Study Finds Major Weaknesses In U.S. Sports Betting Industry

Written By J.R. Duren on October 7, 2022
regulators lobbyists responsible us sports betting

For as successful as legal US sports betting‘s emergence has been in some regards, not everything has gone well.

That’s according to a trio of university researchers who published an analysis of the U.S. sports wagering market. Their conclusion? Congress and the Uniform Law Commission (they consider nationwide standards for things like sports betting) failed to prepare state legislators for sports betting:

“…Neither Congress nor the ULC sufficiently acted—thus leaving state legislators scrambling to pass new laws to legalize, tax, and regulate sports gambling in their respective jurisdictions. In many cases, these new laws seem to have been largely a product of lobbyist intervention. And, in many cases, these laws have proven to be suboptimal to meet the needs of all constituent groups.”

The researchers found that states can improve in three main areas: the number of sports betting licenses they issue, protecting problem gamblers and minors, and having experienced professionals experienced in online gambling involved with oversight and regulatory boards. It also addressed the negative impact of lobbyists on sports betting.

More licenses are needed to avoid US sports betting monopolies

Of the more than 30 states that offer sports betting, many of them have multiple operators working in the state. For example, New York has nine sportsbooks.

However, there are some states that have just one operator, whether it’s the state lottery commission or a single company. New Hampshire is a good example of this—DraftKings is the only operator in the state.

According to the researchers, these types of arrangements can lead to monopolies and oligarchies.

The report noted that DraftKings, FanDuel, and Caesers control more than 82% of the market share in the United States. Smaller operators can’t compete with the advertising dollars bigger companies pour into markets—customer acquisition is too costly.

“States should take reasonable steps to increase the number of sports wagering licenses awarded to avoid creating monopoly or oligopoly markets,” the study noted.

States need to do a better job of protecting problem gamblers and minors

Researchers noted that, in the past four years since sports betting became a legal option for states, individuals have been hammered with sports betting advertising.

That inundation has not been good for problem gamblers. Not only are they faced with a regular diet of sports wagering ads, but problem gambling resources have not caught up with the explosion of advertising.

“Consumers with proclivities toward problem gambling have almost certainly been negatively affected by the expansion of legalized sports betting, which has not been accompanied by significant increases in resources for the treatment of addictions,” the study noted.

Experienced gaming execs should oversee states’ sports wagering

States typically put one of three systems in place when they launch sports betting: gaming board rule, lottery rule, or tribal rule.

Lottery rule over regulations and oversight has “no apparent benefits,” the report said. Furthermore, tribal rule tends to be tricky because of the Indian Gaming Regulatory Act (IGRA). The best way to go? Follow Nevada’s example. Use a gaming board made up of industry experts.

“States desiring a competitive market should consider transitioning to the model of overseeing sports wagering that makes use of an experienced, professional gaming control board as has been in place in Nevada for over half a century,” the report said.

Researchers slam lobbyists

A thread that makes its way through the entire report is lobbying influence. The study’s authors consistently attack lobbyists, making note of how they influence legislation.

For example, several New York legislators are pushing lower taxes on gaming revenue. This is happening despite New York being “the most successful state to date in raising tax revenue for licensing sports wagering.” The motivation? Casinos are exerting their influence over the legislators, who also serve on the state’s gaming regulation committee.

As far as the data that sports betting platforms use goes, lobbyists have had a tremendous influence there, too. There were able to convince lawmakers in several states to require operators to get their data directly from the sports leagues holding the contests.

“Many states also have mandated the use of so-called official league data—adopting a false narrative promoted by sports-league lobbyists who…are king for a means to profit directly from the legalization of sports gambling.”

Photo by Shutterstock
J.R. Duren Avatar
Written by
J.R. Duren

J.R. Duren has covered the gambling beats for more than a dozen states for Catena Media since 2015. His past reporting experience includes two years at the Villages Daily Sun, and he is a first-place winner at the Florida Press Club Excellence in Journalism Contest.

View all posts by J.R. Duren
Privacy Policy