Sports Betting

Written by
Ira Boudway
Written by

Ira Boudway

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(Bloomberg) -- One of the main objections to legalizing sports betting used to be that it would tempt players and officials to rig games. But that's become something of a moot point following an explosion of illegal sports gambling via online bookmakers. In fact, many sports bodies and law enforcement agencies now argue that the best way to combat match-fixing is to bring sports betting out of the shadows. Whatever the risks, the potential tax windfall from legalization may be too alluring to pass up for many jurisdictions. By legalizing the practice in 2018, the U.S. is becoming the biggest test case in sports gambling history.

The Situation

Betting on sports is legal from Australia to western Europe, but flourishes globally even when it's outlawed. Sportradar AG, a Switzerland-based data company that monitors betting markets for fraud, estimates that 1.5 trillion euros ($1.7 trillion) in wagers are placed worldwide annually, with the majority going through unregulated markets. In the U.S., where a 1992 law had limited the practice almost exclusively to Nevada, annual illegal sports wagers are estimated at $50 billion to $150 billion. The landscape is shifting, though, after the U.S. Supreme Court struck down the 1992 law, freeing New Jersey to legalize sports gambling and others to follow. Thirteen 13 states now have live legal sports betting and several others have approved it. The professional U.S. sports leagues, traditionally wary because of concerns that betting would encourage corruption, have come around to the idea, especially as they press their case to receive some of the revenue; more than $13 billion of wagers since legalization, by one estimate. Even Wall Street is getting in on the act by offering technology or, in one case, putting together a team of traders to make bets. The challenge for legal bookmakers everywhere is whether they can lure gamblers who've grown accustomed to wagering on overseas or illegal websites. Globally, some 80 percent of sports bets are placed via the black market, according to a 2014 report by the International Centre for Sports Security. Betting syndicates in Asia, where sports gambling is largely illegal or restricted, have instigated some of the biggest cases of match-fixing. Europol, the European Union's law enforcement agency, found one such syndicate fixed 380 soccer games between 2011 and 2013.

The Background

The internet has transformed sports betting from its once seedy past. After the U.K. legalized betting establishments 1961, the shops that still line major shopping streets had by law to be kept drab to deter customers from lingering. Now, bettors can place a wager at home or on the go via their smartphone. It's possible to bet on just about any professional sport played just about anywhere, and not just on winners and losers but also the minutiae: The number of fouls or who'll win the third game in a tennis match. That allows gamblers to profit from their prescience, but also broadens the scope for bribery. Match-fixing scandals have rocked not only soccer but cricket, tennis and even sumo wrestling in recent years. It's a century since eight players for the Chicago White Sox were banned from baseball for life for throwing the 1919 World Series. To counter such threats, sports ruling bodies such as the International Olympic Committee and the NBA have linked with data-mining companies to monitor for suspicious betting activity.

The Argument

The strongest case for legalization is that sports betting goes on regardless of whether the law permits it, so why not regulate and tax it? Doing so gives bettors greater assurance their wagers will be honored and raises government funding that otherwise flows into the pockets of illegal bookmakers or even organized crime. Detractors say the benefits don't justify the social costs of gambling, from addiction to indebtedness. (Two in five Australian sports bettors have a gambling problem, one survey found.) Naysayers argue that the same limits for tobacco and alcohol advertising should be in place for bookmakers to protect vulnerable younger people. Athletes and academics also warn of a growing gambling culture around sports, in which the odds become the focus of attention rather than the pleasure or pain of following the action. Doomsayers maintain that the sports-betting genie is out of the bottle, making match-fixing inevitable and putting the very integrity of sports at risk in much the same way that doping has.

The Reference Shelf

Wall Street's getting in on the act.
The U.S. Supreme Court's ruling in May 2018.
Match-fixing revelations so far are just the “ tip of the iceberg,” according to the International Centre for Sports Security.
CNN interviewed soccer's most prolific match-fixer.
A QuickTake on why U.S. sports gambling was mostly illegal in the first place.
How William Hill bet big on U.S. sports gambling.
Interpol and the International Olympic Committee have a handbook on how to prevent match-fixing.
Transparency International has a report on the subject.