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Sports Betting Is Everywhere Now, But Is It Paying Off?

Sports Betting Is Everywhere Now, But Is It Paying Off?

Turn on any sports game, and the ads will be hard to avoid Sports betting From companies like FanDuel and DraftKings.

A Pew survey found that a fifth of all American adults say they have put money on sports in 2022 – a huge change from just four years ago, when Supreme court Legalizing sports betting allowed states outside of Nevada to set their own rules.

Earlier this year, Ohio became the latest to join 35 other states and Washington, D.C., that have legalized sports betting with age restrictions. Three more states may join that list by the end of 2023.

It’s clear the sports betting craze is on the rise, leading many to wonder if there are any signs of slowing down as it sweeps state legislatures.

The main argument for its legalization was twofold. Supporters such as the American Gaming Association (AGA), a trade group representing gambling companies, argued that legalization could help curb illegal gambling while providing a major tax revenue source for local governments.

At first, after decades of high-profile scandals, the major sports leagues were very wary of any association with gambling. But NBA commissioner Adam Silver wrote a now famous op-ed in the New York Times Taking the AGA’s side, arguing “$400 billion” in illegal gambling was already happening anyway. That stat will also be cited by lawmakers trying to legalize betting Pennsylvania And West Virginia,

The AGA recommended that states impose a relatively low 10% tax on revenue for gambling companies to encourage faster growth. In return, he predicted, state governments could earn hundreds of millions of dollars in new revenue.

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Now, four years after the 2108 Supreme Court decision, was that really the case?

States were so eager to move gambling operations online, few rules or regulations were put in place. Some states let companies begin operating before a full review of their practices is over: in Iowa and Tennessee, companies let gamblers add money via credit card, even though the states have outlawed such practices. Had given. Louisiana State University partnered with betting companies and encouraged students to place bets, even though gambling is widely illegal For anyone under the age of 21 in Louisiana.

AGA introduced its code for “Responsible Marketing” and boasts of self-regulation; The code includes things like no marketing to underage audiences or irresponsible betting.

New York Times investigation It was found that most of the states did not provide more enforcement than this. in new jerseyFor example, regulators initially wanted to review all ads but gave up after two years after too many ads came in.

But in exchange for giving the industry a very long lease, many states are not seeing revenue numbers as anticipated. The revenue of some states has been less than half of the revenue estimated by the AGA. There were some states that fared better, however, after ignoring the association’s advice: New York set a higher tax rate of 51% on gambling company revenue and brought half a billion in revenue Within the first 10 months of 2022 only. This was half of all sports betting tax revenue across the country combined.

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As far as the $400 billion in illegal silver gambling goes, it’s not very clear how much dent legalization has actually taken place. same New York Times investigation As mentioned earlier the numbers didn’t stand up to much scrutiny – cited the NBA and AGA A 1999 Report to Congress Regarding gambling losses, that puts estimates of illegal betting at “anywhere between 80 billion and 380 billion”. An economics professor who admitted he regretted citing the same figure in his paper told the Times, “The numbers are pretty much pulled out of thin air.”

As the legal battle was unfolding for the first time, “60 Minutes Sports” interviewed two former illegal bookies – both with mob ties – about how legal betting could overtake the illegal scene. Both had similar responses:

John Allite, a former Gambino family associate, said, “They won’t finish it. They won’t even break into it.”

“Because the man who has no money in his pocket is betting [games]Will still call a local bookie to place bets because he can bet with no money,” said Angelo Lutz, a restaurant owner and former bookie.

The meteoric rise in demand for legal sports betting is clear, but as tax revenue doesn’t live up to that initial hype, states may reconsider granting such free reign to gambling companies. All eyes will be on how the sports betting industry and new sports betting companies navigate the ever-changing landscape.

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