Although some form of sports betting is now legal in nearly three dozen states, the biggest prize of them all – California – has eluded the industry. That could change in the November election, however, as industry advocates and opponents wage a $300 million political battle over whether to legalize sports betting in the Golden State, where the betting pool annual could reach $3 billion, according to proponents. This would cap a remarkable and disturbing increase in legalized sports betting in the United States since only 2018, when the Supreme Court overturned a federal law banning activity in all grandfathered locations.
Even though the industry is heading towards the $80 billion a year mark in the US, however, the UK, which has had forms of sports betting for decades, is taking a break. A UK government commission is set to recommend tough new limits on gambling and its marketing, amid a significant rise in problem gambling, particularly among young people.
The contrast between the United States and the United Kingdom is striking.
Californians will be able to vote in November on two competing gaming initiatives. Proposition 27, the broadest, would allow Indian tribes in the state to partner with gaming companies to create online betting platforms for state residents, including through mobile apps.
Sports gaming companies including FanDuel, DraftKings and BetMGM have funded the initiative with massive donations. Proponents have tried to stoke support by touting a 10% tax on betting revenue that would fund housing and social services. Thus, the initiative appears on the ballot as the “Legalize Sports Betting and Revenue for Homelessness Prevention Fund Initiative”. In a rare bipartisanship, the state’s top Republican and Democratic legislative leaders oppose Proposition 27.
These problems are never simple in California; so naturally, the ballot includes a competing initiative, Proposition 26, which would legalize sports betting only on-site in Indian casinos and racetracks, likely creating a betting market estimated at one-tenth the size of an online gambling environment. This “retail” betting initiative has won support from Indian tribes who are wary of a takeover of gambling in the state by domestic players supporting the Prop. 27. Enemies include an odd mix of Prop supporters. 27 and groups that reject any expansion of legalized gambling.
As Californians prepare to vote, sports gambling advocates as well as critics await a government report on recommendations to reform gambling in the UK. Since 2019, a government commission has been reviewing UK gambling laws in light of the data. Recommendations are due this fall; already, some ideas leaked. Among the most important would be a ban on partnerships between sports betting companies and football teams, including in the English Premier League, whose matches are broadcast around the world.
Some reports suggest league teams have voluntarily agreed to waive such advertising to ward off tougher government measures. Additionally, the commission is considering imposing strict caps on individual bets, setting monthly betting limits, and launching so-called financial wellness audits of players who lose a certain amount online, in order to ensure that they do not go into deep debt. Regulators can also ban or limit so-called betting clubs or preferred betting programs that reward frequent players. Similar measures have already been implemented in other countries, such as Germany, resulting in a sharp drop in betting.
These recommendations are giving rise to troubling results in the UK. A 2010 survey estimated that the number of problem gamblers in England had more than doubled in just a few years and that up to a third of those with problems bet primarily 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 the UK should set off alarm bells in the US. Major American sports leagues have gone from opposing legalized sports gambling to passively supporting it, encouraging it and partnering with betting companies, all despite evidence that sports betting, especially in the leagues popular fantasy, are a bridge for underage punters in regular play. Nevertheless, Major League Baseball has approved Prop. 27. The NFL has negotiated agreements with FanDuel, DraftKings and Caesars, making them “sports betting partners” in the league. Twenty teams now have partnerships with game companies.
The vast expansion of sports betting in the United States has been touted as a harmless diversion, a job-creating juggernaut and a vast reservoir of new government revenue. But America may be losing the bet.