Edition #6: Gambling and sport

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The Whitehouse lit up at night, photographed from a distance, showing tall trees on either side and blurred lights
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One of the biggest gambling issues in America right now is the expansion of legalised sports betting.

The 1992 Professional and Amateur Sports Protection Act effectively restricted sports gambling to Nevada.1 However, cash-strapped state governments, entrepreneurial team owners and large gaming companies are all showing considerable interest in legal and legislative efforts to overturn the Act.

Yet lost in the debate is the potential increase in gambling problems.

Legalised sports betting will increase both revenue and harm

This summer, one gaming executive predicted the ban will be repealed ‘three to five years from now’, as the ‘monstrous opportunity’ to tap into the massive illegal sports betting market increases momentum for change.2

The American Gaming Association estimated that US$3.9 billion would be bet on the most recent Super Bowl, 95 per cent of that illegally. Its prediction for the National Collegiate Athletic Association (NCAA) Men’s Basketball Tournament, popularly known as March Madness, was US$9 billion in betting.

Cash-strapped state governments, entrepreneurial team owners and large gaming companies are all showing considerable interest in efforts to overturn the Act.

It is likely legalisation would improve the accessibility and acceptability of sports betting, and thus increase participation. Some gamblers who currently bet illegally with bookies may shift to state-sanctioned operators. As regulation would likely include a number of restrictions and taxes on winnings, other gamblers may remain with the black market.

The prevalence of gambling problems appears to spike when gambling expands, and evidence suggests it generally decreases or stabilises thereafter.

How addiction prevention and treatment programs fit in

Advocates of legalised sports betting often say it would be accompanied by increased support for addiction prevention and treatment programs. For example, in 2014, National Basketball Association (NBA) Commissioner Adam Silver wrote in the New York Times:

‘Congress should adopt a federal framework that allows states to authorise betting on professional sports, subject to strict regulatory requirements and technological safeguards.

‘These requirements would include: mandatory monitoring and reporting of unusual betting-line movements; a licensing protocol to ensure betting operators are legitimate; minimum-age verification measures; geo-blocking technology to ensure betting is available only where it is legal; mechanisms to identify and exclude people with gambling problems; and education about responsible gaming.’3

Yet, while most of the prevention and treatment programs would need to be created or greatly expanded, no funding is specified. The leagues, in particular, would need to bolster their programs to prevent gambling addiction among players and personnel as well as heavily support public awareness programs. So while the intent of Commissioner Silver and others may be sincere, the resource allocation and effectiveness of responsible gaming efforts to date have been mixed at best.

No safety net

Historically, the expansion of gambling at the state level has not been uniformly accompanied by appropriate – or, in some cases, any – funds to prevent or treat gambling addiction. In fact, there are still nine states that provide no public support for problem gambling programs, even though they receive several billion dollars in revenue from legalised gambling per year and are likely to have significant numbers of illegal sports gamblers.

While most of the prevention and treatment programs would need to be created or greatly expanded, no funding is specified.

The experience with daily fantasy sports is also instructive. The majority of states who have chosen to regulate this ‘cousin’ of sports betting have done so without robust consumer protection or additional funds to prevent or treat related problems.

On the national level, the federal government receives approximately US$7 billion per year in tax revenue from gambling, but does not dedicate a single cent to problem gambling prevention, treatment or research. Without federal support and only sporadic state involvement, the safety net is tattered and, in some areas, completely absent. This is a shaky foundation on which to expand sports betting.

1 Delaware, New Mexico and Oregon have limited exemptions for sports-related wagering as they allowed such activities prior to passage of the Professional and Amateur Sports Protection Act.

2 Batt, T 2016, ‘Penn national boss predicts U.S.-wide sports betting within five years’, GamblingCompliance, online 27 May, www.gamblingcompliance.com

3 Silver, A 2014, ‘Legalize and regulate sports betting’, New York Times, 13 November.

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