Will Legal US Sports Betting Ever Happen Beyond Nevada’s Borders?

Legal US sports betting has been a hot button topic in America since the 1990s. This article explores the history and factors of this controversial and complex subject.

As match-fixing accusations, the legitimacy of the daily fantasy sports (DFS) industry, and New Jersey’s push for removing the ban on sports gambling continue to make headlines in US gambling news, the question of legal US sports betting continues to be pushed further and further to the forefront. To help readers figure out where they stand on the subject, GamingZion presents a compact history and analysis of the issue’s many factors to be taken into consideration.

The history of legal US sports betting

In 1992, New Jersey Senator and former NBA star Bill Bradley spearheaded a successful movement against legal US sports betting. He asserted that when you bet on sports in the US it undermines integrity of the sport; that it makes sports about money instead of achievement and sportsmanship; and that the activity attracts corruption.

Bradley was not alone in his beliefs. His movement was backed by the NCAA and the major sports leagues, whose representatives testified before Congress that there should be an all-out ban on sports betting across America. Congress refused complete illegalization, but passed the Professional and Amateur Sports Protection Act (PASPA) that forbade sports betting in states besides Nevada, Delaware, Oregon, and Montana, who allowed betting at the time.

As a result of the PASPA, the state of Nevada gained a monopoly on single-game sports betting that it still enjoys today. It received no competition from the other states, as they only offered unpopular multiple-game parlay contests.

However, Nevada’s monopoly is now in jeopardy. Judicial scrutiny of the PASPA, a change of heart from several major sports leagues, and the constantly rising popularity of the DFS industry all threaten Nevada’s once-untouchable position. For the first time since the creation of the PASPA, there now stands a real possibility of legal US sports betting growing beyond the Las Vegas Strip.

Financial gain versus social costs of legal US sports betting

One of the main arguments for legal US sports betting is the financial gain America stands to receive. Nevada sportsbooks already handle approximately USD 4 billion in legal bets yearly; however, estimates exist that anywhere from USD 50 billion to USD 400 billion is bet illegally each year through bookies and overseas online sports betting companies. Even if it the exact amount is in the lower range, it’s still indicative of the existence of what could be a booming business.

Those opposed to PASPA cite the possibility of immense financial gain as one of the main reasons why the policy should be overturned. They argue that states would receive a sizeable revenue through taxation on sports gambling, as over 60% of Americans favor legal US sports betting, suggesting the existence of a large potential market that is currently untapped. In addition, by legalizing sports gambling, the illegal market—which has ties to organized crime and other criminal activity—would be eliminated.

The flipside of the pros to legal US sports betting are the cons, which have considerable social costs. Some believe that legalization would result in an increase in gambling disorders. Others believe that it is too idealistic to think that making US gambling laws more lenient would eliminate match-fixing or the existence of bookies.

Legal US sports betting, DFS, and the NFL

While major sports leagues such as the MBA and the NHL have indicated that they’re coming around to the idea of a structured, legal sports betting system, others remain vehemently opposed. Mainly, the NFL and its commissioner Roger Goodell, who continue to assert that sports betting is damaging to the integrity of the sports.

That said, the NFL has received considerable backlash for being hypocritical when it comes to its stance on the legalization of sports gambling. In 2015 it played games in Britain, where sports betting is legal and fans could freely put money on the NFL games. It has also developed strong connections with the DFS industry: DFS industry leaders sponsor fantasy lounges at NFL stadiums, and two NFL owners have equity stakes in companies like DraftKings and FanDuel. Goodell insists that he “doesn’t look at fantasy sports as gambling,” but recent developments suggest that DFS is on its way to becoming labeled as such by the US government.

Some suggest that the NFL’s integrity justification is a scam, and that its opposition to legal US sports betting is actually a financial matter. One would think that the NFL would be for sports betting if the activity was regulated and monetized to their benefit. However, without legalized betting the NFL already makes USD 10 billion a year in revenue. The revenue they’d get from betting would likely not be large enough to risk changing their stance on the PASPA and jeopardizing the profitability of the NFL should a gambling scandal break out.

So will legal US sports betting happen?

It’s hard to say whether legal US sports betting will expand beyond Nevada anytime soon. The state of New Jersey believes that there is a way around the PASPA and is currently attempting to challenge it before the 3rd Circuit Court of Appeals. Should New Jersey receive their appeal, many states would likely follow suit, and major sports leagues would then be forced to put together a national system for sports gambling.

That said, the NFL and the US government remain strong opponents who are difficult to sway, which means legal US sports betting remains a question of “if” and not “when”.