Sports Betting Is a Plague

Yahoo

09-05-2025

When do practical policy effects trump cherished principles? The mess that has come with gambling liberalization should force the thoughtful kind of libertarian to consider that question.
Set aside, for the moment, the recent ideological devolution of the Republican Party into national socialism: Traditionally, most of the Americans who called themselves 'libertarians' were in effect conservatives ('Republicans who like weed and porn,' as a Marxist friend of mine used to put it), while American conservatism was thoroughly libertarian, and not only as an economic matter but also in a way deeply rooted in the live-and-let-live sensibility of figures such as Barry Goldwater, with his suspicion of Moral Majority types. ('Mark my word,' Goldwater famously said, 'if and when these preachers get control of the party, and they're sure trying to do so, it's going to be a terrible damn problem.') Libertarians and conservatives both prioritize freedom; libertarians and conservatives both admit the unwelcome reality of trade-offs; libertarians tend to lean a little more into freedom, and conservatives tend to dwell more on the unpleasanter facts of life.
Here is a sobering write-up of a study published in December by scholars at Northwestern University's Kellogg School of Management:
At the outset, the researchers observed a sharp increase in sports betting in the states where it was legalized.
'The figure goes from zero in most states to sizable amounts, and it continues to increase for several months as people learn about it,' [Kellogg professor Scott] Baker says. 'Only a year or two after it's been introduced do we see a bit of a plateau, and this is at a pretty high level in terms of money spent and people involved.'
By the end of their sample period, the researchers saw that nearly 8 percent of households were involved in gambling. These bettors spent, on average, $1,100 per year on online bets. While the amount of money people put into legal sports gambling rose, their net investments fell by nearly 14 percent. For every $1 a household spent on betting, it put $2 fewer into investment accounts.
As bad as that sounds, the report in toto is considerably worse. For example, the researchers also found that sports gambling correlated with greater participation in other forms of gambling, especially lotteries, and that this trend is more pronounced 'among households that frequently overdraw their bank accounts,' i.e., poor people and those living on the financial edge.
There is an open question of real relevance to policymakers in this: whether sports gambling is a cause of other reckless economic behavior or is a symptom of more general economic recklessness, especially among those already under economic stress. Economic pressure moves some people in the direction of conservation (cutting spending, saving more, etc.) but moves others in the opposite direction as their anxiety and sense of hopelessness work together to make high-risk activities seem more attractive: Gambling is fundamentally a form of entertainment based on wishful thinking about the likelihood of a big payoff—the economic version of George Orwell's man who 'may take to drink because he feels himself a failure but then fail all the more completely because he drinks.'
The cause/symptom distinction is relevant, but the answer, whatever it is, is not dispositive: Even if increased gambling is only a secondary effect, it remains the case that, other things being equal, people in financial distress probably would be better off if opportunities to increase their distress were less readily available.
A few regular readers will be thinking: 'Wait—this from the guy who supports legalizing heroin?'
The thing about the prohibitionist argument is, it isn't always completely wrong. Alcohol consumption really did go down in the early years of Prohibition—it was a bad policy, but it did not fail on every front. And the benefits to be had from libertarian reform often turn out to be more modest in practice than what had been hoped for. For example: The presence of legal prostitution in some parts of Nevada has done little or nothing to alleviate the problems associated with street-level prostitution in Las Vegas and elsewhere and may have made it worse in some ways, with poorly informed visitors to Sin City believing that prostitution is legal there, which it isn't. Experiments with de facto legalization of some 'hard' drugs, and the more general liberalization of marijuana laws, has not eliminated the black market for drugs and thus defunded the cartels, while drug use generally has increased where drugs are legal. And now gambling legalization has led to more gambling and arguably to more destructive and addictive forms of gambling via app.
You can make a good libertarian case that some of these intractable problems above point to reforms that were insufficiently libertarian: There is not very much legal prostitution in Nevada, and what there is remains relatively difficult to access and much more expensive than illegal prostitution—a couple of high-priced brothels an hour's drive from the Strip were never going to eliminate prostitution on the street of Las Vegas or in casino bars; black markets in marijuana and other drugs endure because prohibition of marijuana and other drugs endures, and this has effects even on legal production as marijuana cultivated for use in the liberal states is diverted to the black market in the prohibition states. ('What's the matter with Kansas?' indeed.) But if your best argument amounts to, 'The ideal hypothetical version of my policy is preferable to the non-ideal real-world version of your policy,' then you haven't made a very good case for your policy.
And clear-eyed libertarian critics might have a few important things to say about legal gambling, too: that lotteries are state monopolies and that the casino industry is a series of regional state-organized cartels, that neither really is an example of free enterprise in action, and that, as with drinking alcohol, only a minority of gamblers develop problem habits.
It is difficult to make a cost-benefit analysis here, because the benefits are almost entirely a matter of taste: Walking through an Atlantic City casino, I myself do not see anything that seems worth preserving—but, then, we have free markets, and more general liberty, precisely because different people have different values, interests, and priorities.
(Given the advertising footprint of the sports-betting industry, you can bet that bro media would push back hard against any attempt at limitation.)
Still, my thoughts linger on that money being diverted from retirement savings to be pissed away on sports gambling. The Kellogg authors offer the possibility that this is only partly a problem with sports gambling per se and that the pathology is made much worse, as so many things are in our time, by its having migrated to the lonely world of the smartphone, where you can make a spur-of-the-moment bet on a sleepless night at 3 a.m., perhaps after a few drinks. They suggest that the situation might be improved by restricting sports gambling to on-premises wagers in gambling parlors. But if you ever have visited any of those ghastly little mini-casinos that have popped up in converted convenience stores and gas stations around the country – or most of the big gambling palaces, for that matter – then you may come to assume that location constraints are unlikely to produce substantial results. Gambling is an ugly business, morally and aesthetically, almost everywhere it exists. Even the world's most famous baccarat enthusiast knows that.
But you know what I'm still thinking about: $2 in vanished retirement savings for every $1 gambled. That's not the kind of return a reformer would hope for.