Sports betting is one of the big issues in modern sport. It offers massive revenue for leagues, but can compromise the integrity of sport. In either case sports betting is coming and it’s coming quickly. The industry is currently valued at around $250 million dollars, and could see growth to 5 to 10 billion in the coming decade. The last several years have begun to lay the landscape for betting to become an important part of the sports industry.
In the United States sports books are in a legal gray area. In 2018 the laws that made sports gambling illegal were overturned on a federal level. Now it comes down to states to determine how they handle the law. Cities like Las Vegas and Atlantic City have allowed betting in casinos for decades. Betting in Europe is everywhere. Every town has a small bet shop where you can go in at any time and place all sorts of bets. The legality of betting has forced much of it underground and has stunted the growth of the industry. When legalized in a majority of states we will see the betting industry take off.
Some of the biggest scandals in sport have been around gambling and have had elements of organized crime involved. Because of the large returns, some criminals are attracted to this form of betting. In no other arena can you double your money with just on luck. Sports feel predictable, spectators think they know exactly who is going to win each game. But bettors often forget that all the athletes are professionals, and fucking good at what they do. It takes one guy having an off day to completely change the outcome of a match. This is one of the more common ways that game outside parties influence matches. One athlete or referee is paid off to make things tip a certain way and guarantee yourself an absurdly sized payout.
Chicago Black Sox
In 1919 the Chicago White Sox found themselves in the World Series, the final games of the baseball season. The team was favored against the Cincinnati Reds. Bookies approached eight players and offered a small fortune to throw the series. At that time professional athletes were paid a working class wage, which made them easier targets. On top of that the owner of the White Sox underpaid, or even refused to pay players. The bookies saw this as an opportunity to capitalize on and make a fortune by betting on the Reds. The White Sox lost and the federal government discovered the operation. While the players were acquitted of wrongdoing in court, they were banned from baseball for life.
A more recent scandal that made waves throughout the sports world was the 2007 NBA betting scandal. Referee Tim Donaghy used insider knowledge to provide an outside gambler with valuable information to win bets. Referees get together before and after games to watch film and better understand their performance. This process affords the NBA influence on what calls are made in specific matchups, which becomes very important in the playoffs. This insider knowledge informed the bets that Donaghy instructed his partners to make in games he didn’t ref. When Donaghy was working he might change the flow of the game by calling an early foul on a star player. In 2008 Donaghy was caught and cooperated with an FBI organized crime investigation.
Over the last months one company has come to the forefront of the American sports gambling world. DraftKings is a daily fantasy contest and betting operator founded in 2012. It lets users enter daily and weekly fantasy competitions in many of the major sports leagues. DraftKings was able to keep this form of gaming legal across the country because fantasy sports need a degree of skill. This early adoption moved DraftKings ten years ahead of the industry in the creation of partnerships. The company even had an IPO in the form of a SPAC in earlier this year. Last week Michael Jordan invested in the company and is now serving in an advisory position. The dominoes are beginning to fall in the sports gambling world, because leagues have seen the unrealized gambling profit. Betting rights could become equivalent to media rights in terms of how they are sold and offer another massive source of revenue for leagues.
In American betting the bookie makes individual bets with each gambler. They set the odds, you choose what game you are willing to bet on and how much you are willing to bet. In general you will always lose money, because while you set the price and what event you’ll bet on, the bookie sets your return. A good bookie will make a return of at least 15% on every game. Another model of betting that is commonly used in places like Hong Kong is pool betting. A large group of people put their money into a pool and gamblers bet against each other for the whole pot, and the bookie takes a fee off each bet. If you win the bet you get a piece of the pie depending on how much you wagered. With this methodology the bookies are incentivized to get more people betting which makes the pie bigger for the winners.
Sports betting is an important issue within the sports world. It creates a secondary market for sport that relies on the game, but isn’t a part of it. While it isn’t a piece of the event itself, betting is a natural extension of athletics. Many sports fans feel like crystal gazers who can see what is going to happen in the next play. Internet betting has made gambling more profitable by removing physical locations. The internet markets are crazy, from prop bets to stock market style people are betting. Betting is coming and even though it has its dark sides, it is good for sports. It creates more involvement from fans as well as more profit generation for leagues by adding another form of media. The future of sports looks bright as it is, but with the clarification of betting rights and how it will affect leagues is going to add even more fuel to the fire.