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Our New Reality: The Pros and Cons of Sports Betting

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Marijuana Legalization, State Income, David Stern, and Less Disparity in College Football

MGM Mirage Nears Bankruptcy Photo by Ethan Miller/Getty Images

Opening

No other governing body in America is quite as influential as the U.S. Supreme Court. They’ve affirmed or struck down key social issues, so it is not a surprise that they chimed in on sports gambling. For the states that legalize sports gambling, millions of potential revenue is set to flow through their state borders. Not unlike marijuana legalization in states like Colorado, who regularly bring in over 150 million just in weed taxes. There’s also the pro sports leagues and amateur athletic conferences trying to secure a profit from gamblers. We’re at a point in American history where the populous has a strong say in how social issues play out, and a billion dollar revenue stream like sports gambling is what most people across the board want. All told, depending on how gambling revenue is allocated, college football competitiveness could be in the proverbial cross hairs. Sports gambling will tip the disparity pendulum in college football exclusively to the power-five programs.

Similarities Between Marijuana Legalization and Sports Betting

The legalization of sports betting has a similar feel to marijuana legalization, as hot button issues that have become socially acceptable. For years general gambling and marijuana use were demonized as purely addictions. Today, only 4 states abstained from legalizing marijuana in some capacity since marijuana first became legal in 2012. It’s about voter acceptance at the ballot box. Amendment 64 in Colorado achieved nearly 1.4 million votes on route to becoming law. It would seem that now is the best time to legalize sports gambling. Previous generations would have scoffed at the idea that gambling on a game could be a sustainable leisure activity. Twenty states have legislation in the pipe line to legalize sports betting. Sports betting won’t be legal overnight, but that so many states made such arrangements before the Supreme Court ruling indicates a trend amongst its populous that sports betting, like marijuana legalization, is what voters want.

States Cash-In

The Supreme Court’s decision to legalize gambling allows individual states to cash in on a lucrative vice. The USA Today reports that thirteen states accumulated 34 billion in gaming revenue. Las Vegas lead the way with over ten billion dollars in revenue. Also on that list are states like West Virginia (948 million), Mississippi (2.25 billion), New Jersey (3.05 billion) and Pennsylvania (3.16 billion), who have also passed recent bills paving the way for full-scale sports betting in their states. For New Jersey, part of that revenue stream is filtered back to senior citizens and New Jersey schools. In Pennsylvania, only 2% of casino revenue goes back to the state, and it’s still 3.16 billion dollars. This money is used for tax and wage reduction in the state. States will only net about 1.5 cents per dollar bet through sports gambling. But if you were set to inherit .0025 percent of a billionaire’s estate, you’d be a happy camper. States will make more money than if there was not sports gambling. That’s good enough for them.

A Stern Effect

In 1991, David Stern, NBA Commissioner at the time, testified against legalizing sports betting. Legislation banning sports betting outside of Nevada was called the Professional and Amateur Sports Protection Act of 1992. More than 25 years later, even Stern promotes a different approach to sports betting. He said in the following YouTube clip, when factoring in technological advancements, “it’s such a sophisticated approach now...if we can get the sports league and the industry together, we can wind up having a serious, regulatory ability to make it even stronger to protect the integrity.” This analysis aims to refute worries that corruption would envelop professional and college sports. To afford oversight personnel, the NBA is asking for one percent of a state’s profits to pay for that staff, which is approximately 2 billion dollars if every state chipped in. Perhaps if the revenues are high enough money could be allocated to people in the margins who become addicted to sports gambling.

Nonetheless, oversight would seem to be the toughest quandary for professional leagues as well as the NCAA. The NCAA is still dealing with the fallout of the Adidas controversy, which lead to college coaches and Adidas personnel getting arrested. How will the NCAA, for instance, regulate sports betting after it’s been shown through recent controversies that it has had a lot of trouble regulating the basic tenants of amateurism? The linchpin is for states that legalize sports gambling to indirectly pay for a strong oversight.

Sports Betting = Less Disparity in College Football

In addition to the NBA, virtually every professional league will be trying to cash in on sports betting. The Seattle Times also reported that NCAA conferences, like the Pac 12, will be seeking profits from fans who wager on their games. That is potentially millions of dollars in the form of an “integrity fee” going to the power five conferences. What’s concerning to fans, in addition to the integrity of amateurism, is the competition level across the board in College Football. When Power Five schools rake in 6 billion dollars, and all other schools combined only account for 4 billion in revenue, it stands to reason that the disparity in college football is widening. That won’t change with sports betting. The power five conferences can clean house regarding integrity fees. Would Ohio State be content with the same amount of betting revenue as Buffalo? More gamblers bet on Ohio State games. You’d think Ohio State in that situation would attempt to negotiate for more. Small schools will receive the same benefit from this Supreme Court decision as the WNBA would in the professional league market. That means less competitiveness and disparity in college football with regards to funding. The bigger, more popular schools bring home the paychecks while small schools in the WAC or MAC are on the outside looking in.

Conclusion

There are many arguments surrounding pro sports betting. In one regard, sports betting is a lot like recreational marijuana use. It’s what the majority of Americans want. They’ve become socially accepted as leisure activities. Sports betting will also help states financially, thereby directly helping public schools, senior citizens, or a state’s wage reduction. The biggest issue is how pro leagues and the NCAA regulates gambling among its players and staff. Also important is how each person involved in promoting or benefiting from legalized sports gambling can help those who unfortunately become gambling addicts. Another issue is the financial disparity in college football. The competitiveness of college football is a real concern today. In five years, that gap could widen if certain schools receive the lion’s share of sports gambling profits. Whether you like the Supreme Court’s decision or if you loathe those six justices who voted for sports gambling, it is emphatically here to stay.