Why should organized crime have all the fun?
In 2018 the U.S. Supreme Court declared that sports gambling was a “states rights” issue, making what had been illegal for many years now able to become legal. This opened the door for “legitimate” businesses to turn what had been dominated by organized crime to go mainstream.
Although laws varied from state to state, sports gambling had been illegal because it was acknowledged that gambling on sports can compromise the integrity of the game by putting pressure on players, coaches and even referees to fix games. Sports gambling has been used to launder money. Some people become addicted to gambling, resulting in financial ruin. Until 2018 most sports gambling was left to the bookies and other seedy characters of the capitalist underworld.
What has changed?
TV viewership has been on the decline in most sports with competition from video games, social media and other online outlets. This has led the sports media to search for other profit-enhancing strategies. They found a ready partner in gambling companies – Draft Kings, FanDuel, Penn Entertainment, Playfly, PointsBet, BetMGM, Caesars Sportsbook, Barstook Sports and others.
Soon every bank, credit card company and sports business realized that a profit bonanza was in the making. The U.S. sports betting and online casino market combined for $7.75 billion in gross revenue in 2021 and is on pace to reach $24.3 billion by 2026, according to a study by Vixio Gambling Compliance.
At lease 30 states have legalized sports gambling since 2018, including 21 that allow on-line betting — no need to even go to the game to lose money. Sports gambling is a major “growth industry” for banks, credit card companies and many others. It has been sold as a revenue source for states, but that’s mostly public relations since sports betting companies get so many tax breaks.
“Gambling companies and their allies deployed a bare-knuckled lobbying campaign, showering state lawmakers with money and gifts, using deceptive arguments to extract generous tax breaks”, according to a New York Times investigation. Advertising alone on sports betting is expected to reach $1.8 billion in 2022.
But this was just the beginning. Tax deductible promotions filled the media, along with “Partnerships” with universities. For example, the University of Colorado at Boulder collects $30 every time a student downloads a betting app. At the University of Maryland if you lose $2,000, PointsBet will grant you another $2,000 of complimentary “free” bets, all tax deductible! (New York Times)
At public universities, sports marketing companies are “privately held,” and act as intermediaries so they don’t have to publicly disclose sponsorship deals. For example, at Michigan State ,the contract with the sports marketing company Playfly allowed Caesars Sportsbook to promote gambling in monthly emails to 775,000 of the university’s fanbase, but the exact details of the contract were kept secret.
This offer at Michigan State reflects knowledge from drug pushers who offer free or cheap drugs at the beginning in order to promote addiction:
BetMGM is also giving Spartans fans a risk-free $1,000 bet, and it’s just as easy to claim: Use this link here to sign up for BetMGM … your next wager at BetMGM up to $1,000 will then be refunded in free bets if it loses…. But wait! There’s still $500 in risk-free bets on the table, so let’s round out our profitable day, shall we? )
Surely a profitable day, but for whom?
According to Sports Handle, betting in New Jersey alone since the Supreme Court ruling has totaled $32.5 billion, with $2.2 billion profit for companies and only $265 million in taxes (12%). (MSN.com)
Sports betting was never a “zero sum” game. Sports betting companies, like the “illegal” bookies, take a cut of every bet, called a “vigorish” or “vig” for short. The way this is calculated, the “vig” is a fee of .91%.
This seems small, but “while that 0.91% fee may not seem like much, it adds up quickly over time. Every time bettors lose a $1,100 bet, they lose $1,100. But when sportsbooks loses a $1,100 bet, they only lose $1,000. So if a bettor makes 10 wagers of $1,100 each and goes 5-5 on those wagers, the sportsbook turns a profit of $500, and the bettor is $500 in the hole”. (Forbes)
After working all week every worker is entitled to some relaxation and rest, an escape from the daily doldrums of work. For millions of workers, watching sports is an exciting escape. But there is no escaping the capitalists’ desire to prey on our need for entertainment and turn it into a predatory profit stream.
When the real game is the capitalists’ desire for maximum profit vs. the public good, it is really no contest. The banks win every time.