The Author's Series: The Rise of American Sports Gambling with Danny Funt

00;00;07;26 - 00;00;42;28
Mark Conrad
Hello and welcome to the Sports Business Podcast with Prof C. The podcast that explores the world of professional, collegiate, amateur, and Olympic sports. I'm Mark Conrad, or Prof C, from Fordham University's Gabelli School of Business, where I serve as Professor of Law and Ethics and the Director of the Sports Business Initiative. In just a few years, sports betting has been legalized in many states, and millions have placed wagers.

00;00;43;01 - 00;01;12;03
Mark Conrad
The total in the tens of billions of dollars. This explosion in legalized sports betting is the subject of a new book, Everybody Loses: The Tumultuous Rise of American Sports Gambling by Danny Funt. The book casts a critical eye on this fast-developing industry. Danny's reporting has appeared in The Washington Post, The New Yorker, and The Wall Street Journal.

00;01;12;06 - 00;01;19;05
Mark Conrad
He hails from Charlotte, North Carolina. Danny, welcome to the Sports Business Podcast.

00;01;19;08 - 00;01;22;01
Danny Funt
My pleasure, Mark. Thank you for having me.

00;01;22;03 - 00;01;37;08
Mark Conrad
And the pleasure is mine. So lets start off, why and how did you get interested in the subject of sports gambling? And when did you have the idea of writing this book that is very critical of the way legalized sports betting evolved?

00;01;37;10 - 00;01;58;26
Danny Funt
The simple answer is, I've been a sports fan all my life, and how could you not be interested in what's happening with gambling because of that? It's so transformative, not just to the business of sports professional and college, but in the fan experience in a lot of profound ways that I think we're still wrapping our heads around, so on that level.

00;01;58;26 - 00;02;37;28
Danny Funt
As a fan, I was a little bit mystified by why things had changed so abruptly and why, in particular, the leagues had abandoned a century of opposition to the spread of illegal gambling outside Nevada. The other thing that particularly made me want to write this book is I'd been covering it for the Washington Post and other outlets for some years, but I felt like I was just scratching the surface as far as getting to the bottom of that fundamental question, why did the leagues change their tune and become such enthusiastic evangelists for gambling after being its staunchest opponents?

00;02;38;01 - 00;03;11;14
Danny Funt
And I also saw these companies, namely FanDuel and DraftKings, become household names and so influential over sports. And yet they remained kind of mysterious. A lot of people have no idea what it's like to work there, how they think about their customers, how they see their business evolving. And so, giving the time that I could, over the course of reporting a book, to speak with dozens of people who work in the industry was very eye-opening, and I thought it made for a good book.

00;03;11;15 - 00;03;22;19
Danny Funt
So I've been quite happy with the response thus far. It seems like people, whether they're diehard sports fans or just have sort of a passing curiosity in this, have found it pretty interesting.

00;03;22;22 - 00;03;50;23
Mark Conrad
And the book has struck a chord as well, because certainly it's gotten a lot of publicity. And I think it is the first book that's been written that really cast a critical, critical view of this explosion in sports betting. And you raise a good point, and I'm going to ask the question in a little more detail. Sports gambling has traditionally been considered a sin activity, and one that has been illegal in most of the United States for a very long time.

00;03;50;26 - 00;03;57;11
Mark Conrad
Why do you think the attitude has changed? Leading to its legalization in about 40 states?

00;03;57;14 - 00;04;30;06
Danny Funt
Well, as you said, there has been a federal excise tax on sports gambling since, I think, the 1940s, maybe even earlier, and it remains in place. So another word for an excise tax is a sin tax. I think it's clear that many people in government have viewed this as an activity you would want to discourage. I think part of why that changed was you saw a similar rationale take hold with cannabis legalization, where people came to the belief that this is happening whether we like it or not.

00;04;30;08 - 00;04;57;20
Danny Funt
People are determined to smoke weed. And so why not regulate it and tax it so that there can be some consumer protections, and so that these companies can be treated like any other business rather than flouting the law. So that argument seemed applicable to sports betting. We know that there's been vast illegal betting all over the country. It's hard to pinpoint that number because how could you, if it's happening under the table?

00;04;57;20 - 00;05;21;00
Danny Funt
But there's good estimates. There are tens of billions of dollars have been wagered on sports illegally for quite a while, despite federal and state laws. You've got these offshore sites, mainly in Latin America, taking bets over the internet. You've got bookies all over the place who are too difficult to find. If you're looking to place a bet that way.

00;05;21;00 - 00;05;54;02
Danny Funt
So, whether it was NBA commissioner Adam Silver in his memorable op-ed in 2014, in The New York Times, arguing that there should be federally regulated sports betting because he cited this vast black market. I think he actually dramatically overstated the size of the black market, and people have dug into that since. And, it might have been a bit misleading the way that he cast the black market back then, but nevertheless, that idea took hold.

00;05;54;02 - 00;06;20;11
Danny Funt
And so a lot of lawmakers have parroted some version of that, that this is happening, whether we like it or not, it would be in the public's interest if we taxed it and regulated it. And now states are having some buyer's remorse about that, where they say, we've failed to drive out the black market, and these regulated companies aren't behaving all that differently from illegal operators.

00;06;20;11 - 00;06;54;13
Danny Funt
They're still preying on people. They're still pushing people in shrewd ways to bet more than they intended. And so you've seen a couple of prominent lawmakers, whether Governor Mike DeWine of Ohio or former Massachusetts Governor Charlie Baker, say versions of, I wish this had stayed in Las Vegas; we regret signing those bills. But as you said in the intro, something like 38 states and Washington, D.C. have legalized some form of sports betting, and that number is only continuing to grow.

00;06;54;15 - 00;07;23;23
Mark Conrad
And you do mention, and I think for our audience, it's important to know that for a long time, there was a federal law that prohibited states from creating these kind of legalized sports betting schemes. But the Supreme Court invalidated that law as unconstitutional on more constitutional theoretical aspects. That is sort of beyond our podcast, unless you're really into pure constitutional law and you can look at and research elsewhere.

00;07;23;27 - 00;07;40;02
Mark Conrad
But essentially, the Supreme Court opened the door for states to create systems of legalizing sports betting. And the states acted very, very quickly. Do you think that the states pushed the leagues or the leagues started to push the states?

00;07;40;05 - 00;08;00;04
Danny Funt
That's an interesting question. Before I get to that, I do want to acknowledge, I'm not surprised that you would set the record straight on the true nature of what that Supreme Court case turned on. I've read your writing and research on that with interest, but a lot of people misunderstand it. And of course, they misunderstand a lot of Supreme Court case law.

00;08;00;07 - 00;08;30;25
Danny Funt
But this one in particular is important because people remember it as the justices saying, Congress lacks the authority to regulate sports betting, or it would be good for the country if there were legal sports betting, or sports betting is now legal across the country. None of those things were true in fact, the court went out of its way to say Congress does have the authority to regulate sports betting and could pass an updated version of this 1992 law if it's so wished.

00;08;30;27 - 00;08;56;02
Danny Funt
And yet there wasn't the willpower to do that. And it was that case provided the cover for the leagues and other people who stood to profit from sports gambling to say, well, the Supreme Court has issued its ruling. This is our new reality. We can only, we can't do anything but adapt. And that was pretty misleading or disingenuous, even, because none of that was true.

00;08;56;04 - 00;09;35;29
Danny Funt
It was still up to the states to decide if this is something they wanted. So, getting to your question. The thing that I found so fascinating in my book was before that decision in 2018, the leagues had been meeting secretively with representatives of the gambling industry in meetings that were kicked off by Adam Silver's 2014 op-ed after representatives of casinos and other gambling industries saw the commissioner's op-ed, they thought, oh, maybe there's a crack in the door, and we could persuade the other leagues and their broadcasting partners that this would be in their interest to push for legalization.

00;09;35;29 - 00;10;03;00
Danny Funt
And so they were meeting behind closed doors and explaining not just how much money they stood to make, but how, particularly for the leagues, their TV rights would benefit so much. The biggest moneymaker for sports is the right to show professional and college games. It's not ticket sales, it's definitely not Merch, and the leagues were looking down the road and seeing people are canceling cable subscriptions.

00;10;03;02 - 00;10;25;17
Danny Funt
The audience is dwindling. Young people don't want to sit through a 3 or 4-hour game. And so the gambling industry had commissioned these studies that demonstrated in vivid detail that gamblers watch more than twice as many games as traditional fans. They also watch to the ends of blowouts to see how that plays out, when a normal person might have changed the channel.

00;10;25;17 - 00;11;04;11
Danny Funt
Since the game has long since been decided, and that was very persuasive to the leagues. So much so that they signed a law firm called Orrick to represent them, and that the. What's noteworthy about that is Orrick had also been representing FanDuel and DraftKings, these two sports betting giants. And so you had the same firm representing DraftKings, FanDuel, the NBA, and Major League Baseball, and working in sync to make sure that both of them advanced their interests in terms of how they wanted to see sports betting legalization play out.

00;11;04;14 - 00;11;31;28
Danny Funt
And the clever thing that Orrick realized is by that point, FanDuel and DraftKings had run into really hot water with a lot of states and state attorneys general because their previous product, Daily Fantasy, had been accused of flouting anti-gambling laws. A number of states had sued or issued cease and desist letters to try to get daily fantasy out of their states.

00;11;32;01 - 00;11;56;22
Danny Funt
So DraftKings and FanDuel didn't really have great standing to now go and lobby state legislatures to pass betting bills, the NBA and Major League Baseball did, and Orrick realized they could get any meeting they wanted. They would be so effective at wooing lawmakers by taking them to games, having them meet sports dignitaries. And that would be in a very effective lobbying strategy.

00;11;56;22 - 00;12;20;19
Danny Funt
So the leagues were incredibly hands-on in one state after another, convincing lawmakers that sports betting was a good thing for sports, that the leagues wanted it, and that they should pass these bills as quickly as possible. And the bills that they were pushing for were essentially written by FanDuel and DraftKings. These were the industry bills in a lot of states.

00;12;20;21 - 00;12;46;03
Danny Funt
And yet, because it had the league's backing, states were more than happy to give their stamp of approval. The last thing I'll say on that is it was just a remarkably effective lobbying campaign. And I remember speaking with a lobbyist in Virginia who had been hired by Orrick to advance this legislation, and she was gushing about how they got everything that they wanted in the bill.

00;12;46;03 - 00;13;09;09
Danny Funt
And I asked her, there must have been something that you were pushing for that you didn't get in that final bill. What's one thing that you couldn't convince Virginia to pass in its sports betting legalization? And she thought about it for a moment, and then she said, You know, honestly, we got everything we wanted. There was nothing left on the table that we couldn't get done.

00;13;09;09 - 00;13;22;28
Danny Funt
And that gives you a sample of how overwhelming this lobbying effort was, and all thanks to the fact that the leagues and the gambling operators were working arm in arm.

00;13;23;01 - 00;13;46;16
Mark Conrad
And speaking of gushing, let's talk about the media coverage in the aftermath of the legalization of sports betting, which I found almost uniformly positive. I found very, very little that was critical or foresaw some of the issues that would come up. Does that jive with what your experience has been? Because you do write a lot about that in the book?

00;13;46;18 - 00;14;33;12
Danny Funt
Yes, absolutely. I devote a whole chapter to it because I think sports media is so essential in terms of normalizing gambling. It's easy to forget that even if there was a robust black market, this was something people tended to do discreetly. You wouldn't be, you know, blabbering about it with your family or at a school event. It was not, I think it's safe to say, in a lot of polite society, people were talking all the time about sports betting and the fact that very respected columnists or podcast hosts or in-studio analysts or radio hosts or even people calling games, were paid hundreds of millions of dollars in a short amount of time to be finding

00;14;33;12 - 00;15;07;01
Danny Funt
ways to bring up gambling, suggesting bets, saying what they would be betting if they were to place a bet, as I said, even interrupting game broadcasts to say. And by the way, you could go to FanDuel or DraftKings or wherever else and go place a bet that we'd recommend that had a huge impact. I remember speaking with someone who was involved in partnerships at NBC Sports when they inked a $500 million deal with an operator called PointsBet that has since been acquired by Fanatics.

00;15;07;04 - 00;15;45;10
Danny Funt
And that was a big, you know, turning point to have a gigantic company like NBC get in bed with a gambling company and integrate the odds and other ways of referencing PointsBet in its sports coverage. And that fellow went on to work for a telehealth provider that provides addiction services for a number of things, especially gambling. Maybe he's sorts of repenting in some respects for what he did to promote gambling at NBC, but he was telling me about how he now goes to all these colleges and talks, especially with fraternities, about the risks involved with gambling.

00;15;45;10 - 00;16;21;00
Danny Funt
And so many of them just say this has become the default way of engaging with sports. And if they're about to watch a game, it's just second nature now to say, Hey, who you got? You know, what parlays are you constructing? Let's all get our bets in before we start watching. And he couldn't help but think that the way that NBC had normalized that through, you know, being paid $500 million to strike that deal with PointsBet, that he was seeing the downstream effects of that in how ubiquitous gambling has become among college students.

00;16;21;02 - 00;16;47;19
Danny Funt
The other thing I'll say is that it came at a time when a lot of sports media was fighting for survival, and you saw massive layoffs at big companies like Sports Illustrated and ESPN. You saw a lot of distinguished sports outlets going out of business or becoming shells of their former selves. And so it was a very difficult time for them to stand on principle and turn away a gigantic new revenue stream.

00;16;47;21 - 00;17;13;15
Danny Funt
And I spoke with leaders in newsrooms and business executives at news organizations. And I asked, you know, for years, sports media barely acknowledged Gambling's existence. Why were you so quick to sign these deals and do a 180 on that? And the word I got was basically the money was too good to pass up. And when you're fighting for survival, it's really hard to turn down all that money.

00;17;13;15 - 00;17;38;18
Danny Funt
And yet a lot of journalists feel like their work is fundamentally compromised because of all this money. As someone who used to work at ESPN put it, it's as if sports media is being bribed by all that gambling advertising to both promote gambling, but maybe more importantly, to not cover unflattering things about gambling that might annoy some of their top sponsors.

00;17;38;21 - 00;18;02;21
Mark Conrad
And this comes at a time when major newspapers in the country have cut their sports coverage. So we only have more niche coverage. I mean, you know as well as I do, the Washington Post pretty much obliterated their sports department, and The New York Times subcontracted it out to The Athletic. At least they subcontracted it out. And of course, others that you mentioned, you know, having a difficult time.

00;18;02;24 - 00;18;24;19
Mark Conrad
Also, the regional cable networks have been having severe economic problems. So you can sort of see where the lifeline could come in. And that's also something that you do mention. I mean, for those of you who are curious, the number of cable subscribers has dropped by about 40% in the last ten years. And that's really hurt

00;18;24;19 - 00;18;45;16
Mark Conrad
the RSNs. The reasons the regional sports carriers and they're looking for revenue to stay alive. But back to the effect of all this. How does it change fandom? Has it really begun to change what it means to be a fan following a sports team? Is it becoming more monetized because of the gambling?

00;18;45;19 - 00;19;13;20
Danny Funt
I posed that question to a lot of people I really respect. One of them is Bob Costas, the legendary broadcaster, and he said it makes fandom less emotional and more transactional. And I think that's clear. If you talk to gamblers or see how they watch a game, they're thinking about what's making or losing their money. They're fixated on superficial things within the game that they might have placed a prop bet on.

00;19;13;22 - 00;19;33;26
Danny Funt
I remember actually talking with someone who's in recovery for a gambling addiction, and he went to a playoff basketball game after he was getting treatment for this addiction and had stopped betting. And he told me that there were these guys sitting in front of him, and it was a Philadelphia Sixers-New York Knicks game. Like a really interesting series a couple of years ago.

00;19;33;26 - 00;20;06;22
Danny Funt
And these guys in front of him had traveled from Long Island to Philadelphia. So, you know, they took a ferry and then a train and then a bus. So huge ordeal that to get from Long Island to Philly, coupled with the fact that playoff basketball tickets aren't cheap and yet this guy who is in in treatment for a gambling addiction was telling me that the people in front of him, all they cared about the whole game was whether Jalen Brunson of the Knicks would get a steal, because that was the prop that they had bet on, and that was all they were worried about.

00;20;06;22 - 00;20;35;28
Danny Funt
And I can't help but feel dismayed by that. I think it really makes fandom more shallow. It can make it more cynical. I tell a story in the book is coincidentally also at a Philadelphia Sixers game, when it was the day Kobe Bryant had died in a helicopter crash, the legendary Laker and teams began the games by committing 24 second shot clock violations because he had been number 24.

00;20;35;28 - 00;20;55;16
Danny Funt
And that was their way of paying tribute. So the first minute of the game was scoreless, and when I got to this game in Philadelphia, this beer vendor was telling me about that tribute. He seemed really upset about it. And like, you know, down to the dumps. And then I figured, you know who isn't? Kobe Bryant just died.

00;20;55;16 - 00;21;16;02
Danny Funt
But then he said, I'm so mad at myself, I should have bet the under on points scored in the first quarter because no one was trying to score in the first minute. And that, to me, was just such a sign of the times that people are that ghoulish about, you know, what's making or winning the money, and kind of shove everything off to this side.

00;21;16;04 - 00;21;41;22
Danny Funt
And that was the fear you used to hear the commissioner say. You used to hear Bill Bradley, the New York Knicks legend turned U.S. senator, say that it would reduce athletes to roulette chips if all people cared about was their bets and their studies to back that up, that's happening on a much more mainstream level. People really thinking about sports differently and, maybe for the worse.

00;21;41;24 - 00;22;08;00
Mark Conrad
And since you bring that up, reports of problem betting and gambling addiction have increased throughout the country. And it was thought that regulated betting would solve the problem. But maybe it's certainly in the maybe not the case, but maybe has made it worse. Do you think it could make it worse, and what do you think the reasons are for these increased issues and reports of gambling addiction or problem betting?

00;22;08;03 - 00;22;34;26
Danny Funt
It goes to one of the central arguments for legalization, which I find honestly pretty ridiculous, especially in hindsight. But the proponents of gambling argued that there would not actually be an increase in the number of people betting, it would just transfer people from an illegal market to a legal one again, so it could be regulated and taxed and maybe done more safely and in a controlled environment.

00;22;34;28 - 00;23;01;22
Danny Funt
There is so much evidence to suggest that the rate of gambling across the country has exploded, that so many people who never would have dreamed of betting with some sketchy offshore website or tracking down a bookie are now, you know, more than comfortable downloading an app from the App Store, depositing money with Venmo and PayPal, or from their bank and betting with a few taps on their phone.

00;23;01;23 - 00;23;27;08
Danny Funt
Just the ease of betting on your phone. And now, 95% of bets are placed online makes this so much more appealing to so many people than had ever been the case previously. So to me, it's common sense, but also undeniable, that vastly more people are betting. And as a result, it seems, unfortunately, more people are developing gambling problems.

00;23;27;08 - 00;23;56;04
Danny Funt
It's what's called a progressive disorder. So you don't necessarily immediately see the evidence of that. It can take years for a gambling problem to emerge if people are betting, but I've heard health experts speculate that the previous rule of thumb had been that maybe 1% of the population is susceptible to a gambling problem. Now they worry it could be as high as 6 or 8%.

00;23;56;06 - 00;24;22;29
Danny Funt
It's even higher among young men who are the target demographic for sports betting and the target of a lot of these ads. You see a lot of alarming signs, and I keep bringing up signs and circumstantial evidence and things like that, because there's a conspicuous lack of research into basic questions like how many people are betting in the US and how many suffer from gambling problems.

00;24;23;02 - 00;24;58;09
Danny Funt
And I think the reason why is that the industry is staunchly opposed to that sort of research. And I've spoken with members of Congress who have proposed funding those sorts of studies, definitely university researchers, and others who want to shed light on those questions. And they say the industry doesn't want us to be able to scrutinize things as basic as how many people are betting because they know they would maybe come under a lot more criticism if we had a clearer picture of the state of gambling in the US.

00;24;58;09 - 00;25;29;08
Danny Funt
But nevertheless, as I said, there are so many indicators that things could be getting out of hand. One I'll just leave you with for now, at least, is I live in North Carolina. Half of the calls to our problem gambling hotline now come from parents who are so concerned about their kids gambling, like never before. I've heard not just in college, where 1 in 5 college students tap into tuition funds to pay for their bets.

00;25;29;11 - 00;26;09;09
Danny Funt
But high school, middle school, even elementary school students developing gambling problems now. And as an expert on youth problem gambling named Jeff Derevensky, a professor at McGill University, told me, in his experience, so often for youth gambling, eventually they're gambling on everything they can find. But typically, sports is their way in because they're already fans of sports and they see it being normalized, especially from heroes of theirs, in you know, superstar athletes, in TV stars and movie stars who are now in all these commercials telling you gambling is the thing to do.

00;26;09;09 - 00;26;16;12
Danny Funt
So I think there's a lot to be worried about of this as a public health crisis in the making.

00;26;16;14 - 00;26;41;04
Mark Conrad
And your book goes into examples of bettors who became addicted to sports, and it also outlines the techniques the industry does to make betting attractive. One of them is prop bets. Do you think that prop bets has exacerbated the problem? Along with betting on mobile devices, and maybe could tell the audience? For those who do not know what prop betting is?

00;26;41;06 - 00;27;10;27
Danny Funt
So the word prop is short for proposition, and it describes statistical propositions within a game, whether related to individual performance, like, well, a quarterback throw for two or more touchdowns in a game, or team performance like, well, a team have X number of rebounds in a basketball game. But it can also be the time frame, of that can be a quarter, a half, even a single player possession.

00;27;10;28 - 00;27;42;29
Danny Funt
There's this whole growing category of so-called micro bets, which are props on things as granular as well. The next pitch in a baseball game be a ball or a strike. Well, a football possession end in a touchdown, a field goall, a punt, a turnover, etc. and a lot of people compare that to a slot machine, because traditionally you place your bets before the game on things like who's going to win or how many total points will be scored, and then you sit back and bet your fingernails and watched.

00;27;42;29 - 00;28;07;17
Danny Funt
And now people are betting constantly, as you said, on their phones throughout the game, on all of these thousands of props that you can find on every game, including with odds that update in real time. And that does look like a lot like betting on a slot machine. You're hammering away on a minute-by-minute, or even second-by-second basis.

00;28;07;20 - 00;28;30;04
Danny Funt
It looks like a road to compulsive betting. And I ran that by an executive at one of these companies that generates those micro bets. And he said a few things that I found revealing. One was I asked him, Is there a danger that this will inspire compulsive behavior? And he interjected and said, sticky, sticky. Here's how we like to think of it.

00;28;30;04 - 00;29;02;17
Danny Funt
And to me, that's just a corporate euphemism for a compulsion. You know, if you're glued to your phone betting, that sounds like a potential health problem. The other thing I asked him was, I could imagine someone who might be comfortable betting, let's say $50 if they're wagering pregame, but if they're betting on these bets during a game, they might bet $10 10 times over the course of the game and then look up and say, wow, I just bet twice as much as I would have otherwise.

00;29;02;20 - 00;29;22;18
Danny Funt
And he said, yeah, that's the goal. That's the brilliance of this business model, is that it can get you to bet more than you would have if you were just betting before the game started. And so you combine those two things. It seems like a recipe for compulsive behavior and a recipe for people betting more than they intended.

00;29;22;20 - 00;29;55;04
Danny Funt
And I think that is a distinct danger of this new era of gambling. And again, I just think it's so worth underscoring that we don't just have legal betting, we have new ways of betting that you could never have found previously. The idea that you can bet on micro bets constantly while watching a game, or that you can assemble these long shot parlays on a variety of props that you combine for the chance at a much bigger payout.

00;29;55;07 - 00;30;22;05
Danny Funt
Those are distinct byproducts of the online betting boom. You simply couldn't bet that way through the black market pre 2018, so I just think as we're trying to take stock of what's happened, it's legal betting. It's more betting, and it's betting on a vast variety of things that you could never have bet previously. And all that seems like a recipe for trouble.

00;30;22;08 - 00;30;38;08
Mark Conrad
Danny Funt, who's the author of Everybody Loses: The Tumultuous Rise of American Sports Gambling. Since states control this endeavor, do you think that the rules and enforcement are inconsistent from state to state?

00;30;38;10 - 00;31;01;06
Danny Funt
Without question. In serious ways, you know, things like the age that, you know, the minimum age to bet its over 21 in a lot of states, but it's about 18 or up in others. Some states say, a minority of states say you can only do this in person. Some, like Washington State, say only in person on tribal land.

00;31;01;06 - 00;31;45;11
Danny Funt
The idea being use this to stimulate tribal economies. But we don't want this being a ubiquitous activity across the state of Washington. Most states allow online betting, but they're inconsistent as far as all the regulations that come with that. Whether it's what types of advertising is allowed, what sort of enticements are allowed, which has been such a huge part of customer acquisition, dangling free money, or what sounds like free money in a lot of states. Even things that might seem a little in the weeds, but I think are important to just illustrate how checkered the regulatory situation is across the country.

00;31;45;11 - 00;32;13;08
Danny Funt
So, I get into the issue of, if a sportsbook offers odds that they call an obvious error, something that clearly was a mistake by the bookmaker, and therefore they try to void those bets after the fact, rather than having to pay people who bet on obviously erroneous odds. States take a very different tact as far as how they officiate those disputes.

00;32;13;08 - 00;32;36;21
Danny Funt
New Jersey, for example, has been very strict in saying we don't want operators using that as a get-out-of-jail-free card, where they post, you know, imprecise odds, and then they void the bets rather than just being more careful about the odds they offer. Other states have tended to side with the operators and allowed them to avoid those bets.

00;32;36;21 - 00;32;59;21
Danny Funt
You can imagine how infuriating that can be for customers who think they've just hit a jackpot bet, and then they hear the sportsbook say never mind, or canceling that wager. So that is one of many examples of how inconsistent this is and the reason why it's so inconsistent isn't just different philosophies about how this ought to be regulated.

00;32;59;21 - 00;33;30;23
Danny Funt
And there is some of that, and that's important. It's also the fact that there's a significant learning curve, state to state, where a lot of states, you know, created a gambling commission or the regulatory office that would supervise sports gambling with such haste. Sometimes they'd say, you know, there's a Super Bowl around the corner or March Madness or the start of football season events that tend to generate a lot of gambling and therefore potentially a lot of tax revenue.

00;33;30;23 - 00;33;58;28
Danny Funt
So, they would say, hurry up and get this off the ground by then so we can make money off that. And as a result, a lot of the regulations and, staffing for overseeing sports betting was really thrown together haphazardly. You had states that were just grabbing people who supervised the lottery or former police officers, people who are unfamiliar with all the nuance of online sports betting.

00;33;58;28 - 00;34;20;28
Danny Funt
And as a result, you've basically got 39 different rules of the road, and that, more often than not, tends to benefit the operators because they've been able to have an outsized influence on those rules. And a lot of the time, customers are sort of hopeless if they try to bring a dispute before a state regulator.

00;34;21;01 - 00;34;39;19
Mark Conrad
And you made a good point, which I was going to ask, but you preempted me. The contracts that the bettors sign, you know, often very one sided, that basically the company, in its own discretion, could not pay for a big jackpot, that a better wins. You know how many industries allow that? And you go through a lot of examples.

00;34;39;23 - 00;35;03;12
Mark Conrad
In fact, I think one whole chapter on the way the books are cooked, if you will, you know, in some of the contracts. So, moving on from that to the corruption issues. And then the last year, we've seen reports of an arrest of an NBA coach, former NBA players regarding what we used to be called match fixing. But obviously, you know, various forms of federal fraud.

00;35;03;12 - 00;35;24;16
Mark Conrad
Are you surprised because the idea was that, oh, legalized sports betting would be allowed because these athletes make so much money, why would they want to do this? So, are you surprised that we're getting reports of that? And these are still allegations? No one's convicted. But nevertheless, there's certainly they made headlines and may address some concerns. So, what do you think?

00;35;24;19 - 00;35;48;21
Danny Funt
I'm not surprised at all. In part because there was a century plus of evidence that making a lot of money does not make you immune to being tempted to place a bet. You know, going back to the Chicago White Sox when they threw the 1919 World Series, I think they were the highest paid or the second highest paid team in the American League.

00;35;48;23 - 00;36;14;12
Danny Funt
So that didn't make them incorruptible. Fast forward to Pete Rose, the all-time leader in hits in Major League Baseball. He's banned for life for betting on games as a player and then the coach of the Cincinnati Reds. He was for a time the highest paid player in all of team sports. That didn't stop him from placing a lot of ill-advised and illegal bets.

00;36;14;14 - 00;36;41;21
Danny Funt
And then you've even got people like Michael Jordan and Phil Mickelson. Jordan has made, you know, billions of dollars, and yet he's an inveterate gambler. And that's a frightening amount of money at casinos and on the golf course. Phil Mickelson has made about $1 billion over his golf career, and yet opened up recently that he has a gambling problem that reportedly caused him to lose over $100 million gambling.

00;36;41;21 - 00;37;06;18
Danny Funt
So, making a lot of money doesn't stop you from wanting to gamble. If anything, there's a lot of evidence that athletes are drawn to gambling as much as anyone you know. If you think about it, what makes you a good athlete? Being maniacally competitive, not accepting defeat, thinking you can overcome the odds. All of that is, you know, a recipe for being a problem gambler, potentially.

00;37;06;18 - 00;37;46;14
Danny Funt
And yet those are the trademark personality traits of being a star athlete. So that adds up if you think about it. But then more to the point, I had just been in researching this book, speaking with so many people at the leagues, whether it's athletes, agents, managers, and especially these companies, these so-called integrity monitors that are international firms hired to police improper betting, where they flag what they call suspicious activity and then investigate to make sure someone's not betting who's prohibited or to make sure a game isn't being manipulated.

00;37;46;16 - 00;38;13;08
Danny Funt
And people at those companies told me it's just inevitable that if you make it so easy to win a lot of money on so many more things than you could ever gamble on before, and as a result, it becomes so difficult to police that because how hard is it to tell your neighbor or your relative or someone, hey, go place these bets for me, it'll be very difficult to catch someone betting illegally.

00;38;13;10 - 00;38;51;06
Danny Funt
And we've seen the consequence of that. You know, you said you're right. Some of these are allegations. There have been some convictions, though. You had a total no name bench player on the Toronto Raptors named Jontay Porter. He was indicted and ultimately convicted of fixing a handful of games a couple of years ago where he told people, hey, I'm gonna remove myself from these games with fake injuries, and you should bet that I won't hit my prop on points, rebounds, assists, blocks, what have you.

00;38;51;09 - 00;39;25;20
Danny Funt
And people were betting to win more than $1 million on bets involving a guy most of us had never heard of, and that again. You could never have bet a, you know, $1 million parlay on a guy as obscure as Jontay Porter before legalization took off. That's a distinct invention of the online betting era. So the leagues have invited unprecedented risk of corruption, and they've offered this argument that all this stuff is in the sunlight.

00;39;25;20 - 00;39;58;10
Danny Funt
So were going to have an easier time catching bets because we can track betting data in ways we never could before. The fact of the matter is, sophisticated fixers are going to continue going through the black market. I had people who worked to these integrity monitors say exactly that, that if you are working with a, you know, gambling syndicate that bets a lot of money, theyre not just going to go to FanDuel and bet that, you know, on a fixed game, theyre going to go through illegal bookmakers overseas.

00;39;58;10 - 00;40;26;29
Danny Funt
And that's very difficult to trace. And the other part of it, they said, is that by carving up games into thousands of distinct betting opportunities, you can make a lot of money on things that are incredibly subtle and therefore so difficult to detect. You know, it's one thing to swing who wins or loses a game. It's way different to swing how many rebounds a bench player gets in the in a quarter, let's say, of a basketball game.

00;40;27;01 - 00;41;05;13
Danny Funt
So, they've invited a lot of trouble. It seems totally untenable. And the real risk I'm worried about isn't just these games being corrupted. It's the cynicism that it instills in fans, because this is yet another example of why this is a much bigger issue than just how it affects people gambling. There have been studies that more than half of Americans now suspect that some athletes are influencing their play to swing the outcomes of bets, and when you have that level of conspiracy thinking, reach the majority of Americans.

00;41;05;15 - 00;41;22;22
Danny Funt
I think that's profoundly damaging for sports. And it's what the commissioner is used to warn about. I don't think it was, you know, so difficult to see this coming. And yet it's the tradeoff the leagues have accepted and now they're sort of in hot water trying to justify it.

00;41;22;25 - 00;41;49;15
Mark Conrad
And now we'll get to the elephant in the room in 2026. And that will be prediction markets. So, these are firms that were set up differently than traditional betting firms because they're based on investment contracts, based on derivative investments, where individuals make contracts that predict certain events with other individuals. So, the companies don't have a house to speak of.

00;41;49;20 - 00;42;18;17
Mark Conrad
They get their commissions by making these agreements. And the rules regarding these companies are not governed by states, but governed by a federal agency called the Commodity Futures Trading Commission. And under the Biden administration, there were attempts to regulate this practice, too but the Trump CFTC has pretty much allowed this to go on. And these companies allow 18-year-olds to enter these contracts and arguably would violate at least

00;42;18;17 - 00;42;31;23
Mark Conrad
states are claiming, they violate state laws restricting or allow, gambling, because they don't have a license or the few states that still ban it. They're operating in those states. Where do you think this is all going to go?

00;42;31;26 - 00;43;03;26
Danny Funt
That's the billion-dollar question. It hinges on a few things. For one, will Congress intervene? And you've seen, I think just today, Senator Richard Blumenthal of Connecticut proposed a bill to restrict prediction markets, saying they've become a haven for insider trading and market manipulation and youth gambling. A number of members of Congress who had never spoken out against sports betting at the state level have said it's insane.

00;43;03;28 - 00;43;43;02
Danny Funt
As Senator Chris Murphy of Connecticut put it, that you're able to bet a lot of money on wars and other things, and they feel like they absolutely should crack down if the CFTC isn't. The other thing is, there's roughly a dozen cases in federal court where, as you alluded to, states, certain companies, and even some aggrieved consumers have sued, saying this is illegal gambling and these companies are using the guise of prediction markets and exchanges as a way of circumventing gambling laws so that they're not taxed and regulated like other gambling operators.

00;43;43;02 - 00;44;12;08
Danny Funt
And they're taking bets in states that don't prohibit that, like California, that don't allow that. I'm sorry, like California and Texas in particular. So, I have no prediction on how those cases will go, perhaps even reach the Supreme Court. Something like 90% of the money flowing through Kalshi, maybe the top prediction market in the country involves sports in a manner that's almost indistinguishable from traditional sports gambling.

00;44;12;10 - 00;44;44;13
Danny Funt
So, I do think there's some chance that that is disallowed, or at least they have to rebrand it so that it's regulated at the state level. But if election betting catches on or betting on contracts involving other current events, from award shows to legislation to the weather tomorrow, you name it, the CEO of Kalshi has said basically every dispute that you could think of, he hopes one day you can find a market to bet on it on his site.

00;44;44;16 - 00;45;13;24
Danny Funt
Whether that is something that attracts mainstream interest, I'm not so sure. I find it interesting that the people who founded FanDuel, the top sportsbook in the country, originally had tried to launch a website that would take election bets on US elections, and they found that there was a spike in interest around presidential races. But the rest of the time, not a lot of people cared to put their money in US politics.

00;45;13;26 - 00;45;39;06
Danny Funt
And so, it just didn't seem like much of a business. I wonder, ultimately, if a lot of people will be interested in betting on, you know, what will someone say when they appear on a talk show or what will be the highest selling album of this year on the charts? That sort of stuff maybe is fringe even by today's standards, where people seem to have an insatiable appetite for betting.

00;45;39;08 - 00;46;06;14
Danny Funt
On the other hand, you know, these companies are worth more than $10 billion. They now have partnerships with major news organizations like CNN and CNBC. So just as we saw with sports, where there was so much money spent to push this into the mainstream and make it normalized, I think we're seeing the exact same thing happen with prediction markets just on a very accelerated timeframe.

00;46;06;17 - 00;46;18;25
Danny Funt
And if they continue to have friends in the White House and if the courts rule in their favor, maybe this will be the new form of investing slash gambling in a lot of different ways.

00;46;18;27 - 00;46;21;19
Mark Conrad
Okay. Quick question: Do you think that this is gambling?

00;46;21;22 - 00;46;49;07
Danny Funt
As it relates to sports? Absolutely. I do think it's useful to break it up by category. So, the argument that they make, as for why it's not gambling, is that it serves a legitimate economic function as a hedging tool. So, let's say you're thinking about a political race and one candidate is going to raise your taxes. Perhaps you would want to hedge and bet on their opponent to win.

00;46;49;09 - 00;47;18;29
Danny Funt
That way you've sort of hedged your bets as far as your exposure to a tax increase. In the same vein as how you know you have futures markets on grain and other commodities, why not allow a similar form of hedging to exist with other categories of the economy and politics? So, I think that has some merit. There's other meritorious qualities of these markets in politics, at least, that I do find somewhat compelling.

00;47;19;01 - 00;47;44;07
Danny Funt
Whether it makes you more engaged as a citizen or a voter and a news consumer, all of that, I think, could be redeeming. But when it comes to sports or this fluff like, you know what will someone say in an earnings call or a speech or an interview that just seems like we're kind of contriving everything we can think of as more fodder for gambling.

00;47;44;10 - 00;48;04;13
Mark Conrad
Now let's move on to, you know, one of the key points in the book, you describe many sad situations where betters lost great sums of money. And how were some of these wagers adversely affected, you mentioned by divorces, bankruptcy, things of that nature, but how does it really ruin people's lives?

00;48;04;15 - 00;48;28;23
Danny Funt
I think anyone who suffers from gambling addiction, you know, it's a tragic mental health condition and I sympathize with them. I wanted to highlight people, though, who feel so relatable because I that's a fundamental misunderstanding that impairs how we talk about this and how we make policy is unfortunately, a lot of people think of problem gamblers as reckless.

00;48;28;23 - 00;48;52;28
Danny Funt
And, you know, out of control in their decision making. And like, you know, they had it coming. And the people who I highlight who I, I feel so terribly for, you know, one of them was a elementary school teacher. Another of them went to my alma mater, Georgetown, just a few years after I did both seem like totally mild mannered, ordinary people.

00;48;53;01 - 00;49;28;02
Danny Funt
They just loved sports. And like so many of us, were convinced that gambling was a way you could make money by leveraging your knowledge of sports in this newly available way. And because of some, you know, brain vulnerabilities and the way that these products are designed, they developed addictions where they were betting at all hours of the day on not just the sports they had always loved, but obscure, you know, Middle Eastern soccer and South Asian cricket and things happening in the middle of the night.

00;49;28;05 - 00;49;50;05
Danny Funt
And you might ask, you know, is there any reason to offer those in America other than to provide fodder for people with gambling problems to be betting at all hours of the day. But it turned their lives upside down? In the case of the college student. Made me so sad to think of and speak with him about, you know, all these wonderful aspects of being in college.

00;49;50;05 - 00;50;09;16
Danny Funt
He just said, unfortunately, I was basically in my dorm betting when I wasn't in class. The middle school teacher, he was just saying I was carrying this unbelievable shame everywhere I went. And yet, I couldn't open up about it because it had gotten so out of hand and the debt that I was racking up was so terrifying.

00;50;09;16 - 00;50;42;09
Danny Funt
And so ultimately, he changed course when his wife caught him betting, and he had to come clean about how much he had been betting and that money that her parents had given so that they could buy a house was now gone because of all the money he'd lost betting on FanDuel. And I just found it shocking that the, you know, the person closest to you in your life, your spouse could be completely oblivious to betting at that degree where you're literally betting it at every waking moment.

00;50;42;12 - 00;51;05;25
Danny Funt
It's a fundamental aspect of this, that it's an invisible disease. You know, you don't smell gambling on someone's breath. You don't see marks on their arms where they've been shooting up. You can disguise it even from your spouse. And the other thing about it is it's just such a waste of time eventually. And I even spoke with someone who was winning money.

00;51;05;27 - 00;51;28;16
Danny Funt
But they said the time I lost from my gambling addiction is hard to stomach. In his case, he just described, you know, he could either go bet on basketball late at night or help put his young kids to bed, or he would be pushing them in their stroller and catch himself constantly looking at his phones to see the scores on games.

00;51;28;16 - 00;51;51;05
Danny Funt
He'd bet on. And he just said the amount of time I lost; I'll never get back. I even heard from a couple people who said they started losing their hair because of all the stress that they experienced, losing so much money and betting so relentlessly. And it's just one of a million examples of how this is, you know, it's about money, but it's really not about money.

00;51;51;05 - 00;52;14;09
Danny Funt
And the people who get sucked into it the worst say, yeah, they're have horrible debt that they're going to spend a lot of time trying to pay off. But it's really not about this craving of profit. It's about what it does to you emotionally, how you get hooked on that rush and the thrill of winning. And you chase that day after day.

00;52;14;09 - 00;52;26;00
Danny Funt
And, it's a brutal disease from people who've been in recovery for gambling and other forms of substance abuse. A lot of them say gambling is the most difficult one to overcome.

00;52;26;00 - 00;52;42;19
Mark Conrad
Wow. We're speaking with Danny Funt, author of Everybody Loses: The Tumultuous Rise of American Sports Gambling. We don't have much time left. I'd like to ask two quick questions. 1. Would you start restricting advertising?

00;52;42;21 - 00;53;10;06
Danny Funt
I think so. Other countries have done that when they've had legal sports betting for longer than the U.S., and they've had longer to come to terms with the damage done by being very permissive and trusting these companies to self-police. That can take a lot of forms. You could regulate when ads are perhaps banning ads during games, banning them during hours of the day when kids are more likely to be watching.

00;53;10;13 - 00;53;35;07
Danny Funt
Some countries and I think the state of Connecticut have banned celebrities from appearing in these commercials. And I remember talking with representatives of the gambling industry in Canada, where they don't allow, by and large, celebrities and sports stars to appear in gambling ads, and they just think Americans are crazy to allow that, that it has such a damaging, effect of normalizing gambling.

00;53;35;07 - 00;53;49;23
Danny Funt
And so, to hear that from representatives of the gambling business just goes to show that once you kind of recalibrate your expectations, certain things that we allow in the US might quickly seem just hopelessly reckless.

00;53;49;23 - 00;54;07;23
Mark Conrad
And indeed, that's correct. But in the US, we have, the First Amendment, which protects advertising to a considerable degree, which you know, for those of you in the audience, that's a subject of my research. So, an issue I've been following. But we only have time for one more question, and that is, can we turn the clock back?

00;54;07;25 - 00;54;18;20
Mark Conrad
We created this situation. Can we turn it back? Can we start restricting some kind of gambling? And if so, what do you think should be done?

00;54;18;22 - 00;54;49;05
Danny Funt
I think it's unlikely that states that have legalized will revert to banning it, but I think the industry wants us to reduce this to that binary, because there are some arguments for legalization, and it might seem unrealistic to revert to prohibition. But as you said, Mark, there's so much in between that could be done. Restrictions on advertising, on promotions in particular, these deceptive promotions that seduce people into signing up for accounts.

00;54;49;08 - 00;55;22;17
Danny Funt
You could restrict types of bets that are especially prone to corruption and to engendering compulsive behavior. You could require very modest affordability checks so that sports folks have to do something to confirm that people can afford to be losing staggering amounts of money. There's so much that can be done short of banning it. And I just look all over the world, and there have been a lot of countries that I was, as I was saying, have had a wave of what they call reregulation.

00;55;22;19 - 00;55;29;16
Danny Funt
And I think that's probably what's in store in the US as we come to terms with the fact that a lot of this is really out of hand.

00;55;29;18 - 00;56;03;03
Mark Conrad
Well, unfortunately, we have come to the end of our time. On behalf of Fordham University, the Gabelli School of Business and the Sports Business Initiative, I want to extend my thanks to Danny Funt, the author of Everybody Loses: The Tumultuous Rise of American Sports Gambling, published by Gallery Books and available online and in bookstores. It has received stellar reviews in The Washington Post and the Wall Street Journal, and I think it's a must read to understand what we have created by legalizing sports betting.

00;56;03;05 - 00;56;06;24
Mark Conrad
Thank you so much. It was a pleasure to speak to you.

00;56;06;27 - 00;56;15;18
Danny Funt
Thank you, Mark. And as I said, I have great respect for your work and your writing on this. And it definitely boosted my reporting. So, it's a pleasure to speak with you.

00;56;15;20 - 00;56;36;28
Mark Conrad
Pleasure was mine. I want to thank my producer, Victoria Ilano, for her great work in preparing and editing this episode. Finally, many thanks to all of you for listening to the Sports Business Podcast at Fordham's Gabelli School of Business. I'm Mark Conrad. Have a great day.