The sports gambling industry needs reform

Most people can't afford to lose as many parlays as Charles Barkley

Back when I lived in DC, my friends and I occasionally liked to drive out to Arlington, Virginia on a Sunday, slurp down some bowls of pho, and open the sports gambling apps. Inevitably, as low to medium information gamblers operating largely on the whims of sheer instinct, we’d mostly lose. But thankfully, we didn’t bet much. Ten, twenty dollars at the most, combined with the $11.75 spent on pho. It wasn't the worst way to have a soul-restoring meal and extra entertainment for that day’s slate of football games. 

But I credit my limited losses not to my will power to avoid gambling, or to my particular ability to accurately predict Travis Kelce’s receiving yards against the Broncos, but rather to the fact that I lived in DC. And mobile sports gambling wasn’t legal in DC, it was legal in Virginia. So when we crossed state lines to return to our DC townhouse to watch that day’s slate of football games, we weren’t tempted to replenish our funds with hasty bets. 

I’m betting in fifteen years, I’ll be able to wager using Fanduel, DraftKings, or any of the popular sports apps anywhere in the District. Really, anyone in the US over the age of 21 with access to the internet will be able to legally and easily toss digital cash at some half-baked bet.

Since 2018, when the Supreme Court struck down the federal ban on sports betting, 38 states (including DC)  have legalized the practice in some form. Twenty-six states allow sports gambling through sports apps, and five more have serious proposals circulating in their state legislatures. It’s a $280 billion marketplace that’s generating massive tax windfalls for the state legislatures that legalize it. That’s even without the so-called “sleeping giants” of sports gambling, California, Texas, and Florida; three states that forecasters expect will inevitably legalize the practice and bring millions of gamblers to the market. 

Even if you’re not like the 20% of Americans who bet on sports last year, you’re still likely exposed to the market in some capacity. And even if you’re like me, and you occasionally dabble in the practice, it’s important to realize that the unstoppable growth of legal sports betting has some serious public health downsides.

The industry could use some reform.

To no one’s surprise…

Having a highly addictive vice like mobile sports gambling sitting in your pocket all day is a real problem. Since 2018, $220 billion has been wagered in legal sports books, with the annual total increasing by an average of 22% year over year. And with all that easily accessible gambling, addictions have increased. 

In New Jersey, calls to gambling addiction hotlines doubled in the four years after legalization. In Michigan, calls doubled in just a month. The Gambling Helpline Network received over 270,000 calls in 2022 nationwide, a 45% increase from the previous year.

This increase is particularly pronounced among younger gamblers. Earlier this month, the Guardian ran a particularly eye-catching headline about sports gambling: ‘We’re killing the youth of America.” Now, I think that’s a bit of an exaggeration, but it is true that the legalization of sports gambling has had pronounced effects on youngsters.

In that same article, Brad Ruderman, of the Beit T’Shuvah treatment center in Los Angeles, explains that because younger people’s brains are still in the process of developing, they’re “very susceptible to dopamine, endorphin rushes. And as a result, are unable to fully process the downsides of gambling.”

I can attest. When I was 22, I won $1,000 correctly betting the score of the Super Bowl. I just experienced an endorphin rush typing that sentence, and will always remember that big win. I don’t focus too much on the losses. 

In a Slow Boring piece last year, Milan outlined a pretty strong case against the legalization of gambling as a whole, arguing that the cost of addiction really isn’t worth the revenue. But as we’ve seen over the past five years, and as he admits at the end of the piece, the cat is really out of the bag. We can’t reasonably expect for public outcry to lead to sports gambling to be outlawed again. Sixty-six percent of the public wants to keep the practice legal, and honestly, I’d like to keep tossing $10 long-shot bets every once in a while. 

What we need is to diminish its accessibility and cultural salience. 

Betting from the couch is bad

In 2019, gambling industry experts predicted that in 10 years, 90% of the sports gambling market would go mobile. That figure has already been reached in New York and New Jersey, two of the largest gambling states in the country. A Drive Research survey found that three-quarters of sports gamblers prefer to bet online. In our convenience economy, where you can order groceries and literally anything from the comfort of your own home, it makes sense that gamblers enjoy the same convenience. 

But that’s not a good thing.

As I mentioned earlier, when I lived in DC, my gambling habit never really took hold because it took a significant amount of effort to head out to Arlington. The trip was treated as a ceremonial event, complete with hot soup.

Clearly, in states where sports gambling exists in the convenience of one’s pocket, gamblers are choosing the most convenient option to place their bets, and that’s leading to compulsive and repeat gambling behavior. That same Drive Research survey found that in-game wagering is the most popular form of betting. And a 2022 Harris poll found that 70% of sports gamblers bet at least once a week.

Those numbers are good for Fanduel and Draft Kings, but bad for the American public. Amongst most recreational gamblers, in-game bets are often more impulsive and lack careful consideration. This issue is exacerbated when individuals already have a bet on the game, as some sports gambling companies aggressively send push notifications encouraging additional in-game bets. Clinical psychologist Meredith K. Ginley, a specialist in gambling addiction, emphasizes that these in-game notifications are strategically crafted to trigger risky behavior in individuals predisposed to such tendencies. Essentially, these gambling apps, driven by profit motives, exploit psychological triggers to encourage habitual and hazardous betting practices among their customers.

It’s better to make sports gambling less accessible.

People who live closer to casinos are more likely to develop a gambling addiction. Conversely, it’s reasonable to assume that if a person lives in a place where it’s less convenient to gamble, they’ll be less likely to develop an addiction. When Delaware legalized sports gambling, they restricted it to three specific brick-and-mortar sites.

So with gambling generally occurring in physical locations, we get the graph for the Delaware sports gambling market below. There was a huge bump in usage when sports gambling first became legalized, but Delaware hasn’t seen constant growth in its market, just spikes that seem to coincide with the beginning of the NFL season.

We can contrast that with New Jersey, a state with completely legal mobile sports gambling. There’s the same seasonal dips in betting handles during the transition between between various sports seasons, but the growth is generally linear. More people are gambling. And it’s safe to assume that some of those people are becoming addicted.

If we follow the casino proximity principle, states should restrict the geolocation of gambling and force people to travel out of the comfort of their home to place a bet. Of course, people would still gamble and addictions would still develop, but it just wouldn’t be as convenient. That means less in-game wagering from the comfort of one’s couch and less frequent sports gambling throughout the week. Generally, less sports gambling, which is good.

Charles Barkley can afford to be bad at sports gambling

Charles Barkley was a great basketball player, and I’ve always enjoyed his schtick with Shaq on TNT. But I would never take gambling advice from him — he’s admitted to losing $1 million in gambling throughout his life. Luckily for him, he’s worth $60 million and his reported $100 million TNT contract can more than cover those losses.

But what is pretty morally shady about Chuck’s gambling is that during every TNT pre-game show, he offers a GUARANTEED parlay.

Parlays combine the odds of multiple bets into one larger bet with a bigger payout. Professional gamblers who aim to make money over a large period of time frequently deride them as a sucker’s bet. But novice gamblers, who like the idea of turning $10 into $200 based on several seemingly plausible things happening, use them pretty frequently. David Forman, a vice president of research at the American Gambling Association, notes that parlays should “be enjoyed purely for fun, not as a moneymaking opportunity.”

But for Fanduel and Charles Barkley, parlays are a money making opportunity. Chuck clearly knows the dark underbelly of gambling. But he and his employers at TNT are paid to advertise for Fanduel, and in turn, Fanduel is able to attract viewers and hopefully turn them into regular sports gamblers who regularly pay into these long-shot bets.

Of course, Charles Barkley isn’t alone in this morally dubious behavior. Similar bets are advertised by all sorts of sports commenters. The major sports leagues also cashed in on the sports gambling legalization by signing exclusive deals with major sports gambling companies.

This is all a part of a $2 billion gambling advertisement industry that seeks to normalize sports gambling. At stadiums, teams flash gambling ads bigger than championship banners. Watch any sports game and you’re bombarded with commercials featuring famous athletes and comedians, all promising “no sweat bets,” and special deals for sporting events like the Super Bowl. Earlier this year, Caesars, DraftKings, and Bet MGM were fined hundreds of thousands of dollars in Ohio for falsely advertising “free” promotions that actually required gamblers to put down money. But this is a rarity; many of these ads continue to air and suck in potential customers under the false lure of free money.

And aside from the fact that celebrities, networks, and sports leagues are collectively incentivizing harmful and addictive behavior, I think that having sports and sports gambling so inextricably tied just makes for a bad overall product. Watch this clip from a college basketball game a few months ago. Bartstool Sports’ Dave Portnoy and two college basketball announcers spend the final few minutes of a blowout actively cheering for the game to hit an “over” points total, all so they can win a bet.

Is this actually enjoyable to anyone? Do we want to give over the joy of sheer sports fandom to the gamification of sports gambling? Alas, this is a $280 billion marketplace we’re talking about here. And this is what it looks like when everyone is scrambling to get a piece of the pie.

The federal government should step in

Aside from limited state regulations that seek to ban sports gambling advertising to people under 21 and false advertising, the federal government doesn’t play a role in regulating it. In 2018, Senators Chuck Schumer and Orrin Hatch did introduce legislation looking to standardize regulation on the sports gambling industry, but it stalled in the Senate. And in the five years since, the growth in sports gambling advertisements has been completely unabated.

Other countries have actually attempted to regulate their sports gambling industries. Ontario recently banned celebrity endorsements of sports gambling. The Netherlands banned “un-targeted gambling ads,” until they were proven to not reach audiences under 24. Italy completely banned gambling advertisements in 2018.

The First Amendment’s protections on commercial speech could make similar advertising restrictions harder to pass in the United States. But notably, the Supreme Court did uphold a ban on casino advertising in Puerto Rico, finding that reducing gambling demand constitutes a legitimate government interest. Given how fast and generally uncontrolled the sports gambling market is growing in the United States, I think there is an interest in the federal government stepping in and playing an effective role in reducing sports gambling.

The sports gambling industry argues that advertisements are a necessary way to recruit people away from the black market. But I think it’s pretty clear that if you regularly bet on sports gambling, you’re aware if it’s legal in your state. What these companies are doing is turning sports fans into sports gamblers, and regulation is needed to cut back on this unrestricted pipeline.

There haven’t been a lot of studies on the efficacy of banning gambling advertising, but a 2014 study in Europe found that rates of “disordered gambling were higher within environments that mandated less strict regulation of advertising for online gambling.” Moreover, the US ban on cigarette marketing was highly effective, and could serve as a model for how just limiting the exposure of negative products can reduce overall consumption. This year, Rep. Paul Tonko introduced legislation modeled after Federal Cigarette Labeling and Advertising Act that would similarly ban sports gambling advertisements.

Common sense advertising regulation on sports gambling isn’t a silver bullet, but it would be a start. Whether that means outright banning sports gambling advertisements in general, the FCC banning networks from talking about it during pre-game shows and sports broadcasts, or banning celebrity endorsements, something clearly needs to happen. We’re becoming a nation of sports gamblers, and as a sports gambler, I think that needs to change.