On May 14 the U.S. Supreme Court opened the professional sports gambling industry up for business. In a 6-3 decision, the court struck down the Professional and Amateur Sports Protection Act of 1992, which had kept most states from legalizing sports gambling. As a result every state gets to decide if it wants to get into the bookie business.
Over the next few years, how you consume pro sports—from football to tennis—will completely change. Your standard game coverage of who won and lost will be supplemented by analysis of how that missed shot at the buzzer cost bettors millions. And if you hate hearing about sports, I have bad news for you: It will dominate the cultural discourse even further, seeing as nearly everyone in the U.S. will be able to win (and lose) bundles of cash with a few taps on their phone.
It will be insane, glorious, and utterly stupid. In other words, purely distilled America.
When you factor in everything from gaming revenue to job creation to taxes, the economic output of such legalization will be as much as $41 billion annually, according to an analysis by financial forecast firm Oxford Economics. The rollout will happen state by state, with Nevada already offering it, Delaware just starting now, and New Jersey, Pennsylvania, New York, and Iowa expected to have it in place in time for football season.
Another dozen states, including California and Illinois are still in the planning stages, while Utah will probably never legalize it.
The future of placing your bets
What will this brave new gambling landscape look like? Certainly, there will be more brick-and-mortar locations like off-track-betting where you can bet on horse races. But there will also be gambling apps galore, and, if the United Kingdom is any example, plenty of advertising featuring actors who generally play tough-guy mobsters.
As for what the games themselves will look like, the mobile app company Readyfire has already launched an HQ-style app called Halftime Live that asks trivia questions during halftime, like “how many championships does LeBron James have?” But that’s only be the start. Imagine sitting in the nosebleeds of an NBA game with a $10 Bud Light, and instantaneously placing a bet as to whether or not the next free throw goes in or not. Or betting on how many points LeBron will score in the game—or for the entire season.
Who wins from online sports gambling
In addition to the legion of new gambling apps that will invade your phone, geolocation compliance companies like GeoComply, which blocks users with IP addresses outside of an accepted geographical location, are sure to prosper too as they will help ensure any gambling being done is within the state’s borders. So too could backend payment platforms that move money from your bank account to the game companies’ coffers.
Pro sports leagues (NBA, NFL, NHL, and MLB, especially) will also benefit massively with this deal. Despite reps for the big four pro leagues currently barraging state legislatures with reasons why they deserve their cut of the pie—the most compelling legal argument is that they own the intellectual property—the most blatant cash-grab is their bid for an “integrity fee” so they, you know, keep things on the ol’ up-and-up.
But even if pro sports league get no cut of the gaming revenue, the value of their franchises is about to go way, way up. “More sports bettors means more people watching, means bigger ratings, bigger media contracts, bigger sponsorship contracts,” says Andrew Brandt, executive director of Villanova University’s Moorad Center for Sports Law. “They know what incredible fan engagement this will bring.”
Other potential winners are the states themselves. Part of each state’s legislative process will be deciding how to dole out the windfall. An analysis by AGA Oxford estimates up to $2.6 billion in annual tax revenue nationally, split up among the participating states. The obvious place to spend that cash is in the state general fund, which goes toward state employee salaries and public assistance programs, or on new infrastructure programs.
Who loses from legalized sports gambling
Yet where there are winners, there are losers. The most-cited one is purported to be Las Vegas, the idea being that if folks gamble locally, there’s no reason for them to make the trip out west. But that mentality discounts why people go to Vegas instead of their local riverboat casino in the first place, which is the gaudy entertainment spectacle of the great money funnel in the desert.
Another perceived loser is the illegal gambling industry, meaning those underground bookies that take bets on whatever you want. It makes sense. Why would bettors risk the “grey market” when they can bet legally? Well, one reason is that your neighborhood bookies will still be offering services that can’t be condoned by state-sanctioned practices, like taking bets on credit, as opposed to “posting up” the money before. “Most people hate giving money before they have to,” says R.J. Bell, CEO of the sports handicapping website Pregame.com. “It’s just human nature.”
Protecting against the dangers
There is, though, a good argument to be made that a portion of the money may best be served protecting another set of potential “losers” from this new arrangement: Those gambling all their money away.
“If you take any addiction and make it more available, then absolutely more people will develop problems related to that,” says Timothy Fong, co-director of UCLA’s Gambling Studies Program. “Gambling should be a social form of entertainment. Part of the potential problem with online sports betting is that is can be done quickly, in isolation, and without limits.”
Here is where state legislators paying attention to the specifics of the regulations may go a long way. “Bars aren’t open 24 hours a day,” Fong says. “We don’t allow alcohol to be sold above a certain proof. Cigarettes are sold behind the counter, and not to minors.” The sports gambling equivalent of such limitations would be a monthly limit on money lost, or funded programs to help new addicts. Any defenses against addiction will depend on the affordances that states allow, and should be aligned.
“If protections are put into place properly, we can limit the damage of gambling addiction,” Fong says. “But if they don’t address it, there will be a lot of pitfalls down the line.”