The Problem With Sports Gambling
Timestamps are as accurate as they can be but may be slightly off. We encourage you to listen to the full context.
Podcast Summary
This episode features Derek Thompson in conversation with Jonathan Cohen, author of "Losing Big: America's Reckless Bet on Sports Gambling," following the FBI arrests of prominent basketball stars in a gambling scandal. (01:42) The discussion explores how professional sports leagues went from viewing gambling as a threat to embracing it as a revenue stream, culminating in the current state where sports betting has become deeply embedded in American sports culture. Thompson and Cohen examine the historical context, from the 1992 Professional Amateur Sports Protection Act to the 2018 Supreme Court decision that legalized sports betting nationwide, revealing how the current regulatory framework was largely written by sportsbook lobbying teams rather than with consumer protection in mind. (43:00)
- Main themes include the evolution of sports gambling from prohibition to mainstream acceptance, the personal and societal costs of widespread gambling addiction among young men, and the need for regulatory reform that prioritizes consumer safety over revenue maximization.
Speakers
Derek Thompson
Derek Thompson is the host of Plain English and a staff writer at The Atlantic. He is known for his analysis of economics, technology, and cultural trends, with a particular focus on how new phenomena affect American society and individual behavior.
Jonathan Cohen
Jonathan Cohen is the author of "Losing Big: America's Reckless Bet on Sports Gambling." He has deep expertise in gambling regulation and policy, combining historical research with on-the-ground reporting about individuals affected by sports betting. Despite his concerns about the industry, Cohen acknowledges his own participation in sports gambling and consumption of gambling-related media.
Key Takeaways
Sports Gambling Laws Were Written by Industry Lobbyists, Not Consumer Advocates
The current regulatory framework for sports betting was largely crafted by gambling company lobbying teams rather than lawmakers focused on consumer protection. (31:00) Cohen's research into Colorado's legalization reveals that state legislators, who don't think about sports gambling daily, relied heavily on DraftKings and FanDuel lobbyists to write the actual legislation. These companies successfully convinced lawmakers that their approach would maximize tax revenue for states, while virtually no consideration was given to responsible gambling measures or problem gambling prevention. This resulted in a regulatory environment designed to extract maximum revenue from consumers rather than protect them from harm.
The Problem Isn't Just Addiction - It's Financial Harm to Casual Bettors
While gambling addiction gets attention, Cohen emphasizes that the broader issue affects people who wouldn't necessarily qualify as addicts but still suffer significant financial consequences. (10:46) Research from UCLA, Harvard, and USC found that states legalizing sports gambling saw substantial increases in bankruptcy rates, debt sent to collections, and auto loan delinquencies. The story of Kyle, a Denver resident who gambled $95,000 in one January while making $65,000 annually, illustrates how even casual gamblers can spiral into financial ruin through loss-chasing behavior and the frictionless nature of mobile betting apps.
Revenue Concentration Reveals Predatory Business Model
The economic structure of sports betting reveals its predatory nature: 82% of NFL betting revenue comes from just 3% of bettors. (11:29) This extreme concentration means that sportsbooks are primarily dependent on a small group of people who are likely losing far more money than they can afford. Meanwhile, 60% of NFL bettors account for just 1% of revenue, meaning most casual bettors like Thompson and Cohen contribute minimally to the industry's bottom line. This business model incentivizes companies to identify and exploit vulnerable heavy bettors rather than focus on sustainable, entertainment-based gambling.
Technology Created a Fundamentally Different Gambling Experience
Modern sports betting bears little resemblance to what advocates like NBA Commissioner Adam Silver envisioned in 2014. (29:55) Instead of the traditional Vegas-style sportsbook experience, companies pushed for and achieved a "technologically supercharged" version that allows betting on virtually anything from Malaysian badminton to the speed of individual tennis serves. This transformation was enabled by mobile technology that removes friction from the gambling experience, allowing people to bet "basically as much money as you want, as easily as you want" from their phones. The result is an environment designed to keep users engaged and betting continuously rather than placing occasional wagers on games they care about.
Sports Leagues Transformed from Opponents to Partners for Financial Reasons
The dramatic shift in sports leagues' gambling stance was driven by cord-cutting concerns and new revenue opportunities. (27:31) Thompson's analogy comparing the leagues' evolution to the Roman Empire embracing the Goths captures this transformation perfectly - what was once seen as a threat became a valuable ally. The leagues now profit through three channels: advertising revenue (equivalent to adding 2-3 extra NFL teams), increased viewership from engaged bettors, and data sales to sportsbooks. This financial integration makes it nearly impossible for leagues to advocate for consumer protection measures that might reduce gambling volume and threaten their new revenue streams.
Statistics & Facts
- Half of men between the ages of 18 and 49 have a sports betting account, while nearly one in five men aged 18 to 24 in New Jersey is on the spectrum of having a gambling problem. (11:26)
- 82% of revenue from NFL betting comes from just 3% of bettors, while 60% of NFL gamblers account for only 1% of sportsbook revenue. (11:29) This extreme concentration reveals the industry's dependence on problem gamblers.
- States that legalized sports gambling after the 2018 Supreme Court decision saw substantial increases in bankruptcy rates, debt sent to collections, use of debt consolidation loans, and auto loan delinquencies according to research from economists at UCLA, Harvard, and USC. (03:33)
