Though some form of sports betting is now legal in nearly three dozen states, the greatest prize of all – California – has eluded the industry. That could change in November’s election, however, as supporters and opponents of the industry wage a $300 million political battle over whether to bring legalized sports betting to the Golden State, where the annual betting pool tops $3 billion. Dollar could reach, say proponents. This would limit a notable and worrying rise in legalized sports betting in the US since 2018, when the Supreme Court struck down a federal law banning the activity in all but a handful of backyard locations.
As the industry heads towards the $80 billion-a-year betting mark in the US, the UK, which has had forms of sports betting for decades, is taking a pause. A UK government commission is in the process of recommending tough new restrictions on gambling and its marketing amid a sharp rise in compulsive gambling, particularly among young people.
The contrast between the US and the UK is striking.
Californians will be able to vote on two competing gaming initiatives this November. Proposal 27, the far-reaching one, would empower the state’s Native American tribes to work with gambling companies to create online betting platforms for residents of the state, including through mobile apps.
Sports gaming companies including FanDuel, DraftKings and BetMGM have funded the initiative with massive donations. Advocates have tried to stoke support by touting a 10% tax on betting revenue, which would fund housing and social services. As such, the initiative appears on the ballot as Legalize Sports Betting and Revenue for Homelessness Prevention Fund Initiative. With rare bipartisanship, leading Republican and Democratic state legislatures oppose Propagation 27.
These problems are never easy in California; therefore, of course, the ballot contains a competing initiative, Proposition 26, which would legalize Sports betting only on-site at Indian casinos and racecourses – likely creating a betting market estimated to be a tenth the size of an online gaming environment. This “retail” betting initiative has garnered support from Native American tribes who are wary of a takeover of state gambling by national Prop. 27-supporting players. Enemies include an odd mix of Prop. 27 supporters and groups opposed to any expansion of legalized gambling.
As Californians gear up for the vote, sports gaming supporters and critics alike await a government report on recommendations to reform gambling in the UK. Since 2019, a government commission has been reviewing UK gambling laws using the data. Recommendations are due this fall; beautiful, some ideas have been leaked. Among the most important would be a ban on sports betting companies’ partnerships with football teams, including the English Premier League, whose games are broadcast worldwide.
Some reports suggest that the league’s teams have voluntarily agreed to forgo these ads to stave off stricter government measures. In addition, the commission is considering introducing strict caps on individual bets, setting monthly betting limits and launching so-called financial well-being checks on players who lose a certain amount online to ensure they don’t sink deep into debt. Regulatory authorities can also prohibit or restrict so-called betting clubs or preferred betting programs that reward frequent gamblers. Similar measures have already been introduced in other countries such as Germany, leading to a sharp drop in bets.
Behind these recommendations are worrying findings in the UK. A 2010 survey estimates that the number of problem gamblers in England has more than doubled in just a few years and that up to a third of problem gamblers primarily bet online. Another study found that up to a third of UK children with mobile phones had sports betting apps on them.
What is happening in Britain should raise alarms in the United States. America’s major sports leagues have gone from being opposed to legalized sports betting to passive support to encouraging and partnering with betting companies – all despite evidence that sports betting plays a role, particularly in popular fantasy leagues Goal for underage bettors to gamble regularly. Nonetheless, Major League Baseball endorsed Prop. 27. The NFL has done this negotiated offers with FanDuel, DraftKings and Caesars making them the league’s “sportsbook partners”. About 20 teams now have partnerships with gambling companies.
The tremendous expansion of sports betting in the US has been touted as a harmless red herring, a job-creating juggernaut and a vast reservoir of new government revenue. But America really might just lose the bet.
Steven Malanga is editor-in-chief of city newspaper and the George M Yeager Fellow at the Manhattan Institute. A version of this comment was previously published by City Journal.