Why gambling rules should be national

By Felix Salmon
February 4, 2013

Jim Surowiecki’s column about sports betting has appeared at roughly the same time as two important news reports. Firstly there’s a big Lucy Kellaway piece about traders in the City of London who become addicted to sports betting, with disastrous consequences for their careers and marriages. And secondly there’s the results of a 19-month international investigation, uncovering match-fixing in a mind-boggling 680 high-level soccer matches, including World Cup and European Cup qualifiers as well as a Champions League match in the UK.

Surowiecki paints sports betting as being an issue of states’ rights: New Jersey voters have spoken, and there’s no good reason why they shouldn’t have the same rights as residents of Nevada, Delaware, Oregon, and Montana. In those states, sports betting is legal, having been grandfathered in under a 1992 federal law making it illegal in the rest of the country. Sports betting also thrives illegally, with varying degrees of local tolerance.

There’s no doubt that the current jurisprudence surrounding sports betting (or any kind of betting, for that matter) is messy. But even if the 1992 law was declared unconstitutional, that wouldn’t much clean it up. Surowiecki says that allowing sports betting in one state would have “no obvious negative effects on other states or on the national economy”, and that “gambling has typically been a state issue, not a federal one” — but I don’t think that’s true any more, and it almost certainly won’t be true in future.

While the New Jersey law only allows sports betting in Atlantic City casinos and the state’s four horse racing tracks, for instance, it also allows people to place their bets at those venues over the internet. If the law is ever declared constitutional, the chances have to be high that pretty soon everybody in the US will have access to web apps offering spread betting — the kind of highly-addictive product that got those UK traders into deep trouble, and which promised huge riches to the Asian crime syndicate in the soccer scandal. Good luck to anybody trying to keep all gambling to New Jersey residents once that happens.

I’m an occasional gambler myself, although not on sports, and I’d probably avail myself of the opportunity to indulge in some spread betting were it easily available online for things like election outcomes or Oscar winners or the chances of the eurozone breaking up. But I don’t kid myself that such activity, once legalized, can or should be confined to individual states or individual casinos within states.

All of which is to say that we should really start a grown-up discussion about gambling, whether it should be legal, and whether paternalism can or should override the freedom to indulge in such activity. We should be open about the fact that if we legalize gambling, then the incidence of harmful gambling addiction will rise, as will the incidence of people trying to game sporting matches. And we should also be open about the fact that gambling will still be a lot less societally harmful than, say, gun ownership, or cigarettes, or alcohol, and that there’s no particularly compelling reason to be so much more prohibitive on the gambling front than we are elsewhere.

But it seems to me silly, in the online era, to try to confine legal gambling to certain physical locations, be they states or casinos within states. And it also seems silly to try to confine betting to certain things (sports) and not others (like, say, the Academy awards). If you’re going to allow it, then allow it. Make sure everybody offering it is clearly regulated and taxed — at the federal level, to avoid a regulatory race to the bottom. And make a clear determination that if you’re mature enough to be allowed to buy a gun, then you should probably be allowed to be able to bet on the Super Bowl, too.

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