This week, millions of people will do something they’ve never done before: legally lose their money gambling on March Madness. By the time all the championship confetti has fallen on April 8, and the last note of “One Shining Moment” fades away, a lucky few will have actually won money, and legally so.
The advocates for legal sports betting got to cut down the nets last May when the Supreme Court struck down the federal ban on sports betting, wisely making it a state issue. According to the American Gaming Association, eight states now have legal sports betting, while three others and Washington, D.C., have passed laws legalizing sports betting that have not yet taken effect.
It’s part of the beauty of federalism that different states, with different cultures and different economies, will have different approaches to sports gambling. And the early adopters will learn lessons that later adopters can apply. When it comes to gambling addiction or gambling and children, there will be plenty of lessons to learn.
States opening up to recently banned businesses such as gambling, though, have a worrisome tendency. Wanting to maintain some of the control they are giving up, they often establish monopolies in the newly legal business, fostering corruption and preventing competition.
States ought to avoid that path in legalizing sports gambling.
The first thing to be explicitly legalized should be the office pool.
In 2019, it’s estimated that 47 million people will wager a collective $8.5 billion on March Madness. At least 7 million of those people will still be making illegal wagers.
Friends, relatives, neighbors, and colleagues should be given an explicit safe harbor for low-stakes personal gambling. This obviously isn’t a priority of the gambling industry, but the legislators are supposed to be serving the interests of the public, not the industry.
Lest you think the legalization of gambling in those eight states has caused a surge in gambling, the $8.5 billion to be wagered nationwide this year is actually down from the $10 billion that was wagered last year. But 97 percent of that $10 billion was illegally wagered. [Editor’s note: The winner of the Washington Examiner office pool spent his “winnings” on a happy hour for his colleagues.]
The case for a federal law prohibiting sports betting was always pushed by nanny-staters, like Stop Predatory Gambling, who said allowing sports betting would “exploit the financially desperate, exacerbate crime, [and] cultivate addiction.”
Much of sports betting is done by casual sports fans who bet regularly every year on fantasy football, the Super Bowl, and March Madness. It adds an extra layer to the entertainment, giving sports fans a stake in a matchup that might otherwise be meaningless to them. The addiction-addled gambler putting money on a AA pitcher to throw five strikeouts in Pensacola is a rarity. The working man or woman who’s just competing with his colleagues for beer money is the norm.
Of course, there will be big money wagered at gambling institutions such as casinos, stadiums, race tracks, and bars. States ought to resist the temptation to grant monopolies or near monopolies to a handful of establishments or one type of business. Competition is often the best protector of consumer interest, and so big-time sports gambling, while it will be heavily regulated, ought to be allowed in as broad a swath of institutions as possible.
After the eight states with legalized sports gambling see success with it during March Madness, other states should follow suit and legalize gambling at casinos, online, and between friends.
Good luck predicting the madness, and don’t forget to pick at least one 12 seed to upset a 5 seed.
