Legalized sports betting is paying off

A year ago, New Jersey’s fight to overturn the failed federal ban on sports betting was vindicated by the Supreme Court, with the justices deeming the Professional and Amateur Sports Protection Act (PASPA) unconstitutional. After 25 years of federal inaction and rampant illegal sports betting, it took states just a year to demonstrate why Congress never should have taken away state lawmakers’ freedom to regulate the activity as they and their constituents see fit.

The vast majority of states and tribal nations successfully regulated other sorts of gaming for decades, providing consumers opportunities to wager responsibly in safe environments. Rather than eliminating illegal sports wagering, the federal ban hamstrung state officials from addressing the growing $150 billion illegal sports betting market. The ban left consumers vulnerable to organized criminals, siphoned billions of dollars from the legal economy, and put sports integrity at even greater risk.

Recognizing the magnitude of this problem, New Jersey lawmakers challenged the decades-old law, winning at the Supreme Court.  

Since then, New Jersey and six other states have provided citizens with what they said they wanted in 2011 when voters approved a sports betting referendum: a competitive and convenient legal market. Consumers have responded enthusiastically to the bevy of new, legal products the state now offers. In the first three months of 2019, more than $1 billion has been legally wagered across the state. In March alone, New Jersey’s sports betting handle made up a third of the total amount bet legally on sports across all states with legal markets. That means valuable tax revenue, with nearly $20 million in new revenue going to the state since the ban was lifted.

Through these newly created legal markets, consumers are protected in ways they never were before. Prior to the ruling, if a Garden State sports fan wanted to place a wager on the outcome of a single game, they had to willingly bet in the unregulated and unsafe illegal market, putting their information and finances at risk. Now, New Jerseyans no longer need worry about breaking the law and putting their trust in the hands of criminals with no oversight. They can walk into a legal sportsbook or take out their phone to place a bet, knowing their activity and data is safeguarded by state regulators and gaming operators.   

The reason for New Jersey’s success is that the legal market operates with consumers’ best interests in mind: it gives consumers what they want. Even though 70 percent of sports bettors participating in the illegal market said they would move some or all of their business to legal markets if given the chance, that only happens if legal markets provide a competitive product.

To their credit, New Jersey lawmakers rejected special interest demands that would have diminished the competitiveness of the state’s legal sportsbooks, such as league-proposed integrity fees, high taxes and mandated data monopolies. By emphasizing convenient mobile access and private business agreements between leagues, operators and gaming companies, New Jersey and other states have enabled their sports betting markets to thrive by offering consumers a wealth of betting options.

New Jersey is not the only state to enact successful legal sports betting markets. Today, new single-game sports betting markets are also legal and operational in Nevada, Pennsylvania, Rhode Island, Delaware, West Virginia, Mississippi and New Mexico. Nearly $3 billion has been wagered legally in these states alone since last May. So far, eight more states and the District of Columbia — Delaware, Pennsylvania, Mississippi, West Virginia, Rhode Island, Iowa, Montana and Indiana — have passed legal sports betting and either already offer sports betting or are set to go live in the next year. Even more astounding is that more than 80 percent of the country (41 states) took steps to legalize sports betting in the past year.

The success of New Jersey and other new legal markets prove the demand for legal sports betting is immense. The fact that the states were able to recognize and act on that demand less than a year after the Supreme Court ruling demonstrates why state-based regulation is so important. 

As more states and tribal nations pursue legal sports betting, it is crucial to reject narrow interest group lobbying, emphasize smart policies that promote consumer protections, enable fair market competition to eliminate the illegal market, and deliver valuable tax revenue for states and tribal nations. Above all, the power to make these regulatory decisions must be left to state lawmakers and their constituents if we are to preserve our laboratories of democracy, lest we end up stuck with bad laws and their consequences for another 25 years. 

Michelle Minton is a senior fellow with the Competitive Enterprise Institute, a free market public policy organization based in Washington, D.C. Follow her on Twitter @michelleminton