The recent growth in daily fantasy sports may now threaten this monopoly. Some voices, such as those of the professional sports leagues, believe that Congress should reconsider its ban on sports betting.
Is it time for PASPA to be repealed or changed? We need to look at the arguments both for and against PASPA and examine why it is still largely banned outside Nevada’s border.
Bill Bradley (center) wanted to ban sports betting completely. Reuters
The business boom
Sports betting in America is a huge industry.
Bookies and overseas betting companies that operate online or through bookies handle bets between $50 billion and 400 billion illegally.
There are so many estimates because illegal businesses don’t reveal their records. Even at the lowest end, there is a significant market for sports betting.
PASPA has been attacked by proponents of legalized betting on sports for three main reasons:
States that offer sports betting would be able to generate significant revenue from taxing an activity that is popular in the US. Polls suggest that most people support legalizing sports betting. States are losing out on a substantial revenue stream by allowing such an illegal market to exist.
Sports betting is legalized because licensed bookmakers have a vested interest in notifying authorities of unusual betting activities. Sportsbooks will lose money if bets are accepted on “fixed” games, because the success of a sports book depends on having an approximate equivalence on both sides of an event.
By legalizing, taxing, and regulating sports betting, we eliminate the illegal sports betting market, which has historically had ties to organized crime. The state should receive tax revenue from sports betting rather than criminal elements to profit.
Gambling has high social costs.
Legalization is not a given. The social costs of gambling addiction could offset the tax revenue generated by legalized sports betting.
As European soccer illustrated, legalized betting on sports does not eliminate match-fixing. Moreover, the belief that professional athletes make too much money for them to be targets of game-fixing is likely wrong.
Finally, legalized sports betting will not force the neighborhood illegal bookies to close. Sportsbooks are operated on a cash-up-front basis. Sports bettors “settle up” with their bookies on a regular basis to pay back losses (or collect wins) without having to advance money.
What the sports leagues are doing
The trendlines remain clear. The majority of American sports leagues have gradually come to accept the notion that legalized sports betting will bring this activity “into sunlight.”
In November 2014, NBA Commissioner Adam Silver requested a federal sports betting system. Major League Baseball and the National Hockey League have both indicated that they would be open to such a solution.
Why is it still illegal to bet on sports in America if 3 of the most popular professional sports are for it?
Roger Goodell, the NFL commissioner, is responsible for keeping PASPA alive. Bill Bradley was the man who made it possible.
The NFL commissioner recently reiterated that the league is opposed to sports betting. He emphasized the harm to the integrity of sports that would result from legalized sports gambling.
Does it really matter that the NFL is the only professional sports league to be a lone wolf in this regard? This question has an unmistakable answer.
By 2027, revenues are expected to reach $25 billion. The NFL’s TV ratings are at an all-time high.
Due to the interest that prospective players have in events like the NFL Combine and the NFL Draft, the league has gained visibility all year round. With the NFL’s prominence comes a political influence that could help thwart efforts to repeal PASPA.
Roger Goodell, the NFL commissioner, argues that the partial ban should remain in place. Reuters
Is the NFL’s position hypocritical?
One of the criticisms that the NFL has received is the fact that its opposition to betting on sports can’t be reconciled with the other things it does.
In 2015, for example, three NFL matches were played at Wembley Stadium in London. In Britain, sports betting is legal. Fans can bet on NFL games in nearby sportsbooks and even during the game using their mobile phones. There has been no claim that these games have been compromised in any way.
The NFL also has connections with the daily fantasy sports market. Nearly all NFL clubs have some relation to the two biggest DFS operators, DraftKings or FanDuel. The DFS leaders have sponsored “fantasy rooms” in several NFL stadiums. Two NFL owners also own equity stakes.
The question as to whether DFS is considered sports betting or not has yet to be settled. The New York attorney general recently issued an order for DraftKings to cease all gambling activities in the state.
The Nevada Gaming Control Board also declared last month that DFS was a form of sports betting that required licensing. Commissioner Goodell insists, however, that he does not consider fantasy sports gambling and that it should be left up to the states to decide.
Legalized sports betting would also provide substantial tax revenue to the states, which they could share with the cities. This is fair, as NFL teams have received significant government subsidies for building stadiums.
The economic benefits to the community have not always been realized. It’s a questionable idea to use government subsidies to fund a stadium that is owned by a professional sports team. Denying states tax revenue generated from legalized sports gambling only makes the problem worse.
Jason Robins, CEO of DraftKings. Reuters
What could cause the NFL to change its position on this issue?
The NFL, according to one view, would not oppose sports betting as long as a regulatory framework was created that monetized it for its benefit. If, for example, there was a small tax that would be paid to the NFL on each sports bet placed on a game, wouldn’t this be a financial boon that the league could not pass up?
This view assumes that the NFL’s “integrity” justification is a hoax and that this is really a matter of money. It may be true, but not as many people think. The NFL’s focus is on the money that it makes already for its owners and revenue streams not related to sports betting in the future.