In September, the American Gaming Association (AGA) released a report that estimated Americans will bet approximately $95 billion on college football and the National Football League alone in the 2015-2016 season. Of the enormous quantity wagered, less than four percent will be legal. The AGA’s evaluation, in conjunction with the recent October DraftKings and FanDuel controversy, serves to corroborate AGA President and CEO Geoff Freeman’s sad observation: “Illegal sports betting is reaching new heights of popularity in America. It’s clear that a federal ban on traditional sports betting outside of Nevada is failing.”
Sports betting outside of Nevada is failing.”
GamingCompliance, a company specializing in international gaming research, referred to the American sports betting market as a “sleeping giant” after projecting that a legal market in the United States—with bets placed in casinos, retail bookmaking shops, and online—would create approximately $12.4 billion annually. United States revenue would be more than 11 times larger than Italy’s entire gambling revenue and over five times as large as the United Kingdom’s government-regulated sports betting market. To compare, Americans placed over $3.8 billion worth of unlawful bets on Super Bowl XLIX alone, an amount “38 times greater than the total bet legally.”
Based off these statistics, it is overwhelmingly clear that a change should be made. Either betting should be more strongly prevented, or it should be legalized.
Moving the Goalposts: Efforts to Reduce Illegal Sports Gambling
Largely due to recent scandals in illegal sports betting, the American Gaming Association has developed the “Stop Illegal Gambling—Play it Safe” initiative that “seeks to distinguish the highly regulated, $240 billion legal gaming industry—which supports 1.7 million jobs and generates $38 billion in taxes across 40 states” from criminal networks’ use of illegal gambling. Specifically, the initiative attempts to prevent gangs and crime families from utilizing illegal gambling to bankroll other activities such as violent crime, drug distribution, and human trafficking. Although this initiative is conceptually powerful, its application has been somewhat ineffective so far, given the massive size of illegal sports betting rings. The recent discovery of a 17-person, $32 million illegal sports betting ring in New York with more than 2,000 active bettors unequivocally demonstrates the AGA’s impotence.
In addition to its initiative, the American Gaming Association actively tries to counteract Internet sweepstakes cafes and black market machines through undercover law enforcement operations. Most recently, the AGA has assembled an Illegal Gambling Advisory Board, comprised of former law enforcement and government officials. This group includes former FBI deputy director Tim Murphy, former Boston Police Commissioner and Institute of Politics fellow Ed Davis, and former Wisconsin attorney general and U.S. attorney J.B. Van Hollen, among other influential members with experience combating illegal sports gambling.
Despite the efforts of the AGA and other lawful gaming organizations, illegal sports wagering shows no signs of slowing down. Although not deemed illegal in court yet, DraftKings employee Ethan Haskell’s win of $350,000 on rival site FanDuel created a large controversy centered around insider trading concerns, leading both companies to ban employees from participating online fantasy sports competitions for profit. However, over half a million more users entered into guaranteed prize pools the following week between both websites. Rather than deter entrants from joining and placing bets, the controversy highlighted the opportunity to win for many users, essentially making NFL Week Six “the most profitable week of the NFL season for both sites.”
In addition to sites of dubious legality like DraftKings and FanDuel, outright illegal activities like point shaving, match fixing, bribery, and sports betting corruption have only increased in prevalence due to the availability of online satellite contests and widespread illegal wagering. Europol has suggested that sports betting criminals have paid millions of dollars to players, match officials, and club officials in over 15 countries in the past decade. Admittedly, this phenomenon most often occurs abroad and in locations where sports betting has few, if any, regulations.
But in the United States, illegal sports betting rings continue to grow in spite of governing bodies’ efforts to stop illegal wagering. The National Gambling Impact Study Commission (NGISC) discovered that the state of Nevada accounts for less than one percent of sports betting each year despite being the largest gambling hub in the United States. “Organized crime and other underground markets control the remainder of those wagers,” the Commission states. In 2010, five illegal betting rings with close relationships with the notorious Genovese and Gambino crime families were closed in New York. However, illegal betting rings continue to develop despite some successes from the AGA and law enforcement, which creates, even more, the urgency for the legalization of sports betting.
Nevertheless, the United States can be influential in saving the integrity and public perception of international sport, considering its established relationships with global sports organizations and its monetary investment in athletics. Global sports security expert Chris Eaton, who has collaborated with both FIFA and Interpol, told ESPN’s David Purdum that “Eastern European and Southeast Asian betting fraudsters have driven European soccer into the danger zone” and that “[t]he USA very much holds the key to saving international sport from complete loss of credibility.”
An End Run: Pro-Legalization Perspectives
NBA Commissioner Adam Silver strongly advocates for the legalization of sports betting in the United States, as he believes it is the best option to protect the integrity of the game. In addition, high-ranking officials and owners for several NBA teams—most notably those of the Dallas Mavericks, Sacramento Kings, Washington Wizards, and Los Angeles Lakers—have explicitly expressed their support for legalization. The National Hockey League and Major League Baseball, although still officially undecided, have voiced their openness for new perspectives on betting legalization and their desire to reduce point shaving and corruption among players and officials.
If legalized, regulated, and taxed, sports betting would create a very profitable market. Between $80 and $380 billion are wagered illegally in the United States every year. Andrew Vacca writes in the Willamette Law Journal that similar regulations to Nevada are used, the federal government could earn five percent of bets’ yearly value. An optimistic estimate of the subsequent annual government revenue reaches $19 billion.
The benefits of the legalization of sports betting in America transcend the obvious. Gambling industry expansion will create a higher demand for labor. New Jersey state senator Raymond Lesniak wrote in U.S. News and World Report that he believes legal sports betting in Atlantic City will create thousands of jobs in the region, including those resulting from more customers for local businesses. This is clearly evident in the analysis of Club CalNeva, a Las Vegas gaming trends analyst, which estimated that the legalization of sports betting in New Jersey could produce $120 million in tax revenue and $1.3 billion in gross revenue for the state, in addition to creating thousands of new jobs.
Getting to the Red Zone: Closing in on Legalization
Although the Professional and Amateur Sports Protection Act of 1992 placed a federal ban on sports betting in all states but Delaware, Montana, Oregon, and Nevada, many states are taking matters into their own hands. In recent years, the California State Senate Governmental Organization Committee has advanced legislation to legalize and regulate sports betting. In a landmark decision, New Jersey governor Chris Christie stated that his state would defy the federal ban on sports betting and would enable its citizens to wager on sporting events the coming season. Legislators in Iowa, Washington, and Kansas have all proposed legislation to legalize Daily Fantasy Sports (DFS)—the model of DraftKings and FanDuel—with the center of their argument being that fantasy sports are a “game of skill” rather than gambling.
Associated Press columnist Tim Dahlberg, unsure of the reasoning behind the NCAA and NFL’s opposition to betting, makes a convincing argument for the legalization of sports betting: “London—which has at least one betting parlor on every major street—managed to hold an entire Olympics without any problems, while offering bets on everything from Usain Bolt winning the 100 to Michael Phelps getting seven golds,” he writes. “The NFL, meanwhile, hosts a game in London every year and hasn’t complained yet about fans being able to bet their favorite on their way to the stadium.”
Ultimately, sports gambling is inevitable, as shown by the persistent increase in the amount wagered in the United States despite numerous controversies. With greater backing from government officials and major sports organizations such as the NBA and FIFA, legal sports betting has never seen more support than it does now. Some continue to argue the legalization of sports wagering may have unfavorable effects for the integrity of the game. However, the impact of legalization can only improve current conditions of sportsmanship and honor within sports by increasing regulation and placing pressure on officials, referees, and players to act with honesty.
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