Why Sports Betting is Bound to Be Legal in America Soon

American gambling laws have heavily restricted sports betting since 1992, but that looks like it will change sooner rather than later.

American laws and social norms represent a messy hodgepodge of excessive libertarianism and repressive puritanism. In few (if any) places on Earth do people have the freedom to do so much, yet seemingly always have the nanny state nipping at their heels.

• Gambling laws prohibit betting everywhere except Nevada, Delaware, Oregon and Montana
• Americans wager roughly $400 billion per year betting on sports illegally
• NBA Commission Adam Silver recently came out in favor of legal betting

Americans have the right to express almost any opinion anywhere as well as purchase firearms with minimal restrictions. Seemingly every day an obvious criminal goes free on an obscure legal technicality. At the same time, Americans can’t drink alcohol until age 21, can’t smoke marijuana in most states, and can’t bet on sports anywhere except Nevada, Delaware, Montana and Oregon.

While most outsiders can’t wrap their head around all the contradictions, one must simply resign themselves to the fact that in a large, diverse and ideological state like the US, things aren’t supposed to make sense. There is one aspect of American life which appears likely to become a bit more rational, however, and that’s the market for betting on sports.

PASPA and the rise of unregulated Web betting

To bet on sports in America was, is, and will forever be popular amongst a large portion of the population. But while beloved behind closed doors, sports wagering is publicly stained by the stigma of scandal. A large part of the negative perception dates back to the 1919 “Black Sox” scandal, when members of the Chicago White Sox baseball team accepted money from New York City gangster Arnold Rothstein to throw the World Series.

Several major match-fixing cases erupted in professional and college sports throughout the 20th century, including the 1989 revelation that baseball legend Pete Rose had wagered thousands of dollars on his team’s games as manager of the Cincinnati Reds.

Loud agitating by anti-gambling crusaders coupled with lobbying on the part of the major pro sports leagues culminated in the passage of the Professional and Amateur Sports Protection Act (PASPA) in 1992. While 46 out of 50 states had bans on betting anyway, this law cemented prohibition on the federal level. Only the quartet of abovementioned states (which had legal betting as of 1976) could legally issue licenses to sportsbooks.

While PASPA made puritans, bible thumpers and men like NBA Commissioner David Stern and NFL Commissioner Paul Tagliabue happy, it hasn’t been effective in preventing Americans from wagering on sports. It has simply ensured that state governments don’t collect any taxes from sportsbetting activities.

A report from the American Gaming Association (AGA) estimated that in 2013 Americans wagered roughly $400 billion using unregulated or offshore betting services. Time estimated that Americans wager $12 billion annually on the NCAA’s March Madness tournament alone.

The NBA puts a crack in the anti-gambling façade

State governments now want a piece of the action. Facing ballooning budget deficits and stagnant labor markets, more states look poised to turn to legalized betting as a way of boosting their economic fortunes. New Jersey has been attempting to override (or overturn) the PASPA for at least a decade to no avail, but each time they seem to be getting a bit closer.

The major sports leagues (NFL, NBA, MLB, NHL and NCAA) have united in defense of PASPA and rallied to block attempts by states to legalize betting. The group filed the legal challenge which resulted in federal judge Michael Shipp rejecting New Jersey’s attempt to create a legal betting market.

But that united front now has a major dent in it. While the NBA stood by the other leagues in opposition to New Jersey, Commissioner Adam Silver recently came out in favor of altering American gambling laws to make betting on sports legal.

Last month the New York Times ran an Op-Ed penned by Silver and titled “Legalize and Regulate Sports Betting.” Silver’s words shone like a refreshing ray of sunlight:

Despite legal restrictions, sports betting is widespread. It is a thriving underground business that operates free from regulation or oversight. Because there are few legal options available, those who wish to bet resort to illicit bookmaking operations and shady offshore websites… some estimate that nearly $400 billion is illegally wagered on sports each year.

Silver’s proposed solution to the proliferation of illegal betting is to repeal PASPA while setting comprehensive federal regulatory standards on sports betting. In his view, this approach would allow states to reap the benefits of legal betting while ensuring that regulation is at a satisfactory level.

Thus the NBA has woken up to the reality that regulation is more effective than prohibition. Whether the other leagues follow suit is yet to be known. NFL Commissioner Roger Goodell is a staunch opponent of legal gambling, and his league remains the biggest and most powerful in the country. But the NBA’s decision has started a fire, and in upcoming years there will most likely be nothing that can put it out.