Legalized gambling continues to rip through an extended Wild West era, in many different ways. Once the floodgates opened in May 2018 for state-by-state sports betting, the focus became grabbing dollars — not spotting and addressing problems.
It was always inevitable that problems would arise. And it’s now inevitable that one of those problems will be big enough to spark legislation and/or regulation.
Katie Tarrant of the Washington Post has published an article with quotes from lawmakers on both sides of the aisle regarding the need for safeguards on an industry that has been more about “damn the torpedoes” and less about pumping the brakes.
The problem with federal legislation that would enact national rules is obvious — there’s a risk of running afoul of the same constitutional principles that doomed the 1992 legislation restricting states (other than Nevada, the one that already had it) from adopting sports-betting programs. If changes are going to be made, the states that have embraced sports betting will be the ones to adjust their own rules, with an elimination of or restriction on individual prop bets becoming the primary target.
It’s very difficult to rig a game. It’s not hard at all to fix a prop bet to hit the “under.” A fake injury or a “bad day” keeps the numbers low enough to not beat the magic number that would trigger the “over.”
Beyond legislation, Congress could create an agency that would regulate sports and sports betting. The various leagues absolutely do not want that; in 1983, former NFL Commissioner Pete Rozelle made that clear in the chilling debut episode of PBS’s Frontline, which took a close look at pro football’s gambling ties. (It’s worth your time to watch it.)
By legalizing gambling, the various states (nearly 40 of them) have also normalized it. The stigma is gone. It’s easy to pick up a cell phone, download an app, enter the promo code, and start betting. On anything. On everything. Nearly eight years in, more and more of the players who make it to the professional level will have grown up in an era where FanDuel and DraftKings are as commonplace as Coke and Pepsi or Nike and Reebok.
There’s rampant inside information in sports. It’s virtually impossible to prevent individual players, coaches, staff, whoever from misusing it. The disincentive needs to come not from finger-wagging by self-regulating leagues that could be inclined to say (as the NBA did with Terry Rozier), “Nothing to see here.” There must be clear and obvious legal consequences for trading in material, non-public information about injuries, strategies, and other secrets about the next game.
It often takes a massive event to compel real change. The Securities and Exchange Commission didn’t even exist until five years after the stock market crash of 1929.
That’s what it will take for sports betting. First, the mess. Then, the cleanup process. In the end, the federal government will create the same kind of fear for the sports industry that exists for executives and others with access to information that will cause stock prices to rise and fall.
Even if prop bets are limited or eliminated, everyone needs to know the connection between sending a text or making a call or whispering in an alley about material, non-public information and potentially going to prison. Without that kind of clarity, it will keep happening — and it will only be detected when there’s enough of an uptick in betting activity to sound an alarm with sportsbooks that loathe the thought of individual bettors leveling the playing field and/or acquiring the edge that the house typically enjoys.
