Facebook Twitter

NYT spent about a year investigating the sports betting industry. Here’s what it found

How sports betting went from being an illegal activity in every state to one of the biggest industries in the U.S.

SHARE NYT spent about a year investigating the sports betting industry. Here’s what it found
Men watch horse racing on an array of screens at Monmouth Park Racetrack in Oceanport, N.J.

In this May 14, 2018, file photo, men watch horse racing on an array of screens at Monmouth Park Racetrack in Oceanport, N.J.

Seth Wenig, Associated Press

The New York Times conducted an investigation to look at how the sports betting industry went from only being legal in one state to a booming business.

About five years ago, sports betting was only legal in one state and now is growing large and fast.

Here’s what was reported.

What did the Times find?

The Times spent nearly a year looking into the business and examined what the outcomes are most likely to look like for those in the sports industry, public health, taxpayers and more.

Here are some of the findings.

  • Different gambling companies cozied up to state lawmakers to get sports betting legalized in the first place.

Those within the gambling industry lobbied to legalize sports betting and influenced lawmakers to believe that a new wave of tax revenue would come in from legalizing the industry.

While many states ended up legalizing the business, others were skeptical.

NPR reported that the recent push to legalize sports betting in California wasn’t successful due to card room operators fearing people would end up bringing “civil lawsuits against the card clubs over disputes in state gaming law.”

  • Gambling companies have had to make strategic business partners to boost revenue.

The Times reported that an online betting company decided to pay a university for the right to promote gambling on campus.

“Alan, if we are willing to take an aggressive position, we have a $1 M/year deal on the table with Caesar’s,” Paul Schager, an official at Michigan State University’s athletic department, wrote in a letter to the university’s athletic director in 2021.

The five-year deal proposed to the university by Caesar’s Sportsbook was worth $8.4 million and was dubbed “the largest sportsbook deal in college athletics.”

The Morning Brew reported in March that there were a total of seven schools who had made sports betting deals, and The Times reported that number is now up to eight.

  • Other methods to bring in customers were looked at by different casino companies.

Penn Entertainment decided to purchase Barstool Sports in a $387 million deal, despite the founder of Barstool, David Portnoy, filing for bankruptcy due to gambling losses, according to the Philly Voice.

The Times investigation found that in 12 of the 13 states where Penn acquired Barstool sports betting, “regulators didn’t require Mr. Portnoy to undergo a licensing review.”

  • State regulators were caught unprepared to handle the sports betting industry.

Since the federal government doesn’t regulate sports betting, the states that have authorized sports betting have a hard time regulating the rules in order to police the industry.

The Times reported, “the more people bet, the more states collect in taxes. While also seeking to protect consumers, regulators have an incentive to help gambling companies get up and running quickly.”

Why does this matter?

The Washington Post reported in January that legal sports betting had a major increase in 2021 and predicted that there would be a large boom of sports betting in 2022.

The Grid confirmed the Post’s suspicions, reporting in September that this year’s revenue from the industry has been outpacing last year’s record, with $3.04 billion already made by June 2022.

Different companies have been working to make sports betting even more accessible and take the betting from the casinos to online. The Deseret News reported that some companies doing this are DraftKings, BetMGM, Caesars and FanDuel.

It has been predicted that the new industry boom, “the sports gambling gold rush,” may make around $39 billion by 2033, according to Bloomberg.

But there could be some negative outcomes from this increase.

“There is some evidence,” said Alan Feldman, distinguished fellow of responsible gaming at the University of Nevada, Las Vegas, “that the legalization of sports wagering has led to an increase in problem gambling.”

Why was there an investigation to begin with?

The origin story of sports betting began when a Supreme Court ruling in 2018 gave the power back to the states to decide how to regulate sports betting.

The Professional and Amateur Sports Protection Act was ruled to be in violation of the 10th Amendment of the Constitution during the Supreme Court case of Murphy v. NCAA.

CBS Sports reported this ruling made it possible for individual states to legalize sports gambling in May 2018. Until this case, Nevada was the only state where sports betting was legalized.

Before its legalization, sports betting was only found as an add on at casinos in Nevada and even then, the money was typically made at slot machines and the various table games, according to Bloomberg.

The Times reported that some sports leagues warned that the legalization of sports betting, and the easy online access users can have to participate in it, may have significant long-term consequences. For example, Britain’s sports gambling industry has left behind “trails of addiction,” the Times said.

Since Murphy v. NCAA, only 12 of the 50 states have continued to rule the practice as illegal. The only states within the U.S. where you can’t legally bet on sports are Idaho, Utah, Hawaii, Alaska, Texas, Oklahoma, Missouri, Minnesota, Kentucky, Alabama, Georgia and South Carolina, according to Action Network.