By Caleb Newman
Executive Summary
While there have been laws preventing gambling on sports since the 1960’s, the Supreme Court disrupted the landscape in 2018 in Murphy v. NCAA when they overturned a ban on sports betting. Soon after, states adopted legislation to allow for sports gambling to be legal. However, some sports bettors suffer from gambling addiction, while sports leagues are a massive scandal away from having the integrity of the league’s product be put into question. I propose that there should be national standards to protect the consumer. To get legislation to pass, however, the argument must focus around protecting the sanctity of sports leagues.
Background
There were two major laws that Congress has passed concerning sports gambling. In 1961, Congress passed the Wire Act which banned people from doing anything related to betting across state lines through a telephone (18 U.S.C. §1084). The Professional and Amateur Sports Protection Act in 1992 banned all forms of gambling with limited exceptions (28 U.S.C. §3702, §3704).
In 2018, the Supreme Court in Murphy v. National Collegiate Athletic Association struck down PASPA as unconstitutional due to section 3702 violating the anti-commandeering clause (Murphy v. National Collegiate Athletic Association). Since the Murphy decision, gambling has exploded. Many states have begun or completed the process of legalizing sports betting in their state. As shown in Figure 1, 30 states and Washington D.C. have authorized sports betting with more states to follow in the future (American Gaming Association). In June of 2018, $310 million was spent betting on sports; in October of 2021, bettors wagered $7 billion as shown in Figure 2 (O’Brien and He).
While gambling has exploded, the policy on the federal level has not. There has not been a replacement to PAPSA, or any comprehensive legislation on sports betting since Murphy. The professional sports leagues who refused to be associated with gambling for so long have now embraced it, but their players are still not allowed to gamble to protect the integrity of the sport. The leagues are one massive gambling scandal away from their product being perceived as fixed. Additionally, some consumers of sports betting suffer from gambling addiction.
Problem & Analysis
The first problem that has occurred with the legalization of sports betting is gambling addiction. While most people do not get hooked on betting, there are some who do. In the United States, one estimate is that 6.6 million people have an addiction problem (Streeter 2022), but some estimate that as many as 15 million people have some sort of problem with gambling (Parsons 2020, 269). Collectively, they cost society around $5 billion dollars a year (Parsons 2020, 269). While these are some of the statistics, the role that it can have on people is significant. Gambling has led to severe consequences for some people, including suicide (Streeter 2022). So, while gambling has raised tax revenues, society cannot ignore the consequences.
The second problem is an issue that goes back to the early 1900’s when the Chicago White Sox threw the World Series. The league fears its games being fixed due to their players betting on sports. Obviously, sports make their money from the number of followers they have whether in the stands or watching at home. When people lose confidence in the games, they stop paying attention to the sport. In other words, if games are fixed, the leagues stand to lose everything as nobody will go to or watch their product.
In 2022, the National Football League (NFL) banned Calvin Ridley, a Wide Receiver for the Atlanta Falcons, for the entire following season after he bet on a Falcons game (NFL Communications 2022). The NFL found that no game had been compromised as Ridley was away from the team after being placed on the non-football illness list. However, by giving Ridley one of the longest suspensions in the history of the game, the NFL sent a message that sports gambling was not allowed.
Yet, the leagues have embraced sports gambling as a form of revenue for them. In the 2021-2022 season, gambling companies collectively paid the second highest amount (in terms of dollar figures per industry) of the $1.8 billion sponsorship revenue that the NFL collects (Young 2022). Keeping gambling companies sponsoring the games is lucrative for the sports leagues if their players do not participate in sports betting.
While the first two problems are an issue, the largest problem around sports gambling is there is no big issue that society can see. Neither sports addiction nor one player betting on sports is big enough to constitute a problem in the public’s eye. If a league finds that some of their players had gambled on sports causing the games to be fixed, then there would be a focusing event to prompt the introduction of legislation. However, there is too much money at stake to let that happen. There needs to be policy at the national level to protect the integrity of sports. By arguing to protect the sanctity of the leagues, hopefully the leagues will be compelled to lobby for solutions that not only protect the integrity of sports games, but also the consumers of sports betting.
Solutions
After PASPA was overturned, there was a proposed bill to help regulate sports gambling at a federal level. In late 2018 as the 115th Congress was ending, Senator Orin Hatch (R-UT) and Chuck Schumer (D-NY) introduced the Sports Wagering Market Integrity Act (SWMIA). Some of the recommendations in this memo are based off that bill. I propose that there should be federal legislation to create standards of gambling. Rather than having to lobby each state, passing a bill at the national level will allow for consistent standards across the sports betting industry. The main standards that I am proposing are a national database of betting information and a national database on individuals who gamble. This will be in addition to the current standards of who is and who is not allowed to bet.
The standards of gambling will not only allow for consumers to have one set of laws that they have to follow, but also one entity, preferably the Federal Trade Commission, will oversee sports betting. They will be allowed to levy fines and penalties such as revoking a state’s right to have sports gambling in the state if states do not comply with the standards.
Before any person places a bet, there must be standards on who is eligible. The age requirement should remain in place. Apart from that, most of the edibility requirements should focus on who is not eligible to gamble. This should be set in close consultation with the professional and amateur sports leagues. For example, athletes are not allowed to bet on any games within their league. Additionally, a national database on individuals further strengthens the eligibility requirements set on a federal level. If an individual who is not eligible to gamble places a bet on sports, then the database would flag local authorities or sports leagues to provide the appropriate punishment.
A national database on individuals also allows for consumers to have more information of how they bet. When people have more information, they tend to make better decisions. This occurs not only in financial decisions, but also in trying to maintain a healthier diet by tracking what they eat (Parsons 2020, 287). The hope is that by giving consumers more information they can be more responsible with the type of bets they place. A recent study on scratch card games suggests that presenting information in a foreground-background icon array discourages gamblers from playing due to them feeling less excited to play and win a prize (Walker et al. 2022, 17).
Furthermore, a national database will allow for sports bettors to prevent gambling addiction. I propose that consumers should be allowed to set limits on how much they can gamble. This will prevent them from getting addicted as they will stop themselves from placing another bet. Since the database is nationalized, any bet placed will trigger an alert to them and trusted contacts (family members, close friends, etc.) if they choose, so that there can be an intervention to get the gamblers the help they need.
While there are privacy concerns with having a national database on individuals, this is a central component for the sports leagues to support new legislation. Additionally, gambling companies will be able to have more information on their users to tailor their product to them. However, this will also allow for the consumer to be more informed about the type of bets that they place and prevent them from suffering gambling addiction as previously stated. This is very similar to having an account with a shopping service, such as Amazon.com Inc, where users can see what products they have ordered in the past. In exchange for giving up vital information on their betting habits, consumers will gain new information in the form of a national database with information from gambling companies.
A national database on betting information can help educate new consumers in addition to giving experienced bettors more information. I propose having standard information that producers, the services that facilitate sports betting, would have to adhere to. For example, not only should money line, point spreads, and over/under betting information of all platforms be public across all the distributors, but also information on how the sports book decided such lines. Input from interest groups would be helpful as to what to include. In short, the more information that the consumer can have, the higher chances of productive outcomes for them.
A lot of what I am proposing is focused on the consumer and not the producers. That is intentional. Currently, as mentioned before sports gambling revenues are skyrocketing. The American Gaming Association (AGA) released a statement after SWMIA was introduced. They opposed all federal legislation at that time (Slane 2018). Regardless of what is proposed, I doubt that the AGA will support the policy. Therefore, my proposed solutions focus on protecting and enhancing the consumer’s gambling experience. As previously mentioned, the lobbying of the sports leagues should help to convince Congress that legislation is necessary. Additionally, new legislation will help to stop illegal gambling that is already a penalty under the Wire Act or the Unlawful Internet Gambling Enforcement Act of 2006 (UIGEA).
Conclusion
While having people in America suffering from gambling addiction is sad, I do not think that that is enough of a causal story to have Congress pass legislation to regulate sports gambling. Instead, I think it will need to be the sports leagues who will want policy passed to protect their game. When they realize that the sanctity of the game is more important to them than their relationships with gambling companies, then there can be meaningful legislation passed. I propose solutions that not only protect the sports league’s product, but also consumers of sports gambling through creating national databases.
Bibliography
American Gaming Association. 2022. “Interactive Map: Sports Betting in the U.S.” https://www.americangaming.org/research/state-gaming-map/.
Murphy v. National Collegiate Athletic Association, 584 US _ (2018).
NFL Communications. 2022. “Falcons’ Calvin Ridley Suspended Through At Least The 2022 Season For Betting On NFL Games in 2021 Season.” Press release on March 7, 2022. https://nflcommunications.com/Pages/FALCONS’-CALVIN-RIDLEY-SUSPENDEDTHROUGH-AT-LEAST-THE-2022-SEASON-FOR-BETTING-ON-NFL-GAMES–IN2021-SEASON.aspx.
Parsons, Joey. 2020. “Better Bettors: Regulatory Proposals to Reduce Societal Costs Associated with Gambling Disorder in States That Permit Legal Sports Betting,” Law & Psychology Review 44, (2019-2020): 267-296.
Professional and Amatuer Sports Protection, 28 U.S.C §§3701-04 (1992).
O’Brien, Timothy L., and Elaine He. “The Sports Gambling Gold Rush Is Absolutely Off the Charts.” Bloomberg, December 16, 2021. https://www.bloomberg.com/graphics/2021- opinion-online-sports-betting-future-of-american-gambling/.
Slane, Sara. 2018. Sara Slane to The Honorable Charles Schumer, Washington, DC, September 12, 2018. https://www.americangaming.org/sites/default/files/AGA%20Letter%20to%20The%20H onorable%20Charles%20Schumer%209-11-18%20FINAL.pdf
Streeter, Kurt. 2022. “The Rising Human Cost of Sports Betting.” New York Times, January 31, 2022. https://www.nytimes.com/2022/01/31/sports/football/super-bowl-sports-betting.html.
Transmission of wagering information; penalties, 18 U.S.C §1084 (1961).
Walker, Alexander, C., Madison Stange, Mike J. Dixon, Jonathan A. Fugelsang and Derek J. Koehler. 2022 “Using Icon Arrays to Communicate Gambling Information Reduces the Appeal of Scratch Card Games.” Journal of Gambling Studies (2022). https://doi-org.libproxy.kenyon.edu/10.1007/s10899-021-10103-5.
Young, Jabari. 2022. “Tech, gambling and alcohol helped the NFL earn almost $2 billion in sponsorships this season.” CNBC, January 26, 2022. https://www.cnbc.com/2022/01/26/tech-gambling-alcohol-helped-nfl-earn-almost-2- billion-in-sponsorships.html.