Is the legalization of sports betting in the US inevitable?

Written by  on December 11, 2015 

This would seem to be fair in that NFL teams have benefited considerably from government subsidies to build stadiums.

The NFL commissioner recently reaffirmed the leagues opposition to sports betting, emphasizing the damage to the integrity of the game that would follow from widespread legalized sports betting.

Unless the judiciary forces the hand of the NFL, those who say that legalized sports betting is a matter of when and not if may experience similar frustrations.

The interest in events such as the NFL Draft and NFL Combine workouts for prospective players has given the league year-around visibility. Sports betting is legal in Britain, and fans can place bets on the NFL games at nearby sportsbooks or even at the game from their mobile phones. If the court ruled that there was a way around PASPA, as New Jersey claims, many other states would follow suit. Most American sports leagues are gradually coming around to the idea that a structure for legal sports betting would appropriately bring the activity into the sunlight.

So if three of the professional sports in the US are in favor, why is sports betting still illegal?

Congress, however, refused to go along with a complete ban. By allowing such a substantial illegal market, states are leaving untapped a sizable revenue source.Legalized sports betting actually promotes integrity of sporting events because licensed sportsbooks have an interest in reporting unusual betting activity to authorities. This may be true, but not in the way many people believe. In the last decade, proponents of legalized sports betting have attacked PASPA as bad policy, primarily on three grounds:

If states could offer sports betting, they would gain considerable revenue by taxing a form of gambling that enjoys wide support in the US. For example, if there were a small tax on every sports bet made on an NFL game that went to the league, wouldnt that be a financial bonanza the league couldnt pass up?

The senator was supported in his efforts by the major sports leagues and the NCAA, whose representatives testified before Congress that sports betting should be illegal everywhere in the US.

In 1992, then-Senator Bradley spearheaded an attack on sports betting in the US. Commissioner Goodell, however, insists that he doesnt look at fantasy sports as gambling, and that the legality issue should be left to states to determine.

For example, in the 2015 season, three NFL games are being played in Wembley Stadium in London. Instead it passed the Professional and Amateur Sports Protection Act (PASPA) in 1992, which forbade state-licensed sports betting but grandfathered in four states that allowed betting at the time (Nevada, Delaware, Oregon and Montana). At that point, the major sports leagues, including the NFL, would have to seek a national system of sports betting. Simply put, the financial potential of legalized sports betting may not be large enough to cause the NFL to relent in its opposition to a change in PASPA.

Where we go from here

Federal court litigation could change the dynamics of the sports betting debate.

But does it matter that the NFL is the outlier among the professional sports leagues in this opposition? The answer to this question is undoubtedly yes.

The legal question of whether DFS should be considered sports betting is far from settled. Recently, the New York attorney general issued a cease and desist order to DraftKings and FanDuel, stating that the companies were engaged in illegal gambling operations in the state.

The wide range of estimates exists because businesses operating illegally dont disclose business records. These DFS industry leaders sponsor fantasy lounges at several NFL stadiums, and two NFL owners have equity stakes in these companies.

Keith Miller, Ellis and Nelle Levitt Distinguished Professor of Law, Drake University.

This perspective assumes, of course, that the NFLs integrity justification is a sham, and that it is really a financial matter. A sports bettor typically settles up with his bookie on a periodic basis to pay off his losses (or collect winnings) without money being required in advance.

Where the sports leagues stand

But the trendlines are clear. He is also the reason that Americans cannot place bets on sporting events unless they travel to Nevada.

Last month, the Nevada Gaming Control Board likewise declared that DFS is a form of sports betting that requires licensing. The money the NFL is focused on is the money it already makes for the owners of the teams, and the revenue streams unrelated to sports betting that will develop in the future.

By Keith Miller

Drake University

Now, judicial scrutiny of PASPA and the recent rise of daily fantasy sports (DFS) may threaten that monopoly. Even the low end of the range indicates a substantial market for sports betting.

A few years ago there was frequent talk of how widespread internet gambling in the US was inevitable. Better to have the states realize tax revenues from sports betting than to have criminal elements profit.The social costs of gambling are high

The pro-legalization arguments are far from indisputable. The sportsbooks stand to lose considerable money if they accept bets on games that have been fixed, because a successful sports book operation depends on having a rough equivalence bet on each side of an event.By legalizing, regulating and taxing sports betting, we eliminate the illegal market for sports betting, which historically has had connections to organized crime. For example, tax revenues generated from legalized sports betting might be offset by the social costs created by those with gambling disorders.

Finally, legal sports betting would not put the illegal neighborhood bookie out of business. Other voices, including some from the professional sports leagues themselves, assert it is time for Congress to reconsider its widespread ban on sports betting.

The NFL generates $10 billion a year in revenue without legalized betting. Moreover, Bradley argued, legal betting sent a message to the nations youth that sports were more about money than achievement and sportsmanship.. Using government subsidies to help fund a stadium owned by a profitable professional sports team is a dubious proposition; denying states tax revenue from legalized sports betting only magnifies the problem.

What might make the NFL change its position?

One view is that the NFL would no longer oppose sports betting if a regulatory structure were created that monetized the activity to its benefit. No claims have been made that the integrity of these games has been affected in any way.

But it is far from certain that sports betting will expand beyond Nevadas borders.

The NFL is a business behemoth with yearly revenues exceeding $10 billion; by 2027 revenues are projected to reach $25 billion. Betting on sports undermined the integrity of the games, he asserted, and damaged the publics confidence that they were free of corruption. The act also gave New Jersey one extra year to enact its own sports betting legislation, which it failed to do.

The result of PASPA was to give Nevada a monopoly on single-game sports betting, as the other three states offered only multiple game parlay contests that have limited appeal.

Is it time to repeal or change PASPA? To answer that question, we need to examine the arguments for and against and why its still mostly banned beyond Nevadas borders.

A booming business

The American appetite for sports betting is prodigious.

While Nevada sportsbooks handle some $4 billion in legal bets yearly, anywhere from $50 billion to $400 billion is bet illegally with bookies and internet-based overseas sports betting companies.

In November 2014, NBA Commissioner Adam Silver called for a federal system of legal sports betting. Polls suggest people favor legalizing sports betting by nearly 60%. Sportsbooks operate on a cash up-front basis. So far that has proven to be untrue.

Finally, legalized sports betting could provide states considerable tax revenue, which could be shared with cities. Major League Baseball and the National Hockey League have also both indicated they might be amenable to such a solution.

Bill Bradley was a Princeton graduate, All-American basketball player, NBA star, United States senator and one-time candidate for president. Nearly all NFL teams have some sort of relationship with the two largest DFS operators, DraftKings and FanDuel. Along with the NFLs prominence comes political clout that can blunt efforts to overturn PASPA.

Is the NFLs stance hypocritical?

Among the many criticisms leveled at the NFL is that its opposition to sports betting cannot be squared with its other actions.

This article was originally published on The Conversation.

Currently pending before the 3rd Circuit Court of Appeals is a challenge to PASPA by the state of New Jersey. The risk of a betting scandal that would jeopardize the profitability of the NFL juggernaut has to be considered. Its television ratings are at all-time highs.

Moreover, here at home, the NFL has developed extensive connections to the daily fantasy sports industry. The courts ruling, likely many months away, could be decisive.

While Bill Bradley made PASPA possible, it is the NFLs Roger Goodell who keeps the act viable.

Moreover, legalized sports betting does not eliminate match-fixing, as European soccer has illustrated, and the belief that professional athletes make too much money to be targets for game-fixing may be mistaken.

This arrangement hasnt always worked to the economic benefit of the community

Max Lyons

Max Lyons

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Max Lyons

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