The house always wins, not the gambler.
The house always wins, not the gambler.
W hen the NCAA college-football-championship game between Alabama and Georgia kicked off on January 10, all eyes were on the star athletes competing in the limelight. The stars didn’t disappoint. Bulldogs quarterback Stetson Bennett dropped a 40-yard dime to wide receiver Adonai Mitchell, and defensive back Kelee Ringo returned an interception 79 yards for a TD.
In the prelude to the game, though, the news coverage was less about the athletes and more about the odds, moneyline, spread, and over-under. One wealthy mattress-store owner bet $2.7 million on Alabama — and lost. Sports betting is King. Or Caesar, depending on your preference.
In 2018 the Supreme Court overturned the Professional and Amateur Sports Protection Act, allowing states to legalize sports gambling. Since then a sports-betting market has been authorized in 30 states, and gambling ads dominate the airwaves.
On the upside, gambling activity is shifting from illegal operations to legal, creating jobs and reducing criminal activity in the betting industry. State and local governments stand to benefit from greater tax revenue from legal gambling — $861 million in gambling taxes since 2018 — money that was hard to pass up when tax receipts dipped early in the pandemic.
Legalized sports betting is popular. Gaming advocates point to one poll showing that 80 percent of Americans approve of sports bets, or at least allowing states to decide. That may be overstated. Even in free-thinking Colorado, legalization passed by less than three percentage points in a referendum.
In the first three years of widespread legalized betting, people have bet almost $87 billion — that’s billion — at casinos and online. Where did all that $87 billion come from, and what was it not spent on?
It’s called an opportunity cost. Spending money on one thing — say, gambling — means you don’t have money to spend on something else — groceries, gas, health care, rent, and savings. The opportunity to place a bet denies an opportunity to spend on many other things.
The well-known Oxford Economics research firm, in a 2017 study, said, “There may be some shifts from other types of spending . . . but these are secondary effects and are not directly quantified as substitution effects in this analysis.” In other words, they do not even attempt to gauge the effect of gambling on family spending and basic necessities.
Gambling has significant social costs, from increased crime rates and bankruptcies to divorce and suicide. According to Baylor University researchers, a decade ago, the social costs of one gambling addict were roughly $10,000. In addition, betting losses are rarely tallied, but estimates — from 2017 before legalization — were that bettors and lottery players lost $107 billion in just one year. The average debt of a male gambling addict is between $55,000 and $90,000.
Gambling has the same stimulating effect on the brain as drugs and alcohol. And the results can be catastrophic. The Mayo Clinic warns that side effects of gambling addiction include relationship and financial problems, legal problems, poor work performance, and even suicidal thoughts. Various mental-health disorders — including depression, anxiety, ADHD, and substance abuse — are additional risk factors for compulsive gambling. Calls to gambling-addiction help lines have jumped dramatically since early 2020.
Treatment and regulation have a long way to go to catch up.
In Colorado, for example, some of the state’s gambling-tax revenue is set aside for counseling and crisis hotlines. But as of June 2021, that was $130,000 out of $6.6 million in revenue, or about 2 percent. That is to provide treatment for residents who have lost $275 million “to the house” since 2019.
Oxford Economics blithely concludes that “regulated sports betting operators are assumed to provide certain protections, such as against underage gambling, compulsive gambling, money laundering, sports integrity, and fraud.” Colorado’s director of gaming reportedly suggested that “betting apps and websites have features built in to help people control how much they wager or pause their betting. Operators can also detect if someone has a gambling problem.” Despite these protections, some companies such as DraftKings have perhaps been overlooking money-laundering through their sites.
Those who stand to profit the most from legalized gambling are the ones responsible for limiting betting. The fox is guarding the chicken coop.
Legalized betting may affect sport itself. Owners, players, and major sports leagues are all betting that legalized gambling will have no effect on the integrity of their sports. Global sports continue to see scandals in bribery, match- and score-fixing, and point-shaving. Do the Houston Astros ring a bell? Or a trash-can lid? The Atlantic predicts it’s only a matter of time before the next big sports-fixing scandal. Further, why would anyone want to watch sports that they know are fixed? Ask TV advertisers how they feel about that possibility.
We need our state governments to do an honest accounting of the social effects of legalized gambling, including the real costs to families, society, and mental health. The house always wins, not the gambler.