States are welcome to step to the betting window whenever they feel like it.
The United States Supreme Court’s decision in May to overturn the Professional and Amateur Sports Protection Act effectively opened the door for states to decide whether they wish to legalize sports wagering. It was seen as a landmark moment for gamblers across the country, yet a number of questions remain.
We address a number of those questions in our series on legalized sports betting and what it means for New England, and how bettors will react is one of the biggest unknowns.
Humans have been placing bets on sports since the days of the gladiators, and as technology and sports have evolved, so has the way bets are placed. Whereas bettors used to make a relationship with a single bookie based on credit, there now are a variety of options, but most of the action still happens illegally. According to a brief by the American Gaming Association, Americans bet roughly $150 billion illegally on sports per year and 97 percent of the $10 million that was bet on March Madness was done through off-shore websites, online outlets and around-the-corner bookies.
It remains to be seen, however, whether the Supreme Court’s decision will draw wagerers into a more legitimate venue.
The legalization of gambling will remove some of the stigma that goes with the act, experts agree. States like New Jersey, Delaware, Rhode Island, Mississippi and West Virginia already have made moves to legalize sports wagering in their states. As more states follow suit, bettors could flee the shady online bookies for their local casinos or daily fantasy sites such as DraftKings or FanDuel.
When the Supreme Court announced its decision, DraftKings CEO and co-founder Jason Robins sent an email to his company’s members noting that the company already was making its way toward offering sports gambling.
“Our mission has always been to bring fans closer to the sports they love and now, thanks to the wisdom of the Supreme Court, DraftKings will be able to harness our proven technology to provide our customers with innovative online betting products,” Robins wrote in that email.
Still, human beings are creatures of habit. If they have built up a relationship with a certain bookie or site, doubt remains as to whether they will leave to bet with the state lottery or whatever vendor in their state controls the sports gambling.
Offshore bookie BetDSI, based out of Costa Rica, has its concerns.
“We are going to be exposed. That’s something that, again, we’re concerned with and we’ve been concerned with. Certainly, as more of these local sports books start popping up, the bettors are going to gravitate to those eventually,” spokesman Scott Cooley told Forbes in May.
But while offshore books might be concerned, University of New Hampshire law professor Michael McCann told NESN.com that a number of factors will determine whether bettors leave the illegal bookies for state-based wagering.
“It’s going to come down to, if legal sports betting is very accessible, and is easy, and doesn’t have transaction costs and is convenient, then we could see a shift from people that have been betting illegally to betting legally,” McCann said. “But I think we have to be realistic as well. Someone who has been betting in a certain forum and they’ve done it in a way that is accessible to them, then they will continue to engage in practice. But it will come down to how easy it is and how attractive it is.”
Legalization will cut into the black market, Boston College professor Richard McGowan believes, but the level of taxation will be key to determining the number of people who switch to legal wagering.
“(At) what level are you going to tax it?” McGowan told NESN.com. “Because if it’s going to be a lot more expensive than what people do on the black market, then people aren’t going to do it. So (Massachusetts) has to be really careful. As a rule, they want to raise the revenue. At the same time, they are worried about building a black market, so they are going to have to tax it a little less.”
Competition also could keep people in the illegal market. If online books do begin to see a trend of bettors leaving, they may offer better odds to keep their customers around. Even beating the Las Vegas odds by half a point on certain games could keep people offshore. The Vegas norm is 10 percent, vigorish, meaning you normally have to bet $11 to make $10. Bettors will stick with illegal books if they offer the ability to make more money.
Whereas legalization might see the money shift around, however, don’t expect an explosive increase in the number of bettors, McCann said.
“People have clearly been betting on sports online for quite some time,” McCann said. “It hasn’t been prosecuted and I don’t know if this changes the landscape that much. If somebody was intent on betting on sports, it’s a practice that obviously there are offshore entities that could have been used. So I think in that regard it’s hard to measure.
“Some people wonder: does this mean there are going to be way more people betting on sports? That shouldn’t be. In a way, I think they may have already been doing so.”
Even so, it’s possible there could be a shift in the type of person that chooses to bet on sports.
The demographics of sports gamblers are likely to shift to a younger, poorer demographic than those who currently place bets on sports, according to a Morning Consult poll taken after the decision.
The poll showed that 37 percent of current bettors are males between the ages of 45 and 64. Of those current bettors polled, 46 percent make less than $50,000 a year. But those numbers shifted toward those making less than $50,000 when prospective bettors were polled after the decision. Of those who said they were more likely to gamble on sports once it became legal, 38 percent were between the ages of 18 and 34 and 56 percent made less than $50,000 a year, showing that the decision could indeed change the face of gambling.
While the poll projected the demographic shift, roughly only one in five respondents said they were likely to place a bet once sports wagering is legalized in their states.
So while the states line up to capitalize on the revenue opportunities from sports wagering, it’s unclear whether those who already are gambling will change their ways or if a large number of people who haven’t spent their fall weekends sweating a tough over-under will all suddenly ditch apple picking for a chance throw money on “Monday Night Football” or a mid-Saturday Big 10 Conference game.
At least, not until the states give them a reason to. That might come in time, but for it now it appears there’s no reason to bet on a sudden seismic shift in the betting landscape.
Thumbnail photo via Suchat Pederson/The News Journal via USA TODAY NETWORK Images