A Public-Health Gamble: A Comprehensive Analysis of Sports Betting Legalization in the United States

Abstract

In 2018, the Supreme Court overturned a federal ban on sports betting, placing the issue of regulation within the jurisdiction of the states. Today, just four years after the Court’s decision, policymakers from 33 states and the District of Colombia have eagerly implemented intrastate sports betting platforms, with several more positioned to do so in the coming years. The industry has grown tremendously over this timeframe, reflecting significant consumer demand for legal betting as well as the unprecedented access provided by mobile betting platforms. This thesis begins with a comprehensive analysis of the sports betting industry, focusing on nuances between state policies as well as the factors that have driven such rapid adoption. I then examine the impact of legalization on professional sports leagues and the continued integration between sports betting companies and media companies. Additionally, this thesis investigates several licensed sports betting companies, outlining their business strategies and their history. Ultimately, my analysis presents an industry that will only continue to expand, as the incentives of lawmakers are aligned with the gambling industry to maximize sustained growth and profits. In addition to the persistent expansion of legalization policies into new states, the states with existing frameworks have overwhelmingly adjusted their policies in favor of the industry’s needs. I then pivot to a discussion about the potential public health consequences of gambling expansion. Not only is pathological gambling considered a DSM-V addiction by the American Psychiatric Association, but an analysis of relevant behavioral economics, with a particular focus on Prospect Theory, shows how the compulsion to gamble can exist when users both win and lose money. Moreover, I show how the psychological compulsions to gamble can lead to pathological addiction and how these factors are directly targeted and exploited by advertising campaigns. Ultimately, I argue that the risks associated with widespread gambling legalization are not reflected in current regulations. It is too early to adequately assess the scope of the public-health consequences brought on by increased gambling participation, but calls to the National Council for Problem Gambling have increased by 50% between 2020 and 2021. Given how nascent the industry is, states are limited in their ability to regulate companies, but preventative measures grounded in theories of behavioral economics will prove crucial as the industry expands and matures.