Reining in online Wild West of sports betting where public loses
As March Madness peaked last week with the NCAA championships, so did the mania of sports betting — a sign of spreading gambling addiction spawned by companies that exploit vulnerable bettors.
By the time the UConn men’s basketball team routed Purdue in the national championship Monday night, more than $2.7 billion was bet by roughly 70 million Americans, most of them losing. The South Carolina-Iowa women’s basketball championship was the most bet on women’s college basketball game in history and the biggest winners were sports betting companies like DraftKings, Fanduel and BetMGM that have made online gambling a hugely lucrative cash cow.
Through their pitches and promotions, credits and bonuses, these companies enlist people in their first bets, and then entice them to do more. Sports betting behemoths exploit problem gamblers, and their predatory practices have contributed to unprecedented levels of gambling addiction.
The result is a public health crisis: burgeoning addiction and betting losses spawning hideous costs in financial debt and bankruptcy, job loss, theft and fraud, family breakdown, drug and alcohol abuse and much more. Many of those costs are ultimately borne by our whole society.
Solutions need to recognize key changes in sports betting as a business supporting its spread. The rapidly growing trend of gambling legalization by states — indeed participation by states in the business itself – has made gambling more acceptable and accessible.
When sports betting was prohibited, the bookie on the street corner or the telephone line, was often hiding in plain sight. He made the odds, collected from losers, paid winners, and took a cut. Needless to say, there wasn’t much sophisticated marketing and promotion, and exploitation of problem gamblers was pretty rudimentary.
Online gambling technology, combined with legalization, has fundamentally changed gambling and sports betting in America.
New online technology enables sports betting companies to collect reams of data about gamblers – how and what they’re betting – in real time. Algorithms empower them to pitch credits, bonuses and other enticements, even as they’re online making bets.
Technology could enable bettors to better protect themselves by allowing them to block themselves from platforms through self-exclusion features. But the online betting companies, perhaps unsurprisingly but very unfortunately, have made self-exclusion difficult to accept or use. Sometimes, they actually seem to talk problem gamblers out of it, as the Wall Street Journal recently reported.
The net result: an online Wild West in sports betting where the big guys win, and individual people – and the public interest – loses.
As important as technology and legalization are in fostering this toxic online environment is lack of treatment. Gambling addiction must be recognized as a disease, just like addictions to drugs, alcohol and tobacco. It isn’t enough just to stop the promotions, problem gamblers need help.
Astonishingly, while the federal government rightly provides hundreds of millions of dollars for treatment programs addressing drugs, alcohol and tobacco, not a penny is spent on gambling addiction. That’s totally incomprehensible and unacceptable.
I’ve proposed a first step toward federal treatment funding — the GRIT Act — which would use one half of the revenue from the federal excise tax that is already collected on wagers to support gambling addiction treatment. The excise tax is minuscule, only a quarter of 1%. Right now, all the money goes into the U.S. Treasury’s General Fund.
This measure would impose no new tax. Nor would it raise any existing tax. It would simply redirect a modest amount of present revenue to address health damage resulting from industry generated revenue. This proposal should be bipartisan. Fans in Connecticut and across the country thrill to our favorite sports teams, pro or college. We gleefully surrender to March Madness. Most bet what they can afford, in moderation. But some number are afflicted with a health issue that can devastate their lives, livelihoods, families, friendships and more.
More steps are needed to regulate and rein in current sports betting practices with guardrails and safeguards. Sports betting and gambling needn’t be an online Wild West. In fact, they can’t be — for all our sake.