Legalizing Sports Betting

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For a long time I have wondered here and elsewhere why there is no state sanctioned sports betting. It isn’t like gamblers aren’t betting on sports in areas where there is no legal way to do so.

From what I have heard, you can simply walk into pretty much any bar and get “parlay cards“, or bet on games online.

Since these activities are already going on, why have states been so anguished about setting up organized betting for them? We all pretty much have lotteries where we can bet on RANDOM numbers, so why not on sports games? Vegas has dialed in the sports betting ratios and how to run a sports book long ago; there aren’t any real secrets in that realm. Set the spread so you get half the bets on one side, half on the other and collect the “juice” or “vig“. Simple as that.

Well, with many states budgets in the toilet, there is movement toward state sponsored sports betting. Delaware looks like the first state east of the Mississippi to allow betting on sports games through their state sponsored system.

I love this quote from a representative of the NFL:

“Our policy on this issue has been consistent for decades.” NFL spokesman Greg Aiello wrote me in an email. “We have been an active proponent of federal and state legislation that prohibits the spread of legal sports gambling. We do not want our games used as bait.”

Hate to let you in on the worst kept secret in the nation, Mr. Aiello, but that horse left the barn a long time ago. Bars and bookies everywhere use your league as a great source of revenue every fall, and they also use the NCAA and other sports leagues.

The casinos in Vegas and elsewhere are responsible for driving gamblers to local watering holes and bookies for their action. The truth is that if gamblers could sit at home and place their wagers they would prefer it. From the same article, this looks like a first step toward that.

PricewaterhouseCoopers reported that the United States stands to earn $52 billion over the next decade by taxing, rather than policing, Internet gaming sites, mainly those focused on poker. That news prompted Congressman Barney Frank (D, Mass.) to announce that, later this month, he’ll propose a bill overturning the Unlawful Internet Gaming Enforcement Act of 2006, which bars banks and credit card companies from making payments to known online gambling sites. The law has made it difficult for many betting sites to do business in the U.S.

Uh oh. Even though internet gambling in the US in still in its first stages, this looks like a serious crack in the armor. It was only a matter of time before states and the feds realized that they are getting a zero cut out of an immense cash business.

I think within 10 years or so the choices of where one may place a wager on a sporting event in the US will be many.

Cross posted at LITGM.

10 thoughts on “Legalizing Sports Betting”

  1. You can go down the whole list of “victimless” crimes as opportunities for the state to make money off what are universally recognized as vices. But they also make the state equity partners with the purveyors of the vice. And this partnership acts as a state endorsement for the vice. And there is a tipping point where the state suddenly becomes dependent on vice revenue. What would states do if all their smoking cessation advertising campaigns started working?

    I dislike vices. I dislike the state being involved in vice, whether as an extortionate enforcer or an equity partner. It shouldn’t be a crime to gamble, but the courts of the state should not be available as a means to collect a gambling debt.

  2. Don’t get me wrong – I am not endorsing state sanctioned gambling in any way. I am just surprised that various governments haven’t gotten involved until now. Like I said, we can bet on random numbers like lotto, why would the states restrict it to that?

    I would rather private entities run the wagering and the government collect taxes. Correct me if I am wrong, but I think this is what happens (or should happen) in futures and options markets.

  3. legalize all gambling, including offshore. Tax it by govt and state. that way, we bail out corps, insurance companies, banks that have been gambling legally.

  6. Correct me if I am wrong, but I think this is what happens (or should happen) in futures and options markets.

    I can’t correct you, but are you implying there is a tax other than the personal income tax that is assessed in futures and options markets? I was unaware of that. Because gambling winnings are already taxable as income.

  7. Mrs. Davis – I wasn’t trying to imply that there was any other tax besides the personal income (of course, unless it is a business making the money, in which case it would fall under corporate tax). Gambling winnings are taxable income, but the govt. gets zero of that in the case of a sports book unless the amount is large and the casino reports it. The govt., of course, gets zero as it stands with wagering going on in bars and with bookies.

  8. NYC’s Off Track Betting offered worse odds than the bookies and still couldn’t make money. Leave it to gov’t to screw up anything.

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