The esteemed Wall Street Journal has made its bones helping consumers the world over make sound – and legal — financial investments since 1889. Their latest “hot tip” — underground sports betting?!
Sort of. Earlier this week, the WSJ laid out a case for the survival of your local neighborhood bookie – and to an extent, offshore sportsbooks – in the face of the growing threat of legalized sports betting.
Avoid taxes! Hide potential winnings from your spouse’s divorce attorney! Bet on credit when you’re broke! Come one, come all!
Underground betting will feel the pain, over time
Yes, a bit facetious, but you get the picture. The position of some interviewed for the WSJ’s piece is that all the above factors will continue steering a fair number of bettors in states with legal options toward the black market.
Granted, local bookmakers are still going to see a share of action. After all, there’s a certain “legacy” component to their business. Consider the sheer number of decades that sports betting has been illegal virtually everywhere — these guys and gals often have an entrenched and loyal base.
Offshore books are a more recent phenomenon, of course. However, they’ve increasingly gained their own foothold within the betting market. There’s no denying the convenience of placing a wager from your office, the john or anywhere in between through a couple of clicks.
Let’s pump the brakes on the black market avoiding a decline, however. Sure, the molasses-like pace of legislation across the country is going to buy them plenty of time. It’s going to be years before a majority of the 50 states have legalized single-game betting.
Yet the drain on business as lawmakers progressively push legislation through will be real.
Legal sportsbooks have certain unique advantages
Yes, the anonymity of underground methods will continue reeling a certain percentage in. But legal sportsbooks offer their own set of advantages:
- Sportsbooks are attached to other amenities – casinos and racetracks – that serve as a draw and make placing a sports wager a multi-faceted experience. Additionally, sportsbooks offer an invigorating environment within which to sweat things out when one has skin in the game(s).
- Out-of-state visitors are exponentially likelier to head to a legal sportsbook. Not only won’t they be familiar with a local bookie, but they’re naturally looking for a trusted, regulated source.
- It’s safe to say that legalization will breed a certain and steady number of first-time/novice bettors. These consumers are also usually looking for a trusted source and peace of mind. Plus, they wouldn’t have a history with a bookie or offshore operator.
- Speaking of illegal online betting options, healthy skepticism still abounds regarding many of them. The WSJ’s piece even includes a hair-raising, albeit anecdotal tale of a bettor who was allegedly bilked out of thousands in winnings by Bovada, long thought to be among the most trusted online betting sources.
- And simply put, when it comes to money, especially large sums, security overrides almost everything for most.
Overzealous taxation could indirectly make legal options less desirable
However, there is one X-factor that legislators around the country would be wise to be conscientious of — the unintended but inevitable consequences of onerous tax rates and integrity/royalty fees.
It’s well established that among real-money gaming, sports betting isn’t exactly at the top of the heap when it comes to margins. Nevada sportsbooks retain only about five percent of total money wagered on average.
The fear that bookies and overseas sites could offer bettors more attractive lines and odds isn’t misplaced; legal sportsbooks would in fact be forced to offset excessive overhead over the long term by extracting more profit from the consumer.
Therefore, a tempered approach to taxation will be to the benefit of all parties. The states will naturally realize more tax revenue from sportsbooks the more customers patronize them. Bettors will flock to legal means more often than not if they have the incentive to. However, wonky lines will repel a certain number over time, likely driving them back into the waiting arms of those underground operators.
Because whether it’s Mickey the Collector or a sportsbook’s inflated money line, no bettor likes getting squeezed.