Writing for The Atlantic, Charles Fain Lehman claims that legalizing sports gambling was a huge mistake. “If you follow sports, gambling is everywhere. Ads for it are all over broadcasts; more than one in three Americans now bets on sports,” he laments.
Lehman, a fellow at the Manhattan Institute, gets his history right if nothing else:
Before 2018, sports gambling was prohibited almost everywhere. Now it’s legal in 38 states and the District of Columbia, yielding $10 billion a year in revenue.
Starting in 1992, sports betting was generally banned throughout most of the United States under the Professional and Amateur Sports Protection Act. PASPA forbade running gambling “schemes” tied to competitive sports.
That approach held until 2012, when New Jersey, fearing that Atlantic City was losing its competitive edge, legalized sports gambling. The NCAA brought suit, alleging a violation of PASPA; the state responded that PASPA itself was an infringement on its sovereignty. The case came before the Supreme Court, which in 2018 ruled that PASPA violated the Tenth Amendment’s prohibition on the federal government exercising powers reserved for the states.
In the 2018 Supreme Court case of Murphy v. NCAA, which was combined with N.J. Thoroughbred Horsemen’s Assoc. v. NCAA, Justice Samuel Alito, writing for the majority, said:
The legalization of sports gambling requires an important policy choice, but the choice is not ours to make. Congress can regulate sports gambling directly, but if it elects not to do so, each State is free to act on its own. Our job is to interpret the law Congress has enacted and decide whether it is consistent with the Constitution. PASPA is not.
The American Gaming Association (AGA) estimates that Americans will bet $35 billion with legal sportsbooks during the 2024 NFL season.
According to Lehman:
The rise of sports gambling has caused a wave of financial and familial misery, one that falls disproportionately on the most economically precarious households. Six years into the experiment, the evidence is convincing: Legalizing sports gambling was a huge mistake.
According to a “growing body of social-science literature” cited by Lehman, “Alarming patterns have started to emerge.” Lehman refers to three recent papers that look at the economic impacts of legalized sports gambling. One paper finds that “legal sports gambling depletes households’ savings.” Another paper finds that “legalization increases the risk that a household goes bankrupt by 25 to 30 percent, and increases debt delinquency.” And another paper finds that “legal sports betting leads to a roughly 9 percent increase in intimate-partner violence.”
Lehman sees three issues with legalized sports gambling:
Sports gambling is addictive, which yields not only debt and bankruptcy but emotional instability and even violence. Even worse, gambling addiction has been connected to anxiety, depression, and even suicide.
The costs of gambling are concentrated among those least able to pay, setting back those who most need help.
Tax revenue — one of the major justifications for legalization — has been anemic, with all 38 legal states combined making only about $500 million from it a quarter, less than alcohol, tobacco, or marijuana.
Lehman rejects more government regulation in favor of something more drastic: “ban sports gambling once again.” Regulation is “complex, hard to get right, and challenged by near-certain industry capture of regulatory bodies.” Prohibition, on the other hand, “cuts the problem off at the root. No legal sports gambling, no sports-gambling industry.”
So, what if it is true that legal sports gambling depletes savings; increases the risk of bankruptcy, debt delinquency, and domestic violence; is addictive and connected to anxiety, depression, and suicide; harms the poor more than the rich; and doesn’t bring in the tax money that was promised or that people thought it would?
What if legal sports gambling is and does all of these things and more. What if it also increases the divorce and obesity rate among those who bet on sports and decreases charitable giving and volunteer work?
Of course, legalized sports gambling does not actually do any of these things. Just because sports gambling is legal does not mean that anyone is forced to bet on sporting events. And neither is anyone coerced to go into debt, neglect his family, commit domestic violence, divert his income to gambling instead of paying his bills, or stop saving money.
It is people who do these things. Some people did these things before sports gambling was legalized, and some people do these things now without betting on a single sporting event.
Ultimately, it all boils down to the proper role of government.
Is it the proper role of government to make sure that people don’t gamble?
Is it the proper role of government to make sure that people save money?
Is it the proper role of government to make sure that people don’t waste money?
Is it the proper role of government to make sure that people don’t engage in addictive behavior?
Is it the proper role of government to make sure that people don’t get anxious?
Is it the proper role of government to make sure that people don’t harm themselves?
Is it the proper role of government to make sure that people don’t get depressed?
Is it the proper role of government to make sure that people don’t get too deeply in debt?
Is it the proper role of government to make sure that people don’t file for bankruptcy?
Is it the proper role of government to make sure that people don’t commit suicide?
To sum it all up: Is it the proper role of government to be a nanny state?
But Lehman has another problem as well. The Constitution gives no authority to the federal government to ban or regulate any form of gambling. As James Madison explained in Federalist No. 45: “The powers delegated by the proposed Constitution to the Federal Government, are few and defined. Those which are to remain in the State Governments are numerous and indefinite.” It is on the state level that Lehman must take his anti-sports gambling crusade. But since more and more states are continuing to legalize sports gambling, it is apparent that crusade is doomed to failure.
The libertarian position on sports gambling is a simple one. Although sports gambling — whether online, at a casino, or in an office pool — may be addictive, financially ruinous, a waste of money, a bad habit, or a vice, it is not the job of government to discourage anyone from doing it, prevent anyone from doing it, or punish anyone for doing it.
Even though gambling — in whatever form it takes — may be addictive, financially ruinous, a waste of money, a bad habit, or a vice, it is not something that the government should discourage anyone from doing, prevent anyone from doing, or punish anyone for doing.