How sports betting legalization will look after Supreme Court decision
Sports betting already exists in the United States. Many millions of dollars are wagered here every year at offshore and underground sportsbooks. That the Supreme Court has now sports betting will bring much of this wagering out into the open.
Change won’t happen immediately. The court’s decision didn’t legalize sports betting nationwide, but opened the door for states to do so on their own. That will take time, and when it happens, states could have a patchwork of regulations to deal with the need for oversight. Congress could also move to regulate sports betting, but states will be in charge unless the feds tell them otherwise.
The natural starting points for sports gambling are casinos and racetracks.
“I think most states originally are gonna say, ‘Alright, we’re just gonna allow it at the casinos,’” Richard McGowan, a professor at Boston College’s Carroll School of Management, tells SB Nation.
Twenty-four states had commercial casinos when the American Gaming Association counted in 2017, including several that have already had sports betting bills introduced in their legislatures. Many of these venues already have some of the infrastructure needed to host sports bets, like proper space, security, and licenses.
“It’s sensible to assume casinos and racetracks will be the first venues to begin offering sports betting,” says Scott Cooley, an odds consultant for offshore book BetDSI. “The technology infrastructure is somewhat in place, and obviously the frequent visitors to those operations are the target demographic.”
New Jersey is slated to have sports betting at a popular racetrack by Memorial Day.
At some point, legal sports betting will move online.
“Eventually, the app is really where it’s at,” says Dan Etna, who co-chairs the sports law practice at Herrick Feinstein LLP, a firm with offices in New York and New Jersey.
“Let’s face it: You’re still gonna be competing with the underground economy of bookies and whatnot. It’s a time suck. You’ve gotta make time to go and park at Monmouth Racetrack and the Meadowlands and whatever and make your bets and get back in your car and get on with your day. It’s not user-friendly. It’s not totally convenient. So I think that you’re not gonna see these big Palazzos of sports arising from the ground to handle sports betting. I think this is gonna be a largely, predominant digital platform.”
Dozens of sportsbooks based in other countries already offer online betting to Americans. These products aren’t complicated. You can place a sports bet from your phone or computer to places like Bovada (based in Latvia) and 5Dimes (Costa Rica). They take American credit cards, and they’re intuitive to use.
Like everything else about sports betting, the the legality of betting apps depends on each respective state’s legal climate. But it’s not hard to see a future when new and existing American media companies open up their own online sportsbooks.
A likely component of betting apps will be a geofence that only makes wagering available to users in states where it’s legal. The federal Wire Act makes sports gambling by way of interstate commerce or communication illegal.
The leagues could get in on the action themselves.
Imagine pulling up a baseball game on MLB.tv with an option to bet through a league-run portal while you watch. Imagine betting on football on NFL.com, a website that already hosts fantasy football leagues.
“I’ll go even further,” says John Wolohan, a sports law professor at Syracuse’s College of Sport and Human Dynamics. “I bet you are going to see books right at the games. I bet you’re going to be able to walk into Yankee Stadium and they’ll have a book right there in the concourse where you can place money on the game that day.”
How that might work:
“‘Give me whatever the runs are, the Yankees are gonna win. Also, give me a prop bet on the first inning that there’ll be two hits’, or something like that,” Wolohan says. “I have little doubt that that’s gonna happen within a relatively short period of time.”
In general, you can expect lots of political fighting about implementation.
How high will the taxes be in states that legalize sports gambling? Who will pay them — bettors, casino operators, or (in most cases) both? Will the leagues get a cut?
The leagues are going to contend that they should get a cut. One mechanism for that is often called an “integrity fee,” a tax on the total amount bet at sportsbooks that would go into a fund for each leagues. The NBA says it needs that fee to cover monitoring costs to ensure that no one — not players, officials, fans, nor coaches — is cheating. The gaming industry is opposed to integrity fees and argues they could be devastating for operators. Casinos only pay taxes on bets they win, but an integrity fee would tax the total bet amount, forcing casinos to pay sports leagues whether or not they win. These fees will be a major point of contention for lobbyists going forward.
“I understand that there is a need for some heightened integrity,” Etna says. “But on the other hand, let’s not kid ourselves: This is just a new, fertile revenue source for them to tap into. You can’t convince me otherwise.”
The big sports leagues might argue to state legislatures that they should have total control of specific game and player data that would be useful to sportsbook operators — like live stats and other in-game information that could help bettors place their wagers at scale. The NBA, MLB, and PGA Tour are already pushing for an arrangement like that, which would mirror how sports betting works in the United Kingdom.
“Their argument is that, ‘It’s our game. Without us, there is no product to bet on. There are no players. There’s nothing. New Jersey or New York or Massachusetts can’t have a sportsbook. Without us as a league, without us as an entity and our players, there is nothing,’” Wolohan says. “They’re claiming that, ‘this is a property right that we have, and that we should be able to control it.’ Once again, it’s an argument that they’re creating. They don’t own this right today.” American courts have generally denied it to them.
The states will also have debates about how to control consumption. This gets back to the most vital truth of gambling: Most people lose money when they do it.
“This is when the addiction problem’s gonna go up, a lot,” McGowan says. “I just think the young males between 18 and 35 are going to go crazy trying to beat the odds on this stuff. It’s already on a lot of college campuses. This will just compound it.”
Right now, every and any model for American sports gambling is possible.
In the coming months and years, states will choose their own paths.