Geoff Zochodone, Covers
By cracking down on good bettors, legal sportsbook operators can create demand for illegal sportsbook operators.
Like many other cogs in the industrial content machine, I woke up this morning and checked my email. There, as per usual, was fodder from one of the major sports betting sites in the U.S., ripe for sharing on social media.
According to the latest from BetMGM, many people are wagering that a team will lose every single game during the upcoming National Football League season. And, again per BetMGM, a lot of people think the Arizona Cardinals are going to lose a lot of games.
Perfect. A few screenshots and a tweet later and I shared this negativity with the world. However, the only reaction this tweet received (and, yes, I realize this is a very self-centered way to start a column) was the following: “Geoff no one with a pulse is able to bet @BetMGM this insight is absolutely useless.”
Pushing it to the limit
Well, ouch, but I can’t verify for certain if the above is universally true. Maybe the tweet will amuse a guy sitting in a bathroom somewhere or someone will use this factoid in a water-cooler discussion with a fellow employee. Moreover, I have a BetMGM account, and last I checked I do have a pulse because the blood moving through my body is helping me to write this. However, I’m not a sharp bettor. I’m just a guy who bets.
This brings me to the point I’m here to make: overly-aggressive limiting of players will undermine the whole point of legal sports betting. This is an opinion, and maybe you disagree. But, in short, if people can’t make a decent bet through a legal channel, I think they will go somewhere else that is not regulated, licensed, or taxed.
If so, by cracking down on good bettors, legal sportsbook operators can create demand for illegal sportsbook operators. This flies in the face of one of the main reasons to legalize sports betting in the first place, which was to redirect wagering going on in “gray” and “black” markets into totally legal ones.
Like every other business, gambling has supply and demand. Notably, the American Gaming Association and others are urging federal lawmakers to crack down on the suppliers of offshore and non-U.S.-regulated gambling.
“Illegal and unregulated gambling is a scourge on our society, taking advantage of vulnerable consumers, skirting regulatory obligations and robbing communities of critical tax revenue for infrastructure, education and more,” AGA President and CEO Bill Miller said in a press release last November.
Again, though, regulated operators can create demand for offshore and non-U.S.-regulated gambling by refusing to take action from certain players. Going after supply but not considering demand means only addressing half of the problem.
Some data suggests a sizable amount of such demand could be created by limiting. Citing bookmakers, the Washington Post reported in November that “genuine sharps” may only make up less than 1% of the betting population, but limiting policies could affect as much as 10% of players.
If you can’t beat ’em…
What’s more, the AGA report released last year estimated Americans were wagering $63.8 billion a year with illegal bookies and offshore sites. Meanwhile, around $100 billion in legal sports betting was projected for this year, findings the AGA said “imply that illegal sportsbook operators are capturing nearly 40 percent of the U.S. sports betting market.”
Some illegal wagering is in states without legal sports betting, such as California or Texas. Still, a sizable chunk at least is attributable to states where people continue to use unauthorized operators. Indeed, the AGA report found 49% of sports bettors wagered with an illegal operator over the past year.
Rest is here…
