The booming sports betting industry in the United States has had a landmark year, setting new records for legal wagering while grappling with high-profile scandals that have shaken public perception. Nearly $130 billion is expected to be legally wagered by the end of 2024, but the road to this milestone has been fraught with controversy.
Scandals That Rocked the Industry
This year’s most glaring scandal involved former Toronto Raptors player Jontay Porter, who was banned for life from the NBA after admitting to fixing proposition bets. Porter, on a two-way contract with a modest $410,000 salary, faced mounting gambling debts and resorted to manipulating game outcomes. His actions were a stark reminder of the potential risks associated with legalized sports betting.
Adding to the tumult was the case of Ippei Mizuhara, former interpreter for Shohei Ohtani, who pleaded guilty to defrauding Ohtani of $17 million to settle illegal gambling debts. While Ohtani was cleared of wrongdoing, his proximity to such a case brought negative attention to one of baseball’s brightest stars.
John Holden, an expert in gambling policy, summed it up succinctly: “When you have people betting on sports, you have people trying to corrupt sports.” These scandals have spotlighted the inherent risks of legalizing sports betting, reminding Americans that these issues are not unique to the U.S. but rather part of a global pattern.
Industry Reactions and Policy Adjustments
In response to Porter’s actions, several major sportsbooks, including DraftKings, FanDuel, and BetMGM, announced they would no longer accept proposition bets involving players on two-way or short-term contracts. NBA Commissioner Adam Silver acknowledged the vulnerabilities of such bets, stating, “They lend themselves to more shenanigans than other kinds of bets.”
Despite these measures, the long-term impact of these scandals remains uncertain. Andrew Brandt, a sports law expert, noted, “Porter was an ‘easy’ ban as he was a low-level player. The real test will come when a bigger star is implicated.”
The industry’s adjustments underscore a growing recognition of its responsibilities, but they also highlight the challenges of maintaining integrity in a high-stakes environment.
Shifting Public Sentiment
The public’s enthusiasm for sports betting has shown signs of waning. Oversaturation of gambling advertisements and lower-than-expected tax benefits have contributed to a more critical outlook. According to Matt Para, a gambling consultant, the constant barrage of betting promotions has become a point of frustration for many viewers. “People are tired of seeing gambling ads during every commercial break,” he remarked.
This fatigue may have played a role in Missouri’s narrow approval of sports betting legalization, which passed by a mere 50.05% in November. Campaigns by DraftKings and FanDuel poured $43 million into the effort, a record for the state, but the slim margin indicates growing public skepticism.
Hurdles for New States
The scandals and changing public attitudes could further stall sports betting expansion in states like Texas and California. In 2022, California voters rejected two competing sports betting initiatives despite over $450 million in campaign spending. The state’s complex negotiations with Native American tribes, who control gaming rights, remain a significant obstacle.
Texas, meanwhile, is unlikely to revisit the issue until its legislature reconvenes in 2025. Lieutenant Governor Dan Patrick has expressed doubts about the financial benefits, stating that projected revenues would barely dent Texas’s $125 billion annual budget.
Tax Revenues and Economic Realities
Although sports betting has generated significant tax revenue in some states, the overall numbers have been inconsistent. Most states tax gambling revenues between 5% and 20%, but only 15 states achieve rates of 10% or higher. For example, Texas could generate an estimated $250 million annually, but this pales in comparison to its massive budget and surplus.
California, which already earns $9 billion annually from tribal casinos, faces similar hurdles. While additional revenue from sports betting is enticing, legalizing it would likely require a referendum and extensive negotiations with tribal entities. Such efforts may take years to come to fruition.
The Road Ahead
The sports betting industry’s trajectory remains uncertain. Experts predict that fewer states will legalize betting in the near term due to regulatory and political challenges. “Of the remaining states, there might be a surprise here or there,” Holden speculated. “But the days of four or five states legalizing in a single year are behind us.”
While the industry continues to grow, scandals like those involving Porter and Mizuhara have underscored the importance of accountability. As legal wagering expands, balancing financial incentives with ethical concerns will remain a delicate and ongoing challenge.
