With Game 5 of the World Series looming and the Yankees facing the Dodgers at home, you can bet millions of Americans are wagering on the outcome of the game — including from the comfort of their homes. Some politicians would like to change that.
U.S. Senator Richard Blumenthal (D-Conn.) and U.S. Rep. Paul Tonko (D-N.Y.) recently held a press conference to announce their introduction of the SAFE Bet Act, which would ban sports betting nationwide until states adopted their preferred regulations on it. Let’s hope these lawmakers strike out.
Virtually every form of entertainment has some social cost associated with it. Gambling is no exception.
Online sports betting has become immensely popular. Americans spent about $11 billion on online sports bets alone last year, plus another $7 billion in wagers at casinos. Thirty-eight states have legalized it and, on November 5, Missouri residents will vote on it.
For many years, Congress only allowed Delaware, Montana, Nevada, and Oregon to have legal sports betting. Then, in 2018, the U.S. Supreme Court struck down that federal ban, and state legislatures started legalizing it.
Even prior to that, in the 2010s, companies like DraftKings and FanDuel began offering daily fantasy sports on smartphone apps. They work by awarding prizes to winners, funded by participants’ entry fees. This model was a legal gray area; some states banned the apps as illegal sports betting, and others did not.
Whatever the legal differences between fantasy sports and sports betting, in both cases, participants win or lose money based on their correct forecasts of sports outcomes. Recognizing this, many state legislatures have legalized both daily fantasy sports and traditional sports betting, while a handful of states continue to ban both.
But sports betting is basically entertainment. The enjoyment that bettors get is a good thing. The average Gen Z sports bettor spends $268 a month on bets. That’s less than what many young people spend going out for dinner or drinks, traveling, dating, or many other entertainment activities.
Sports betting also has a rational function. If you’re a big sports fan, you can hedge your psychic losses by betting against the teams you want to win. You can also make watching games more entertaining by placing a small wager on the outcome. It can be a social activity — something you talk about with friends.
But anti-gambling advocates want to roll back the progress we’ve made and return us to the bad old days of prohibition.
They point to data showing that between one-sixth and one-third of all gambling revenue is produced by “problem gamblers.” Since problem gamblers are by definition spending a lot of money, you can bet that the percentage of people who gamble without becoming problem gamblers is an even larger majority. Furthermore, sports bettors, who generally have to do a lot of research on their picks, are less likely to be problem gamblers than, say, people who play slots or state lotteries — which typically have the worst odds of all forms of gambling.
The Manhattan Institute’s Charles Fain Lehman is a card-carrying member of the Coalition Against Fun, making a career of inveighing against the legality of weed, betting, and even alcohol. A running theme of his work is that the intrinsic pleasures of an activity are worthless; all that matters are the costs.
Lehman points to three new, non-peer-reviewed studies on the effects of legal sports betting on different outcomes. One finds that households reduce saving at least dollar for dollar when they begin betting on sports. Another finds that average credit scores decline by 0.3 points when sports betting is legalized in a state, corresponding to an increase in consumer debt and bankruptcies. The final one finds that “the effect of NFL home team upset losses on intimate partner violence” increases by 10 percentage points where sports betting is legal.
But the effects of sports betting found in these new papers are quite small. For instance, the second paper mentioned above finds no effect of legal sports betting in general on bankruptcies, just online sports betting. And the effect of online sports betting is to increase the risk of bankruptcy by merely 1 in 10,000 per person per quarter.
Virtually every form of entertainment has some social cost associated with it. Gambling is no exception. American families and cultural leaders could do a better job teaching the young that gambling is a foolish way to make money, that it should be treated as entertainment, like buying tickets to a concert, and that just as you shouldn’t spend more on such tickets than you can afford, you shouldn’t gamble more than you can afford to lose.
Instead of trying to keep citizens from entertaining themselves as they see fit by banning gambling, government could address the social problems it can cause by doing things like making it easier for problem gamblers to remove themselves permanently from their temptation. There should be a way for them to put themselves on a “do not contact” list that would exempt them from marketing by gambling outfits and voluntarily restrict their access if they try to sign up gambling accounts. Empower people to make good choices for themselves rather than taking away their freedoms.
Let’s deal with the downsides instead of going back to prohibition. When it comes to online sports betting, government needs to take the W.