You Can Bet The Sports Industry is Changing
By HENRY HSIA
Sports betting has been illegal for as long as anyone can remember, yet the urge to place bets on your favorite team is always there.
For the people that want to bet with a larger scope than just wagering short change with some friends, the Supreme Court legalized sports betting in 2018. As a result, states across the country have the option to legalize the practice.
While states receive a cut of the profits if sports betting is legalized, major sports leagues do not. In opposition to this, major sports leagues such as the National Basketball Association (NBA), the National Football League (NFL), and Major League Baseball (MLB) all argue that sports gambling will lead to match-fixing and corruption in their games, and that they need a cut of the profits to offset extra costs these problems pose. This leads us to the question: should major leagues receive a cut of sports betting, and do they deserve it?
In my opinion, major sports leagues do not deserve a cut of the profits from taxing sports gambling. It is widely speculated that the legalization of sports betting will increase viewership and audience engagement for major league sports. I believe that these benefits outweigh the potential costs.
Ever since the infamous 1919 Black Sox Scandal, where members of the heavily-favored team, the Chicago White Sox, threw the world series against the Cincinnati Reds over a matter of bribery, betting within the sports industry has been ruthlessly fought again by major league sports and Congress alike.
However, this long-standing battle over the betting controversy seems to be approaching its end. On May 14th, 2018, the Supreme Court overturned the 1992 Professional and Amateur Sports Protection Act, which prohibited states from authorizing sports gambling. The court declared the law as unconstitutional, and this was immediately acted upon by prospective states.
New Jersey legalized sports betting after the Supreme Court’s decision, considering they attempted to legalize the venture themselves in 2011. Eight other states have followed suit since 2018, and even more are predicted to legalize the practice eventually. Sports gambling serves as an extra source of income for state governments, with most taking a 0.25% tax on all bets.
With states profiting off of sports gambling, major sports leagues believe they deserve a cut of the pie as well. “I can’t think of another industry where a class of people is able to make hundreds of millions of dollars off someone else’s product, put risk on that party, and pay them nothing,” said Bryan Seeley, a senior vice president of Major League Baseball.
Bryan Seeley argues that major sports leagues deserve compensation for the problems that might arise from the legalization of sports gambling. While this statement is true, as major leagues will have cost increases associated with hiring new officials and analysts to evaluate the integrity of their games, the actual impact on the league is doubtful. These costs pale in comparison to the revenue the leagues already generate every year, and seem even less substantial with the extra viewers and increased audience engagement that will inevitably come from the legalization of sports betting.
Additionally, it is highly unlikely for players to actually engage in acts of corruption and throw matches, as the risk vs. reward disincentivizes it. Modern day professional athletes are some of the most highly paid individuals in the world, and as such the average salaries for most players far exceed any temporary gains made by purposely losing a match.
On the other side of the spectrum, unpaid amateurs are significantly more vulnerable to corruption than professional players. Without a stable salary, the potential risk of their engagement in match-fixing is much higher. Coaches are also much more susceptible to bribery then all-star players, but whether they can change the outcome of games by themselves is unlikely.
Considering these arguments, five states proposed paying an “integrity tax” to states before rejecting the proposal in 2018. The leagues plan to lobby state legislatures harder this year, with Missouri, New York, Kansas, Illinois, Iowa, and Massachusetts having again proposed bills that provide leagues with small cuts of the profit from sports gambling. Yet many representatives are still skeptical of the bills, citing the fact that Nevada, a state in which sports betting has been legal for decades, does not provide royalties for the leagues.
In conclusion, I believe that major sports leagues do not deserve a cut of profits from the legalization of sports betting. The increased viewership and audience engagement that come from the legalization of sports gambling outweigh the potential costs. Professional players are also unlikely to risk their six-figure salaries for the temporary gain that comes from throwing a game. Furthermore, this proposed cut for major leagues will directly decrease state income, which I believe is a better use for the money. Over twenty-five percent of state spending is on education, and another twenty-five percent funds health care. But regardless of my opinion, only time will tell if sports betting becomes a nationwide phenomenon, and whether major sports league deserve a cut of the pie.