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Is legalizing sports gambling a mad idea?

March 21, 2015 at 6:48 PM EDT
Billions of dollars every year are wagered on the outcome of various sporting events, but except for bets made in Las Vegas and a few other states, they're all illegal. Now, representatives from cash-strapped states and even the NBA commissioner are behind the push to legalize sports betting, which they say will yield economic benefits. But plenty of opponents to the idea remain. NewsHour's William Brangham reports.
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WILLIAM BRANGHAM: Right now, millions of basketball fans in America are breaking the law… by betting on the NCAA’s March Madness tournament.  And it’s not just college hoops, it’s bets placed on any sport: the NFL, Major League Baseball, the NBA.  Billions of dollars every year are wagered, but — except for bets placed in person, in Las Vegas — they’re almost all illegal.

Chad Millman is the editor of ESPN the Magazine, which put NBA Commissioner Adam Silver — and his discussion of legalizing sports betting — on last month’s front cover.

WILLIAM BRANGHAM:  Right now, outside of Las Vegas, it is illegal for me to place a bet on sports.  So how does one go about doing that?

CHAD MILLMAN:  You call your bookie.  You go online.  A lot– there’s a lot of internet sites where you can make a bet.

WILLIAM BRANGHAM:  Off-shore betting sites like this one, called Bovada, are a huge hub for betting on sports. It’s illegal for Americans to use these sites, but they do.  Authorities have cracked down on these transactions, but they still continue.   Notice the website’s address — it’s bovada.lv — you might think that stands for ‘Las Vegas’?  No, it’s Latvia.

Because it’s a black market, it’s hard to know exactly how much money gets wagered illegally, but the Federal government estimated it ranges from 80 to 300 billion dollars — that’s billion with a b — every year.

WILLIAM BRANGHAM:  So that’s a lot of money.

CHAD MILLMAN:  It’s a lot of money that’s not being taxed. A lot of money that is going under the table.

WILLIAM BRANGHAM: These days, it’s not just the Commissioner of the NBA who says this situation needs to change.  There are a lot of cash-strapped states that want in on that action, too.

Take New Jersey:  the resort town of Atlantic City is in dire economic straits — its unemployment rate is 11%, double the national average.  Several of the city’s huge casinos are shuttered, hit by the one-two punch of the financial crisis, and competition from new casinos in neighboring states.

Some in New Jersey now want to tap into illegal sports betting to revive this area.

DENNIS DRAZIN:  So the whole idea came as a result of the casino and the racetrack industry being on hard times.

WILLIAM BRANGHAM: Dennis Drazin is a lawyer who represents Monmouth Park racetrack in New Jersey — and he’s helped champion an effort to legalize sports betting at the states casinos and racetracks.  He says the betting is already happening, so why let the criminals be the ones to profit?

DENNIS DRAZIN:  Let’s figure out a legal way to do this where it can be regulated, it can be taxed, it can provide revenues not only for the racetracks and the state, but money can go to others also, like senior citizens, property tax relief, medical care, whatever the needs are of the individual state.

WILLIAM BRANGHAM:  Proponents have estimated New Jersey could net 100 million dollars a year in new tax revenue, and so, through a referendum and legislation over the last four years, New Jersey tried to legalize sports betting.

The folks at Monmouth Park thought they were so close to success that they actually built this room — according to Drazin, the first of its kind outside of Las Vegas — where customers could come and place their sports bets.  But, the courts ruled against the state’s efforts, and so the room sits empty and unused.

WILLIAM BRANGHAM: New Jersey isn’t alone. Legislators in at least five other states (including Indiana, New York and South Carolina) have tried to legalize sports gambling in recent years — and none have succeeded.  The obstacle to them all is a federal law known as PASPA.

CHAD MILLMAN:  PASPA is the Professional Amateur Sports Protection Act, turned into law end of ’92, it was proposed by Bill Bradley, who was then a senator from New Jersey.

WILLIAM BRANGHAM:  And former NBA great–

CHAD MILLMAN: –former NBA great.  And the idea was he wanted to make sports gambling illegal from a federal perspective.

WILLIAM BRANGHAM:  And what was he trying to protect?  What was the argument made?

CHAD MILLMAN:  The argument was — the argument for anybody who’s against sports betting is always protecting the integrity of the game.  They don’t want match fixing.  They don’t want game fixing to be a part of the conversation, whether it’s at the professional level or at the college level.

WILLIAM BRANGHAM:  Game fixing is trying to change the outcome of a game through illegal means. Someone who’s got money riding on a certain outcome persuades a player or a referee — often by bribing them — to fix a game or shave off a few points.  And it’s not some phantom issue — it happens.  It happens in college sports, it happens in professional sports.

WILLIAM BRANGHAM:  When New Jersey made its attempt at legalizing betting at the state level, all the major sports leagues — the NFL, Major League Baseball, the National Hockey League, the NBA, as well as the NCAA — they all sued, arguing that allowing betting would jeopardize sports, and make fans think there was widespread cheating.

NBA Commissioner Adam Silver later clarified that he’s against a piecemeal state-by-state approach to legalization, saying it ought to be a Federal issue.

But Dennis Drazin says, ask yourself this:  who’s got more of an incentive to fix games: the criminal groups that currently run illegal betting, or a regulated, monitored group like the racetrack like Monmouth Park?

DENNIS DRAZIN:   They would have to tell you, if they’re thinking squarely “We think there’s more likely a chance of a game getting fixed or the mob getting to a player and giving ’em money, than any involvement Monmouth Park could have.

WILLIAM BRANGHAM:  Supporters of legalization point to a famous case in 1994 where the legal sport bookies in Las Vegas noticed something odd in the bets coming in for an Arizona State basketball game, alerted the authorities, and uncovered a full-blown point shaving scheme underway.

CHAD MILLMAN:   What you’re seeing from the people who run gaming businesses to the commissioner of the NBA is they understand that light is the best disinfectant.  And so they think, if there are more people focusing on this, more people paying attention to this, if we are taking it out of the shadows, and we are regulating it, then there’s better chances that people will not have the opportunity to fix games.

WILLIAM BRANGHAM:  But critics point out that legalizing betting doesn’t guarantee unblemished competition.

In Europe – where sports betting is legal and widespread — authorities two years ago revealed a criminal network had tried — and sometimes succeeded — in fixing over 300 soccer matches in Europe, including qualifiers for World Cup and European Championship matches.

Critics also point out that the U.S. is already awash in gambling — in addition to widespread gambling online, nearly every state has some kind of lottery or casino allowed.  Those critics argue that gambling often hurts those who can least afford it, it can sometimes become addictive, and it’s the last thing the government ought to be encouraging more of:

LES BERNAL:  You know, the debate isn’t, you know, whether or not you have a Friday night poker game or have an office Super Bowl pool.  The debate is, should government be actively encouraging and you know, sponsoring predatory forms of gambling?

WILLIAM BRANGHAM:  Les Bernal runs a national organization called Stop Predatory Gambling, and while their efforts are mostly aimed at things like state lotteries and slot machines, which, he argues, are a huge, unfair tax on poorer Americans — he objects to the idea of the government encouraging even more gambling by even considering legalizing betting on sports.

WILLIAM BRANGHAM:    But what about the argument that’s often made by Libertarians and many others that people have to make their own choices, and if someone wants to choose to gamble their money, and I want to choose to put my money in a savings account, that those are perfectly viable choices for me as an individual and I should have the freedom to do that.

LES BERNAL:    Sure.  So directly to this libertarian argument, any libertarian — any real libertarian would be 100% with us on this issue because if you wanna have people gamble, sure, keep gambling private and local.  That’s not what this debate’s about.  This is government, encouraging people to do something that is blatantly dishonest, in terms of they’re going to, you know, lose their money inevitably, but it’s a very financially damaging and socially harmful activity if you do it relentlessly like we’ve seen today in our society.

CHAD MILLMAN: The argument is always, “if you legalize sports betting, you are allowing more people who could potentially be addicted to gambling to have easier access to it.”

And I do think that it is a horrible sickness — addiction to gambling is something that everyone needs to be aware of when they are running a gambling business and gaming business. But I don’t know that that’s an argument you can make, because it presupposes that gambling doesn’t exist already.

WILLIAM BRANGHAM:  While New Jersey’s legalization push is stuck in court, there have been attempts in Washington D.C. to undo the federal ban on sports betting.

REPRESENTATIVE FRANK LOBIONDO: This legislation seeks to allow any state that wants to, to have sports betting.

WILLIAM BRANGHAM:  Congressman Frank Lobiondo, Republican of New Jersey — has introduced a bill that would grant every state the ability to opt-out of PASPA — giving them a four-year window to explore and implement legalized sports betting within their own borders if they wanted.

WILLIAM BRANGHAM:  While Lobiondo’s bill hasn’t got a lot of traction — not even a hearing yet in the TWO times he’s introduced it, he points to those recent comments by Commissioner Adam Silver, and those by Senator John McCain –who was a prior critic of gambling — but who recently said the Senate should hold hearings on whether to rethink the Federal ban.

REPRESENTATIVE FRANK LOBIONDO: The country is ready for this debate. You’ve got a discussion that wasn’t going on today that wasn’t happening even a year ago.  Once we lay out the arguments, lay out the talking points for people, I think people will come to the conclusion that this is ok.

WILLIAM BRANGHAM:  Right now, New Jersey’s push is being argued at the Third Circuit Court of Appeals in Philadelphia.  If the court approves the state’s appeal — a decision could be weeks away — legal sports betting could begin in New Jersey almost immediately.

WILLIAM BRANGHAM:   If you were a betting man in this regard, what do you put the odds on the country legalizing betting?

CHAD MILLMAN:  Oh, I definitely think the country will legalize sports betting.  It’s just a question of in what form, and when.

WILLIAM BRANGHAM:  In the meantime, March Madness rolls on. The American Gaming Association just estimated that $9 billion dollars is being bet right now on these games — and the overwhelming majority of those bets are illegal.

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