How did sports betting become legal in the US? (shreyashariharan.substack.com)

I would like to become friends with your friend.

Well you have a truth telling friend.

Casinos have a ton of leverage in some states. Here in Nevada MGM and Caesar's and Wynn, thanks to their expansion, are effectively treated as too big to fail and given huge amount of deference in how they operate by the gaming commission. But there are also incredibly problematic protectionist regulations that I and several other residents who didn't really know each other tried to get rid of through the admin law process, primarily allowing remote signups which would also allow out of state entities to set up shop without literally having a physical casino. Having to physically go to a casino and sign up in person was onerous and clearly pointless, and then impossible during the pandemic, and became a really silly charade. What was supposed to start as public meetings right before the pandemic got dragged out, meetings would get rescheduled at the last minute, and casinos made entirely spurious rationales like "there aren't enough local datacenters" (Google Cloud's Henderson datacenter is surely sufficient for in state traffic?), that they would want taxpayer money for potential loss of revenue (capitalism dude, what are you afraid of?) Meetings would get scheduled in Carson City and that's literally six hours away by car. Agenda items would suddenly be altered. It was a hot mess. We managed to get iGaming in theory legalized but they straight up never even pretended to start working on regulations for it, and now with the 90% loss deduction limit by the IRS on the OBBB books basically have 12.5% house edge on any line to start if it's properly priced. My model can beat 2.5% but 12.5% is insane. If the feds are going to ban pros constructively, well, I can't out lobby a casino. And the pro betting constituency isn't big enough to pander to, frankly. If there's action, it can't actually happen on shore. I realize that "people who can beat the books due to specialist knowledge and can bankroll drawdowns to the extent that returns long term profit" is also publicly not sympathetic and generally people either think we're touts (if it makes me money touting absolutely won't help me, in fact the fewer people I have to interact with the better) or something. Wagering by hand sucks, but no model is perfect, just some are more useful than others, and someone in accounting may be able to figure out that ban or bankrupt is not a sustainable strategy to run books. But with the feds involved to put that imprimatur of authority in writing, I guess I'm never getting my limits lifted. Good luck finding stable liquidity elsewhere.

Not as much as traditional bookmakers but they absolutely care. Betfair has a "premium charge" where if you earn over a certain amount in a year, you get charged a fee equal to a % of your gross profit.

Its the same as poker. An exchange wants a bunch of equally skilled players betting against each other. If everyone has zero edge, all the money stays on the exchange betting over and over and the money eventually all goes to the exchange in commissions.

Players with a strong edge dramatically reduce the time before the losing players run out of money, meaning less commissions for the exchange.

How can it not care if you win? They still have to pay out correct? Do they then limit the maximum payout that can be expected?

I don't know as I don't bet but it seems counter-intuitive that just charging a commission would change the dynamic.

You're right that people don't get directly banned for winning too often, but they will get their maximum bets limited to something like $10 if they consistently place bets where they get a good deal on the odds (i.e. placing a bet at +100 when the odds closed at -200). This is one of the worst aspects of legalized sports betting IMO, and why I think it should be regulated. The companies running the sportsbooks are free to make errors on their odds without consequences because they're allowed to identify and ban anyone who takes advantage of the mispriced odds. This means they get to limit their customer bases solely to people who don't understand expected value, which turns the whole industry into a mechanism to take money from the stupid/uneducated. If you have an account at a sportsbook that's more than a few weeks old, and it's still in good standing, it's because the sportsbook knows you're a loser and that even if you win big a few times, you'll be profitable to them long-term.

In these cases one should apply the cybernetic principle. The purpose of the system is what it does.

The intention of the mathematician friends of yours may be to prevent money laundering and match fixing from being profitable (and thereby providing a public good). However, so many genuine sharp and/or plain lucky bettors are caught in these AML & Match Fixing cross-fires, it would be very naive to assume these are all just unfortunate false positives.

Sportsbooks are however legally hamstrung in what they can admit to of course. By doing so they would also admit to completely ignoring and even violating one of the core duties imposed on legal sportsbooks: the duty of care (in EU countries at least this is supposedly an important aspect of the legalisation).

By kicking someone off your platform, you definitely no longer have any way to nudge their behaviour into something less self-destructive. Some players might quit, but for those that do not: Illegal sportsbooks will try to take even more advantage of their players, and now you have also indirectly caused the financing of all kinds of other activities that AML regulation is specifically designed to prevent.

My hot take: your mathematician friends looking at suspicious betting patterns are a way for sportsbooks to greenwash and "legalize" their exploitative practices.

I'm pretty sure they actually use their data-mining advantage to make their betting offers as attractive to regular users as possible, and therefore maximise profit.

It's so easy to just ban any user who gets "too lucky" (simply ban the top ~0.1% of your userbase every week) why waste resources on offering actually fair bets? And the requirement for "fair bets" probably interferes with the requirement for bets to be as attractive to "regular users" as possible.

How does the house not have a data-mining advantage in card games?

They would know whether you make bad choices on Tuesdays, how people of your nationality and consumer preferences react to seeing an Ace, they can deal the better card to the person they’d like to have win, or the opposite, they know what effect the equivalent of a hot waitress bringing you free drinks will be on you specifically as well as on people statistically similar to you and at what moment in time…

Do you just not play against the house when you play cards? And do you 100% trust the house to deal randomly? Does the house not care at all who wins at cards?

Sorry if these are stupid questions, I don’t gamble, but it seems like they have lots of actionable data if they want to use it. Even if they only use it to get you to play more (or less).

Gambling debts are unrecoverable by law in Ireland. Casinos are under no obligation whatsoever to pay out under any circumstances

If you happen to be too lucky while placing a bet or gambling, the person can simply say ‘no you’re not entitled to the money’. That is simply the law in Ireland”. https://www.thejournal.ie/court-gamblers-not-paid-d1-casino-...

The hilarious thing is that if a Betting Company allows you to beg on margin/credit, then they can't subsequently sue you for the money either https://www.algoodbody.com/insights-publications/high-court-...

How do you know they would not also ban you if you were exceptionally “good” at betting?

Is there some specific EU regulation guaranteeing the right to place bets even if the house is losing?

why not bet till you get banned, then switch to state owned?

State run bookies charge commission so high you will not win anyway unless you have insider info and then your risk is bigger with a state run bookies.

Big bookies won't have you so easily. Multiple small ones will but you will get your money back. They not paying is a very small risk even if they decide to not do business with you later.

In the US, a business can refuse service to anyone, generally, as long as it isn’t because the person belongs to a protected class (e.g. you can’t ban all black people or all Jewish people). You could refuse to do business with someone because you didn’t like the way they looked at you, or because you were grumpy the day they came in.

Famously, for example, James Dolan bans all sorts of people he doesn’t like from Madison Square Garden and any of the other venues he owns. He notoriously bans all lawyers who work for any firm that sues him (which happens a lot). He even uses facial recognition to catch them, and kicks them out without refunding their tickets. People have tried to sue him for this (many of them are lawyers, after all!) and so far no one has won against him for it, so he keeps doing it.

Here is an article about it: https://www.espn.com/nba/story/_/id/45949758/new-york-knicks...

Generally most businesses are allowed to refuse service to customers for any reason, or no reason at all (there are certain legal exceptions to that principle for protected classes). As a practical matter, banned online bettors often sneak back in with strawman accounts.

Companies outside of betting do this regularly. I know a guy who is banned from returning stuff at Best Buy.

There are absolutely companies that “stack rank” their customers and cut the bottom N%, or even just keep the top N, period.

I have always found this to be maddeningly counterintuitive, because surely at least some of these customers yield a net profit. But I have to admit that I’ve seen it done to very profitable effect.

> (This shows they at least know to lie about it)

Or they just don’t do it? I don’t enjoy gambling at all. I don’t do it in casinos, I don’t do it online, and I don’t even do it with friends where there’s no “house” to pay off. I think the worst night gambling I’ve ever experienced, I lost $20. I still remember it.

'Proper' gamblers use exchanges like Betfair rather than Sportsbooks, where the host takes a rake off the spread with individuals laying against you. The only major issue with this is not being able to do things like place betting accumulators.

FOI in EU means you can get the notes attached to your account - the insights can be staggering, down to friend and family connections with Jockeys or Racing Stables, Sports Personalities or High Net Worth individuals.

Isn't mule or proxy betting incredibly illegal in the US? It would seem to violate every known money laundering law I can think of

I don’t like gambling, but I love sports. I will very occasionally engage in “emotional hedging”, where I bet AGAINST the team I want to win.

If my beloved team wins, I’m ecstatic and don’t really care I lost $50. If they lose, well, at least I have $50.

Was it a fantasy league? I guess it’s gambling, but not what most people would consider sports betting. I know lots of people who play in a fantasy league with friends every season and do no other gambling.

Drafting players and then fielding a team every week for a season can be fun if you like the sport.

I signed up for one of those first time deposit offers and made a bet on the Super Bowl once, as I was going to a watch party and find it to be unbearably boring, so I figured this would make it somewhat interesting. I ended up winning, I think I tripled my money when including the bonus. Even though I won, I had zero interest in ever betting again. I got so much spam texts and emails from that Sportsbook over the next few years trying to get me to bet again it was insane.

My brother jokes and says I am in the top 1% of sports bettors now

I'm the same.

I am very very careful around activities and substances which could become addictive, because I know from benign life experiences that I sometimes lack the self control to stop.

It would probably be fine but there are no upsides risking it.

That and ever since my undergrad statistics class I hate the thought of playing games which are staked against me from the beginning. The thought of betting or gambling feels like voluntarily signing up to be swindeled.

In the UK I've seen lots of "first bet: win or your money back", or "make another bet free" sign-up deals. They're poorly disguised dopamine sharks.

Well aside the organised criminal element that goes hand-in-hand with legal gambling, it destroys people's ability to make rational choices.

But yes, I'm also lucky enough to have never won.

If gambling should be legal, then so surely should malicious advertising right?

Predatory advertising, gambling, they both prey on people.

Cards on the table, I think both advertising and gambling should be heavily controlled.

Why is gambling your natural right, but advertising not mine?

In a capitalist system, gambling has a lot of negative externalities that go far beyond the individuals participating. It must be carefully controlled. In some countries like Monaco, citizens can’t gamble, but foreigners can do so freely.

Let's also legalize crack and heroin. Getting addicted to fent is a person's natural right.

>It might be more informative to see how many men actually use their sports betting accounts.

A sibling poster posted a link to Siena survey that has related betting statistics. For males the percentage that "have accounts" vs those who "had accounts" is 30% and 6% respectively. You see similar ratios in the age breakdowns. Therefore it's safe to say that around 40% of males below 50 "have" betting accounts.

Even with that link I have trouble believing it myself.

Like how was this data/survey gathered/administrated? Sample size ect...

Also I don't understand how sports seem to get so much attention. Like they are just games why?

Another post I was reading a bit ago was how Spain what basically suffering internet outages to stop pirate streams of games on the weekend: https://news.ycombinator.com/item?id=45323856

Like why is a game considered so important that even internet traffic has to suffer. It boggles my mind.

Yeah, I registered with every single one I could find when they all had $300 bonuses, just took the bonuses, made 99% sure bets on everything (bet $300, win $300.01) and cashed out about $3000 and never touched them again.

I'd have just gone to a different bar.

I hate betting but even I can't avoid taking a chance on the big new year's lottery. Chance of winning is virtually nil of course.

> The fact that these limits don't exist seems like evidence that the lawmakers didn't care about the effects on society.

The lawmakers care primarily about the wants of their corporate donors, which is why this legalized gambling situation arose, and also why you have many geriatric congress people on both sides of the aisle suddenly very interested in legitimizing crypto with soft "regulation".

No? Show me some cigarette ads.

The Public Health Cigarette Smoking Act of 1969, which is still in effect, bans all commercials for cigarettes on TV and radio in the US.

Cigarettes and alcohol both have advertising heavily regulated/banned. The government just needs to make a public health argument which is easy enough here

A significant difference with gatcha games compared to traditional cash gambling is that you cannot chase your losses. You either get the skin/item or you don't, but there is no false hope that you could recover the money you gambled with if you spend even more. Obviously, that's not true when the game allows you resell the skins individually for real cash (eg. CS skins). Chasing losses and borrowing money to earn back the money you lost and getting even more in debt is what makes people kill themselves in casino parking lots.

I agree, banks have in their best interest that they don't loose money and bet houses have in their best interest that you lose yours.

So if there aren't any natural incentives you just make up artificial ones. One such mechanism is regulation, just like with the tobacco industry.

It's the same for casinos. If you buy $50k of chips, lose them to someone else in poker and they redeem them. If your $50k purchases bounces the casino loses money.

Wait whose money do you think is in the bank? Banks are funded by depositors' money and they absolutely play fast and loose with it when not regulated.

I do believe the more money you have the more money you should be allowed to throw away irresponsibly. I mean, that's true for all other products...

A 90% RTP will typically (typically - lots of exceptions and caveats) be quite volatile - offering big wins but long losing streaks. Exactly the kinds of game behavior designed to extract long playing times and really peak the dopamine response.

The casino will be accounting/forecasting a 5% take across stakes made as it's super complicated with jackpot contributions/payouts and stuff.

These machines are there to be always accessible and to train the human in just the right way so as to get you addicted.

That 90+% has nothing to do with the 97% in the other comment. Betting platforms also return 90+% to players.

Slot machines typically keep 3% and returns the rest to the player. They do many things to keep people play to empty their deposit. Bonuses, wins on every spin (but amount is usually less than stake). Use internal coins to hide actual value etc

> Most sports bettors arent trying to make money.

This is totally disingenuous. Why else are gambling providers forced to include addiction recovery phone numbers with their ads?

> A ticket to the game is $100+, is that money wasted too?

No, and this is equally as insincere as your first statement. Gambling takes money without offering a fair return in goods or services.

The article itself is garbage and I strongly believe it's AI generated.

But even on top of that, the coverage of this issue is severely lacking. There were already many online sports books "legally" HQ'd in the Caribbean or other offshore locales. They were pointed to as proof of how much money could be made and money won. That's the story. We allowed greed to addict millions of young men on sports gambling because we lost our spines in this country.

How is it being a game of skill better for society than random chance?

It doesn't matter if it's a game or skill it not. It's still gambling and it's still terrible. You can even argue that games of skill for money are worse than pure chance game because there is one more mechanism for people to get addicted: delusion of having an edge.

If DFS is legal roulette should be legal as well because it has fewer negative consequences for society.

I know it's popular narrative among pro gamblers that games of skill deserve a different (better) treatment but it's just self serving nonsense in my view (I've spent most of my adult life in a gambling world as both a pro player and software developer).

And when they lose all their money it becomes a tax on society.

Lest us not forget the origins of prohibition where women were collectively extremely upset about their husbands constantly going out and spending their salary on drinking instead of actually buying food and etc for the family.

I went to a casino once with a bunch of engineering students. The amount of superstition was eye opening.

Understanding math isn't enough I think it is largely emotion driven. Like a fun thing to do, not work.

I know quite a few casino addicts. They all understand the math just fine. Some are actually very good at math but still can't stop themselves from betting on a spinning wheel.

That's interesting, but it's almost the opposite for me. I get way drunker in a bar because the environment is inviting and it's easier to order another drink at the bar than to get up and get it myself. The bartender typically sees when you are getting low and offers another drink.

I would also spend way more money on gambling when at a location to do so. The desire to bet on sports on my phone is really low because it's boring so I won't do more than enough to make a game interesting.

When I used to have to make an effort to get things that are now legal but previously illegal I would be much more compelled to make that effort to avoid having to do it in the future when I wanted the thing. Which inevitably would lead to more doing of the thing. Now that I know I can get it anytime I don't actually care about it.

I definitely agree, but I don't think all of those examples are apt. Particularly the drinking one, because I think that's fairly likely to be 50/50.

Some other good examples (I think) are simply watching things. It doesn't need to be porn, think about how many people are chronically watching mindless trash content for hours at a time because we've made constant scrolling an immersive experience available all the time everywhere. I know I am. We've gone so far as to even eliminate the necessity to decide what to watch, the media companies have automated the process of turning what used to be customers into their products and delegated the friction to the telecom companies. When you think about your phone bill, really we should be paying basically nothing for it (and in some places it's nearly that cheap), but in expensive places we're paying like $80/month to engage with 5 free addictions that only take value away from our lives. They're charging us to sell ourselves to each other.

Weed: I agree that it should be legal, but how many new customers have been created since a store opened in every available vacant commercial space within a legal jurisdiction?

The pursuits of car and oil companies have literally re-shaped the built environment in the name of making it as easy as possible to be sedentary when you'd otherwise have to move—most significantly so in places that missed out on dense urbanization in the pre-industrial period—and now all we know how to do is get in our big SUV and drive to Costco, then to McDonalds, because otherwise there's a near-zero likelihood you have access to more economical healthy choices that are persuasively close to not drive to. Most North American cities effectively made it illegal to do anything else but sprawl, and concentrated as much wealth and power as possible in the hands of mega-franchise companies and private equity while we watched our wetlands get paved over for parking lots (we unironically should have listened to Joni Mitchell on this one). Good luck opening up a new corner store, those only go on the main avenues and shockingly someone owns that land already.

Credit Cards: Obvious one, but if you obscure how much you've spent and eliminate the requirement to keep track of what's available to you, maybe even add a nice little ding sound when you tap your phone, you're going to buy a hell of a lot more.

Or, just make it illegal.

Not a lotto fan, but, in theory, the money collected by state lotteries goes to some sort of public good (scholarships, etc.). Don't get me wrong, I still see them as destructive, but they don't operate with the same intent.

These new sports books are operating purely to enrich the owners of the platform. Ban 'em.

Nothing? At least you can't play lotto in your pocket.

At least they fund the State Park System (in my state as least) -- so much less of a scam than sports betting that funds ... nothing

> Between low IQ, impulsivity, addictive personalities, etc., a large fraction of the population needs guardrails imposed by society for the sake of both themselves and the people around them.

I find it telling the the people that have this opinion always seem to believe that they are going to be the arbiters of how other people should live, and that they themselves are without the vices that they would regulate.

And I even agree on the betting bit: it's bad. But then again, so is voting for criminals and yet, we allow it and arguably that causes a lot more damage than betting.

The society is not separate from "those people". Indeed, given the results of referendums, it would seem that the society is in fact mostly those people. So, who should be imposing guardrails on them, exactly, and how do they justify it in a democracy?

I'm generally a libertarian-leaning person and I completely agree. Some things are just too destructive/addictive/etc to allow easy and free access to them.

And it really saddens me to see American children being introduced to gambling at a younger and younger age via things like loot boxes, blind boxes, and trading card game speculation.

I was interested in this, so perusing I found https://govinfo.library.unt.edu/ngisc/reports/2.pdf which estimates in the late 90s

"Estimates of the scope of illegal sports betting in the United States range anywhere from $80 billion to $380 billion annually, making sports betting the most widespread and popular form of gambling in America."

which seems surprising even at the low end.

similarly from https://www.americangaming.org/new-aga-report-shows-american... in 2022

"AGA’s report estimates that Americans wager $63.8 billion with illegal bookies and offshore sites at a cost of $3.8 billion in gaming revenue and $700 million in state taxes. With Americans projected to place $100 billion in legal sports bets this year, these findings imply that illegal sportsbook operators are capturing nearly 40 percent of the U.S. sports betting market."

I think what would be more interesting to me is estimates on the unique number of citizens betting. Is it up? If so, how appreciably?

If you wanted to bet on sports when I was in college you needed a bookie. Now, you have access to all the legal bookies in the world in your pocket. It's hard to make an argument that something that is now legal and much easier than before is not much more popular than before.

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It is, because we live in a society, have a social safety net that you and I pay for, and our kids go to school with their kids. It’s your responsibility as someone fortunate enough to be graced with intelligence and impulse control to help those who weren’t, and you’re not doing that by encouraging them to do whatever they want.

It's kinda bad for society if a bunch of, let's say, middle class men become economically lower-class men while the upper-class owners of such gambling establishments rake it in.

We as a society should get to decide what "freedoms" and what "constraints" make for a better society as a whole, don't we?

All of those should be banned. It IS OUR BUSINESS how shitty we allow society to be.

Vices like gambling are not about one person’s money— they create addiction, crime, and family harm that spill over into society at large.

Cause they become gamblers and then everyone else has to deal with the problem. Notably, their wifes are responsible for paying half those debts and their kids suffer. Gambler causes hell including financial one for everyone.

Also, because their gambling asses smart wifes divorced get lonely and somehow it becomes contribution to male loneliness epidemic and then we have right wing using them as argument to stop "no fault divorce" and restrict women so they have no choice.

Its for the same reason you don't give a license to someone with a DUI.

They are a harm to others. People with gambling addictions don't just hurt themselves - they hurt families, friends, and also the society at large as they come to be dependent on the safety net for substeance.

I think you dont need to make it illegal to keep it in check. A simple rule saying: IF a person spends more than 20% of the overall W2 or 1099 income on gambling, then the gambling house is liable for every 95 cents of every subsequent dollar paid out. We transfer liability for selling alcohol to irresponsible bartenders - casinos should also take the heat for the malaise they inflict.

You'd see very quickly how things get real.

This makes no sense at all. You shouldn't be gambling against the platform, you should be gambling against other users. The platform profits equally whether you win or lose, since they take a cut per bet, not per loss

I find this really irritating, it’s not just that sports gambling is legal, it’s also legal for sports gambling companies to limit their customer base to only the people who are bad at it.

It seems totally unbalanced, predatory, like an overt scam.

I would feel a lot better about the law permitting sports gambling if it also required companies to accept bets from all gamblers. It likely would reduce margins and feel a lot riskier to the companies. Like with poker… you can’t sit down at the table hoping to win big without also risking to lose big.

In small print, that most people don't bother to read or don't have time to read.

It's probably included because some states require it and it's easy to just make one commercial. For example, Virginia 11VAC5-70-240.B "Advertising, marketing, and promotional materials shall include a responsible gaming message, which includes, at a minimum, a director-approved problem gambling helpline number and an assistance and prevention message, except as otherwise permitted by the director for certain mediums such as social media messages. "

as designed

Well, in 1979 the people who had the money were the existing casinos, operating in the 4 states that had legal sports betting. This was a way to close the rest of the market, so they could continue to have a monopoly on gambling and wouldn't have to compete with other states.

Then FanDuel and DraftKings arrived with a lot of investor capital, and had the money and power to push through the legalization.

It was never morals that kept gambling from being legalized elsewhere, it was protectionism.

This article https://www.rosloto.net/en/how-vs-and-big-tech-investments-a... is very much on point — it shows how VC funds and global tech giants like Google, Amazon, Meta, and Apple are directly or indirectly investing in the online casino market

Those same traps and dark patterns you mentioned are used well beyond gambling. those things themselves should be regulated, not gambling. You're arguing against something unrelated to the topic here. It's fine to trap and addict people into gambling, and then punish them for getting addicted and trapped? how does that make sense? let people gamble if they want, but ban malicious and hostile practices of capitalism. Whether it is gambling,shopping addiction, social media addiction, porn or political influence campaigns, the practice and trappings are the same and should be heavily regulated. No argument there.

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Can you please be any more dismissive and condescending?

First, I chose "idiots" carefully, if a person has a pre-existing condition or some other weakness, "idiot" excludes them as you've so obviously noted and they should be protected. However, if they chose to enter a life of addiction, fully being informed that even gambling once will addict them, they fall under the "idiot" category, although there are better terms to use and I'm being lazy with my wording there.

Your rant about the government protecting people and you not getting mugged has nothing to do with what I'm saying,that's false equivalency.

I have every right to enter a life of addiction and ruin myself, as do you. i have every right to get addicted and live a miserable and short life. it isn't a great idea, but it is none of your business either.

As I stated very clearly, banning and regulating harmful and deceptive practices by gambling companies is something I support fully. What insane is you thinking you have a right to prevent me from doing something that doesn't affect you in the least because you want to force yourself to being everyone's caretaker. There should be a term for this sickness, perhaps "hostile and performative empathy"?

Help those who can't help themselves and ask for help! You don't get to decide who can't help themselves unless they can't make decisions or communicate on their own. Sane adults can speak up for themselves and tell you if they need help. And your idea of help? what is it? throwing people in prison? that's what you're advocating, you understand why that's insane right? Short of murdering a person, that is the worst thing you can do to them, do you get that? When you say "banning" it must be enforced somehow. Or perhaps you think it will be a small fine, even if that was the case, what happens when gamblers who lost all their money can't pay a fine, other than imprisonment? Loan sharks to pay your fines, and a life of crime to pay the loansharks? Either way, it ends up in people being forced to participate in worse and worse crime and thus causing actual harm to others because of your unending empathy.

I return your invitation to spend a little more than 2 calories and think about what we're discussing here. Your nanny state beating people until they die for their own good.