Life Gets Better for Sports Bettors

On November 30, English soccer teams Newcastle United and Norwich City played to a 1–1 draw in a Premier League matchup. The teams were last and second-to-last in the league at the time, so even most diehard soccer fans didn't care much about the result.

But I cared. I kept a close eye on the match as Newcastle had a player sent off, managed to take the lead anyway in the second half, and relinquished that lead with about 10 minutes left. The result cost me $10.

Shortly after that match ended, Leeds United scored a late penalty kick to get a win over Crystal Palace, and I made $6.25. I lost a few dollars overall, but it was worth it for the entertainment of having a financial stake in the result of two soccer matches I otherwise wouldn't have mustered much enthusiasm for.

I placed my bets for both matches at the Caesars Sportsbook inside Capital One Arena in Washington, D.C. A sportsbook is a venue, physical or virtual, where betting on sports can occur. The in-person Caesars Sportsbook location is basically a sports bar that also has desks and computer kiosks; patrons can place bets using the kiosks or using the Caesars Sportsbook app while they're in the building.

It's a way for sports fans to raise the stakes and try to make a little money—with more skill required and entertainment provided than picking random lottery numbers and watching some ping pong balls bounce around (though some sportsbooks do accept bets on table tennis matches). Even if a bet loses, the bettor paid whatever amount they lost for the entertainment of having a financial stake in the game. It's not all that different from paying for a movie and getting entertainment in return, but in this case the entertainment is the potential to make money off sports drama.

I visited the Caesars Sportsbook on an otherwise quiet Tuesday afternoon, but it was still busy with people placing bets on hockey and college basketball. I waited about 15 minutes in line to place my bet on Leeds United, and then registered for the local Caesars Sportsbook DC app to place a bet on Norwich City at halftime. The clientele were overwhelmingly black men, with a civil society developing among the regulars, who shared betting picks and strategies. (For example: Don't bet on parlays, where the payouts are bigger but the odds of winning become smaller and smaller with each leg added to the combination bet.)

This was all pretty much impossible in Washington, D.C., before the sportsbook opened in May 2021—or basically anywhere in the country except Nevada until May 2018. That's when the Supreme Court made its ruling in Murphy v. National Collegiate Athletic Association. The lawsuit was spearheaded by New Jersey Republican Gov. Chris Christie, with the major athletic leagues fighting tooth and nail against it. The NBA, NFL, NHL, MLB, and NCAA were all opposed. Finding that the law commandeered regulatory power from the states, the Court overturned the federal Professional and Amateur Sports Protection Act of 1992, which banned most forms of sports betting. The ruling didn't legalize sports betting nationwide, but it allowed states to legalize sports betting if they want to.

Some states decided to treat people like adults, let multiple sportsbooks enter their markets, and let fans place bets online on whatever they want. Some states haven't legalized sports betting and have no plan to do so. And some states, much like Washington, D.C., have decided to allow some sports betting but have also chosen to put byzantine, bewildering regulations in place.

If you walk two blocks away from Capital One Arena in any direction, the local government won't let you place bets on the Caesars app. Gambling with Caesars Sportsbook is legal only at Capital One Arena and the immediate vicinity. You can place a bet on your phone if you're inside the Shake Shack at 9th and F Street NW, but not at Pi Pizzeria, about 350 feet to the west.

There's only one way to bet on sports from anywhere inside Washington, D.C., and it's through the near-monopoly granted to the DC Lottery to run GambetDC. Even when would-be bettors manage to navigate the glitchy app or website registration process, they'll find the odds are often notably worse than those set by nonlottery sportsbooks. For example, for a December 1 game between the Washington Capitals and Chicago Blackhawks, GambetDC offered odds of -250 on the Capitals to win (meaning a bettor would have to bet $250 dollars to net $100 if the Capitals won). Anyone using the Caesars Sportsbook DC app that day could get odds at -200, for a 25 percent better return. GambetDC wasn't just more confident in the Capitals; it offered worse odds on the Blackhawks too (+150 vs. +175 on the Caesars Sportsbook DC app). In general, the house cut that's built into the odds is much bigger at GambetDC, taking more of bettors' winnings and entertainment.

That's why, as one man at the Caesars Sportsbook in D.C. confided to me, "I bet my real money in Virginia."

Winning the Legalization Bet

After settling my Leeds United bet at the Caesars Sportsbook downtown (annoyingly, the location only accepted and paid out cash, though the app let me deposit money straight from my bank account), I headed to my favorite betting spot in Virginia. It's not technically a sportsbook; it's just a pub where I can place bets—not with a sketchy bookie or with just one sportsbook but with a ton of mobile betting options: Barstool Sportsbook, BetMGM, BetRivers, Caesars, FanDuel, DraftKings, Unibet, and WynnBET all operate throughout the state. While Washington, D.C., has a few retail sportsbooks and the bad lottery option, anywhere in Virginia with cell reception can be a sportsbook: your local sports bar, your basement man cave, the Metro platform, whatever. It's relatively easy to sign up, and sportsbooks are almost always giving out ridiculous offers to entice new users (deposit matches, better odds, or "risk-free" first bets where losses get reimbursed in the form of free bets). Through various avenues, there could eventually be up to 19 sports betting apps legally operating in Virginia. A few states, like my home state of Michigan, have even more sportsbooks options, including PointsBet and FOX Bet.

Having access to more sportsbooks lets you find the best odds on a team. For frequent bettors, that choice is crucial. Differences in odds at various sportsbooks can mean big differences in winnings. If a bettor decides to wager on a certain team to win, he wants to use the sportsbook that will give him the highest payout if he's right. Especially on longshots, there might be a $50 difference in winnings between the best and worst odds for a $100 bet. That's why comparing the lines at different sportsbooks for the same game is frequently mentioned in betting guides for beginners. The difference really adds up over time for high rollers and professional bettors.

There are 17 states that have gotten the most important aspects of sports betting right, save for a few minor restrictions. For example, several states don't allow bets on in-state college sports teams—an annoying and unnecessary restriction but one that still leaves the vast majority of the sports landscape open for bets. As of December, the states with legalized, convenient online betting with multiple sportsbooks are Arizona, Colorado, Connecticut, Illinois, Indiana, Iowa, Louisiana, Maryland, Michigan, New Jersey, New York, Ohio, Pennsylvania, Tennessee, Virginia, West Virginia, and Wyoming (though a few of those are still sorting out the regulatory framework and haven't launched yet). Nevada has online betting with multiple apps, but only after the bettor has registered in person at a casino. New Hampshire, Oregon, and Rhode Island have online betting with a single app. Other states offer sports betting only in person at licensed casinos.

Legalization means more tax money for state governments, though taxation of sportsbooks varies by state. New Jersey sports betting operators paid $10.6 million in taxes in October 2021. (For some reason, the state taxes in-person bets at 8.5 percent but online bets at 13 percent.) In New York, sportsbooks have access to a huge market but get hit with a 51 percent tax rate on their profits. (Most businesses in the state face a 6.5 percent corporate income tax rate.)

One might not want the state to have more money to waste, and taxes on sportsbooks can have a marginal effect on the betting experience in terms of worse odds and fewer promotional offers. It's unclear why sportsbooks and casinos should face special taxes that don't burden other forms of entertainment competing for attention, from bowling alleys to oft-subsidized film productions. It's also awkward that while state governments tax gambling revenue from horse racing, the federal government gives wealthy racehorse owners a special tax break by letting them depreciate the value of a racehorse over three years instead of the normal seven years. And state and local government receipts are 23 percent above their pre-pandemic levels, so they're not exactly strapped for cash. But overall, it's better for betting to be legal and taxed than not legal at all.

For bettors with legal access to online betting, the plethora of available bets can be overwhelming. On a Friday morning in December, Unibet offered Virginians almost 90,000 different things to bet on. The vast majority of those options were soccer-related (because apparently some people believe there's money to be made on teams you've never heard of from Gibraltar). But all the major American sports were represented, in addition to obscurities such as Finnish hockey, Israeli basketball, darts, cricket, rugby, and the 4x6 km women's biathlon relay still more than two months away at the 2022 Winter Olympics. (Norway was the favorite at +125, while Latvia and Romania brought up the rear at +250,000—yes, a $100 bet on Latvia or Romania would result in $250,000 of winnings if one of those countries managed to take the gold medal.) The most common types of bets (such as who will win a game or championship, whether a team will beat the spread, or the over-under on a combined score) were available in addition to plenty of detailed options. For every NBA game that night, Unibet offered at least 100 things to bet on, from which player would score first to whether a certain player would score over or under a certain number of points and even whether the total points scored would be even or odd. Even in the middle of a game, bettors can watch live as the odds change and bet on which team will win, how many corner kicks a soccer team will take, whether the next basket will be worth two points or three, and so on.

As I sat at my Virginia "sportsbook," it was quick and easy for me to place a few larger bets on hockey games with a few taps on my phone: $20 on my hometown Detroit Red Wings to upset the Boston Bruins, with potential winnings of $38; $20 on my relatives' favorite team, the Nashville Predators, with potential winnings of $12.50; and $10 on the San Jose Sharks and New Jersey Devils to combine for five goals or fewer, with potential winnings of $10 (because my new friend from Caesars had told me of his success at betting the unders on total goals scored in hockey games). I was about to watch these games anyway, so betting on them just made the stakes more personal.

Can't Win 'Em All

In most of the country, it would have been impossible to place those bets so easily. Combined, the 17 states that currently or will soon allow online betting with multiple sportsbooks account for almost 40 percent of the country's population. Some populous states have no good legal sports betting options, including California, Texas, Georgia, and North Carolina.

Of course, when something is banned, black markets fill the void, and online offshore betting is always an option. But as with most black markets, these come with risks. Due to financial regulations, it can be difficult to make deposits and withdrawals with offshore sportsbooks, oddsmakers may take a bigger cut of winnings, and offshore sites have a reputation for shutting down and making off with their customers' money.

Under the federal ban, people across the country had been betting on sports in various avenues anyway. In addition to black market bookies and betting via proxies in Las Vegas, people bet with their friends and co-workers in fantasy sports leagues and March Madness bracket pools. More recently, daily fantasy sports started to take off in 2015. And the federal ban included exceptions for betting on horseracing, dogracing, and jai alai. (States can still ban bets on those, but few do.)

In the sports betting industry, a tremendous amount of activity that's technically illegal nonetheless goes unchecked. The American Gaming Association estimated that 21.7 million people would bet casually with friends on the 2021 NFL season, even more than the number of people who were expected to bet online. And even with legalization spreading across the country, the group estimated that 6.7 million people would bet this season with illegal bookies, a 13 percent increase from 2020.

There are occasional instances of illegal bookies being prosecuted, like the Ohio man who pleaded guilty to operating an illegal gambling ring for five years and was sentenced to three years of probation, but prosecution seems more rare than not. Legalizing sports betting would give bettors who are going to bet anyway more secure ways to do it and legal avenues to resolve disputes. And for those who worry about betting's impact on the integrity of sports, more legal bets means oddsmakers have more information available to help them detect instances of impropriety where betting may affect a game.

The most complicated (and so far unsuccessful) attempt to legalize sports betting is ongoing in Florida. The saga goes back to 2018, when Florida voters passed Amendment 3 with 72 percent support. As a result, any expansion in casino gambling has to be approved by 60 percent of voters in the state. Supporters of legalized sports betting, including Republican Gov. Ron DeSantis, thought they could get around Amendment 3 by making an agreement with the Seminole tribe. If the web server that processed bets was located on tribal lands, they argued, then the expansion of gambling was on tribal lands, not in Florida.

The Seminole tribe agreement was supposed to guarantee at least $6 billion in revenue for the state over a decade, so the government was eager to get it passed. It took just 12 days for the resulting legislation to go from being filed to being signed by DeSantis, with supermajorities of the legislative chambers supporting the bill. The U.S. Department of the Interior allowed the deal to go forward on August 6 without formally approving or disapproving of it.

But by the end of August, two federal lawsuits had already been filed by West Flagler Associates, owners of a casino in Miami and another gaming facility in Bonita Springs. One suit alleged that the pact violated the Indian Gaming Regulatory Act; the other alleged that the secretary of the interior exceeded her authority by approving the pact. In the meantime, betting competitors FanDuel and DraftKings teamed up to start the process of getting online and in-person sports gambling legalization on the ballot in 2022, with online betting revenue going toward education spending. Naturally, the Seminole tribe opposes the ballot initiative, since it would mean more competition for Florida's gambling dollars.

On November 1, online betting got a surprise launch in the state through the Hard Rock Sportsbook app (the Hard Rock brand having been acquired by the Seminole tribe in 2007). But just three weeks later, a federal judge sided with opponents and said the pact violated the Indian Gaming Regulatory Act. The Hard Rock app was taken down temporarily that day. It went back online as the Seminole tribe filed an appeal, then was taken down indefinitely on December 6, with bettors able to withdraw their money and with any outstanding bets voided.

If the 2022 ballot initiative manages to pass, sports gambling might take off in Florida. The industry's giants will spend tons of money campaigning on both sides. The Seminoles will have to try to explain why they, and only they, should be able to offer sports betting in the state. Still, the initiative will face an uphill battle to go from 70 percent of voters in 2018 saying legalization should require a constitutional amendment to 60 percent of voters in 2022 saying legalization should happen. Then again, the sports betting landscape has changed a lot in just a few years.

Big Money

Perhaps nothing exemplifies the swift change in that landscape more than the attitude the professional leagues have taken toward gambling. In a few short years, they went from fighting a bitter legal battle against legalization to embracing sports betting, lest they be left out of the revenue stream. Leagues and teams have official sports betting partners and data-sharing agreements; betting apps have ads on the boards at hockey games and will soon appear on jerseys. It's not uncommon to hear TV announcers say "Let's hear from FanDuel" for a brief, in-game commercial. In-stadium sportsbooks (like the aforementioned one in Washington, D.C.) are starting to proliferate, and in some states, a partnership with a professional sports team is one of the avenues for a sportsbook to get a license.

Sports betting is now so normalized that it has a complementary entertainment industry growing alongside it, with influencers hawking their betting picks on podcasts and YouTube, publications and betting-focused websites using in-depth analytical models to try to beat the sportsbooks, and betting news websites covering which systems and pickers are performing best. There are journalists focused solely on covering bets, the business side of sports betting, or the legalization battles.

That adds up to a big industry. Thanks to online betting and dwindling tourism during the pandemic, in 2020 New Jersey passed Nevada in annual dollars bet on sports. In October 2021, more than $1.3 billion in bets were placed in New Jersey, a record, with sportsbooks making $84 million in revenue (and those numbers don't capture the value of the parallel betting entertainment). Of course, a lucky few bettors come away with a profit—myself included.

As I watched to see if my hockey bets would pay off in November, Nashville cruised to an easy 6–0 win over Columbus, but my over-under bet on San Jose vs. New Jersey lost when the score became 4–2 with almost seven minutes to play. In Boston, the game I cared most about and stood the most to gain from, my Detroit Red Wings clung to a 2–1 lead in the final moments. A nice thing about watching your bets play out live is that some sportsbook apps will let you cash out early if you're worried about a comeback, though for a smaller portion of what would be won if the bet settled successfully. With a minute to play and Boston getting aggressive, I chickened out and took my money. The Red Wings closed out the win anyway.

Overall, between the two soccer matches and three hockey games, I risked $70, won three bets, lost two, and came away with a profit of $29. But most importantly, I had a lot more fun watching sports.