According to the American Gaming Association, the Professional and Amateur Sports Protection Act (PASPA) was adopted in 1992 and banned betting on sporting events. Four states – Nevada, Oregon, Delaware, and Montana are exempt from this law because they legalized sports wagering prior to the approval of PASPA.
Nevada is currently the only state where “free market” sports betting is taking place, but Delaware and New Jersey have taken steps to legalize sportsbooks.
Prohibition: The U.S Government Should Legalize Sports Betting
Delaware
In 2009 the Delaware Senate voted 17-2 in favor of Govenor Jack Markell’s proposal to legalize sports betting in the state. Prior to legalizing sports betting, Delaware was facing an $800 million dollar budget deficit. Sports wagering in Delaware has generated at least $15 million each year since 2009.
In 2013 the law was amended to allow 31 restaurants and bars the chance to wager on sports. In order to offer sports betting, retailers must have terminals from the Delaware lottery. Prior to the amendment, betting was only permitted in the states three racetrack casinos.
Sports betting in Delaware is limited to wagers on NFL games only through parlay cards. The minimum bet is $2 and the bettor must wager on at least three games.
According to Paul Ogden, a restaurant owner, the legalization has been great for business. He says that bettors wager an average of $10 and keeps the customer in the restaurant longer. In addition to the 5% commission from NFL betting, Ogden’s Famous Tavern chain as seen a 10% increase in customer spending.
New Jersey
With three Atlantic City casinos closing in New Jersey this year, Govenor Chris Christie is seeking change. About 5,900 jobs were lost due to the closures, or 20% of the city’s casino workforce.
According to UNLV’s Center for Gaming Research, gambling revenue in Atlantic City has fallen about 45% since 2006. The decline is a result of increased competition from neighboring states (Delaware) and the recession.
Christie has requested to permit legal sports betting in the Garden State. As it stands, federal court ruled that state law would conflict with PASPA, a form of federal law. The govenor recently veto a bill that would have allowed sports betting because he did not want state law to conflict with federal law.
Christie called ignoring federal law “counter to our democratic traditions and inconsistent with our Constitutional values I have sworn to defend and protect.”
New Jersey Assembly Speaker Vincent Prieto (D) said “we’ve desperately needed innovative ideas to keep New Jersey’s gaming industry competitive, not only at Atlantic City casinos, but at our racetracks. This is an opportunity to jump start Atlantic City and generate new revenue for the state.”
On October 14 2014 the New Jersey Senate approved a bill that would approve sports betting in the state. After federal courts struck down New Jersey’s attempt to legalize sports betting and the U.S Supreme Court refused to hear the states appeal, Attorney General John Hoffman issued authorities a directive not to prosecute sports betting at casinos and horse racing tracks.
The move is intended to comply with federal law (PASPA) because its aimed at allowing private enterprises to offer sports wagering services. Hoffman contends that PASPA prevents state sponsored betting, a law that New Jersey would comply with. In addition, the bill does not allow betting to occur on college sports in New Jersey, or any of the states college teams.
The NFL, NBA, MLB, and NCAA sued the state in 2012, claiming that the state’s plan to allow sports betting violates federal law and threatens the “character and integrity” of sporting events. The lawsuit has yet to be resolved.
Benefits Of Legalizing Wagering on Sports
The ban on sports betting does what Prohibition did. It creates a “black market” where bets are placed by bettors and accepted by bookies “under the table.” States aren’t able to generate tax revenue. The system makes criminals rich. People bet on sports no matter what. The National Gambling Impact Study Commission estimates that more than 300 billion dollars is bet on games annually. Why do state and federal governments refuse valuable tax dollars?
As for the concern that legalization would encourage shady behavior, the truth is that legal and regulated betting makes it easier to spot point shaving practices. The Arizona State point shaving scandal of 1994 came to light after Las Vegas bookmakers noticed unusual betting patterns and reported it to the FBI.
When policed properly, sports wagering is good for the U.S professional sports leagues. In Europe and Australia, betting is promoted by professional sports leagues. It is considered a win-win situation because bookies make money by offering odds on games and the leagues generate revenue from advertising and sponsorship of the various bookmaking firms. In addition, the bookmaking sites like Betfair and William Hill act as a watchdog in that they report suspicious behaviors to the leagues and a National Gaming Commission to punish cheaters.
NBA commissioner Adam Silver said recently that he understood cash strapped states will pursue legalized sports wagering and that the NBA can benefit from it.
“It’s inevitable that, if all these states are broke, that there will be legalized sports betting in more states than Nevada. We ultimately want to participate in that,” said Silver.
“If you have a gentleman’s bet or a small wager on any kind of sports contest, it makes you that much more engaged in it. That’s where we’re going to see it pay dividends. If people are watching a game and clicking to bet on their smartphones, which is what people are doing in the United Kingdom right now, then it’s much more likely you’re going to stay tuned for a long time,” Silver added.
Downside to Legalizing Sports Betting
It should be noted that their is a downside to legalizing sports betting. Rick Reilly details the potential evils of gambling.
For millions of Americans, March Madness is not so much about March as it is madness.
Take a former stockbroker from New York we’ll call Fred (not his real name). For him, March Madness was about waking up, shirt soaked in sweat, already down $40,000 by Sunday morning of the first weekend. It was about taking 10 mg. of Ambien every night and still not being able to sleep. It was about tricking his parents into investing $30,000 into his “business,” when the money really was going to bookies.
http://espn.go.com/espn/story/_/id/9080768/true-madness-march
Conclusion
Cigarettes, marijuana, alcohol, are all legal and have the potential for abuse. It’s up to the individual to limit the amount they smoke or drink. Their is certainly a market for sports betting; it’s up to the government as to whether the betting will happen above – or under – ground.
I’m not saying that sports betting should be as accessible as cigarettes. States that do not have professional sports teams present should offer sports wagering services. Foxwoods Resort and Casino, for example, is in debt $1.7 billion dollars. The hotel and casino had to layoff workers and cut it’s payroll by 11%.
Legalizing sports betting would benefit the casino and hotels because it would add a significant source of revenue. In addition, it would benefit the state because of the additional tax revenue associated with “above ground” business practices.
Sports betting should not take place on every street corner in America. It should be legalized in financially depressed states that are not affiliated with multiple professional sports teams.
Sportsbooks should be strategically placed like casinos are today. Often times, remote areas work best because they create foot traffic to areas that otherwise would not have as much value.
Las Vegas, for example, is a remote city in the middle of the desert. Their is no doubt that the presence of gambling – including sports betting – contributes to the economic development of the city. People go to Vegas to gamble and bet on sports. It benefits the hotels, workers, staff, and economy as a whole.
Professional sports leagues are made better off from the added interest. If the Patriots are 13 point favorites over the Oakland Raiders, and the score is 23-10 in the 4th quarter, it’s likely for the casual fan to shut the game off and do something else. The sports bettor, on the other hand, is on the edge of his seat. The 4th quarter is a heart pumping thrill. Their is certainly an entertainment value in betting on a certain team. Wagering on a team is good for professional leagues because it keeps fans interested.
The taxes from regulation would mean more money to police sporting events. A portion of the tax revenue could go to the National Gaming Commission to oversee betting patterns to strengthen the integrity of each league.
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