Betting on the Future: The Dynamic Evolution of Sports Betting
Sports betting has been a long pastime hobby for many Americans. It’s history has been marked by scandals, milestones, and legislative changes. From the infamous Black Sox scandal of 1919 to the recent landmark Supreme Court decision in 2018, the landscape of sports betting in the United States has undergone dramatic transformations. Let's take a closer look at the key events that have turned a hobby into a 100 billion dollar industry it is today.
The history of sports betting stretches back far longer than we can imagine, back to Ancient Greece, when Greeks often would bet on gladiator battles, horse races and chariot races. Additionally, Greece held the first Olympic games, which took place in 776 B.C. In Ancient Rome, citizens used to argue over victories of gladiator battles; in Roman Law, rulers had banned gambling but allowed sports betting, due to its large following of the people, and its large attendance it brought to these games.
The first major usage of sports betting in the U.S. was in the 17th century, when early colonists brought horse racing events to the “New World” and continued to watch it in America as well. At that time, wealthy Virginia landlords controlled the bets, and the limitations on the amount of money allowed as well. Similar to in England, early sports betting was only meant for the elite. Towards the mid-18th century, betting started to decrease as the rise of the Baptists and Methodists caused many people to stop gambling fully as it was sinful. Horse racing would return in the mid-19th century, where this time it attracted a diverse group of people from all backgrounds. The first large major betting center was in New Orleans, and became a top choice for travelers due to its location as a port city. Additionally, Chicago also attracted bettors, as gambling was popular with immigrants and working-class men, who took advantage of the game to generate new income streams.
From then on, small private parties filled with middle-class and rich men were essentially the only people that did any type of sports betting. But, following the creation of many of the modern sports leagues, such as the MLB, NFL, and NBA, sports betting grew just equally as the sports grew. Not only did the popularity grow though, the scandals that came along with it grew as well. Allow me to walk you through key events from sports betting from 1919 to present day:
One of the first large instances of illegal sports gambling was in 1919, the Black Sox scandal rocked the world of baseball when eight members of the Chicago White Sox were accused of intentionally losing the 1919 World Series in exchange for money from professional gamblers. This scandal highlighted the risks associated with sports betting and tarnished the integrity of the game.
Following a decade of virtually no sports betting, due to the ban of gambling nationally, in 1931, Nevada became the first state to legalize gambling, aiming to boost tourism and revitalize its economy during the Great Depression. However, sports betting remained largely unregulated until later years. Recognizing the potential economic benefits after almost two decades, Nevada legalized sports betting in 1949, further solidifying its position as a gambling hub. In 1951, Congress grew concerned about the spread of legal sports gambling beyond Nevada's borders and imposed a 10% tax on revenue generated from legal gambling activities. This move aimed to stop other states from following.
In 1961, President John F. Kennedy signed the Federal Wire Act into law, prohibiting the use of wire communications for interstate sports gambling. This legislation laid the groundwork for the state-by-state regulation of sports betting that persists to this day. Despite legislative efforts to stop illegal sports betting, the practice continued especially during the 1970s and 1980s, and Atlantic City, New Jersey, emerged as a major city in the gambling industry. During this period, the federal government gradually reduced taxes on legal gambling revenue, from 10% in 1951 to 2% in 1974 and eventually to 0.25% in 1983, a rate that remains unchanged today. The 1980s saw very little sports betting, but states still wanted to appeal to legalize sports betting in their respective casinos and racetracks.
On January 3, 1991, the House of Representatives is introduced to House Bill 74, also known as the Professional and Amateur Sports Protection Act (PASPA), which prevented states from offering legal sports betting, and on June 2, 1992, the Senate voted 88-5 in favor of passing PASPA, which would ban sports betting across the U.S. except Nevada.
The introduction of the internet brought about a new era for sports betting, with the creation of platforms like Intertops in 1996, the first online casino for sports betting. This innovation expanded access to betting opportunities and changed the industry. But, gambling on the internet became a large problem, and the federal government had to control it, and thus there were many 21st century regulations. The passage of the Unlawful Internet Gambling Enforcement Act in 2006 aimed to regulate online gambling by prohibiting financial institutions from facilitating illegal internet gambling transactions. However, the effectiveness of this legislation remained debatable.
Between 2006 and 2018, the world of sports betting witnessed several notable incidents that raised concerns and highlighted various challenges within the industry. One of the largest problems was the match-fixing scandals. Numerous match-fixing scandals rocked the sports world during this time, tarnishing the integrity of various sports. Football(soccer) was particularly affected, with incidents reported in leagues around the globe. These scandals often involved players, coaches, and even referees conspiring to manipulate match outcomes for illegal betting purposes. Along with regulatory challenges, technological challenges, and the problems surrounding gambling addiction and societal impact, the widespread nature of these incidents showed the urgent need for comprehensive regulatory reforms and larger restrictive measures within the industry. Despite facing formidable challenges, including technological advancements and societal concerns such as addiction, the industry had to prioritize restoring public trust and upholding the honesty of sports competitions.
As such incidents continued to occur, the growth of sports betting was still unprecedented, and mirroring its success was the growth of fantasy sports. The growth of fantasy sports mirrored the rise of sports betting, experiencing a surge in popularity during the same timeframe. Fantasy sports leagues, particularly in formats like fantasy football and basketball, saw significant expansion, drawing in millions of participants globally. Just like sports betting, the accessibility through online platforms and mobile applications made it easier for enthusiasts to engage in fantasy sports, contributing to its widespread adoption. While fantasy sports do not involve direct wagering on game outcomes, they share a common appeal with sports betting, offering fans the opportunity to immerse themselves into the excitement of sports competitions and potentially win prizes based on player performance.
From 2012 to 2018, many states, such as New Jersey hoped to sign sports betting legalization into legislation, but fought many major sports leagues on this decision that lasted six years. In August of 2012, 5 of the United States most major sports leagues, NBA, NFL, NCAA, NHL, and the MLB, would sue then governor Chris Christie over his legalization of sports betting. Christie would try again in 2014, but would be sued again, starting another two-year legal battle. At the time, the only two states to legalize sports betting in casinos were Nevada and New Jersey. With New Jersey’s growing legal fights with the sports league, Nevada was still the only state allowed to operate sports gambling machines in casinos.
At the end of 2012, the sports betting industry in Nevada hit the $3 billion mark in a year for the first time, foreshadowing the sports betting industry's future. From then on, sports betting surged to newer heights than it had ever seen before. New NBA commissioner Adam Silver advocated for congressional action, and called on Congress for the establishment of a federal framework that allowed states to legalize and regulate sports betting. The NBA's change in stance regarding sports betting aligned with the league's involvement and investment in the daily fantasy sports platform FanDuel. New MLB commissioner Rob Manfred agreed with Adam Silver on this thought, stating that the legalization needs a “fresh start”. In 2015, the board of directors for the American Gaming Association, which advocates for commercial and tribal casino operators, voted to pursue an appeal for the Professional and Amateur Sports Protection Act (PASPA), and six months later, created a task force that is dedicated to sports betting. In 2016, the NHL allowed for a new expansion team to be added to the league, the Las Vegas Golden Knights. This move created the first professional sports team to be located in Vegas. In 2017, the NFL owners agreed 31-1, for the Oakland Raiders to move to Las Vegas following the construction of their arena, Allegiant Stadium. These decisions indicated that professional sports leagues recognized the evolving landscape and growing legalization of sports betting. By welcoming teams into cities such as Las Vegas, known for their gambling industries, the leagues acknowledged the widespread involvement of fans in sports betting. They viewed these moves as chances to deepen their ties with the sports betting industry, potentially leading to increased revenue opportunities through partnerships and sponsorships. Moreover, by overseeing sports betting operations in these markets, the leagues aimed to better monitor and protect the integrity of their sports.
On May 14, 2018, in a groundbreaking decision, the Supreme Court overturned the Professional and Amateur Sports Protection Act (PASPA), ruling it unconstitutional for violating states' rights under the Tenth Amendment. This ruling paved the way for states to establish their own sports gambling laws. Following this decision, several states moved quickly to legalize sports betting, with Delaware becoming the first state to accept single-game sports wagers on June 5, 2018. Today, a growing number of states have legalized sports betting, each implementing its own regulatory framework.
Despite the large multitude of issues surrounding sports betting, including concerns over addiction and the integrity of competitions, it remains a formidable industry. The proliferation of online platforms and the legalization of sports wagering in various regions have increased its growth exponentially, with a diverse user pool. Technological advancements, such as live betting features and mobile applications, have further expanded its accessibility, attracting a broad group of sports enthusiasts, like myself. Despite regulatory challenges and ethical controversies, the attraction of sports betting endures, driven by the excitement of competition and the fascination of potential financial gains, solidifies its status as a significant player in the global economic landscape.
The history of sports betting in the United States went through numerous highs and lows, marked by scandals, legislative interventions, and technological advancements. From its illegal beginnings to the multi-billion-dollar industry it is today, sports betting continues to evolve, shaped by changing attitudes, regulations, and innovations. As states grapple with the complexities of regulation and oversight, the future of sports betting in America remains both promising and uncertain. It's important to keep watch, and I will continue to do so and inform my readers, so check back here on my blog to stay updated and understand the repercussions for you as a bettor.
