The State of Sports Gambling

In 2015, Tayla Polia made a five-dollar bet on fifteen NFL games at 20,000 to one odds. By the end of the weekend, she had made $100,005. Most people that engage in sports gambling, however, are not as lucky as Polia. In recent years, gambling on sports has become more prevalent. The Professional and Amateur Sports Protection Act of 1992 is a statute that effectively outlawed sports gambling across the United States. Certain havens such as Las Vegas and licensed casinos in states like New Jersey were permitted to continue to provide access to sports gambling, but sports gambling in general was outlawed. Of course, illegal gambling was always possible through a bookmaker (or bookie) in certain areas. Sports gambling is a complicated industry that has become more complex as technology has evolved. It is unclear how the expansion of the sports gambling industry will affect the world economy and other small scale issues such as gambling addictions.

Sports gambling is a broad term that encompasses many different forms of betting. Bookmakers provide “odds” that determine how much money can be won from a bet based on how much money is wagered. These odds are proportional to the risk associated with the bet; if a team is heavily favored to win, a large amount must be wagered on the expected outcome in order to make a comparably small amount. The most well-known type of sports bets are on those that wager which teams will win games. This form of betting is known as betting a “money-line.” Another very common form of sports gambling is betting on the spread of a game. A spread is a certain amount of points that one team is expected to win or lose by, according to the bookmaker. For example, if the New York Yankees are expected to beat the Boston Red Sox by three runs, then the spread would be Yankees (-3) and the Red Sox (+3). Bookmakers use the spread system as a way of creating a more balanced game. If the Yankees are much better than the Red Sox, then it is unlikely that many people will bet on the Red Sox money-line. The spread system makes the game much more competitive from a gambling perspective because the Red Sox no longer need to win the game. If the Red Sox lose by two or fewer runs, then someone who bets on the Red Sox to “cover” the spread of three runs would win the bet. The spread and the money-line are just two examples of an almost endless number of bets that can be made.

The legal sports gambling market has exploded in recent years. The main cause of this expansion was a Supreme Court Ruling in the case of Murphy v. National Collegiate Athletic Association. The ruling in this case is likely to have far reaching implications beyond the world of sports gambling. The case has many intricacies, but, in summary, the state of New Jersey sought to use the Tenth Amendment to challenge the legality of PASPA. New Jersey had passed laws that would legalize gambling for the four major sports leagues in the U.S. Fearing that legal gambling could cause athletes to be involved and undermine the integrity of games, these four major sports leagues (the MLB, NBA, NHL, and NFL) as well as the NCAA  challenged these laws by invoking the Constitution’s Supremacy Clause, which states that federal law is the highest law in the land and always overrides state laws. The Supreme Court ruled in favor of New Jersey in a decision that stated the federal government did not have the power to control the way that states governed their gambling industries. This decision is likely to be cited in the future by states seeking to pass legislation such as the legalization of marijuana because it helps states justify these laws under their power to govern themselves. 

This ruling opened the floodgates for states to follow New Jersey and legalize sports gambling. As of now, 13 states have legalized sports gambling in some form, and more are likely to follow suit. States have begun to legalize sports gambling because it has begun to generate huge sums of money, and the industry is projected to produce even more in the near future. According to one Statista analysis, in 2017, online gambling alone was over a $45 billion market, and by 2024 it is projected to more than double into a $94 billion market. Many states are eager to cash in on revenue from sports gambling either through taxes or through state-run sports lotteries. The revenue from sports gambling has been so large that even sports leagues have decided to attempt to benefit from the practice. The MLB recently struck a deal to make the online gambling website FanDuel, which already has deals with the NBA and the NHL, the official gambling website of the league. In less than twenty years, the major sports leagues in the U.S. have gone from opposing sports betting in court to making partnerships with sports betting companies, highlighting the business opportunities that these leagues see in the gambling market. 

The court ruling legalizing sports gambling is not the only factor that has led to the growth of the industry. Technology has played a significant role in the expansion of sports gambling. Websites like the aforementioned FanDuel and DraftKings provide easy access to sports betting regardless of the legality of the industry in a particular state. Technology has also made the process of live-betting much more accessible. Many sports gambling options have betting lines that update constantly over the course of a sporting event which provides even more opportunities to place bets. 

Creating a more convenient way of sports gambling will not only expand the economic market of the industry, but, according to some critics, would exacerbate issues with respect to gambling addictions. Most research on the subject, however, suggests the contrary. According to a recent study done by the Harvard Medical School’s Division on Addiction, online gamblers appear to exercise more restraint than those who prefer to gamble in casinos. The paper then continues by claiming that there has been no significant changes in the amount of people that are considered gambling addicts in the past 35 years. This research seems to suggest that further legalization and greater accessibility to sports betting may not lead to a significant increase in the amount of people addicted to gambling. 

The sports gambling industry is on a trajectory to become a very lucrative market. Although increases in convenience and prevalence have not increased the likelihood of gambling addiction in the past, it is unclear whether these trends will continue in the future. As the market continues to grow, we are likely to see more deals with gambling companies as sports leagues and other industries attempt to cash in on the gambling business. It is unclear how long the gambling industry is likely to continue to grow, but if this were a betting line, I would take the over.