Only a matter of time before the U.S. starts raking in billions every year from Sports Betting
If you haven’t been living under the rock for the past few weeks, you would know that something quite monumental happened on the 18th of May that would change the gambling landscape in all of America.
But before we delve into that, let’s provide a little context about the history of gambling in the United States.
A little history on Sports Betting in America
Believe it or not, back in the 18th century, gambling was sponsored by the state to fund The American Revolutionary War through taxes on lotteries. In an article by a University professor of law, Ronald J. Rychlak on the historical examination of state-sponsored gambling, the professor explains the use of lotteries in the original U.S. colonies, to fund several government projects:
“Two hundred years ago, government-sanctioned lotteries were common throughout America. Lacking a strong central government and burdened with a weak tax base, early Americans viewed lotteries as legitimate vehicles for raising revenue. Lottery proceeds were used to build cities, establish universities, and even to help finance the Revolutionary War.”
Fast forward to the beginning of the 19th century, and other forms of gambling have started to pick up. Roger Dunstan wrote in a report for the California Research Bureau, that horse betting was becoming popular during that time:
“Lotteries were not the only form of gambling during this era. Wagering on horse racing was a popular form of gambling. Not surprisingly, it was not quite as organized nor as elaborate as modern horse racing. Rather, the gambling was limited to a few friendly bets between owners of horses and their partisans. The first racetrack in North America was built on Long Island in 1665.”
In the report he also explains how casino gaming started taking off from small taverns and roadhouses until it eventually grew to be so big that luxurious land casinos were starting to be built:
“Casino gaming started slowly. Taverns and roadhouses would allow dice and card games. The relatively sparse population was a barrier to establishing gaming houses. But as the population increased, by the early 1800s lavish casinos were established in the young republic.”
Even betting on boxing was starting to become a thing, even though there were no specific laws dictating whether this was, in fact, legal or not. However, things started to take a bad turn when scandals related to lottery winnings and match-fixing began to emerge.
One of the most notable one is the 1919 Black Sox Scandal, which shook the nation when eight White Sox players were accused of accepting a hefty sum of money, about $10,000 each, to intentionally throw the World Series against the Cincinnati Reds, when sportswriters, fans, and bookies, all expected the Chicago White Sox to easily defeat them.
As a result of this scandal, and the general idea that gambling is bad, many states began banning various forms of gambling instead of targeting bettors. However, the more states adopted anti-gambling legislation, the more underground gambling operations became.
The only change that came about in the mid-20th century was Nevada’s legalization of sports betting in 1949, which was done with the intent of boosting its tourism industry. While other forms of gambling had been legal for 15 years prior, the economic expansion that that began after World War II presented Nevada with an opportunity to invest in a market that was elsewhere illegal.
In other states in America, many laws were passed in order to curb illegal sports betting in the 1960s, but not abolishing it completely. Nevertheless, the illegal bookmaking only continued to proliferate throughout the 70s and 80s.
Greatly fearing the compromising of the integrity of sports, in 1992, Congress tightened its rope, and passed a new bill called PASPA — the Professional and Amateur Sports Protection Act which banned states and governmental entities from legalizing sports wagering - except for states that had already legalized sports betting in some form, i.e. Nevada, Delaware, Oregon and Montana.
The bill made Nevada the only state where a person could wager on the results of a single game on both college and professional sports.
With online gambling on the rise in the early 21st Century, Congress was quick to take it by the horns. The Unlawful Internet Gambling Enforcement Act of 2006 dictated that it was illegal for anyone involved in the betting or wagering business to accept money via all forms of payment methods, be it credit, EFT transfer, or through a money transmitting business. This meant that even banks or other financial institutions would have to make sure that such transactions were blocked and to try to identify the people that were behind them.
Up until 2012, PASPA succeeded in dissuading states from legalizing sports betting until New Jersey Gov. Chris Christie signed legislation to permit Nevada-style sports gambling. The NCAA, NBA, NHL, MLB, and NFL sued to stop New Jersey's plan. That lawsuit was accepted for review by the Supreme Court.
Six years later the situation has turned completely on its head - just a month ago the U.S Supreme Court ruled that PASPA was unconstitutional, which subsequently led to the overthrow of the 1992 PASPA bill.
What does this bill mean for America?
Now that the federal ban has been overturned, each state and sovereign tribal nation has the opportunity to set their own policy to legalize and regulate sports betting including football, basketball, baseball and other sports.
This also means that America is about to rake in millions each year from sports betting. Why?
For starters, the U.S. will stop losing money to offshore companies as it has been doing all this time. Second of all, it is also most likely to start getting players from other countries like its little sibling up in the north - Canada.
Canada’s regulations allow for separate provinces to run lotteries and lottery corporations, however, they do not permit wagering on single-sport events. The only Ontario Lottery and Gaming Corporation is the only entity that allows players to bet on sports, however, the catch is that players have to wager on a number of events at one go.
Now, with the new bill in place, Canadians have yet another option where to place their bets on single-sport events. According to a popular Canadian casino review site, this spells trouble for Canada which is already losing millions of money annually to offshore betting companies:
“While in an ideal world this multiple sports betting would mean that Canadian players do not gamble much, what it actually means is that billions are poured into off-shore sportsbooks and underground bookies. Approximately C$4 billion and growing.
In 2016, NDP MP Brian Masse tried to push forward a bill that would allow CA players to bet on single sports events at their provincial lottery offices. This would allow the government to both regulate and tax these events. Unfortunately, this bill was blocked in September 2016.
Now that the U.S has legalized sports betting, it is highly likely that Canadians will start pouring money into single-sport event bets provided by U.S agencies. Not exactly the best thing for the economy.”
Is this a step forward or a step backward for America?
Despite the life-long held belief that sports betting taints the integrity of the games, gambling has been around for centuries and is a big part of what makes sports so exciting. In fact, in spite of the strict regulations that were implemented throughout the years, especially the PASPA bill, efforts to prohibit sports betting in the U.S. were unsuccessful. Americans have been placing bets all their life on their favourite teams.
Ultimately, the truth is that the federal law didn’t stop Americans from betting, and in a way, made things worse because it enabled illegal activity to take place in an unsafe environment for consumers. It is the same problem Canada is facing at the moment. Unless the country takes action to legalize and regulate single-event sports betting, Canadians will keep on engaging in online sports betting in an unsafe and unregulated environment.
Last but not least, the U.S. sports betting legislation is expected to not only bring in a lot of revenue but also create a lot of jobs for Americans. For the moment, it is a bit too early on to feel the effects of this bill, however, we feel it is only a matter of time until we see developments picking up at a fast and steady pace.
