Are Texans Really Betting Almost $9 Billion Per Year Illegally On Sports?

Written By Derek Helling on January 3, 2023
economists black market texas sports betting

The general consensus about the value of illegal Texas sports betting is akin to the “rules” of the once-popular “Whose Line Is It Anyway?” television series. The numbers are made up and don’t really count.

One estimate suggests that Texas people are betting almost $9 billion a year on sports via illegal channels. However, there are significant reasons to view that number with a healthy dose of skepticism.

Does anyone know how much Texas sports betting is really worth?

The simple answer to that question is no, not really. Even those who produced the estimate that the Sports Betting Alliance is touting readily admit that their figure is merely their best guess.

The Sports Betting Alliance has been using a number of $8.7 billion for the number of dollars wagered on sports by people in Texas each year. That activity covers bets placed with local bookies and offshore websites. Both of those activities are illegal in Texas.

The research firm Eilers & Krejcik came up with the figure via a survey it conducted. Adam Krejcik of the firm that the Sports Betting Alliance partnered with told the Dallas Morning News that Texans should take that number with “the largest grain of salt” possible, though.

What’s the issue with basing such an estimate on survey results? Other experts spoke with the Dallas Morning News on that subject.

A game of they said, they said

As Wake Forest economics professor Koleman Strumpf told the Dallas Morning News, the trustworthiness of survey results can be questionable. That becomes even more so the case when the survey regards illegal activity.

“By definition, if you’re studying an illegal market, it’s hard to know [the market’s size]. If a random person calls you and asks, do you cheat on your taxes, would you be truthful?”

While that suggests the $8.7 billion figure might be too conservative, there’s another element to this situation. Part of the reason to legalize sports betting is to pull activity from the illegal market into a regulated space. However, merely creating a legal market is no sole guarantee that any people who wager with bookies or offshore sites will make the switch.

Thus, no matter how accurate the $8.7 billion figure is, it’s errant just to assume any chunk of that action will gravitate to regulated sportsbooks. Rutgers University statistics professor Harry Crane shared his skepticism about the potential for regulatory capture.

“The regulated market is not taking business away from the unregulated market.”

So what’s the value of the $8.7 billion figure if it might be inaccurate and may not change if Texas introduces legal sportsbooks anyway? The aim of the estimate isn’t to provide an accurate estimate of what kind of impact legal sports betting in Texas might have.

It’s part of a sales pitch to sway legislators in Austin.

It’s already happening

The accuracy of the $8.7 billion figure really wasn’t the point of the Eilers & Krejcik report. The report itself stated the firm had a low level of confidence in the estimate. The aim of the survey was to come up with a number that suggests illegal wagering in Texas is not only ongoing but significant as well.

Former Texas Gov. Rick Perry, who has become a spokesperson for the Alliance, has crafted his sales pitch around that idea. According to Giovanni Shorter of The Lines, Perry has said that “betting on sporting events is nothing new” in the state, and “that’s why we need to do it in the state of Texas” regarding legalization.

To make it happen, proponents like Perry will need broad support from the Texas legislature this year. While $8.7 billion might be too big, people like Perry want to convince lawmakers that truly everything, including illegal sports betting, is bigger in Texas.

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Derek Helling

Derek Helling is a lead writer for PlayUSA. Helling focuses on breaking news, including legislation and litigation in the gaming industry. He enjoys reading hundreds of pages of a gambling bill or lawsuit for his audience. Helling completed his journalism degree at the University of Iowa.

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