About the only thing more prevalent these days than phone calls about your car’s extended warranty are ads touting online sports betting. Some ads tout free money to place my first bet, like a corner drug dealer offering samples to build his business. Some radio ads are testimonials from the station’s on-air personalities, which seems terribly conflicted. (Does she really believe Maryville College will cover against Averett or is she simply trying to move the line?)
Everyone wants a piece of this rapidly growing pie. For decades, the NCAA repeatedly argued that sports betting would be damaging to the integrity of college sports. The LSU athletics department, an organization seldom burdened with a call to high purpose or ethics, just named Caesars Sportsbook the official gambling partner of the Tigers.
The growing prevalence of gambling is not a good thing.
I am not a moralizing puritan. If people want to gamble, they should be allowed unfettered (and mostly unregulated) access to do so. Of course, if people want to burn dollar bills or jump off tall buildings, they should be allowed to do that, too. But on balance, the gambling industry adds nothing to either the economy or society. It simply takes a dollar from one group of people and then distributes, on net, about 94 cents to other people. It is one of the few industries where companies take your money and provide nothing of value in return. (Aside: that also describes much of the investment advisory industry.)
It is expected that by 2026, global online wagering will top $1 trillion a year. That is “only” a little more than one percent of global GDP, but from where will consumers shift that $1 trillion? Maybe it will be money that was otherwise spent playing state lotteries. There is a gas station near my home that has unusually large numbers of cars in its parking lot on fall Saturdays and Super Bowl Sunday. Will some of that $1 trillion come from neighborhood wagering?
You can be assured that some of those trillion dollars will come from missed mortgage payments, unpaid child support and higher credit card balances.
While online betting is a net losing proposition, at least it is statistically less unattractive than buying lottery tickets. In a bizarre move that could only happen in politics, when Tennessee legalized online sports gambling in 2020, it named the Tennessee Education Lottery Corporation as the regulator for its new competitors, the online sports book companies. The state lottery folks require that DraftKings and FanDuel pay 90 percent of the amounts wagered to winners, while barely paying 50 percent to the mathematically challenged folks who buy lottery tickets.
David Moon is president of Moon Capital Management. A version of this piece originally appeared in the USA TODAY NETWORK.