Sports gambling’s rapid takeover of the professional sports industry is arguably the most important development of our time in the world of athletics. The introduction of legal betting has created a powerful new source of temptation with corrosive effects on fans, players, owners, and ultimately the games themselves. Sports journalist Danny Funt joins Edge of Sports to discuss the phenomenon and his upcoming book on the subject.

Studio Production: David Hebden
Post-Production: Taylor Hebden
Audio Post-Production: David Hebden
Opening Sequence: Cameron Granadino
Music by: Eze Jackson & Carlos Guillen

Transcript

The following is a rushed transcript and may contain errors. A proofread version will be made available as soon as possible.

Dave Zirin:

Welcome to Edge of Sports, the TV show only on the Real News Network, I’m Dave Zirin. We are going to speak right now to Danny Funt. Danny is a Washington Post contributor who covers the explosion of legal sports betting in the United States, and his book on that subject will be published next year. Let’s talk to him now.

Danny, thank you so much for joining us.

Daniel Funt:

My pleasure, thanks for having me.

Dave Zirin:

So I want to just lay the groundwork, the lay of the land for folks who are just waking up to this. How big a part of the economy of sports is legal gambling right now, and where are the trend lines pointing?

Daniel Funt:

Yeah, I’d say it’s transforming every aspect of the business of sports, the fan experience, certainly the laws that affect sports and those aspects. Yeah, it’s a game changer. 38 states and DC have legalized sports betting, several more expected to in the near future. And from teams to commissioners to certainly the NCAA, everyone is trying to cash in on that legalization, making some suspect choices in the process. And yeah, I mean they’re sort of facing the consequences as we’ve seen in some pretty shocking headlines recently, but it’s only going to continue. I still think we’re in the early innings of this sports betting experiment in the US.

Dave Zirin:

So you’re saying that the recent headlines, you’re talking about some of the betting scandals involving athletes, as well as some of the statements of coaches and players who talk about being heckled or even being threatened because of fans not making their gambling quotas. Is that what you’re referring to?

Daniel Funt:

Yeah, exactly. It was funny, March Madness is one of the biggest betting periods of the year, certainly a time when the sportsbooks want to get positive coverage and attract as many new customers as they can, and yet there was just an onslaught of grim news from the Shohei Otani betting scandal. An NBA bench player who got caught up it looks like, with some, basically a version of point shaving involving his prop bets to the head coach of the Cleveland Cavaliers, saying he gets menacing voicemails from people when the Cavs cost bettors money. The list goes on, it was a rough month for betting advocates.

Dave Zirin:

Yes, so is a reckoning inevitable if these stories keep continuing, of players finding themselves with spare time, their phones, disposable income, and wanting to make bets? I mean, it’s such a perfect stew for more scandal, but. And what would a reckoning look like and is it just too much money for the leagues to even want to have a reckoning for the effects of gambling?

Daniel Funt:

That’s such a pressing question. I don’t know exactly. I think I’m skeptical that leagues would actually, that have recently legalized betting would go so far as to outlaw it. I think they might rein in the sorts of things you can bet on. One of the things that leads to all sorts of suspicious betting is that obviously you can bet on much, much more than just who’s going to win nowadays. You can bet on basically every facet of the game, down to how a certain play is going to play out. So, I think things like that could face stiffer regulations. The ways you can bet on college sports already are being reined in. But yeah, I think the leagues have placed their bet, lawmakers have placed their bet and they’re having to live with it, and I don’t know what level of addiction or what level of corruption would have to go down for them really to pull back in a meaningful way, but they’re being tested recently.

Dave Zirin:

You mentioned addiction, gambling addiction. What are we seeing on that front in the United States especially, obviously since the legalization?

Daniel Funt:

Pre-legalization, the number that was floated was that roughly 1% of the population is susceptible to gambling addiction. Post legalization, now that basically every smartphone is a casino, those rates could be as high as 4% I’m told, which is really a staggering number. You think about it like in a full NFL stadium, maybe 3,000 people could be suffering from gambling addiction. It’s kind of incomprehensible.

I think beyond that, it’s important to recognize there’s a clinically diagnosed gambling addiction that needs a medical intervention, but then there’s all sorts of problem behavior. Just like with drinking, alcoholism is one thing, but people might drink more than they ought to, along that spectrum, and the same thing is proven true with gambling. And it’s so important to note with that, that it’s not just, can I gamble or can I not gamble? It’s the ways you can gamble, and some of the most profitable types of betting, some of the most popular types of betting are some of the most addictive, and that’s certainly driving addiction rates across the country.

Dave Zirin:

I’m speaking just anecdotally, but my son who’s in high school has come home and told me about kids placing bets with other kids because they got their parents FanDuel accounts and my son said, “Dad, we’re creating a new generation of bookies out of our high schools.” Is that just my son’s massive public school experience or are we seeing about youth gambling addictions?

Daniel Funt:

No, I don’t think that’s a one-off. How old’s your son, by the way? I’m curious.

Dave Zirin:

Actually, he’s 15, he turns 16 tomorrow.

Daniel Funt:

Yeah, that’s a classic time of life to start playing around with this. No, I think an irony of legalization is it’s shown a lot of people, a lot of entrepreneurs, hey, bookmaking is a winning business, maybe I should get involved in that. I live near Colorado State University, I was just talking with a student there who said the legal betting age is 21, by 19, as soon as he got to college, he was betting through offshore sportsbooks that are unregulated and through some campus bookies who, just like your son’s classmates, got inspired by all the betting around them and said, hey, this is an easy way to make a buck.

No, I think the argument for legalization was we’ve got this robust black market, let’s bring it into the sunlight just as the same way that happened with cannabis and regulate it, tax it, implement some consumer protections. In reality, yes, some of that has happened, but it’s also caused the black market to surge for a number of reasons with adults and certainly with young people.

Young people, I don’t know exactly what age, definitely are more susceptible to compulsive betting, which is obviously dicey because they probably have a lot less disposable income, but it’s a reason why advertising that targets college students. You can understand why they’re attractive new customers, but that’s some of the most controversial types of marketing. And some of the partnerships that sportsbooks struck up in recent years literally with universities, in some of those cases got shut down pretty quickly just because that seemed like a line too far, even for gambling advocates.

Dave Zirin:

Do the legal gambling concerns, the FanDuels, etc, do they give a damn about these issues of addiction? You see they do the 1-800-GAMBLER at the end of their ads, or is this just window dressing, like the equivalent of a cigarette company saying, oh, by the way, you can get lung cancer?

Daniel Funt:

Yeah, so true. I mean, I think whether they give a damn or not, meaningful change can’t come from sportsbook self-policing. Just a week ago I talked to a guy who was one of the top officials at one of those kind of second tier sportsbooks, and he was saying the incentives just aren’t there to crack down internally on problem gambling. Those are literally your best customers, those are your whales who you’re showering with promotions and egging on with these kind of concierge services to keep those people betting. So their rationale is well, they’re our best customers, if we boot them, they’re just going to go to our competitors, we’re going to lose market share. They’re going to find a way to keep betting. So it’s not really in our best interest to do anything meaningful about that, which is why this person and a number of people across the industry are saying regulators need to impose much, much stiffer fines when sportsbooks are caught recruiting or egging on problem betters.

And there’s also ways beyond that, just really simple fixes, short of banning gambling that would make a difference. One of the tenants of responsible betting is don’t chase your losses. Chasing your losses is like pregame, I bet on the Denver Nuggets to win. They’re down at the first quarter, I place another bet, they’re losing at halftime even more. I place a third bet. You can trick yourself into thinking, well, the odds have gotten better, so if they make a miraculous comeback, I’ll make a fortune. Obviously, more often than not, that doesn’t play out, classic way to bet over your head. So if a tenant of responsible betting is don’t chase your losses, perhaps sportsbooks could just not take those bets past a point. If I keep depositing money in my account during a game and upping my bets, they could just cut you off and say, you need to cool down period. Things like that seem to me like a lot more practical, incremental changes that definitely would make a difference.

Dave Zirin:

Let’s talk about the European experience with legalized sportsbook betting, its effect on soccer. Does that have anything to teach us about how bad this could get or where this could go?

Daniel Funt:

Yeah, I think absolutely. The UK betting market is about a decade ahead of the US, as far as legalizing online betting. If you just walk around London, the betting shops are all over town. It’s those people over there are numbed to that culture. But as far as seeing where they are as foreshadowing where the US could be, there’s definitely been an awakening that, not that they’re going to ban betting anytime soon, but the public health consequences that come with it. I wrote it down anticipating that question.

There was a study last year that found that what they called gambling related harms cost the UK $2.3 billion annually. So that’s a case where sure, they maybe get tax revenue. Sure, it might create jobs, but the harms are clearly outweighing the gains, at least according to this study. And you’ve got similar studies in the US showing that the economic price of… The economic activity goes down in states that have vibrant legal betting markets, even if they’re bringing in certain amount of gambling tax revenue. Again, the scales are imbalanced. Beyond that, gambling addiction, there is just a fact of life and it’s ubiquitous if you go to a soccer match just like it’s becoming at all sorts of American sports. So yeah, a lot of warning signs of where the US market could be headed.

Dave Zirin:

Now, I haven’t been surprised to see the explosion of sports gambling. I haven’t been surprised to see the rise in addiction rates. I’ll tell you what has surprised me, is seeing how this has been embraced by members of the sports media. What are the implications of seeing so many established, grade A, trusted members of the sports media embracing this, giving odds during games, and becoming spokespeople for sports betting? That has surprised me. What are the implications of that, in your mind?

Daniel Funt:

I think it’s definitely normalized sports betting and made it seem acceptable to the mainstream. You could argue, in a lot of different things whether media is just a reflection like a mirror of society or whether it’s influencing society. I think there’s no doubt that there’s certainly been an influence in making sports betting just ubiquitous and intertwined with the fan experience.

One of the first articles I wrote on this topic was for the Columbia Journalism Review, looking at that question. What caught my interest actually was the ethical question of whether sports reporters should be betting on games. It seemed like a ripe opportunity for gambling’s version of insider trading, and I think some of that is definitely taking place. But just as far as media companies embracing gambling, there’s a lot of factors that made this the perfect time for sports betting to explode in the US. Definitely one of them is how so many sports outlets are in peril and facing brutal financial times.

I know you looked at Sports Illustrated recently in one of your recent episodes, they tried to latch on to this bandwagon licensing their name to a sportsbook in Colorado here and a few other states, that clearly didn’t write the ship. But yeah, from the biggest personalities in sports to the biggest names in sports, ESPN I think is a huge example, recently licensing their name to a sportsbook, and now you go on ESPN’s website, you turn on a game, you’re inundated with appeals to bet on ESPN BET.

I actually just spoke with a very knowledgeable sports better who worked as the oddsmaker as well. He was saying similar to you, that his eight-year-old son was seeing so many ESPN BET ads. This guy felt obligated to teach his son like the basics of probabilities, why betting is a losing venture for customers. It’s surreal to think that a parent would feel a responsibility to coach their eight-year-old on that as they might responsible drinking or the dangers of smoking, but that’s just the world we live in.

Dave Zirin:

So if you were in charge of the sports world, how would you handle all of this? Is the wine simply out of the bottle and it’s just about managing the crisis? Is it possible to still ban this and get it out of sports? Where are we right now, and if you did have that kind of power, what could be done?

Daniel Funt:

As I said earlier, I’m skeptical, just practically speaking, that any states are going to outlaw sports betting that have legalized it anytime soon. I think definitely when states go online and are a little late to the party like Ohio and Massachusetts in the last year or so, in North Carolina in recent months, they’re imposing much stricter regulations than some of the early states, just seeing bad examples of things that could easily have been avoided. So risk-free promotions were a reason why millions of people I think took up sports betting thinking, oh, this is literally free money, I can’t lose. You certainly could lose your money. You could also get hooked on gambling from a false sense of how easy it could be. Those have been stamped out. I think more promotions are basically fraudulent still and deceptive, and those could be policed more aggressively.

I think a fairly straightforward fix that if I was this sports betting czar I would see to is, in a lot of states, I think the regulatory apparatus just doesn’t cut it. Sometimes the state lottery is in charge of overseeing sports betting. Now, obviously the lottery is in the business of raising money for the states. What sort of incentive do they have to crack down on sportsbook operators that are bringing in betting revenue? Even more questionable I’d say, is when the lottery is in charge of running the sportsbook. In that case, you’ve got someone who’s functioning as an operator and a regulator. It’s no surprise that there are plenty of examples of them not self-policing very effectively.

So I think state by state, if you had a truly independent commission that was charged with overseeing sportsbooks, it would be a little bit of a fair fight. So often when customers say, hey, this is deceptive, hey, I’ve been screwed over by a sportsbook. The deck is stacked so much in favor of the operators of these companies. Those sorts of complaints, even when I think they’ve been wronged pretty egregiously, just go nowhere. So I think if you had a really aggressive independent regulator state by state, that would make a big difference, and there’s very few examples of that currently.

Dave Zirin:

I want to paint a picture for you and I want you to tell me if I’m being a Cassandra.

Daniel Funt:

Okay.

Dave Zirin:

Or, if this is in the land of the possible, Chicken Little, if you will. Is there a future where sports gambling becomes so hegemonic to the fan experience that people start keeping their kids away, they don’t think it’s necessarily appropriate. The audience for sports thins, the profit margins do not. People start thinking the fix might be in, so they start drifting away. And at the end of the day, gambling which has been so profitable as a revenue stream, actually hollows out sports as we know it. Is that in the land of the possible, like an actual darn near destruction of this incredibly vast athletic industrial complex?

Daniel Funt:

Man, that really got my wheels turning. I hadn’t thought of that, and yeah, it seems feasible. The leagues are certainly betting against it. You brought up the integrity of the game like, do we think matches are fixed? There was always some of that, but it’s just gone through the roofs post legalization. Even players like Rudy Gobert on the Minnesota Timberwolves, made this money, just got a referee recently and got a $100,000 fine for it. The obvious insinuation is he’s saying the ref is on the take. Maybe he’s looking out for a bet by swelling with his whistle or something. The confidence in the integrity of the games has definitely taken a hit, and yet the leagues aren’t spooked enough by that to really do anything about it. So that’s something that I’m really interested in.

As far as people saying, let me keep my kids away from sports. I just find American sports are so deeply rooted. I don’t know. I mean, maybe parents don’t take their kids to the racetracks because they don’t want them to start betting on horses. That might be a precedent worth looking at. But as far as football, basketball, golf, baseball, major sports that are the first things we talk about when we meet people, I don’t know, that feels a little out there, but I’ll definitely keep an eye on it.

Dave Zirin:

Hey, horse racing and boxing were once two of the most popular sports in the United States, so just because something is doesn’t mean it will always be. I can’t let you go without mentioning that you’re doing a book and I was hoping you could tell us something about the book. What about sports gambling are you set to explore? What’s your thesis? What are you going for with this book?

Daniel Funt:

Thank you for asking. I would say what I’m going for is I want to rewind a bit because I feel like just as a sports fan myself, as someone who follows politics pretty closely, it felt like the Supreme Court opened the door for states to start legalizing, and then seemingly overnight it was just, okay, New Jersey, Delaware. Soon after that, New York, Illinois, we’re up to 38 states counting Nevada that have legalized, as I said, more are going to do so. You don’t hear a robust public debate about that. It seems like, okay, this is a money making opportunity for states, we used to be adamantly against it, but now other states are doing it so we got to get on board. The leagues used to speak about sports betting literally as an evil that was poisonous to sports. Now, they’re sports betting’s biggest backers, again, seemingly overnight.

So with the book, I definitely want to force us to have a serious conversation about these pros and cons, whether, as we’ve talked about today, the harms outweigh the positives. I also want to pull back the curtain a bit on what goes on inside of sportsbooks. We see ads for FanDuel and DraftKings and the Caesars, pretty much everywhere. I don’t think a lot of us know exactly how those companies operate, how they think, how think about betters, what their motivations are, and I’m going to definitely get inside of those companies and give a close up look at how they approach this game and trying to anticipate where this is all going. As we’ve talked about looking at Europe, even just looking at states that are a couple of years ahead of some of the others and the second guessing they’re having about what they’ve signed up for.

So it’s a bit retrospective. It’s a bit of making sense of this chaotic world we’re living in and looking forward and seeing, as I said, we’re in the early innings. Is this going to be something that the powers that be are going to wish they hadn’t signed up for?

Dave Zirin:

Wow, it sounds like a book we desperately need. Will you come back when it drops? Come back on the show?

Daniel Funt:

I’d love to, yeah, I’ll be in touch. I won’t forget it. Can’t wait to do that.

Dave Zirin:

Awesome. Danny Funt, thank you so much for joining us here on Edge of Sports.

Daniel Funt:

Thank you, take care.