Of all the ancillary businesses that operate around sporting events themselves – merchandise, advertising, fantasy leagues – gambling is by far the largest industry.
According to the the National Gambling Impact Study Commission, annual illegal wagers total as much as $380 billion. That’s billion with a B.
For context, this year’s budget for the entire state of Pennsylvania was $27.7 billion. So why is such a large industry, particularly one surrounding our national passion for sports, based on illegal, unregulated activity?
In the fall of 1961, President John F. Kennedy signed Senate Bill 1656 into law. Known as The Interstate Wire Act, it was one of eight bills that U.S. Attorney General Robert F. Kennedy created in an attempt to clamp down on organized crime. The bill essentially outlawed the use of a “wire communication facility” when placing interstate or foreign wagers on a “sporting event or contest.”
With that, the landscape of sports betting would be changed forever. If bookmakers couldn’t communicate between state lines, an essential part of the industry, they couldn’t maintain legal sports betting operations. Sports betting was driven back underground, to secret phone lines and to the man in the bar writing the tickets.
More than 50 years later, the Wire Act prohibits an enormous industry that was never even dreamed of at the time the act was instituted: online sports gambling.
Currently in the U.S., the only alternative to sports betting exists in just a few states. In 1992, Congress passed the Professional and Amateur Sports Protection Act, which essentially outlawed any form of sports betting, through wires or not. Four states were grandfathered in: Nevada, Montana, Oregon and Delaware.
In 2009, Delaware became the last of the four to take advantage of that, by implementing a state-run “sports lottery,” limiting betting only to parlays, a type of bet that requires multiple wins, not a single game.
Now, with annual illegal gambling sums and state budget deficits growing every year, some states want the ability to implement legalized sports gambling. In 2011, Nevada alone took $2.9 billion in sports wagers, and other states want a piece of the action, along with the jobs and tourist dollars that come with gambling.
New Jersey Gov. Chris Christie is leading the way, backed by a statewide referendum that showed that New Jersey residents favor legalized sports betting by a 2-1 margin. In a speech last May in Atlantic City, Christie boasted, "If someone wants to stop us, then let them try to stop us.”
In response, last August, the NCAA, NFL, NBA, NHL and MLB all filed suit in federal court to stop to the effort.
Compare this to Europe. Legalized betting shops have storefronts. The English Premier League of soccer, one of the world’s most popular sports leagues, is so supportive of gambling that it actually allows sports betting websites to sponsor team jerseys and advertise during games.
Can you imagine that in the U.S.?
Outside of legal restrictions, U.S. leagues continue to fight the proliferation of sports gambling. Every time this issue appears, PR departments spring into action, claiming that the “sanctity of the game” is at risk, or some other pearl-clutching threat. Lawyers do their thing, because they’re backed by the law.
Leagues are also flexing their business muscle to influence the argument. In 2007, the Oregon state legislature ended its state-operated sports lottery, because the NCAA was threatening to never again let the state host March Madness. The NFL will likely never place a team in Nevada.
All of this is just the leagues and the government sticking their heads in the sand. This gambling is happening at a massive level, and they’re both wasting money in the fight, as well as giving up valuable revenues.
It’s here, it’s huge, and it’s only getting bigger, so it’s time we deal with the reality if we can’t fight it.