Charles Fain Lehman has a fascinating piece in the Atlantic on the demonstrably disastrous results of legalizing sports gambling. He notes that as much as gambling companies say that they take measures to protect bettors from developing an addiction, they make the most money from those gamblers whose behavior becomes compulsive:
The industry may claim to want to prevent problem gambling, but its profits largely come from the compulsions of people with a problem. A small number of people place the large majority of bets—about 5 percent of bettors spent 70 percent of the money in New Jersey in late 2020 and early 2021, for example. The costs of gambling concentrate among those least able to pay, setting back those who most need help. That dollar that could have gone to buying a home, getting a degree, or escaping debt instead goes to another wager. Such behavior is irresponsible, but it’s hard to blame bettors alone when companies make their profits by pushing them to bet more.
I’ve seen firsthand how these companies deploy the prospect of addiction in their business models. Before this NFL season started, I was looking for the best way to watch my Cleveland Browns here in Washington. To buy more time to search for a long-term solution, I jumped on an offer from one of the major sports-gambling platforms, which was offering a three-week trial of NFL Sunday Ticket provided I deposit $5 on the platform.
During the first few weeks of the season, I’ve been inundated with eye-opening promotional offers which, in the context of another industry, would seem bizarre. For example, I received an even-odds — meaning I double my money if I win — offer to bet up to $25 that Bengals quarterback Joe Burrow would throw for more than 1 passing yard against the Washington Commanders this past Monday. For the non-football-initiated, that outcome was all but assured. It is exceedingly rare for a starting QB to fail to tally more than a single passing yard in a game. The company was, in essence, giving me $25 for free.
If you walked into a retail store and the cashier immediately gave you $25 in cash, you would rightly be flabbergasted. But for the sports-gambling companies, the calculus is that by forcing me to go through the process of making a bet to earn that $25, there is a chance I might be roped into further gambling in the future. The company, for all practical purposes, was taking a $25 gamble on me. They are calculating that the money they might make off my activity down the road — spurred by the dopamine hit of one successful bet — is worth $25 up front. For a large percentage of customers, that bet will likely fail. But a select number are likely to develop an addiction — one that makes the company a lot of money. You can come to your own conclusion about whether such a business model ought to be legal.