The Politics of Sports Betting: Analyzing the Effects of Regulatory Absorptive Capacity on Legislative Outcomes

Abstract

Sports betting has risen at a rapid pace after the Supreme Court’s 2018 decision to repeal PASPA, a federal prohibition on sports gambling, in the case of Murphy v. NCAA. Authority over this domain was restored to the states, but significant variation in legislative and regulatory outcomes raised questions regarding whether or not states were actually given uniform authority. This thesis analyzes cross-state variation in outcomes related to sports betting, with a focus on institutional designs. Through the creation of Regulatory Absorptive Capacity (RAC), which is the extent to which a state’s institutional design conditions its ability to absorb new policy domains, this paper analyzes the relationship between institutional capacity and legislative outcomes. Using RAC scores from each state, this thesis uses regression analysis to test the relationships between institutional capacity and different legislative outcomes. These analyses find that RAC is deeply linked to legalization timing, regulatory openness, institutional conflict, and market structure. Case studies are also used to test these relationships in specific circumstances and find the same results. States with a higher RAC score are more likely to legalize sports betting more quickly, specifically incorporate online sports betting, face minimal institutional conflict, and implement competitive market systems, while states with a lower RAC score are the opposite. These results have important implications for future literature and state policymaking, and highlight the importance of institutional design in the implementation of new policy domains.