Opinion: Reflecting On Four Years Of Sports Betting Since Fall Of PASPA

Written By John Holden on May 23, 2022
PASPA

When Supreme Court Justice Samuel Alito and his colleagues struck down the Professional and Amateur Sports Protection Act (PASPA) four years ago this month, it was a monumental day for sports in the United States.

For the first time in 25 years, states other than Nevada were allowed to offer sports betting products that people actually wanted. In the last four years, few topics have been as popular in state legislatures as legalizing sports betting.

With legal sports betting in nearly three dozen states, it seems like even the most bullish projections likely would have not projected this growth. It is even more incredible that 47 states have introduced sports betting legislation in that time (Washington D.C. and Puerto Rico both legalized as well.)

While the expansion has been rapid, at least in legislative terms, the process has not been without its speedbumps and challenges along the way.

Looking at the good after PASPA

Over the last four years, there has been a rapid expansion of sports betting legalization across the country. Even places that might have seemed like they would have little interest in sports betting with their lack of other gambling jumped on the sports betting train – just look at Tennessee.

The expansion of sports betting has resulted in a normalization of the practice (there might be debate for some about whether this is a good thing.) Broadcasts now talk about lines derived from regulated books, as opposed to talking in veiled terms about lines generated from offshore books.

Keeping it together

The system has also largely held it together, with few hiccups along the way. We are now four years into legal sports betting and we have not had a congressional hearing or investigation into a major scandal.

At this point, it appears that a wholesale federal preemption of sports betting regulation is off the table. Given the amount of time and resources that certain stakeholders put into seeing the opposite take place, that is no small achievement.

Then there’s the not-so-good …

Sports betting’s expansion across the United States has happened rapidly after PASPA. With that rapid expansion, there has been a rapid consolidation of the marketplace.

There are presently a handful of companies that are truly competing for any meaningful market share. Most startups are suffocated by high licensing costs or exorbitant tax rates.

High tax rates and licensing costs have been coupled with a promotions arms race that four years on still sees companies paying between $300-$400 per customer in acquisition costs. Small startups simply cannot compete.

This has made initiatives like allowing for dozens of licenses in some states seem like empty gestures. What good is it to be able to have a license if you cannot afford to exist? In the end, this will result in less choice for consumers as the field of options continues to be narrowed to only those that have seemingly endless bank accounts.

The NCAA after PASPA

The NCAA is in a bad place. It does not seem to know what it wants to do: continue its autocratic rule and risk losing control over the sports that deliver much of the organization’s revenue or simply throw its hands up and let individual schools and conferences do all the decision-making.

As part of a growing trend in abdicating primary governance to other entities, the organization has lagged in recognizing that legal sports betting is everywhere. The NCAA remains the most vulnerable major American organization to a match-fixing threat according to virtually all experts on the subject,.

Yet the organization continues to stand by what is effectively an abstinence policy, instead of developing programs for athletes that educate them on risks they might face and working to mitigate potential dangers.

And the ugly …

There have been several pretty ugly moments in the cross-country sports betting rollout. One of the most embarrassing failures has been the NFL‘s (though they are almost certainly not alone) failure to stop active players from betting on league games – first Josh Shaw, then Calvin Ridley.

It is not entirely clear where the breakdown is happening, but there seems to be some failure in communication where players are not getting the message that betting a few grand could cost them tens of millions of dollars.

So far the other leagues have managed to avoid this particular embarrassment, but there is little reason to believe that NFL players are somehow unique.

The advertising

If you own a television or a radio, you almost certainly cringe every time there is a new commercial break.

Even as companies like Caesars have announced a pullback on advertising, sports betting ads seem impossible to avoid. Seemingly every commercial break has at least one ad for a sportsbook.

While there has been a fair bit of grumbling from various politicians about the ubiquity of the ads, so far no regulator has done much the rein them in.

What the post-PASPA future might hold

It is hard to say what the next year might bring. But with ballot initiatives out in California and litigation playing out over Florida‘s compact, there is at least the possibility that in the next year more than 60 million additional people could have access to regulated sports betting.

The states that have not yet legalized, however, face challenges. As Missouri and Oklahoma illustrate, seemingly gone are the states where there are a small number of stakeholders or little opposition to a streamlined regulatory scheme.

What remains are highly complex intrastate battles over continued expansion. With that said, there continues to be a real fear of missing out, even if many of the imagined riches are yet to appear.

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John Holden

John Holden J.D. / Ph.D. is an academic. His research focuses on policy issues surrounding sports corruption.

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