Sports betting seems to be everywhere.
Ads for online sportsbooks like BetMGM, DraftKings, and FanDuel are everywhere, both on social media and while watching games, offering some free winnings for your first bet.
You can hear odds for every contest on pregame shows and sports podcasts. You'll likely hear about prop bets, including whether LeBron James will be the first Lakers player to score against the Warriors on Christmas. You may also hear about a risky multi-stage bet called a parlay, where a $25 wager can turn into $237,553.
Sports gambling's explosion into the zeitgeist was the result of a 2018 Supreme Court ruling that banned gambling on competitive sports almost nationwide. Since the ruling, sports betting has been legalized in 38 states and the District of Columbia, and the American Gaming Association reports that the U.S. sports betting industry posted record revenue of $10.92 billion in 2023. . More than one in three Americans have bet on sports at some point, according to a recent poll by Seton Hall University's Stillman School of Business.
For competitive athletes, like podcast host Danny Green, a three-time NBA champion who retired from professional basketball this fall, hearing from bettors who are upset about losing their bets is a big deal. has become the norm. “They say, 'You owe me money,'” Green said. Today's explanation About angry sports bettors sending him messages on social media. “They're obviously swearing and saying 'beep beep!'” Know-it-all son! You sacrificed me. Couldn't he have gotten two more rebounds? ”
Superstars like Kevin Durant and Kyrie Irving also spoke about how legalized sports gambling has changed the relationship between athletes and fans. “Gambling and sports betting can sometimes completely take the purity and fun out of the game. Let me be honest with you guys,” Irving said on the streaming platform Twitch last year.
Harassment is not limited to professional sports. The NCAA, which governs college sports, said this year that one in three high-profile college athletes have received abusive messages from someone with gambling interests, and that 90% of athlete harassment occurs online through social media. published data showing that
Charles Fein Lehman recently wrote about sports betting in The Atlantic, arguing that legalizing sports betting was a mistake. The holidays have started and there are lots of sports on TV. Today's explanation I reached out to Lehman, who usually writes about addiction, drugs and public safety, and asked him, “What's so bad about legalized sports betting?”
A partial transcript of the conversation, edited for length and clarity, follows below. You can listen to the entire conversation on Apple Podcasts, Spotify, or wherever you find podcasts.
Charles, what do you think legalized sports betting is doing for our country?
When you do a cost-benefit calculation, gambling looks like any other addictive substance. In other words, most people who participate in gambling derive some small utilitarian hedonic benefit. They get fun from it. And a smaller number of them become seriously addicted, potentially causing serious harm to themselves and others and ruining their lives.
Gambling addiction comes with all kinds of dire consequences, including loss of home, loss of family, and loss of life due to personal actions. So we created this huge concentrated social harm and in return we got anemic tax revenues and tons of advertising everywhere. To me, that doesn't seem like a worthwhile trade-off.
oh. It seems like you really don't like it.
I don't! I don't! I don't like it because there are a lot of unscrupulous goods. I think we tend to systematically underestimate their harm, but the problem is the same in each case. That is, they are concentrated in a small number of users who do the overwhelming majority of use and experience the overwhelming majority of harm. And it's like everyone else is profiting off their backs, which is an amazing arrangement to me.
With the widespread legalization of sports betting, are there actually any reports on how many lives have been ruined due to legal sports betting in this country?
absolutely. You know, I think a lot of Americans at this point know someone who has been affected by this. I was at a wedding recently and a friend from college told me about a friend from his hometown in Erie, Pennsylvania. He works at the post office. He's not a wealthy guy who makes $28,000 betting on sports. It's just a very big problem. Interesting point about gambling legalization: Information on this comes primarily from the UK experience, which is pretty harsh. Some estimates suggest that 8% of all suicides in the UK are due to sports gambling addiction.
Because gambling has been legalized in different states at different times in the United States, economists can use a fairly specific set of methods to identify causal effects in sports gambling. In addition to correlations with sports gambling, you can also identify how sports gambling influences various outcomes. . One study I point to by economists at Northwestern University estimates that for every $1 spent on sports betting, households leave $2 less in investment accounts.
This greatly increases the risk of overdrafting your bank account or maxing out your credit card. Another paper by economists at UCLA and USC looks specifically at online sports gambling. They found that legalization increases the risk of bankruptcy by 25 to 30 percent.
The other thing that really stands out in these studies is that harm tends to be concentrated in the most economically unstable populations, right? Harm tends to be concentrated in areas with the highest levels of poverty. They also tend to concentrate on young people who are already at risk for all sorts of less important financial decisions. In other words, the harms caused by gambling do not only fall on some people, but the harms caused by gambling often fall on those who are least able to allow it to befall them.
Do we know how much money people lose on average compared to what they win?
absolutely. Another study by the folks at Southern Methodist University had a panel of 700,000 sports bettors and showed some very interesting things. Only about 5% of the panel participants withdrew more money from the app than they deposited. That means 95% of people are losing money. What's really interesting is that about 3 percent of bettors account for 50 percent of sports gambling profits.
How much does the amount of money people are losing have to do with how gambling has changed due to the little devices we carry in our pockets?
It's an important part of this story in many ways. One of the factors is that it's more readily available. This means that if you have to go to a casino to gamble, you may not want to waste time of your day. I may not be drawn in, and fewer people will become addicted in the long run because they won't be exposed in the first place. The advantage of continuing to gamble in Las Vegas is that you have to go to Vegas to do it.
Even more alarming is that app-based gaming facilitates algorithmic discrimination on the part of sportsbook providers. They can see who spends the most. They will know when you check your stake in the middle of the night.
They know what you are doing and how much you are betting when you are watching a match. And what they can do is enhance it algorithmically. They can make you offers and assign you a personal concierge who will encourage you to place more bets. If you're a big spender whale – this is what actually happens at Las Vegas casinos – you can get all sorts of goodies. But it doesn't happen in a dingy or fancy hotel, it happens on your phone all day, every day, until they receive your money in full.
As I speak with you, it becomes clear to me that legal sports betting is causing a lot of harm in states across the country, especially young people. However, it was legalized with the promise that it would bring many benefits to the states that approved it. You seem to believe it won't pay off.
I think there was some discussion here. One is tax revenue, which is a big selling point. And the reality is that tax revenues are much poorer. Looking at the 38 states where it's legal at the latest count, gambling generates about $500 million a quarter. This is not nothing but a drop in the bucket compared to most states' revenue needs. It is transmitted from alcohol, tobacco, and marijuana.
Another argument is that it will reduce access to overseas gambling sites. That doesn't really seem to be happening. A study conducted in Massachusetts found that bettors were just as likely to use unlicensed betting sites after legalization. But it makes sense. If you're an active sports bettor, you're probably betting at multiple sportsbooks and trying to get as much action as possible. Therefore, offshore sites are just a complement. They are not replacements.
And the third argument, which I think we should take seriously, is the hedonic interest versus the interest of individual freedom. But in 2017, we were not living in a time of horrible dictatorships. If you and I made a bet together, neither of us risked going to jail. In other words, interpersonal gambling was not illegal. What was illegal was for large corporations and states to be involved in this action. And I'm not all that upset about the state of Georgia restricting your or my freedom to engage in betting.
