By: Justin Brascher
Sports gambling is everywhere. When you watch ESPN, it is quite common for the night’s big game to scroll across the ticker on the bottom of the screen, with the point spread–a number only used for betting purposes– listed next to the teams playing in the game. But if betting on the game is illegal in thirty-nine states, then why is the number listed?
The Prevalence of Sports Betting
Sports networks know what most sports fans know: people bet on sports. Gambling on sports is no longer just reserved for weekend trips to Las Vegas; it occurs on a daily basis. Experts estimate sports gambling is a nearly 70 billion dollar industry. In 2018 the Supreme Court’s decision in Murphy v. NCAA declared that the federal government’s ban on sports betting contained in the Professional and Amateur Sports Protection Act (PAPSA) was unconstitutional. PAPSA previously banned states from legalizing sports betting, except for states where it was already legal. This is why Nevada has always allowed sports betting. The Murphy decision did not automatically legalize betting on sports, but rather gave each state the opportunity to decide. Currently, legal sports betting only occurs in 11 states.
Changes in The Sports Betting Market
There are several different types of sports gambling. The oldest and most traditional involves the aforementioned point spread and betting on the winner of a particular game, or whether a particular event will happen during a game. This is referred to as single-game betting. Single-game betting is the type of betting that was previously prohibited by PAPSA, but has now reentered the discussion following Murphy.
However, over the last twenty years there has been a shift in the sports gambling market with much of the money today being spent on fantasy sports. Whether it’s a fantasy football league among friends with a 10 dollar buy-in, or the World Fantasy Football Championship, where a buy-in can cost more than 2,000 dollars, money is being gambled on fantasy sports at increasingly higher rates. Fantasy sports gambling was made possible by the Unlawful Internet Gambling Enforcement Act of 2006 (UIGEA). The UIGEA defines gambling games such as sports betting or poker as “games of luck,” while games such as fantasy sports are defined as “games of skill.” Games of skill are considered legal gambling, but games of luck are not.
This somewhat arbitrary distinction has been stretched over the last five years with the explosion of Daily Fantasy Sports (DFS), led by FanDuel and DraftKings. Millions of people enter DFS contests every Sunday of the regular season, with hopes of winning as much as one million dollars from a single entry. An individual can make a cash deposit on one of these websites and wager money on their self-selected teams within minutes. The possibility of a payout is potentially just hours away. The ability to make money in this way appears contrary to the original understanding of fantasy sports, where one would manage a team of players over the course of an entire season, with the hope of being victorious after months of work. Such a mechanism is much more akin to the term “game of skill.” In contrast, the mechanism used to bet and win money quickly through DFS is much more similar to traditional sports betting, which is considered a game of chance, than that of traditional fantasy sports.
Washington’s Strict Sports Betting Laws
Certain states have gambling bans in place with language that is more restrictive than the UIGEA, creating much less wiggle room for “games of skill.” In Washington State, nearly all forms of gambling that do not take place on tribal land are banned, including sports betting and fantasy sports. In Washington State, participating in a March Madness bracket pool where everyone chips in 10 dollars or participating in a fantasy football league where the winner gets 100 dollars is breaking the law. However, a recent estimate found that over one million Washingtonians participated in fantasy sports in 2016, and that number is likely to increase. Washington being one of six statesThis has created an underground market for IP addresses which Washington residents can use to pose as residents of other states to avoid the location detectors on DFS websites.
It is important to understand that there are two sides to the sports betting debate. Legislators against the legalization of fantasy sports and sports betting in general have stressed the importance of proper regulation being in place. Legislators have also argued since the Supreme Court’s decision declaring the ban on sports betting unconstitutional is new, we don’t yet fully understand the potential economic impact of sports gambling. However, fantasy sports and DFS have been legal in most of the country for a long period of time. Legalizing those forms of sports gambling gives the state government time to build a proper regulatory framework for legalizing single-game betting, as well as analyzing the potential economic impact. This creates a “best of both worlds” scenario, where Washington’s laws aren’t so out of touch with the rest of the country, but Washington can also avoid jumping headfirst into an area it is not familiar with.