Last night, perfectly timed during the midst of March Madness (and for the very first time, mass adoption of March Madness betting in America), 60 Minutes asked, “Will legalized sports betting curtail corruption or encourage it?”

The feature paints the new American sports betting landscape in broad strokes. The overarching theme (in part because it’s March Madness) was, to paraphrase The Simpsons, “Won’t somebody think of the children?” Or more specifically, in this case, the college athletes.

The fix is in

The feature sets an ominous tone at the start by invoking the 100th anniversary of the Chicago Black Sox betting scandal. However, as it relates to potential corruption, most of the focus is (rightfully) around college athletics.

This is something we’ve previously written about at TheLines: Taking a more measured approach toward college sports.

The moral arbiter of the feature is Mike Hamrick, former UNLV athletic director, who now serves the same role at Marshall University. Marshall is in West Virginia, one of the legal sports betting states. Hamrick’s concerns seem mostly about protecting his athletes:

There’s people that will do what they need to do to make a buck at the expense of an 18- or 19-year-old kid.

While game fixing isn’t out of the question (particularly in a more manageable sport like college basketball, where one player can impact a game more easily than football), a less obvious area for corruption is on injury intel.

Insight into injuries provides unpaid college athletes the ability to give gamblers an edge without putting the athlete in danger of actually fixing a game itself.

Hamrick claims other athletic directors have similar concerns, which makes sense. They should. This is a hard one to control at the college level and not something that European sports can be looked to for a successful template. The best answers may be to limit what college wagering is allowed, or to cross your fingers and hope a scandal doesn’t happen early and often.

Reasons for optimism

While 60 Minutes definitely took a darker slant to the piece, there were some positives. It noted that sports betting has undergone a massive shift in perception in the US, from leagues to the public in general. As it noted, pro leagues “transitioned from defense to offense” in terms of sports betting. The MGM signed deals with MLB, NBA, and NHL and Caesars inked one with the NFL.

The show also noted that sports bettors are younger and more affluent than in the past. They’re more likely to watch sports broadcasts longer if they have action on it.

One expert, Ryan Rodenberg, a law professor at FSU, predicts, by the end of this year, 15 states will have some form of legal sports betting with another 12 having laws in the process. This would be a substantial expansion of where we are today, covering over half of the country.

As in-play betting popularity increases, so will total wagering activity. As William Hill’s Joe Asher noted, 50 percent of all betting in Europe (and specifically, betting on soccer) is live/in-play action.

As usual, leave it to the NBA’s Adam Silver to be the shining light of sports betting. Silver says legal betting “dramatically” decreases risk because we access data and technology that helps identify unusual line movement. Basically, moving this into the sunlight decreases risk. Given how the increased media coverage and awareness of sports betting is already a thing, that spotlight will only get brighter.

60 Minutes ignored a Silver staple as well: How sports leagues are pushing “integrity fees” as a means to keep everything legit.

Final takeaways

It would’ve been surprising had 60 Minutes not done a sports betting feature during March Madness. One one hand, this wasn’t so negative that it felt underwritten by Sheldon Adelson, but it was negative enough to cast some aspirations on the industry.

The focus on college sports as being corruptible isn’t outlandish. There should be concerns around college basketball for game fixing and college football for injury intelligence. You’d be naive to think otherwise.

However, to ignore that the pro sports leagues and regulated sportsbooks aren’t diligently working to ensure the integrity of their competitions does the public a disservice. Again, look at England for guidance and data points. For every Daniel Sturridge potential slip-up or fourth tier soccer league fixing scandal, there are billions in legitimate wagers every year without issue. Making mountains out of molehills may grab a few extra eyeballs for a story, but it doesn’t make the story more accurate.

The reality is, sports betting in America is a runaway train now. It’s a giant opportunity for the leagues, casinos and local governments. The positives significantly outweigh the negatives. Not recognizing that and getting on board makes you look outdated, which is precisely what a 50-plus-year-old TV news magazine is in 2019.

Neva Pryor is worried.

Pryor, the executive director of the Council on Compulsive Gambling in New Jersey, sees the wave of legal sports betting sweeping across her state. She worries about how the increased availability will affect vulnerable populations in the Garden State.

Last month, she expressed her concerns to a legislative committee:

“We know that our costs will soar, and we’re very concerned about that.”

New sports betting opportunities may mean new problems

She may be right. More availability for placing sports bets may have a noticeable effect on the humans in the area.

A recent Rutgers study identified 6.3% of survey respondents to be addicted gamblers. That figure puts the incidence of gambling disorder in New Jersey at more than twice the national average.

Nationally, most estimates place the prevalence of gambling addiction at about 3 percent of the US population. Roughly 10 million Americans report suffering from the debilitating condition.

However, those numbers represent a time prior to widespread sports betting. Those 10 million poor souls often had to traverse great distances to feed their addictions, and the sheer inconvenience likely persuaded others not to indulge.

Now, it won’t be so inconvenient. People who merely wished they could bet sports will be able to do so.

Increased availability will also mean increased advertising to vulnerable populations. At least one Australian study has found marketing to be a contributing factor to the enhancement of gambling addiction symptoms.

Sports betting doesn’t have the same societal impact as gambling

We may also see an uptick in compulsive gambling because of how Americans view sports betting. The country is in a time of tremendous social upheaval, and once-taboo elements like marijuana, tattoos, and gambling are becoming much more acceptable.

The growth of social media and reality television has shown people engaging in these behaviors without ill effects. So, gambling, once relegated to dark, smoky backrooms, is now a legitimate industry with corporate sponsors and major cable network coverage.

Worse, sports betting doesn’t even occupy the same societal space as gambling. People who would never enter a casino don’t bat an eye at throwing down a few bucks on a game.

We know that sports betting is in a different arena based upon some of the sheer numbers surrounding it. Gaming research firm Eilers and Krejcik estimates that by 2023, the US market for sports betting will be in the neighborhood of $6 billion annually.

Some of that $6 billion will certainly come from people with a problem.

Legalization doesn’t always mean an outbreak

That said, widely-legal sports betting doesn’t necessarily mean that there will be a surge of new cases. If recent experiences with legalizing marijuana are any clue, the bigger danger will be for the already addicted.

Oregon legalized recreational marijuana use in 2015. Last year, the Society for the Study of Addiction published a study of Oregon college students and their use of the drug.

The findings were somewhat surprising. Use of recreational marijuana among student did increase, but only in students that reported a tendency to binge drink.

Usage rates for other students only increased for those under 21. So, students with ready, legal access to the drug who were not already using were unlikely to do so.

The findings mirrored studies in Colorado and Washington. Those studies found that older adolescents, like high school seniors, similarly did not increase their usage after legalization.

The only populations that did see an increase were younger Washington students – those in 8th or 10th grades. Colorado did not even see a similar uptick in the younger group.

The main solution may simply be vigilance

All of that is to say that it’s not a given that there will be more gambling addicts in states that legalize sports betting. However, the depth of current addictions may increase.

As a result, government agencies and non-profit organizations need to stay on alert. Governments may also want to implement requirements for employees that work in sportsbooks.

There are already legal precedents for imposing a duty upon service providers. Thirty-eight states have “dram shop” laws that require bartenders and other bar personnel to stop serving people who are obviously drunk.

Perhaps casinos, racetracks, and sportsbooks would benefit from a similar situation. On the other hand, a gambling addict could merely move to a different location if he was denied service, and it’s not nearly as obvious as someone who is drunk.

Nevertheless, there does need to be an ongoing conversation in each state that legalizes sports betting. Otherwise, many good people may go down a very dark hole.

From outside the United States, the current scramble to produce state legislation for sports betting looks a bit like the US has just discovered VHS video recorders. The rest of the world has long since moved on.

A quick scan of legislation proposed in various states looks like it was designed for the steam age. Where are the current big regulatory issues in gambling regulation; esports, virtual sports, in-game and crypto-currencies? Conspicuous by their absence.

Esports betting is the next next thing

The most popular esports are League of Legends (LOL), CounterStrike Global Offensive (CSGO), StarCraft 2 and Overwatch although there are many others which garner a large audience.

If any US politicians have noticed the existence of Twitch, they should have picked up that on June 24, Riot Games became the first channel to pass one billion views, almost entirely for broadcasts of their esport game League of Legends.

We'd like to extend a thank you to the viewers for helping the @RiotGames @Twitch Channel be the first one to surpass 1 billion views. We could not have done it without your loyal support ❤️ pic.twitter.com/2W69ix0CEJ

— lolesports (@lolesports) June 24, 2018

At a Nevada Gaming Policy Committee meeting chaired by Governor Brian Sandoval, Arthur Manteris, vice president of Station Casinos‘ sportsbooks made the simple statement:

“Gamblers make viewers, and viewers make gamblers,” adding that the viewing figures are: “Numbers the world has never seen before.”

Manteris has forty years experience of sports betting in Las Vegas.

Governor Sandoval listened, and not long after the meeting in May 2016, the Downtown Grand Casino with its partner William Hill, took the first legal esports bet in Nevada.

Online esports betting still isn’t legal in Nevada, but it is available in casinos. New Jersey’s latest sports betting legislation includes what appears to be a ban on esports betting:

“A prohibited sports event includes all high school sports events, electronic sports, and competitive video games but does not include international sports events in which persons under age 18 make up a minority of the participants.”

Sports attorney Daniel Wallach told Compete that there was still some wiggle room and that the regulator could rule on a case-by-case basis to allow some esports betting. Nevertheless, it doesn’t look good.

Esports is experiencing triple-digit growth

Over the last four or five years, esports betting has been the fastest growing area of sports betting. Sports betting operator Pinnacle has seen triple-digit growth for the last five years.

The growth we are witnessing in #eSports betting is simply phenomenal! pic.twitter.com/AVzbofnigl

— Pinnacle (@PinnacleSports) December 20, 2016

Narus Advisors and research firm Eilers & Krejcik Gaming have forecast that global wagers on esports will be $6.7 billion in 2018 growing to $13 billion by 2020. That’s a small but significant fraction of the global online sports betting market and it’s growing at internet speed.

Virtual sports

Virtual sports are a closer complement to traditional sports. Using big data about players and team performance they enable virtual versions of traditional sporting fixtures to be played out.

Bettors can watch the matches with high-quality video game graphics, and even engage in in-game betting. Sports data firm BetRadar is one of the biggest names in the virtual sports betting business.

Here’s their 2018 promotional video showing the sports they offer as virtual products and the quality of the video graphics.

If you skipped the video, you missed the list of sports that they offer globally; soccer, basketball, tennis, horse racing and dog racing.

No hockey, no American Football, no baseball. This is the legacy of the federal ban on sports betting, the most advanced betting technology in the rest of the world has ignored the most popular US sports.

Nevada and New Jersey are two states where at least some virtual sports betting is allowed, the question is whether other states will follow when they pass their own sports betting legislation.

Skins, crypto & loot boxes

One characteristic of modern video games and esports is that the game developers monetize play by offering virtual goods for sale. These goods, such as weapons, armor, boxes with surprise contents (loot boxes) and other in-game advantages/enhancements can also be won by playing.

Collectively known as skins, they have become a de facto in-game currency, and can sometimes be used for betting.

The regulators of today need to define what counts as money for the purposes of gambling. The UK Gambling Commission has made a good stab at the problem. US regulators need to follow suit, especially with the proliferation of modern cryptocurrencies.

With everyone so excited about the legalization of sports betting, it’s easy for politicians to miss the fact that the industry is moving on into a virtual age. The legislation they produce risks excluding players and US businesses from an important development or at least leaving gamblers to the risks of placing their bets on the black market.

Leagues asking for an integrity fee from sports betting has been all the rage this year. Everyone wants their share. The arguments for “integrity” has been so poor that some leagues have switched to a more royalty-based fee. The leagues DGAF what the fee is called, they just want that money.

Leagues may have been first in line looking for a cut of the revenue from sports betting but more entities are stepping in. Leagues, teams, and casino operators recently shared their thoughts on the matter in Pennsylvania. They each spoke up about how revenue from sports betting should be divided.

The inclusion of specific organizations requesting a handout from gambling money went to another level in Pennsylvania. Not only did a professional sports franchise ask for some of the many riches derived from a fee for sports gambling in the state, but they asked for more.

The Pittsburgh Pirates have stated that they want their share of the integrity/royalty fee that Major League Baseball may receive. Fair enough. They went on to say that they also need more money from the state taxes to keep their stadium operational.

From the Pirates:

“Providing a professional sports product is a costly endeavor…The capital needs at PNC Park are significant and unfortunately are much higher than the current funds allocated to them by our landlord.”

“It stands to reason that a portion of the revenue collected from sports wagering should be allocated to the maintenance and capital upkeep of PNC Park and the other sports-related facilities in Pennsylvania which provide for sports wagering in the first place.”

You can see the full unedited letter at Legal Sports Report. Their 17-year-old gift of a stadium isn’t old enough to be considered a millennial. However, PNC Park could already be falling apart. On Wednesday night there was a little backlog in the Pirates dugout.

It was a little damp in the dugout tunnel at PNC Park tonight. Just a little. pic.twitter.com/zm12uxFz0F

— Tom (@Haudricourt) June 21, 2018

Oopsie! Someone done clogged up the drains inside the dugout leading to the Pirates clubhouse.

There’s no doubting that PNC Park is one of the most beautiful baseball stadiums in the country. The Pirates have been asking the state for funds to maintain the stadium for the past five to seven years. Despite being a profitable business, it probably makes sense that the state pay for upkeep since the residents of Pennsylvania paid to build the stadium.

The good news for the Pirates is that the Pennsylvania state tax on sports gambling is so high that there might actually be money available to them when sports betting becomes legal in the state. Of course, a sportsbook operator has to decide to take bets in Pennsylvania.

It might be difficult to make a profit with the potentially high tax and integrity/royalty fee. Right now, the tax rate proposed for sports betting is 34%. New Jersey, for comparison, has a tax rate for sports betting between 8.5% and 14.5% depending on how and where the bets are placed.

It’s too bad Phil Mickelson overshadowed the premium performance of Brooks Koepka winning his second U.S. Open in as many years. Mickelson committed a bizarre penalty during Saturday’s third round when he putted a ball a second time before the ball had stopped moving.

The infraction earned Mickelson a two-stroke penalty, but many believe he should have been disqualified, including PGA Tour pros. And of course, the USGA’s decision to allow Mickelson to continue his round affected tickets for interested sports bettors around the world.

This left many asking: why wasn’t Mickelson disqualified for his intentional act and rules violation?

The putt heard round the world

The incident came on the 13th hole on Saturday when Mickelson hit his bogey putt well past the hole and it appeared destined to roll off the green. Rather than wait to see where the ball might end up, Mickelson ran after the ball and hit it again as it was still moving.

Phil made a 10 on the 13th hole after being assessed a 2-shot penalty for hitting a moving ball. pic.twitter.com/8QGqJIlV49

— PGA TOUR (@PGATOUR) June 16, 2018

Mickelson was assessed a two-stroke penalty for the infraction and took a score of 10 on the hole. The USGA cited Rule 14-5:

But in citing Rule 14-5, the USGA superseded Rule 1-2.

Rule 1-2 comes with a provision that would have allowed Mickelson to be disqualified if the action were deemed to have gained him a “significant advantage.”

The USGA said Mickelson was given a penalty for violating Rule 14-5, but not Rule 1-2, because, “He didn’t purposely stop or deflect the ball.”

Well, that’s such a poor explanation and excuse for not enforcing what should have been a disqualification. Mickelson later acknowledged that he intentionally hit the moving ball because he didn’t want it to roll off the green. He apologized for his actions on Wednesday.

Ruling impact on golf betting

I had a number of betting interests in the tournament match-ups, including a small slice on Mickelson over Tiger Woods. When Tiger missed the cut and Phil made it to the weekend, Mickelson was declared the head-to-head match-up winner.

According to Nevada sports book house rules:

IF ONE GOLFER CONTINUE PLAY AFTER HIS OPPONENT HAS MISSED THE CUT, WITHDRAWN (WD) OR BEEN DISQUALIFIED (DQ), THE GOLFER WHO CONTINUES PLAY WINS HIS MATCH-UP

But what if Mickelson was in contention to win the tournament? What if Woods had made the cut? There could have been many wagering interests and potential live-betting situations involving Mickelson.

A rules violation can have an impact on wagering results. Recall when the USGA made a ‘big bogey’ according to USGA CEO Mike Davis when it penalized Dustin Johnson one stroke during the 2016 U.S. Open on a murky new rule that was revised to help players who were grounding their putters while addressing the ball. The USGA’s delayed enforcement created a fiasco.

At the 2010 PGA Championship with the PGA officials, Johnson was issued a controversial two-stroke penalty on the 18th hole Sunday in what was one of the most bizarre rules gaffes in decades. Johnson was ruled to have grounded his club in a bunker, but it was more like dirt and a waste area that the crowd had been walking on and standing in during the tournament. Needing only a par on the final hole to win, the penalty cost Johnson the golf tournament.

What about integrity?

In September 2017, the PGA implemented a new integrity program to “protect its competitions from potential outside influences related to gambling.” Then PASPA went to the Supreme Court in December, and the federal sports betting ban was struck down in May, allowing for all states to launch a regulated sports betting market.

In considering golf wagering for the future and the potential impact of ‘integrity fees’, how will the PGA handle these types of situations with a royalty being collected by the PGA for all the golf wagering during their tournaments? The PGA issued a statement on regulation saying that it’s the most effective way of “ensuring integrity in competition, protecting consumers, engaging fans and generating revenue for government, operators and leagues.”

But when these strange occurrences surface like the Mickelson mistake and even more money is at stake, will bettors be the ones sending complaints to the PGA offices?