On Nov. 8, Californians will vote on two ballot measures that would allow for different forms of sports betting in the state.
Proposition 26 would allow sports betting at licensed casinos and horse tracks on tribal lands and run by federally recognized Native American tribes.
Prop. 27 would allow tribes licensed to offer gambling and major gaming companies to offer online sports betting. These companies include FanDuel and DraftKings, which together make up roughly two-thirds of the U.S. online sports betting market.
“If both pass, they might both go into effect or the result could be decided in court, depending on which one gets more yes votes,” writes CalMatters economics reporter Grace Gedye in an article from June.
Although California is the only state with sports betting on the midterm ballot, it’s not the only state where sports betting is a topic of political discussion — and relevant for journalists across beats to understand. For example, Georgia gubernatorial candidate Stacey Abrams recently expressed support for legalized sports betting in her state. Abrams’ opponent, Gov. Brian Kemp, is opposed.
In Missouri, state lawmakers from both parties support legalizing sports betting, but Gov. Mike Parson is hesitant. Vermont lawmakers are considering taking up a sports betting bill during the next legislative session. Gubernatorial candidates in South Carolina and Texas support legal sports betting. In Florida, there is an ongoing lawsuit over whether the state should be allowed to give the Seminole Tribe the exclusive right to run online sports betting there.
Sports Betting GlossaryBad beat: A loss that looked like a sure thing. If a top-ranked college football team is expected to win by 21 points and they end up losing, that’s a bad beat for bettors who wagered that the favored team would win. Betting line: A number that indicates what a sportsbook thinks will happen with a particular wager. On a simple moneyline bet, the favored team — or player in an individual sport, like tennis — will have a negative betting line. For a team with a -150 betting line, the bettor would have to put up $150 to win $100. For a line of +150, the underdog winner would net the better $150 on a $100 bet. An odds converter can change a betting line to a win probability. For example, a -150 line means the sportsbook thinks the favorite has a 60% chance of winning. Handle: The amount of money wagered. Moneyline bet: A win-or-lose bet on a team or competitor. Over/under: A bet on whether something quantifiable will happen — whether a quarterback will throw for over or under 300 yards, for example. Parlay: Two or more bets that have to come up in the bettor’s favor to pay out. Point spread: A number related to how much a team is expected to win or lose by. A bet to “cover” refers to a bet that a team will beat the spread. If the Boston Celtics are playing the New York Knicks and the spread is -9.5 in favor of Boston, a 10-point-or-more win for the Celtics would cover the spread. If the Knicks lose by 9 points or fewer (or win) the Celtics would have failed to cover the spread. Problem gambling: Problem gambling may include a gambling addiction, where someone cannot control their gambling — but generally, gambling becomes a problem when it interferes with personal, family or professional goals. The American Psychiatric Association considers gambling disorders to be similar to substance-use disorders in how they affect the brain. Prop bet: A bet on almost anything during a season or particular game — whether a hitter will hit a home run in their next at bat, for example. Revenue: Money that a sportsbook takes in after winners are paid and losers pay up. Revenue does not include other expenses, such as staff salaries, that a sportsbook has to pay. Sportsbook: The entity that takes sports bets and pays winnings. This could be a Native American-owned casino, a casino owned by a company, or could exist entirely online in states that allow online betting. Sources: National Council on Problem Gambling; DraftKings; The Athletic. |
Legal sports wagering in the U.S. has grown vertically in recent years — from less than $5 billion worth of bets placed in 2018 to $57 billion in 2021 — despite sports betting remaining illegal in nearly half of states. Sportsbooks, the entities that take sports bets, bring in about $4 billion yearly after wagers are settled.
The reason for this growth: a May 2018 Supreme Court ruling. Justice Samuel Alito, in delivering the 6-3 decision, reasoned that 1992 federal legislation banning states from allowing sports betting was unconstitutional.
Under the 1992 law, the Professional and Amateur Sports Protection Act, the federal government did not “make sports gambling itself federal crime,” Alito writes in the 2018 decision. “Instead, it allows the [U.S.] Attorney General, as well as professional and amateur sports organizations, to bring civil actions to enjoin violations.” Other than legislative powers the Constitution grants Congress, the federal government cannot “issue direct orders to state legislatures,” Alito writes. The majority interpreted the Professional and Amateur Sports Protection Act as doing so.
Here is how John Holden, an assistant professor of business at Oklahoma State University who has written extensively on sports gambling, explains the 2018 ruling:
“If the federal government wants to make sports betting illegal, they’re free to do so, but they can use the [Federal Bureau of Investigation] and the [Department of Justice] to enforce that,” Holden says. “They can’t tell a state legislature that you need to keep that law on the books and use your state police to go out and bust up gambling rings.”
A fundraising breakdown from the Los Angeles Times shows about $132 million has been raised to support Prop. 26, with about $43 million in opposition funding. Top backers include the Federated Indians of Graton Rancheria, the Pechanga Band of Indians and the Yocha Dehe Wintun Nation. Non-Native American casino and gaming interests are largely opposed — conversely, they have backed Prop. 27, which would open up sports betting to all gambling interests, not just Native American-run casinos.
Tribal gaming brings in nearly $40 billion a year across all tribes that operate gambling enterprises, according to the National Indian Gaming Commission. “Gaming operations have had a far-reaching and transformative effect on American Indian reservations and their economies,” write the authors of a 2015 paper about how the act affected tribal economic development. “Specifically, Indian gaming has allowed marked improvements in several important dimensions of reservation life.”
The landscape of legal sports betting
If California legalizes sports betting, it would represent a major coup for gaming interests in the state. In California, the most populous state, horse racing is the only legal form of sports betting.
Sports wagering is legal in 28 states plus the District of Columbia, according to a recent Washington Post analysis. Seven states prohibit online sports betting and only allow in-person wagers at licensed locations, such as casinos: Delaware, Maryland, Mississippi, Montana, New Mexico, North Carolina and North Dakota. Sports betting is legal but pending rollout in four states: Maine, Massachusetts, Nebraska and Ohio. Kansas is the most recent state to implement legal in-person and online sports gambling, as of Sept. 1.
States place a range of licensing fees on operators and tax rates on sports betting revenue, from a low of 6.75% in Nevada and Iowa to a high of 51% in New Hampshire and New York. States use tax revenues for a variety of purposes. Some, like Delaware, put sports wagering taxes toward their general fund. Colorado uses sports betting taxes to pay for its statewide water plan, Illinois funds transportation infrastructure and New York funds education programs.
In states where sports betting is legal, bettors can wager on nearly any major sporting event, both professional and amateur. For example, bettors can wager on the outcome of a baseball game, as well as events within the game, such as whether a particular player will hit a home run.
Polling indicates California may be unlikely to join the legal betting club. CalMatters reported earlier this month that despite various campaigns raising more than $440 million in marketing related to Props. 26 and 27, each measure is garnering support from less than a third of likely voters, according to October polling from the Institute of Governmental Studies at the University of California, Berkeley.
Below, we explore recent research on sports betting. Among the findings of the seven studies featured here:
- Sports bettors are more likely to be white, male, and exhibit psychological traits consistent with narcissism.
- Tax revenue from sports betting may appear substantial in raw numbers, but the impact on tax coffers is muted when compared with income and sales taxes, or tax revenue from other gambling offerings.
- Evidence is mixed as to whether introducing sports betting cannibalizes — eats away at — revenue from other types of gambling.
- Some college football referees may more heavily penalize betting favorites.
The nonprofit National Council on Problem Gambling estimates as many as 8 million adults in the U.S. may have a mild, moderate or severe gambling problem. However, there is a lack of comprehensive, recent academic research on the extent of gambling addiction in the U.S., and the societal costs.
If you feel you may have a problem with gambling you can get help from the National Council on Problem Gambling by call or text at 1-800-522-4700, or online chat at ncpgambling.org/chat.
This article first appeared on The Journalist's Resource and is republished here under a Creative Commons license.