Sports Gambling is Legal, and You Can Bet Change is on the Way

Hot off the top-of-the-inbox, it’s time for a back-and-forth breakdown of the recent Supreme Court ruling in favor of legalized sports gambling. Game on!

AK:1 Welcome to the era of legalized sports betting! In a 6-to-3 decision, the Supreme Court struck down the Professional and Amateur Sports Protection Act of 1992 (PASPA) and opened the door for an unprecedented transformation of American sports. There’s a ton to digest here – how sports themselves will change, the fan experience, the political consequences, the moral implications, the risk to my 401k account – but before we dig into the feast, allow me to set the table.

PASPA declared that no state could “sponsor, operate, advertise, promote, license, or authorize” gambling on sports – effectively placing a federal ban on sports betting.2 Former New Jersey governor Chris Christie started the fight to overturn PASPA in hopes of revitalizing his state’s troubled casinos and racetracks. On May 14th, the Supreme Court put an end to this lengthy legal struggle by ruling that PASPA was unconstitutional. Each state is now empowered to regulate sports gambling as it sees fit. Thank you Chris Christie!3

So what now? The floodgates are open – states and sports leagues are rushing to cash in on the newborn opportunity and sort out the altered landscape. As a proud degenerate, what’s your knee jerk reaction?

SW:4 I’ll lay cash on everything from Rotten Tomatoes scores to election results (my PredictIt account is poppin’). As a swashbuckling ruffian, my reaction is simple. Rejoice!

The fact that most people reacted with a shrug and a nod is interesting in and of itself – is legalized gambling that big of a deal? If not, why wasn’t sports gambling legal already?

AK: The decision to legalize gambling is a classic example of government lagging behind culture. It took more than lawyers and Chris Christie’s unwavering leadership5 to get here – trends in sports media and technology paved the way for the Court’s decision.

Influential talking heads like Bill Simmons and Scott Van Pelt took sports gambling from seedy back rooms to primetime on SportsCenter, but the rapid rise and broad acceptance of fantasy sports was the biggest tipping point. You’re kidding yourself if you think fantasy isn’t gambling, and fantasy isn’t just “acceptable” – it’s a booming enterprise! People play fantasy sports with their kids, they set up leagues in their office, ESPN runs 24-hour fantasy marathons… hell, FX ran a sitcom built around fantasy sports for 7 seasons. Media acceptance helped make gambling feel normal.

Like every other social change in the modern era, the acceptance of gambling into the culture was accelerated by the internet. The most unseemly part of gambling, historically, is the actual activity of placing and collecting on bets. It’s fun to have a rooting interest in Monday Night Football, but it’s grimy to interact with a bookie. But who needs a bookie when you have Bovada? Once you combine the air of legitimacy the media provided with the easy access to gambling that technology created, the legalization of sports betting almost feels like a formality.

The last push that the system needed to catch up to the culture is the oldest reason of all – cold, hard cash. There is big money to be made in a world with legalized gambling, whether you are a state salivating over tax revenue or a league fantasizing about boosted interest and a next-gen fan experience. Attitudes and beliefs, especially around a “salacious” vice, are always going to move faster than polite society and formal legal structures. Money gave the establishment a reason to catch up.

So what happens next? I’ll kick things off with a take I simply can’t hold in anymore: legalized gambling can save baseball. As football and basketball have grown in popularity, baseball has fallen from its perch atop the American sports landscape. The most common explanation is that baseball is too slow for modern audiences – yet that deliberate, at-bat-by-at-bat pace makes it a perfect fit for a world where sports gambling is commonplace.

Imagine watching the game side-by-side with an app on your phone or iPad that shows relevant stats on the pitcher and hitter, and lets you easily wager on the outcome of a single at-bat. Think Bryce Harper is about to drill an extra-base hit off a tiring starter? You can get four-to-one odds and an instant payout with two taps. Baseball’s slower pace, combined with the richest set of statistics of any sport, makes the game a perfect fit for live betting. Gambling can be the answer for a sport that desperately needs a new way to drum up interest – especially during the dog days of a marathon 162-game season.

(For the record, you are 90% of the way to $1B of Silicon Valley VC cash if you inject the words “bitcoin,” “optimization,” and “augmented viewing experience” into the above paragraph.)

SW: I have to splash water on that take. Though legalized gambling is projected to be a multiple billion dollar business, the slice of people who are comfortable gambling is smaller than you would think.  According to a Washington University at St. Louis study, just under 25% of people gamble annually – and that counts those who only bet the Super Bowl, the Kentucky Derby, or March Madness (it also includes a horde of legal soccer gamblers). Most of my friends fit into this category of “special occasion bettors,” and none of them are suddenly going to up the ante. It’s not because they’re millennials who burnt all their liquid assets on avocado toast; they just aren’t gamblers.

There’s also a meaningful portion of the country who will continue to take a puritanical, hard-line stance against gambling. Part of the reason it took so long to get here is that enough people view betting as immoral. Marijuana went through a similar process, and that legalization effort has only begun to round the corner after years of work to build bipartisan support. Don’t discount the number of people who will continue to resist gambling on moral grounds.

Finally, and perhaps most importantly, the people that know enough about baseball to competently gamble on it were already watching. We’re talking hardcore masochists here.

AK: Mea culpa – I have been caught red-handed creeping into the dreaded Skip Bayless Zone. Let’s add a little nuance to my “legalized gambling can save baseball” hot take.

Betting doesn’t have to be for everyone to give baseball a boost. The “one-in-four people gamble annually” statistic can be read as a sign that gambling is for the minority, or as a testament to the size of the opportunity. 20-25% of the population is a ton of people, and I would wager that number only grows as legalization makes it easier to place bets. It’s not just mobile apps and online gaming either – what’s stopping sports bars, liquor stores and stadiums from baking miniature sports-books into the fan experience?

The NBA and NFL can benefit from gambling, but no sport needs a jump-start more than baseball. ESPN recently released its third annual World Fame 100, a ranking of the world’s most famous athletes based on search results, endorsement dollars and social media following. Not a single baseball player made the list. Zero. America’s pastime is ceding ground to other major sports, and the game needs a new way to engage fans and build stars. Maybe legalized gambling won’t save baseball (the sport doesn’t need saving as much as it could use a pick-me-up), but betting can give fans a novel reason to tune in. A little extra attention would be a big win for a sport that has struggled to grow in the modern era.

SW: Whether I buy the take or not, I do see the appeal of an app for real-time sports betting. An in-game gambling platform offering more and more tantalizing odds while the Steelers chase a comeback win is a lock to coax more change out of my pocket than a couple handshake bets before kickoff. The future is a dangerous place.

I’m more interested in how legalized gambling changes the viewing experience even for people who don’t gamble. Will Al Michaels report the line every game?  Will it be insufferable? I can already picture ESPN rolling out one of their classic nonsense stats – this is the first time LeBron James has hit a three point shot while being fouled with six minutes left in the fourth quarter of a playoff game when it rained on a day that Chrissy Teigen gave birth! – and then following it up with what the payout would have been if you had taken that prop bet.

AK: From a media coverage perspective, I think the change will be minor. Announcers crossed the line into commenting on the point spread and over/under years ago. ESPN is already tossing out painfully contrived stats and self-parody-level content; swapping in a few nonsensical gambling “facts” can’t make things too much worse. I’d rather know the odds of winning a 17-way parlay than see crap like this:

Or this:

On second thought, I’m here for that Kobe graphic. Mamba mentality, baby!

I’d wager that the physical viewing environment changes more radically than the media coverage. Will stadiums offer access to a sports book? Will prop bets and point spreads blast through the JumboTron between plays? There’s just too much potential money out there not to let people lay down a quick wager on their way into the arena, especially if the league or teams get a cut. Sports bars have to be thinking the same thing. How long before Buffalo Wild Wings starts taking bets, or at least contracting out the right to manage bets from within their restaurants?

As a huge fan of sports and a time-to-time gambler, this all makes me excited… but also a little sad? Something about the idea of gambling fully integrated into sports is kind of a bummer. There’s something to be said for the good old days – even if they were never as pure and wholesome as we want to believe.

SW: That Kobe graphic was the weekly reminder I needed that ESPN is just rotten bad.

I do think we’ll see gambling everywhere… eventually.  Look how far booze has come in the eight short decades since its legalization. I can drink openly in an increasing number of cities, I can buy a beer at Chipotle, and in your hometown of Los Angeles I can get liquor delivered to my freaking house! It will take several years before the financial boon of gambling overtakes our qualms about it (see: marijuana), but twenty years from now we will absolutely be placing bets from Buffalo Wild Wings and 7/11.

You’ll know we’ve reached the beginning of the end for Western Civilization when a guy orders the All Star Sampler from the same iPad he uses to lay twenty on the Browns. Brace yourself.

AK: Can we build a time machine to save that Buffalo Wild Wings customer from betting on Cleveland? Don’t do it! Save yourself!

SW: Somehow, it’s already too late for that guy.

While we watch to see how the fan experience changes, be sure to keep one eye on the Benjamins. How will the multi-billion dollar pie created by legalized sports gambling be doled out? The NBA and MLB have already asked for a 1% “integrity fee” (HA) since fairness and trust in their games enable sports gambling to exist. Bookkeepers shot down that idea since the average house take on betting is only about 4%, meaning leagues were really asking for a quarter of the profits. You can bet that that won’t be the last attempt they make.

Morality is another important factor in all this. It’s going to look awfully bad if this newfound revenue, grown from an arguably unseemly enterprise, doesn’t give back to any positive causes. There’s a reason state lotteries spend millions on local schools, and it isn’t generosity.6 It’s up to our fearless political leaders to make those tough decisions – for all the good they are at it – but I think an absolute bottom line necessity is to fully fund recovery programs for gambling addiction. At any rate, I’d love a silver lining I can preach about when others judge me for my nefarious habits.

AK When it comes to the fan experience, we’re on the same page. It’s only a matter of time until gambling creeps into stadiums, bars and corner stores – and the pace of that progression will depend on how long it takes non-gamblers to get comfortable with the change. My gut instinct is it won’t take as long as we think. The lack of of pearl-clutching after the Supreme Court’s decision has been a surprise. Where’s the outrage? Where are the self-important think-pieces about decaying morality and the dangers of addiction?

It’s possible that the Court’s decision wasn’t visible enough to trigger the outrage machine, and the backlash just won’t arrive until the first sports-book in Yankee Stadium. It would certainly be nice if the powers-that-be proactively dealt with the dark fallout from easier access to wagering, but I doubt we see movement beyond lip service and PR gestures until there is a real mess to clean up. Money won’t flow that way until it has to.

Speaking of cold-hearted capitalism, welcome to the “integrity fee” rant. The argument that sports leagues deserve compensation for creating the content that drives the sports betting market is totally valid. They should and will get a slice of the pie. That said, the argument that leagues will have to spend more to protect the “integrity” of contests, and thus deserve a 1% rake on all gambling action, is ludicrous. The entire professional sports industry is based on the idea that the games are fair! You’re telling me you are just now going to start protecting the sanctity of the game? What in the world have you all been doing for decades? I might as well tell my girlfriend that, with the proliferation of dating apps, I will need a 1% monogamy fee to protect the integrity of our relationship. We’ll see how that goes over. Just say what you mean, sports leagues! There’s a lot of money on the table and you want a cut. Get outta here with this “integrity fee” bullshit.

SW: You may be on to something with that monogamy fee.

AK: Feels like we may need a more diverse panel of opinions on that one.

One last angle for consideration is how the Supreme Court’s decision to overturn PASPA will set a precedent for future law-making. PASPA didn’t actually ban gambling; rather, it banned states from legalizing gambling. The Court decided that the federal government (Congress) can regulate sports gambling directly, but if it elects not to pass an explicit ban, each state is free to act on its own.

The specifics of the gambling decision matter because it gives states the power to legalize activities that the federal government may oppose, but hasn’t explicitly prohibited for political or PR reasons. Congress can still pass laws to make something illegal, but the federal government can’t stop states from legalizing an activity that isn’t directly banned. That distinction could make a big difference in future battles to legalize (or prohibit) the use of drugs or right to carry certain firearms. One small step for gamblers may lead to a giant leap for potheads. Win one for the devil’s lettuce!

SW: It’s not just a victory for marijuana enthusiasts – this is a huge win for states rights, a typically conservative thought camp. The potential downsides of letting the states do their own thing is that, in certain instances, differences between state laws can create unneeded confusion or impose downright hurtful laws that lag behind the broader culture. The obvious upside is that states can experiment with different ideas and observe what is and isn’t working in other states. For example, more and more states are sprinting towards marijuana laws because they see Colorado raking in money hand over fist with few negative repercussions.7

Narrowing back in on gambling, it will be interesting to see how different states play their hands. Some states, like West Virginia, will cannonball into the pool. States like New Jersey are already in mid-air (it should be noted that the case’s champion, Chris Christie, undoubtedly has a mean cannonball). Some states will dip a toe in the water, waiting to see how the first states fare before diving in. And some will be there just to take in the rays, content to lay out poolside and avoid the risk altogether.

It will take 5, 10, maybe 20 years for the tangle of political and cultural threads tied to the legalization of gambling to unwind and settle, each moving at different rates and experiencing their own successes and hiccups. Time will tell just how influential the decision to overturn PASPA will be, but let’s end where we began. Rejoice! Gambling is legal.

Check back in 5, 10, maybe 20 years to see if I am financially ruined.

AK: Can we bet on that?

 

 

 

  1. Aron Kale, editor-in-chief, recreational 3-team-teaser enthusiast
  2. States that had laws governing sports gambling prior to 1992 – including Nevada – were grandfathered in, avoiding this ban.
  3. There’s four words I never expected to type!
  4. Simon Weaver, senior debauchery correspondent
  5. I’m as surprised I’m saying these things as you are!
  6. Fun fact – the Maryland lottery also pays off the debt on Camden Yards and M&T Bank Stadium. Wait, Camden Yards is 26 years old and still owes money? Wait, Camden is younger than me and is considered historic? Anyway.
  7. Fingers crossed that New Jersey makes a killing so I can gamble in my Maryland Burger King by 2019.

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