Has The American Sports Betting Revolution Been A Big Con?

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It's been four years since the US Supreme Court unexpectedly changed its tune on sports gambling. Christians and conservative voices had mixed feelings about the decision at the time. Some conservatives didn't like it because they felt that legalised gambling on a grand scale would create addiction issues and push people into poverty. Other conservative commentators welcomed the move because they support free enterprise and personal freedoms, both of which tie into an individual's right to place a bet on a sporting matter if they want.

The concerns of Christian critics on the matter were a little different at the time. Most of them had similar thoughts as the more cautious conservatives regarding the potential harm that gambling can do to the individual and the family unit, but with Christians, the issue tends to go a little deeper than that, even though it probably shouldn't. Most Christians believe gambling is a sin and is defined as such in the Bible. That isn't actually true. The Bible makes it clear that greed is a sin, but also makes it clear that the casting of lots - itself a form of gambling - is fine. The question is whether one can gamble without committing the sin of greed, and that's a philosophical matter that Catholics and Protestants have been debating for decades.

Regardless of your personal thoughts on the matter, the deal we were sold when sports betting was legalised was that states which adopted legal sports betting platforms would see enormous benefits in the form of employment, tax income and other positives. By and large, that hasn’t happened - and that’s what we want to talk about today.

Not Paying the Bills

In the years since the law changed, we’ve seen states falling over themselves to become the next in line to get a “boost” from sports betting. We’re now at a crossover point - sports betting is legal and available in more states than it isn’t. As of the time of writing, thirty states plus the District of Columbia have live sports betting legislation. All but nine of those states also permit bets to be placed online rather than in person, which is a separate issue that we’ll get to later. There are and probably always will be holdouts - there are no current plans to introduce sports betting in Texas, for example - but those holdouts will become fewer and further between as time goes on.

Such is the speed of the sports betting roll-out in the United States of America that it almost feels like nobody's stopped to make sure the early adopters are actually receiving the benefits they were supposed to receive. Any state that's considering jumping aboard the bandwagon should pause for a moment and do that before they go any further because the statistics make for sobering reading. The New York Times recently took a look at how much states are really making from their legalised sports betting industries, and - surprise, surprise - it's far less than the proponents of the activity told them they'd be receiving. Michigan is a key example cited in the article. When the state allowed people to start placing sports bets online in January 2021, the American Gaming Association told state legislators that they could look forward to collecting at least $40m in additional tax revenue each year. The real figure turned out to be barely half of that amount.

Where the Missing Tax Goes

One of the gambling lobby's biggest " wins " when lobbying for legalisation in individual states was successfully keeping taxes low on sports betting. Specifically, they've persuaded states to allow companies to offer customers zero-tax "free bets" as a means of marketing. It's estimated that the value of these "free bets" in the past twelve months topped $200m last year in Arizona alone. State officials in Virginia and Michigan pointed directly at free bets as the reason that taxes haven't generated what they were expected to generate. Virginia has written new legislation to make it harder for betting companies to hand out free bets. If that legislation helps to plug the hole, other states will likely follow.

Opening the Floodgates

It's clear that the horse has bolted the stable when it comes to sports betting. There's no rowing back on it - especially not when the American people collectively spend more than $160bn each year on the activity, which is what the New York Times article estimates. Instead, it's likely that the mass availability of sports betting will be used as a platform from which to launch "iGaming" in the USA. That's the word Europeans use for the act of playing casino games, including slots and card games, through their phones, computers and tablets. If you have any doubt this is on its way, look at the moves being made by big American gambling companies recently. MGM Resorts International has just bought LeoVegas Gaming PLC for over $600m. That's a huge company in Europe with several online casino websites under its belt. The purchase doesn't make sense unless the eventual intention is to bring the casinos to American audiences.

Once this starts happening, there’s no stopping it. It’s almost impossible to say how many online casinos there are out there in the world already, but it’s a lot. The comparison website Sister Site, which keeps an eye on such things, lists five hundred and sixty-seven online casino sites - and those are just the major ones in Europe. You could probably treble that to include casinos that operate in other parts of the world, including South America. The USA is one of the last places on the planet where playing online casino games remains illegal, but it now seems likely to be a question of when rather than if that will change. Canada already allows it. The USA will, eventually, follow.

So, have we been conned? We were told that sports betting would make our states richer, but those that opted to permit it haven't earned nearly as much as they thought they might. We were told that the activity would be tightly regulated, but instead, in-person betting quickly led to online betting, and the industry has largely been permitted to regulate itself. We were told that this wasn't the start of a road to full online casino betting, but American companies are buying European casino businesses that specialise in the online format. Someone's making money here, but we have a feeling it's not the people who were promised they'd end up in the money by embracing the industry.

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