Breaking the State’s Sports-Betting Addiction

There is plenty of debate about the economic state of America’s working class among conservatives. And political polarization in America seems to have progressed to the point where the Left and the Right can’t seem to agree on the color of the sky, let alone public policy. 

But there is one item that should unite working-class conservatives, classical liberals, and yes, even the progressive Left. That item is reducing the tax on the working poor, or, as it’s otherwise known, sports betting. 

Some might balk at describing it that way, but evidence from Canada and around the world suggests that the proliferation of state-sponsored and -abetted betting, particularly sports betting, has not just ruined the experience of watching Monday Night Football, but lives, families, and economic prospects. 

In Canada, the Cardus Institute studied government statistics on gambling and found that “Ontario’s (Canada’s largest province) lowest income households are spending more than 4.5 percent of their income on gambling.” The wealthiest, on the other hand, spent just over 1%, meaning that the revenue received by the government from gambling (in Ontario, as in many American states, revenue from gambling is taxed by, or simply funneled into the consolidated revenue funds of, the government) runs directly contrary to the progressive nature of our tax code. In other words, “gambling disproportionately burdens the poor, a finding that not only is consistent across provinces in SHS data, but has been repeatedly borne out by other research as well.” The fact that a large portion of all betting revenue (15-30%, the report found) comes from addicted gamblers suggests that not only is there a perverse incentive for governments to encourage gambling, but that the results of this policy are, well, perverse. 

And that research was done prior to the introduction of legalized sports betting. Our research on sports betting, conducted after sports betting was legalized in Canada, is even more alarming, finding that the “average spending per player account in Ontario is currently $283/month (amount gambled, minus any winnings), which is 3.2 percent of the average monthly household income.” For context, this is about 83% of what the average Canadian spends on their vehicles, and more than they spend on fuel for those vehicles. It’s substantial. 

Given that in-game sports betting mimics the most addictive forms of gambling (slots machines and other electronic games), and given that studies of addiction suggest that spending over 1% of one’s income on gambling leads to an increase of the harms accompanying addiction (substance abuse, marital break up, domestic abuse, self-harm, depression etc.), we should be asking some hard questions about why the state supports and, in some cases, actively promotes, sports betting. 

And this evidence is not just to be found in Canada. American studies have shown that the introduction of sports betting has “significantly reduced savings in financially constrained households,” and led to increased debt. A Brazilian study notes that “20% of the money the government handed out for its flagship social program in August was spent on online gambling sites” again showing that the poor are turning to gambling as a means of getting ahead, and then finding themselves further behind. Another, very robust, American paper notes: 

Overall consumers’ financial health is modestly deteriorating as the average credit score in states that legalize sports gambling decreases by roughly 0.3%. The decline in credit score is associated with changes in indicators of excessive debt. We find a substantial increase in average bankruptcy rates, debt sent to collections, use of debt consolidation loans, and auto loan delinquencies. We also find that financial institutions respond to the reduced creditworthiness of consumers by restricting access to credit.  

What’s critical to note here is the despairing nature of sports betting. Low-income citizens who might otherwise save, or use their modest savings to try to get ahead, are turning to sports betting for the big win, but instead of rolling in the dough, are being rolled into addiction and greater economic hardship. 

Given the known dangers of sports betting, why isn’t there a political movement afoot to address it? 

First, it’s important to note that, in many countries across the Anglosphere, limits on sports betting are present, and indeed, quite recent. As Cardus noted in recent contributions to Canada’s attempts to limit the damage done by sports betting, the U.K. limits advertising on betting during sporting events, and Australia outright bans in-game bets. We have called for sports betting advertising, which viewers are subjected to an average of 2.8 times per minute of a live sports broadcast, to be treated the same way as ads for tobacco. While these are modest limits, they represent real inroads to address an issue that has a disproportionate negative effect on the working class. 

But what might an anti-addiction, sports-betting-limiting, political coalition look like, particularly in the United States, where it has become so common? Ezra Klein of the New York Times noted recently that, “online gambling is going to be a fascinating dividing line between the NatCon coalition that sees itself as restoring virtue and the Barstool Conservative side. The evidence is overwhelming that a lot of people are getting hurt, and not just here.”

While there might be a dividing line between Barstool Conservatives and these “New Right” conservatives on this matter, a review of the commitments of the broader groups in America’s political spectrum suggests the weight of support leans toward the long-term limiting of sports betting. 

From a principled point of view there is far more alignment between realignment or “New Right” conservatives, common-good conservatives, and old-fashioned classical liberals on this issue than one might expect. Combine that with the social justice Left and old-fashioned Democrats like Paul Tonko (who has introduced a bill on this exact issue), and it would seem that the preponderance of weight within the American political system leans toward limiting the harms of sports betting in some way, though the nature of those limits will need to be settled. Cardus’ work, for instance, has suggested reorienting state backed gambling to function as a type of prize-linked savings vehicle, but there are other options available. 

Realignment-focused conservatives rightly see gambling and the policy structures which support it as a net ill for the working class, and as a failure of the state and markets to focus on that which allows citizens to work, thrive, and save for their future and their children’s. Common-good conservatives, who don’t see wagers as unjust per se, rightly see it as a policy structure which encourages the vice of money lust, divorces wealth from productive activity, and which has disproportionate negative effects on the most vulnerable. Classical liberals rightly see gambling as something, which while within the bounds of free activity as an act of leisure, but which is always zero (and contrary to the productive) sum, growth-oriented, nature of a free market. The evidence shows that gambling displaces savings and investment, and moves money out of productive areas of markets into the realm of pure consumption. And those on both the Left and free-thinking Right correctly see it as a way for corporations to “zero out” the poor. 

Proponents of sports gambling point to the ubiquity of gambling as a revealed preference of the working class, and will often use this as a rationale for providing latitude to companies running gambling sites, whether in person or online. However, as scholar Matthew Crawford notes, these arguments from liberty, when examined more closely, reveal a “type of dark paternalism of behaviour design.” By this, he means that gambling firms specifically design their machines—slots in casinos, or online games and their algorithms, and indeed even in-game parlays to overcome the will of the user. And, as a recent interview between Nate Silver and Tyler Cowen noted, the firms will deliberately throttle players who understand the algorithms and use them to their advantage. The house—online, as in person—is designed for the player to lose.   

This creates tremendous potential for a broad-based, multi-party approach to limiting sports gambling—and perhaps gambling writ large—in American public life. 

The question, then, is whether or not such a coalition can be motivated to make it a priority. And a priority it will have to be, as there are significant, well-funded interests which will fight hard to maintain an open field for gambling companies to tax the poor with impunity. 

Is it likely? The fact that the executive branch of the federal government is held by a casino developer would suggest that the odds are low. But hey, this is America circa 2024. Stranger things have happened.