On Sports Gambling, ‘Are We Just Going to Let Companies Write the Rule Book?’CounterSpin interview with Amos Barshad on legalized sports betting

Janine Jackson interviewed the Lever’s Amos Barshad  about legalized sports betting for the November 22, 2024, episode of CounterSpin. This is a lightly edited transcript.

Janine Jackson: Among other happenings on November 5, Missouri narrowly passed a ballot measure that will legalize sports gambling in the state. Like similar measures in other states, Amendment Two came with a lot of promises and perhaps not-deep-enough questions, as our guest explored in a timely report.

Journalist Amos Barshad is senior enterprise reporter for the Lever, online at LeverNews.com, and author of the book No One Man Should Have All That Power: How Rasputins Manipulate the World, from Abrams Press. He joins us now by phone from here in New York City. Welcome to CounterSpin, Amos Barshad.

Missouri Independent (10/29/24)

Amos Barshad: Thank you so much for having me.

JJ: So “ballot measure” sounds very bottom-up, but Amendment Two did not arise, as it were, organically from the community. Who did you find to be the driving forces behind it?

AB: Yeah, we found that backers of the ballot measure were the two big sports gambling companies, FanDuel and DraftKings, which are national corporations that probably a lot of people are familiar with through their advertising. And they allied with the professional sports teams in Missouri; there’s six of them. And everyone got together to push forward this ballot measure. I don’t know what the final number was; at least something like $36 million was spent backing this ballot measure.

JJ: We should take a minute to note that there’s a relevant Supreme Court ruling from 2018 that opened the floodgates to states doing this legalizing of sports gambling, right? Essentially, there was a law on the books, and it got taken off.

AB: That’s right, yeah. So the 2018 Supreme Court decision opened the door for states to make their own decisions on sports gambling. And very quickly, many states legalized; so we were up to 38 as of this year before November, and then Missouri did become the 39th state.

JJ: Now, there’s a sort of a blueprint that the industry uses, and it seems to be working. There’s kind of a template that’s gone from one state to another, right? Can you talk about that?

Amos Barshad: “The industry makes these promises that they can’t keep. They’re telling you that this will solve your issues, but it’s not true.”

AB: Yeah, so what we’ve found through our reporting is that the industry often makes promises that the tax revenue from sports gambling will go to causes that most people could get behind. So in Missouri, specifically, it was education, the public school system, money for teachers, money for kids in the public school system. And that’s common, I think a lot of people would maybe know that a lot of state lotteries allocate money for education.

From there, we found that it gets a little bit more cynical, for two reasons. Specifically in Missouri, the critics, the group that was opposing this ballot measure, made the compelling argument that there isn’t that much guaranteed money going to education, that the way the rule was written both creates carve-outs for the gambling companies to actually not pay quite as much in taxes as it might seem. Plus, then from there, there’s not even a direct conduit created so the money will go to education.

Yeah, that’s kind of been, like you said, the blueprint. So we looked at other states, and it seems like, for example, in Colorado, which faces drought via climate change, the money will be earmarked to address water scarcity; Washington, DC, parents faced really high family expenses, so the promise is with funding for childcare. And it’s almost like they’re engineering the end result; they’re saying, we can fix your problem.

And in California, which voted down a legalized sports gambling ballot measure in 2022, the money would have gone to try to alleviate the homelessness crisis. But, basically, the groups opposing that were able to effectively communicate that the industry makes these promises that they can’t keep. They’re telling you that this will solve your issues, but it’s not true.

Kansas City Star (11/6/24)

JJ: And I wanted to ask you a little more about what we do know about that track record, but I just wanted to point out that in this piece in the Kansas City Star from November 6, it says:

A fiscal note attached to the measure estimated that the state revenue generated from legalized sports betting would range from nothing to $28.9 million each year. But the campaign argued those figures would be much higher.

Well, yeah, higher than nothing would be great, but, I mean, this is even, in the measure itself, it doesn’t sound like a promise.

AB: Yeah, exactly. It’s really interesting, because whatever any given voter’s personal opinion on sports gambling is, you can then go from, “OK, but we should write the legislation to ensure that the promises that are being made are being kept.”

And, basically, part of the reason why that minimum could be zero is because of this carve-out that the industry has successfully pushed for in state after state, which is that they can use their promotional spending against their tax bill, basically, which means the money that they use to lure in new gamblers. And it’s a whole big conversation about issues with sports gambling, where that, again, it gets pretty cynical, and that’s money basically spent on luring in, say, problem gamblers, people with gambling addiction issues. So they’re using that money, money that’s spent trying to hook new gamblers, and that not only maybe exacerbates the situation for any given person gambling too much, that can go into debt, create personal problems in their life, but then they get to deduct that from the tax bill. So, yeah.

JJ: So we have at least 38 sort of case studies, and it sounds as though you’ve said it, but can we say that there’s not a strong track record here in terms of sports betting filling budget holes in any meaningful way?

AB: It’s an interesting question, because, again, you can go state by state. So in the state of New York, they were able to push for a 51% tax rate, which is, as it sounds, extremely high, that’s the highest in the nation. There’s a few other states that have it at that rate as well, and they have been able to collect significant funds, and in New York state, that goes to education as well.

But it’s interesting, even there, there’s legislators that are friendly to the industry, that have tried to claw back, lower that tax rate, actually have tried to introduce that same carve-out where the gambling companies get to use the promotional spending to deduct from the tax bill.

And then in the other states, it can be 10%. I think that’s the tax rate in Missouri, a lot of the other states are set at 10%, and, yeah, it doesn’t become a significant enough source of funding to ameliorate all the issues that are then caused from legalized sports gambling. And I think the other point on that is: Education costs go up. These big issues costs go up, year after year. But is the revenue from the gambling going up year after year? It seems that that’s not necessarily the case.

JJ: You have a fact in the piece that says, “in the run up to the 2023 Super Bowl, Kansans bet $194 million, from which the state of Kansas raked in $1,134.” That is not impressive.

AB: It’s a stark figure, and that’s all about that carve-out that I mentioned. All that money, a lot of it was promotional money for their “free” app. What actually happens is, they get you onto their app; once you’re on there, it says, “Oh, you have to spend this $5 by a certain time.” So these gambling companies are extremely good at getting people onto the apps, and getting them to spend more than they necessarily intended to. And you hear, “Here’s a free $5 bet,” but from there, you have to spend a certain amount of money within a certain amount of time to cash in on the offers. So as you can see, a particularly egregious example, but you’re talking about a ton of money being spent, and the end result is not what would seem to be the correct amount of correlating tax revenue for the state.

Lever (10/24/24)

JJ: The piece starts with a photo op in which the mascots from Missouri’s professional sports teams delivered boxes of signatures in support of Amendment Two to the secretary of state’s office.

AB: [Laughs]

JJ: Very cute. What is in it for the teams? What do the teams see that made them put millions and millions of dollars into this?

AB: Historically, the professional sports teams in America were against legalized sports gambling, for probably reasons you’d expect, feeling that it would corrupt the sport in ways. We’re probably all familiar with certain scandals over the history of American professional sports in the 20th century, most famously Pete Rose, the baseball player. The idea that maybe once you legalized, you incentivize more gambling, that players would have reasons to throw games, or affect what’s happening on the field because of gambling interests.

But, basically, once the 2018 Supreme Court decision came out, once they saw just how much money was there to make, sports teams in America did a complete 180, and are all behind this.

And they’re not directly collecting money, there’s not anything written into the law where they get a certain percentage of the amount that’s gambled. But what ends up happening is, with these sports gambling companies, they have so much money to spend, and they end up spending it through the sports teams. They might set up by advertising inside the stadium, or during the broadcast of the team’s games. They might even set up booths inside the stadium, so they have to pay teams for the right to do that. The teams know that if gambling is legalized in their state, that their marketing revenue is going to go up a certain amount.

Reuters (7/3/24)

JJ: Another interesting part of this very interesting piece is FanDuel, their parent company, called Flutter, they operate in the UK, that’s where they started, but they have different rules about just the kinds of things that you’ve been talking about over there, don’t they?

AB: Yeah, and I think that’s really an important part of everything, because, again, any given person might think about sports gambling, and the legalization of it, and say: “It does exist in other states or other countries. Is it really so bad?” And I think that the counterargument would really be to look at the regulation that is happening in other countries.

Specifically in the UK, it’s actually been about 20 years since this kind of online mobile betting took off. And what critics say is that it took decades of families being ruined, individual lives being ruined through gambling debts, for really good regulation to come, in which gambling companies are legally obligated to make sure that the people betting aren’t betting beyond their means, and that they aren’t exhibiting problem gambling behaviors. And in the US, because this is relatively new, that regulation just doesn’t exist.

So you could say, OK, I believe in legalized sports gambling, I want the tax revenue to come in. But from there, you’ve got to think, what is the impact on people? What is actually going to happen next? And you can see, where sports gambling is legal, there is a spike in addiction, and issues of that nature. And so the question is, are we just going to let companies write the rule book, or is there common-sense regulation that could come in that would really save a lot of people?

Forbes (10/17/23)

JJ: I do see in the writeups from Missouri and other states, there’s kind of an offhand reference to, oh yeah, some of the revenue has to go to this fund to combat problem gambling, or something. But it is very vague.

AB: So it’s basically, anytime a state legalizes sports gambling, it will also either indicate that a certain amount of money is going to go to a preexisting state problem-gambling fund, or create a whole new one. So it’s very much, we are aware that these issues are going to come in, and we’re going to try to tackle them.

What I tried to point out in the piece is that there isn’t some sense that we’re going to prevent people from becoming addicts in the first place. We’re just going to be there to treat them after they become addicts. And I think we can see the obvious issue there, to accept the fact that harm is going to happen on a large public scale, and then say, “And then we’ll deal with it,” is not ever going to be as effective as trying to make sure that that harm doesn’t take place in the first place.

JJ: There is, as you’ve been discussing, a real incentive system to keep people betting, but right now this is still betting on actual games that actually happen. But some folks see a slippery slope. Talk about iGaming.

AB: iGaming is the industry-preferred term for any kind of casino game that we might be familiar with, probably most famously slots. And you could just basically play a digital version of that on your phone. But it just creates an endless variety of options for people to gamble on. It’s legal in some states, and the push is to continue legalizing it, and it’s basically much more lucrative because people lose more money playing it.

And the way that it’s set up, the way that certain games are created, for example, you could play multiple hands of blackjack. There’s one infamous game that you’re basically betting on watching a little cartoon rocket go up, and you’re trying to guess when the rocket will explode. So it’s almost cutesy, children’s entertainment almost, but people are spending real money and losing real money playing these games.

CNBC (9/13/24)

Again, it goes back to the idea of regulation. What are we going to allow people to bet on, as far as knowing that if they get hooked on these games, that it could damage their lives? I think with the iGaming, the way that some critics of the industry have talked about it, is that this sports gambling wave was always the prelude to this next phase, this iGaming phase. And when you think about it that way, yeah, it can feel a bit alarming that there isn’t any kind of organized pushback on a national level, because I think that’s what we’re talking about.

As we mentioned, it has passed in Missouri, and looking at the last few states left in the country, there’s good reason to think that they’ll get up to or close to having sports gambling be legal in every state in the country. You just have to wait and see. But I think the question is from there, then, that obviously indicates the need for a national response. And there are, Rep. Paul Tonko, congressman from the state of New York, he has introduced a bill called the SAFE Bet Act, and this is the first attempt to create restrictions, to create protections, to push back on gambling companies, who currently have a complete green light to do what they want.

JJ: Finally, it was a very tight race. Amendment Two passed by something like half a percentage point in Missouri, and we should understand that in the context that there were all these major sports teams, and millions and millions of dollars, supporting it. So there are a lot of people, it seems, who are concerned about this, who are pushing back on this. There’s a constituency there to stay in conversation with, it seems. I just wonder what you would like to see, along with the regulation from the state and perhaps from the federal level, what would you like to see in terms of reporting, follow-up reporting, on this incredibly impactful and interesting issue?

AB: As we talked about, all this has only been legal since 2018, so the data that has come in since then is starting to indicate the exact severity of the problem, and I think we’re just only going to see more of that. We’re going to have more hard numbers on what this is actually doing to people. There has been and continues to be great reporting on this and, yeah, definitely would just love to see more of that. We can really quantify this and say, OK, sports gambling would come in, here’s the amount of tax revenue that is created, and here’s the corresponding issues that it’s led to. And I think if you look at it in that way, here’s the black and white, and people can make informed decisions on where they stand on it, rather than, like we spoke about, being swayed by the funny mascots running around pushing it, their beloved sports teams pushing it, or being told that money is going to go to education. You can divorce yourself from the sales pitch and say, “OK, what’s the reality?” The numbers are all going to be there.

JJ: All right then; we’ve been speaking with Amos Barshad. You can find the article “The Gambling Industry’s Cynical Play for Your Vote” at LeverNews.com. Thank you so much, Amos Barshad, for joining us this week on CounterSpin.

AB: Thank you.