gambling in America over the last few years. The basic problem is that the gambling industry, like any activity that is fairly innocuous for most people who engage in it but highly addictive for a small minority, is going to extract the bulk of its profits from those addicts, and therefore has a powerful incentive to create as many of them as possible:

Mark Kleiman put it this way a few years ago:

The public interest is in the provision of alcohol, cannabis, gambling services to people — adults — who use them responsibly and harmlessly. … The commercial interest is in finding those people with problems and in making as many of them as possible. If you’re in the alcohol business, you’re in the alcoholism business. They all have these signs that say ‘drink responsibly’; that means ‘please put us out of business.’ It’s not responsible drinkers that build breweries.

This is very much true for the newly-legalized sports gambling industry as well:

The same logic applies to sports betting. It’s not casual gamblers that will expand these companies’ profits, it’s the addicts. In New Jersey, “About 5% of all sports bettors placed nearly half of all bets and spent nearly 70% of the money,” wrote Lia Nower, the director of the Center for Gambling Studies at Rutgers, in the Conversation.

Now obviously a prohibitionist approach has been a disaster in the context of mind-altering substances, i.e., “drugs and alcohol,” the oxymoronic phrase we use in order to pretend that alcohol use isn’t drug use. But Meserve points out there was a huge difference between drugs and gambling:

The war on drugs has meant that millions of people have been convicted for drug-related crimes. Those people are imprisoned, gain lifelong felony convictions that scar their employability, and destroy families.

By contrast, there was no war on gambling. The harm involved in sports gambling’s illegality was mostly roadblocks to gamblers and lost tax revenue. According to the National Incident-Based Reporting System used by the FBI, there were 893,682 drug offenses reported in the United States in 2021. There were 504 betting/wagering offenses. Sports gambling was functionally already a decriminalized activity.

This would seem to argue for keeping sports gambling what it was until very recently: a kind of gray market activity that people could engage in at essentially no legal risk if they were willing to overcome various practical barriers to the activity. But of course it’s vastly more profitable to make it as easy as possible for people to simply place an endless number of sports bets using their smartphones:

 In today’s United States, every policy decision opening up sectors to the markets ends up a maximal one, and companies preying off what ought to be casual fun will now saturate every television market, every piece of stadium advertising real estate, in an attempt to turn non-gamblers into casual gamblers, casual gamblers into regulars, and regulars into addicts.

The problem, in other words, is capitalism, and specifically capitalism that escapes any kind of meaningful regulatory leash.

How corrosive this kind of culture inevitably becomes is captured in this charming little vignette involving my own employer:

Every possible customer vein will be mined. The University of Colorado at Boulder in 2020 signed a $1.6 million partnership with a gaming company that included $30 for every new bettor the University recruited, an obvious play at signing up college students even though the legal gambling age in Colorado is 21. (The $30 incentive was discontinued in 2023 after negative press.)

And don’t forget wokewashing!

The Gaming Society, a “betting education platform,” markets itself to women by promoting the opportunity to “prope[l] women’s sports forward through sports betting.” Its tagline? “Bet on women.”

The long-term goal — in this culture of course that means six months from now — of outfits like Draft Kings and FanDuel is to legalize casino gambling in the same way sports gambling has been legalized, so anybody can play the slots or other games of pure chance that have higher profit margins than sports bookmaking, from the comfort of their own mobile device:

A strange irony of all this is that sports gambling is not the most profitable, or addictive, industry in this sector. Oddsmaking is a skill; bookmakers can set the odds incorrectly or simply get unlucky and have to pay out considerable winnings.

Which is why, as the Times reports, the end goal is full “casino” gambling on your phone — slot machines, roulette, and so on. The industry has tried to rebrand this as iGaming, with the chief executive of DraftKings telling lawmakers at a conference: “It is time for your state to add iGaming … Not in the future, but now.”

One thing Meserve doesn’t mention is the practical inevitability of massive game-fixing scandals, as it becomes common for billions of dollars to be bet on sports every day of the week. This is already a huge problem in sports like tennis, where there are big sums bet on matches between obscure players at the lower professional rungs of the sport, which creates a situation where those players — who are often not even making enough money from the sport to cover the expenses they incur playing it — can often have a very utilitarian incentive to throw a match here or there.

But I expect a far bigger scandal than this sort of thing fairly soon, in the NFL or NBA or MLB, because again the sums being wagered make that kind of corruption basically unavoidable, especially since inevitably individual players will develop the sorts of compulsive gambling problems themselves that will put them in desperate situations, that some “entrepreneur” can then “leverage” for maximum profit.

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