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Diverging Bets

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Diverging Bets

Legalized gaming heads in opposite directions in the U.S. and the U.K. Autumn 2022
The Social Order
Politics and law

In a famous short story by Damon Runyon, the gambler Sky Masterson sums up a sucker’s bet when he says: “Someday, somewhere . . . a guy is going to come to you and show you a nice brand-new deck of cards on which the seal is never broken, and this guy is going to offer to bet you that the jack of spades will jump out of this deck and squirt cider in your ear. But, son . . . do not bet him, for as sure as you do, you are going to get an ear full of cider.”

Americans should keep that image in mind as they consider their deepening embrace of gambling. Though some form of sports betting is now legal in nearly three dozen states, the biggest prize of all—California—has eluded the industry. That may change in this November’s elections, though, as industry advocates and opponents wage a $300 million political battle over whether to bring legalized sports betting to the Golden State, where the annual betting pool could reach $3 billion, say supporters. That would cap a remarkable, and troubling, rise in legalized sports gambling in the U.S. since just 2018, when the Supreme Court knocked down a federal law prohibiting the activity in all but a few grandfathered locations.

Even as the industry heads toward the $80-billion-a-year betting mark in the U.S., however, the U.K., which has had forms of sports betting for decades, is taking a pause. A British government commission is about to recommend strict new limits on gaming and on the marketing of it, amid a significant rise in compulsive gambling, especially among the young. The contrast between the U.S. and the U.K. is striking.

Californians will get to vote this November on two competing gaming initiatives. Proposition 27, the expansive one, would authorize the state’s Indian tribes to partner with gaming companies to create online betting platforms for state residents, including through mobile apps. Sports-gaming companies, including FanDuel, DraftKings, and BetMGM, have funded the initiative with massive donations. Advocates have tried to stoke support by touting a 10 percent tax on betting revenues that would fund housing and social services. Thus, the initiative appears on the ballot as the “Legalize Sports Betting and Revenue for Homelessness Prevention Fund Initiative.” Such naming strategies have proved successful with voters dating back to 1976, when advocates for casino gambling in New Jersey pledged that the revenues would go to senior citizen services and education. (See “New Vice City.”) Still, in rare bipartisanship, top Republican and Democratic legislative leaders in the state oppose Prop. 27.

These issues are never simple in California; so naturally, the ballot includes a competing initiative, Proposition 26, which would legalize sports betting only onsite at Indian casinos and racetracks—likely creating a betting market estimated at one-tenth the size of an online gaming environment. This “retail” betting initiative has won support from Indian tribes wary of a gambling takeover in the state by national players backing Prop. 27. Foes include an odd mix of supporters of Prop. 27 and groups that reject any expansion of legalized gaming.

As Californians prepare to vote, sports- gaming advocates as well as critics are awaiting a government report on recommendations to reform gambling in the United Kingdom. Britain has allowed sports betting since 1960, when a law authorizing betting shops passed with the intention of rubbing out illegal gaming. In 2005, Parliament approved a major expansion of gambling houses, added rules for remote gambling, and legalized marketing efforts, including on television. The result: a major expansion not only of gaming but also of the marketing of betting to consumers. One prominent sign was the number of soccer teams, including clubs in Britain’s top tier, that cut deals with gambling houses. Eventually, aggressive advertising via sports-team websites “normalized” (in the words of U.K. regulators) the idea of sports betting among the young. A 2010 survey estimated that the number of problem gamblers in England had more than doubled in just a few years and that as many as a third of those with problems bet principally online. Another study found that as many as one-third of U.K. kids with mobile phones had sports-betting apps on them.

Since 2019, a government commission has been reviewing the U.K.’s gaming laws in light of the data. Recommendations are due by the fall; already, some ideas have leaked. Among the most significant would be a ban on sports-betting company partnerships with soccer teams, including in England’s Premier League, whose games are broadcast globally. Some reports suggest that the league’s teams have voluntarily agreed to forsake this advertising to ward off stricter government measures. Additionally, the commission is considering imposing strict caps on individual wagers, setting monthly betting limits, and initiating so-called financial-well-being audits of gamblers who lose a certain amount online, to ensure that they don’t sink deeply into debt. Regulators may also ban or limit so-called betting clubs or preferred betting programs that reward frequent players. Similar measures have already been instituted in other countries, such as Germany, with a resulting sharp downtick in betting.

What’s happening in the U.K. should set off alarms in the United States. America’s major sports leagues have gone from opposing legalized sports gambling to supporting it passively to encouraging it and partnering with betting companies—all despite evidence that sports wagering, especially in popular fantasy leagues, is a gateway for underaged bettors into regular gambling. Nonetheless, Major League Baseball has endorsed Prop. 27. The NFL has negotiated deals with FanDuel, DraftKings, and Caesars, making them “sportsbook partners” of the league. Some 20 teams now have partnerships with gambling firms. The NBA’s league-wide deal is with MGM Resorts International, and seven teams have their own gambling partnerships. Sports broadcasters have jumped into the game, too, with NBC partnering with PointsBet, CBS with William Hill, and ESPN with both William Hill and Caesars. If California joins the fold, the payoff from such deals would grow even bigger.

The vast expansion of sports gambling in the U.S. has been pitched as a harmless diversion, a jobs-producing juggernaut, and a vast pool of new government revenue. But America may really just be getting an ear full of cider.

Photo: GoodLifeStudio/iStock

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