Sports betting is a costly mistake, says addiction researcher Charles Fain Lehman. He and NBA great Danny Green discuss how it's changed sports for the worse, and whether there's a way to fix it. This episode was produced by Hady Mawajdeh, edited by Matt Collette, fact checked by Laura Bullard with help from Victoria Chamberlin, engineered by Andrea Kristinsdottir, and hosted by Sean Rameswaram. Special thanks to Steven Delaney, host of Fantasy or Reality? The Gambling Problem Podcast. Transcript at vox.com/today-explained-podcast Support Today, Explained by becoming a Vox Member today: http://www.vox.com/members Learn more about your ad choices. Visit podcastchoices.com/adchoices
Chapter 1: What led to the legalization of sports betting in the U.S.?
Remember when sports betting wasn't everywhere you looked in this country? Back in the 90s, Congress passed a pretty sweeping ban on sports betting across the United States.
This is a pretty universally popular law. It passes overwhelmingly. All the sports leagues speak out in favor of it. It's the law of the land between 1992 and 2018.
It wasn't until 2018 that the Supreme Court stepped in and basically undid that law. Since then, almost all of the states have gone ahead and legalized sports betting.
The American Gaming Association estimates that last year Americans bet over $100 billion on sports. Something like one in three Americans now bets on sports. It's everywhere. It's on your phone. It's on TV. ESPN, which is to say Disney, now runs its own sports book.
Mickey Mouse is now a bookie. That's completely correct. Pay up or I'll break your knees. Charles here says legalization was a terrible mistake. He's going to tell us why on Today Explained.
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Chapter 2: What are the social costs of legal sports gambling?
Gambling addictions associated with all sorts of terrible outcomes, including loss of your home, loss of family, loss of life through personal action. And so we've created this enormous concentrated social harm And in return, we've gotten some kind of anemic tax revenue and a bunch of ads everywhere. It just doesn't seem like a worthwhile trade-off to me.
Wow, it sounds like you really don't like it, though. I don't.
I don't. And I don't like it for the reasons that I'm skeptical of a lot of vice goods. And I think we tend to systematically underrate their harms. But the problems are the same in every case, which is that They concentrate in a small number of users who will do the overwhelming majority of the using and will experience the overwhelming majority of the harm.
And everybody else is sort of benefiting off of their backs, which is an alarming arrangement to me.
Do we actually have any receipts, Charles, of the widespread legalization of sports gambling here? increasing how many lives are ruined due to legal sports betting in this country.
Yeah, absolutely. You know, and, and I think at this point, many Americans know somebody who's been affected by this. Many Americans know people are in the hole. I was at a wedding recently and a friend of mine from college told me about a friend of his back home in Erie, Pennsylvania.
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Chapter 3: How does sports betting addiction affect individuals?
He works at the post office, not, you know, a well-off guy who's $28,000 in the hole on sports betting, just a tremendous problem. Um, The interesting thing about gambling legalization, we have information on this mostly from the UK's experience. The UK's experience is pretty grim. There's one estimate that says 8% of all completed suicides in the UK are attributable to sports gambling addiction.
Yikes. That's not great. But the thing about the US context is, to sort of try to simplify it, because gambling was legalized in different states at different times... economists can use fairly specific set of methods to isolate the causal effect of sports gambling, not just sort of the correlates of sports gambling, really what sports gambling causes on a number of different outcomes.
One of the studies that I point to from economists at Northwestern University estimates that for every dollar spent on sports gambling, households put $2 less into investment accounts. There are big increases in the risk of overdrafting a bank account or maxing out a credit card.
There's another paper from economists at UCLA and USC looking specifically at online sports gambling, and they find that legalization increases the risk of bankruptcy by 25% to 30%, which is a big relative risk increase against a small baseline, but still. And the other thing that really sticks out in those studies is that
the harms tend to concentrate among the most economically precarious, right? The people with a history of overdraft end up overdrafting more. There is sort of ecological evidence that the harms tend to concentrate in the areas with highest levels of poverty, that they also tend to concentrate among young men who are already at risk for all sorts of, frankly, not great financial decision making.
And so it seems like It's not just that, you know, gambling harm befalls some people. It's that gambling harm befalls often the people who can least afford to have it come down on them. Like the guy I was talking about earlier who's, you know, nearly 30 grand in the hole working at the post office.
Do we know how much money on average people are losing versus say they're winning?
Yeah, actually. So there's another study from folks at Southern Methodist University where they have a panel of 700,000 sports bettors. And they show a couple of really interesting things. So only about 5% of people in the panel withdrew more from the apps than they deposited. So 95% of people are losing money. Wow. That's actually nuts. not the interesting thing.
The really interesting thing is that about 3% in their estimate, about 3% of bettors drive 50% of sports gambling profits. And this, just to go back to the conversation earlier, is what you see in all markets in addictive goods. They follow what's sometimes called a Pareto distribution or power law distribution.
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Chapter 4: What evidence is there of the harms caused by sports betting?
5% to 10% of the people who are doing the consuming will do 80% to 90% of the consuming. And that's pretty clearly true here as well.
How much does the amount people are losing, the amount people are betting, the amount people are gambling altogether have to do with how much gambling has changed with the little devices that we keep in our pockets?
It's a big part of the story in more ways than one. You know, One component of it is just it's much more readily available, which is to say if I have to go to a casino to gamble, I may not want to take the time out of my day. I may not make the effort at the margin. I may not get drawn in.
And so over the long run, you generate fewer people who are addicted because they never get exposed in the first place. This is the virtue of keeping gambling in Las Vegas is you have to go to Vegas to do it.
Remember what happens in Vegas stays.
In Vegas. But then I think to my mind, the much more alarming thing is that app-based gaming facilitates algorithmic discrimination on the part of the sportsbook provider. They can tell, it's actually trivial to tell with modern methods, who the people are who are going to spend the most. They know when you check your bets in the middle of the night. They know when you are watching the game.
They know what you are doing and how much you are betting. And then what they can do is algorithmically reinforce that. They can make you offers. They can assign you a personal concierge who encourages you to bet more. This is actually what they do at casinos in Vegas. If you are a whale, a big spender, you'll get all sorts of good stuff comped.
But instead of that happening in sort of a dingy hotel or even a glamorous hotel, that's happening on your phone. all day, every day, until they get all of your money.
It's quite clear from speaking with you, Charles, that there's a lot of harm being introduced to this entire country, but certainly states across the country, from legal sports betting. And it's especially hitting young men. But it was legalized with the promise that it was going to bring a lot of benefits to the states that approved it. You seem to believe that isn't paying off.
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Chapter 5: What are the economic impacts of legalized sports betting?
Charles Fane Lehman, he mostly writes about drugs but makes exceptions for gambling. He's a fellow at the Manhattan Institute and a contributing editor at City Journal, city-journal.org. All the sports betting isn't just changing the experience for fans, it's changing the experience for athletes too. We're going to hear from a pretty good one when we're back on Today Explained.
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Danny Green didn't just win one NBA championship. He won three with three different teams, including my Toronto Raptors, for which I had to thank him.
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Chapter 6: How has technology changed the landscape of gambling?
Very illegal. Everything was illegal. There was no NIL.
There was none of that. Everything was illegal. By the time Danny's ready to retire from the NBA, he's not just getting yelled at by an opposing player or his coach. There are fans who are mad about their parlay getting messed up.
So you messing up someone's parlay or messing up someone's gambling bet on you is that they took you for usually over a certain amount of points, rebounds, or assists, or all the above together. And it's like, all right, sometimes a parlay, maybe Boston is going to win by plus six and a half, and then so-and-so is going to lose by minus four and a half.
And then this player is going to get over 10 rebounds. This player is going to get over six assists. This person is going to get over two and a half three-pointers made. That's usually, I'm one of those guys, at least one and a half three-pointers made. And if you win, or if you get hit on all these... people that you gamble on risk is a big payout. And they might get nine out of the 10.
And if you're the one out of the 10 that doesn't get that one and a half threes or two and a half threes for them, they're going to cuss you out. And, you know, because they were this short of turning $5 into $25,000. You know what I'm saying? So that's ultimately what a parlay is.
So tell me, when you're playing towards the end of your career and sports betting has become a daily part of the conversation, when you think back to those days, which aren't that long ago, did you ever get the impression on the court that someone was mad at you for a given play or for some... Yes.
A hundred percent. Like, if you score at the end of the game, you might mess up the spread. You turn the ball over or whatever it is. Or if you lose a game that you were favored in, we are more aware of it and it's brought to our attention. Do we care? No.
Well, my initial reaction, to be honest, is damn, damn good.
So players aren't scared of that? They're not worried about fans and their various bets?
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Chapter 7: What are the misconceptions about tax revenue from gambling?
He's a career 40-plus percent. We get more money. We get more looks. We get to stay in this profession longer. We get a chance to do what we love and play more minutes. So nobody wants to play bad. Nobody wants to do under what they're expected.
You know, players like Kevin Durant and Kyrie Irving have complained about the harassment and said, you know, it's distracting from their game.
Gambling and sports betting has completely taken the purity away and the fun away from the game at times. I'm going to just be honest with y'all, so...
I could imagine on that level, I mean, they're superstars, so I'm sure it's a, you know, I was a role player, and I got it. So I can imagine on superstar level how much DMs, I mean, it's give and take. Advantage is advantage. I'm sure they get a lot of opportunities for sponsorships, money, and people will want to have access to them that they would love to meet or they look up to or, you know.
who I hang out with or kick it with or do business with. And the flip side of it is people flooding your DMs with BS too. So it's a give and take. It's a gift and a curse on both sides of it.
Did the opposite ever happen? Did it ever feel good to get off the court and hear from someone that you made them like $10,000 or something like that?
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Chapter 8: How does sports betting affect young men specifically?
Yeah. I mean, sometimes it's cool. Not that you're going to get a cut, but it's like, oh, that's cool, man. I'm glad I did. I used to bet on you all the time. And some people are like, I lost a lot of money too, man. Trust me. If I played better, I probably would have made more money. And it's like, but when you make the money, you ain't going to give me the money, so why?
There was one time Floyd won big money. We beat the Lakers. He gambled on us beating them. I was in San Antonio. Hit a big shot. Undefeated boxer, Floyd Mayweather. Yeah. And people are like, oh, he ain't send you a cut. No, absolutely not. Why would he? It's his money. He risked it, but no. He sent me a little money team back, like gift, small thing. We connected. It was cool, good people, but...
I ain't going to see the money. So as great as it feels, it's not like I'm going to really share that with you. It's like, oh, that's cool. But I really don't care. But I'm happy for you. I'm happy you won money on my behalf.
You know, you've talked about how the athletes aren't betting themselves and, you know, they don't have money riding on the games. But of course, earlier this year, we saw former now Toronto Raptors player John Tate Porter got kicked out of the league for betting.
Toronto Raptors forward Jonte Porter has been banned from the NBA for life.
The NBA says Porter committed several serious violations that include betting on games, providing confidential information to bettors, and worse, limiting his own participation in games.
It's cardinal sin, you know, that what he's accused of in the NBA and the ultimate extreme option I have is, you know, to ban him from the game. There is nothing more serious.
What did you think when you saw what happened to John Day? What did you make of that?
I mean, they had to make an example of something so rightfully so. I mean, like, what do we do? Like, come on, man. Like I said, if you're going to better yourself, at least bet the overs and try to make it happen. But to bet the unders and then... Hurt your own career, be sick or get hurt mid-game and call out or purposely not take shots or try to miss shots. That's just something I can't fathom.
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