High Stakes: The Gamble Behind Legal Betting

00;00;00;00 - 00;00;47;18
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. Im Mark Conrad, or Prof. C, from Fordham Universitys Gabelli School of Business, where I serve as Professor of Law and Ethics and the Director of the Sports Business Initiative. Seven years ago, the U.S. Supreme Court opened the door to legalize sports betting by allowing states to enact laws permitting this practice.

00;00;47;21 - 00;01;18;19
Mark Conrad
Since then, 37 states and the District of Columbia have legalized sports books. Advocates argued that legalizing sports betting was a better way to regulate the practice, than keeping it illegal. The argument noted that betters will bet illegally anyway, especially during the Super Bowl and March Madness, with no controls, so states creating a legal structure was a better approach.

00;01;18;22 - 00;01;48;17
Mark Conrad
Not to mention that legalized sports betting gave states the opportunity to earn revenues from the licensing of betting companies and from taxes on both those companies and successful betters. Indeed it has worked  too well. Since 2018, the amount wagered legally on sports in the United States surpassed half a trillion dollars. With two-thirds of the states legalizing sports betting,

00;01;48;19 - 00;02;23;22
Mark Conrad
it is a safe bet  no pun intended  that these handles will increase, and increase at a faster rate, as most states dip into the sports betting universe. This is not an idle statement because the nations two most populous states  California and Texas  have not legalized sports betting yet. New York is the largest state with legalized sports books, and it is not only the highest betting handle with an average of $2 billion a month, but it has increased by double digits over the last year.

00;02;23;25 - 00;02;51;16
Mark Conrad
The same is the case in key states such as Pennsylvania, Illinois, Colorado, and Michigan. But the giddiness that the states and the sports industry  which traditionally was against gambling because of the possibility of fixing games  have taken to gambling by monetizing the opportunities for sponsorship and data. But after seven years, there are storm clouds on the horizon that merit concern.

00;02;51;18 - 00;03;25;01
Mark Conrad
First, reports of problem betting have increased. Second, the preferred method of betting  through mobile devices  has made the practice far easier than the days of going to a racetrack or casino, or, dare I say, illegal betting hubs tucked away in townhouses. It is no coincidence that a recent survey by the Siena College Research Institute and St. Bonaventure Universitys School of Journalism reported that one out of five American adults have an online betting account.

00;03;25;04 - 00;03;55;22
Mark Conrad
The gambling industry has heavily encouraged more betting. A recent lawsuit highlights some of the tactics that betting companies have used to corral betters, even those who have addiction issues. A self-described problem gambler named Sam Antar, filed a lawsuit against several New Jersey casinos and BetMGM, an online service claiming violations of a New Jersey Consumer Fraud statute, as well as traditional negligence.

00;03;55;24 - 00;04;29;06
Mark Conrad
He argued that he was enticed to gamble through dozens of bonuses, credits, deposit matches, and incentives by betting companies  despite their knowing or suspending that he is a compulsive gambler. All told, he claimed he lost $24 million in gambling, aided and abetted by the casinos and BetMGM. His complaint stated he received more than 1800 text messages over a seven-month period by the defendants.

00;04;29;09 - 00;04;58;12
Mark Conrad
A federal trial court and a three-judge federal appeals court dismissed his claims as Mr. Antar could not prove that a duty of care existed between the gambling entities and him. Duty of care is a core requirement in negligence law which translates into demonstrating that a direct legal obligation exists between the defendant to the plaintiff to ensure that the defendants actions were made in a reasonable manner.

00;04;58;14 - 00;05;37;06
Mark Conrad
Both the trial and appeals courts were likely correct in their conclusion on the legalities, and Mr. Antar has to take responsibility for his actions. It is astounding to lose $24 million in betting, but if these firms were bombarding the better with hundreds of messages enticing him to bet, that is also very troubling. It makes gambling more than a harmless vice because it is using the marketing power of the industry to get people to the casinos or to their phones to bet  betting from monies that could come from their wages or bank or brokerage accounts.

00;05;37;08 - 00;06;04;07
Mark Conrad
It could also force bettors to get loans from family members or others. It may well be time to reevaluate Americas experiment with legalized sports betting. States or maybe the Federal government should adopt tighter restrictions on advertising and promotions. While advertising is protected by the First Amendment, the range of protection is not as broad as with other kinds of speech.

00;06;04;09 - 00;06;33;29
Mark Conrad
Legislation has been introduced that would limit advertising in the broadcast media, but no action has been taken by Congress. It wont be an easy task to curb betting promotions as powerful interests  including state governments involved in the sports betting space  could object. But with the potential for more problem gambling, some limitations are needed. I discuss advertising and sponsorship restrictions in more detail

00;06;34;01 - 00;06;59;24
Mark Conrad
in an article published last year in the Harvard Journal of Sports and Entertainment Law, which is listed in the written summary of this podcast. If you wish, however, you can find it at the website of the Harvard Journal of Sports and Entertainment Law by searching that title online. For the Sports Business Podcast at Fordham's Gabelli School of Business. Im Mark Conrad, or Prof.

00;06;59;25 - 00;07;11;04
Mark Conrad
C, have a great day!