Sports gambling is on a tear. An estimated 30mm Americans wagered close to 1bn legally and 6-7bn illegally on Super Bowl LVI, with NCAA basketball to follow. The unlicensed side is nothing new – the legal part is.

A Sea Change in Four Years

Once upon a time, sports betting was shunned outside Nevada and a few other states. In 1976, Pete Rozelle, the NFL’s commissioner, said “Legalized gambling on sporting events is destructive to the sports themselves and in the long run injurious to the public.” In 1992, the NCAA and professional leagues still expressed concern for the integrity of the games and supported the Professional and Amateur Sports Protection Act – ‘PASPA’ made it unlawful for states and local governments to allow or promote betting on sporting events.

By the 2010s however, low on cash and trying to revitalize Atlantic City, New Jersey moved to legalize sports betting, arguing that PASPA infringed upon states’ constitutional rights. The NCAA and professional sports sued to block the effort but the Supreme Court ruled in favor of NJ and struck down PASPA in 2018. Several more states soon followed. Not to be left behind, leagues changed their stance, attracted by the opportunity to corral more fans and revenues – NFL viewership had already dropped 10% during the 2017-18 season and COVID hit soon thereafter!

Fast forward to February 2022:

• More than 30 states legalized sports betting, a majority allowing online operations – New York and Illinois rushed to launch mobile sports betting in time for football’s post-season and more states are considering whether to follow suit. California for instance will vote on the issue next November.
• About 30 percent of Americans can legally bet on sports where they live.
• The NFL entered partnerships granting betting operators rights to use trademarks and to advertise during games and broadcasts.
• Bally’s Corporation, a casino operator, acquired naming rights to the “Bally’s Sports Network”, a swath of regional broadcasting networks with rights to MLB, NBA and NHL games.
• Commentators now regularly discuss odds and point spreads…
• 80% of betting happens by phone and online.

“Let’s just say that our fans are really interested in sports betting. Let’s say that our partners with the leagues are interested in sports betting. So we’re interested in sports betting.” Disney’s CEO – LA Times

Mobile Tech and Betting Apps

From the National Council on Problem Gambling…

Heavy sports bettors meeting the criteria for a gambling disorder are typically male, under 35, single, fully employed, and have a high level of education. They think sports gambling is more skill than luck, and are generally highly impulsive.

Online betting puts forth an enticing experience enabled by tech, tailor-made to this audience. To a generation familiar with gaming and rapid fire mobile scrolling, it offers a seemingly endless variety of options which was out of reach for old-fashioned casinos and bookies, together with anytime availability, convenience and privacy. Tech allows operators to place odds on a myriad of bets – not only on the outcome of a game or the number of points scored, but on specific micro events unfolding in real time (“who will get the next pass?”) and on complex ‘parlays’. (Parlays are high-risk, high reward combinations of bets all of which must pan out for the parlay to be won.) Apps package those into live games played alongside the game on the field, adorned with bright graphics and rewards to rope users in and to keep them going.

Increasing the size of the betting crowd and the diversity of play obviously makes for big business. But it is also good risk management! Gambling operators do not in fact like to leave things to chance and a large flow of varied bets enhances their ability to average down risk.

One thing does not change: the house’s goal is to “always win”.

Looking for Moon Shots…

January/February 2021: The rollercoaster rides of GameStop and other meme stocks burn into collective memory tales of YOLO fortunes made and lost on gamified platforms far away from Sherwood Forest… Trading apps advertise commission free trades and bonuses for new accounts. Low price, high-risk out-of-money options break trading volume records.

January/February 2022: TikTok abounds with advice about spreads and parlays. The internet lights up with tales of an online bettor guessing the exact scores of both AFC & NFC title games and turning $20 into $579,000 – the ‘best part’: the 20 bucks were a free sign-on credit. Meanwhile a furniture salesman in Texas makes headlines for seeing a $16mm gain on a Super Bowl bet evaporate in the last minutes of the game.

A coincidence? We bet not. Whether a lottery ticket, the next 100x coin or a successful parlay, there is no denying the appeal of a life-changing long shot, or how fascinating winners’ tales can be. It is easy to surmise that online trading and online betting are learning from each other how to capitalize on the draw of YOLO bets.

The advertising swell has been hard to miss! Faced with a similar tsunami of ads, Spain heavily restricted the marketing of sports betting sites, the UK imposed limits on ads targeting minors together with a “whistle-to-whistle” ban on betting ads during game broadcasts, as did Australia’s New South Wales. Stateside, some industry insiders fear that unrestrained advertising could prompt a similar backlash but no such restrictions are on the horizon so far.

Spoiler alert: casinos, online books, and trading apps do not advertise losers…

Takeaway

Far be it from us to want to spoil the fun. A friendly bet and an occasional wager usually remain just that. But be aware – it’s all fun and games until it’s not.

“About 2 percent of Americans, roughly 6.6 million people, struggle with gambling addiction. A growing number bet on sports. Sports bettors have at least twice as high a rate of gambling problems than other gamblers, and gambling problems increase with online betting.” The National Council on Problem Gambling (Forbes, NY Times).