The Gambling Business
There’s a growing sense of unease among fans about the role gambling is coming to play in the sports business. The recent reports that Adam Schefter, probably the most prominent NFL reporter in the country, is invested in a gambling app set off the latest round of agita, in part because Schefter’s employer, ESPN, is owned by Disney, and some thought the family-focused company might resist the trend towards gambling investments. But ever since a 2018 Supreme Court decision allowed states to permit sports betting, the writing has seemingly been on the wall.
I must admit that at first I was confused by all the hand-wringing about this inevitability. Gambling prohibitions always seemed anachronistic to me. There is little stigma around sports betting, and the rules against it seemed like ways to prop up forms of gambling that the government was more invested in, like state lotteries or casinos where the government gets a cut of the rake. There are obviously concerns about gambling addiction, but to invoke addiction as a reason to keep things banned always struck me as the kind of moralistic, reactionary logic that keeps drugs illegal and fuels mass incarceration.
But what I was slow to realize is how gambling would take over sports. Indeed, it now feels as if it is only a matter of time before the sports business becomes the gambling business.
For roughly its first century, the modern American sports business was really a live events business. People earned money by selling a lot of tickets to see people play baseball, or football, or box, etc. I suppose this is obvious, but the extent of it is often underappreciated. When the NBA was first founded, it limited ownership by rule to the owners of indoor arenas. Basketball was just something to do in the arenas when the circus wasn’t in town.
Then, starting with the rise of cable television in the 1980s, sports became a broadcasting business. Television money flowed into all sports, creating huge salary booms, pressure to expand the leagues, and opening American sports up to foreign markets in a way they never really had been before. This changed the leagues in a lot of ways—more time had to be made for commercials, tickets got more expensive, and stadiums nicer as live viewing became more of a luxury good, etc.—but fundamentally, the profit motive directed leagues in a familiar direction: Make the game as popular as possible, so that as many fans want to watch it, either in person or on TV.
But as the TV business changes, with cord-cutting and new competition from streaming services, it’s not clear if leagues can continue to count on this money. And so the gambling business seems like a lifeline. All major American sports leagues now have huge contracts with gambling companies like DraftKings and Bally’s. For now those deals are simply one of many revenue streams, but there is a real sense that they are the future. And if so, that will fundamentally change the sports business.
Rather than trying to get as many people to watch sports as possible, leagues will shift to trying to extract as much money as possible from the people most willing to wager on games, the way casinos cater to the most hardcore gamblers. The most obvious effect will be to nudge more and more people into gambling addiction, which seems to increase wherever gambling is legalized. But there will be other changes that prioritize the experience of the most obsessive fans over newer or more passive fans.
There is really no need to speculate because we have precedent for this. In an episode of the Lefty Specialists last month, James and I discussed the comparison people often make between football and boxing/horse racing. The idea is that the brutality and obvious immorality of the latter sports doomed them, and so there is precedent for such things dooming football. But as I said then, boxing and horse racing both still exist, and both still make a lot of money. The reason people think they were “doomed” is that they did lose their cultural status. There is far less coverage of those sports in mainstream media, and your average sports fan likely only pays attention during high-profile events like the Kentucky Derby or much-anticipated fights.
But this has far more to do with them becoming Gambling Sports, as opposed to TV Sports, than any moral objection from fans. Gambling Sports generally become insular and corrupt, as they cater to superfans who trade on inside information and have big sums of money invested in the outcomes. This may be the future of all American sports, which would turn off a lot of non-gamblers.
What’s frustrating is that all of this seems to be happening by accident. Fans don’t really want it, players don’t really want it, and even the teams don’t really want it—the leagues all fought the suits to legalize gambling. But in America, we are all powerless to the demands of capital and one Supreme Court decision…