"Sports Gambling"

From The Milken Institute Review, April 21:

The past 60 years have witnessed a massive transformation of the gambling landscape in the United States. In the early 1960s, the only legal casinos in the country operated in Nevada, no states ran lotteries, and essentially all sports bets were either made informally among friends or through illegal bookies. These days, 45 state governments sell $100 billion in lottery tickets each year, with multistate lotto games like Powerball and Mega Millions occasionally offering jackpots exceeding $1 billion. Nearly 1,000 casinos and card rooms operate across 41 states, generating over $50 billion in net gaming revenue. And nowhere has the gambling industry changed more rapidly than in sports betting, where nationwide expansion has led to an increase in legal wagering from just under $5 billion in 2017 to nearly $100 billion in 2022. Here I offer a primer on what’s happened and how it’s changing the face of spectator sports in America.

Say It Ain’t So, Joe!
Organized sports have a long and complicated relationship with gambling. As rising prosperity gave people both more disposable income and more free time, spectator sports became an increasingly popular entertainment option. And where there were games, gambling was sure to follow — along with match-fixing.

The first fully professional sports league in the U.S., the National Association of Professional Base Ball Players (also known as the National Association), was formed in 1871, but lasted only five years. Cheating — players taking money from gamblers to intentionally lose games — was probably a significant factor in its early demise.

The National League of Professional Baseball Clubs (now known as the National League of today’s Major League Baseball) was formed in 1876 in an attempt to clean up the game, but it too suffered from the problem. As noted by a sportswriter of the day, “any professional base ball club will ‘throw’ a game if there is money in it.” Indeed, in 1877, the Louisville Grays, one of the league’s original teams, found itself embroiled in a betting scandal and was forced to fold at the end of the season.

Of course, the Louisville Grays were far from the last team to find itself at the center of a gambling scandal. Most famously, “Shoeless Joe” Jackson and seven other members of the Chicago “Black Sox” almost certainly took cash from a gambling syndicate in exchange for throwing the 1919 World Series. But no sport has been immune. Men’s college basketball has suffered from at least seven betting scandals since the 1950s involving top teams including the University of Kentucky, Boston College and a former powerhouse, the City College of New York. The National Hockey League and the National Football League have both suspended insiders for gambling activities. Schemes involving players, coaches, referees and even groundskeepers have been uncovered.

Gambling on sports events, of course, wasn’t seen by all as inherently wrong. But because of the potential for corruption, most leagues long favored strict controls on the presumption that fans would lose interest if they thought contests might be fixed. Indeed, ticket demand is a lot higher for games between the Los Angeles Lakers and the Boston Celtics than “games” between the Harlem Globetrotters and their perennial doormat, the Washington Generals.

Sports betting was common, though generally illegal, throughout the country for much of the 20th century. But state governments, hammered by lobbyists and salivating over the prospect of big payoffs in revenue, began to adopt more permissive attitudes toward gambling in general. That led to the rise of state lotteries as well as the licensing of both commercial casinos and Native American casinos. Alarmed, the sports leagues began to push back, convincing Congress to pass the Professional and Amateur Sports Protection Act of 1992 (PASPA). This law banned sports gambling nationwide, though it did allow sports betting in Nevada’s casinos to continue, as well as more limited sports betting under the aegis of the Oregon, Montana and Delaware state lotteries.

Second, Third and Fourth Thoughts
That was then. Over the next quarter-century, organized sports’ dim views on gambling evolved for multiple reasons. First, on close look, gambling-related corruption in countries with legal sports gambling — notably, the UK — didn’t appear to be markedly worse than in the U.S. In fact, a reasonable case can be made that legalizing gambling actually reduces match-fixing by bringing betting out of the shadows. In a legal setting, leagues can partner with sportsbooks (companies that organize sports gambling) to identify athletes engaging in gambling. In addition, leagues can work with sportsbooks to identify patterns of suspicious betting — tracking that would be nearly impossible if the wagers were underground.

Second, ballooning salaries (except in college sports where the NCAA cartel has kept player compensation low) meant that players were less susceptible to bribery than in the past. When Shoeless Joe allegedly took $5,000 to throw the World Series in 1919, he was only making $6,000 per year (just over $100,000 in today’s dollars) as one of the highest paid players in the league. Today, MLB players snag an average salary of nearly $4.5 million. It is thus hard to imagine any contemporary players with the ability to affect the outcome of the World Series choosing to risk their careers by throwing games.

Third, leagues began to appreciate the bonanza they could reap through partnerships with sportsbooks. For one thing, gambling companies are prime candidates for sponsorship dollars. For another, those who bet on games are more likely to attend, or at least tune in, making media rights more valuable....

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