Odds Are Sports Betting Will Bring Trouble
(Bloomberg Opinion) -- Henry Hill, the mobster whose exploits animated a bestseller (“Wiseguy”) and an Oscar-winning film (“Goodfellas”), once made a splash working with gamblers to rig college basketball games in the late 1970s. The scheme wasn’t complex. They bribed players to throw games, then cashed in winning wagers.
Gamblers corrupted sports long before Hill’s era; the 1919 Black Sox scandal is just one good example. And they continued doing so long after Hill went to prison. Tim Donaghy, a National Basketball Association referee and gambling addict, went to prison in 2008 for passing inside information about players to low-level mobsters betting on games.
Because the Hills of the world lurked around every corner, and anti-gambling moralists held sway, wagering on sports was constrained through the end of the 20th century — and policed as needed. For decades, Las Vegas was the only home for legal sports betting, and a hodgepodge of federal and state laws kept it that way. But online wagering, and a Supreme Court inclined to let states choose their own destinies, has made sports betting ubiquitous and easily accessible. Now, there’s even a little betting-company merger boomlet afoot.
DraftKings Inc., a leading operator of fantasy sports leagues and digital betting platforms, said Monday that it plans to buy Golden Nugget Online Gaming Inc. for $1.56 billion. Penn National Gaming Inc., which operates casinos and racetracks, said last week it that it will buy Sports Media and Gaming Inc., an online sports betting company, for $1.74 billion. Both deals exemplify all the lines between sports and gambling that have become blurred in recent years and why we shouldn’t forget about the Hill effect — and what sports are really all about — as more of this inevitably gains traction.
Part of DraftKings’ purchase of Golden Nugget includes rights to market its gambling products to patrons of companies owned by Tilman Fertitta, the billionaire who took Golden Nugget public last year through a special purpose acquisition company. One of Fertitta’s holdings is the Houston Rockets basketball team, so the team’s fans are likely to see a lot more of DraftKing’s offerings on their phones and in their email. If Texas legalizes physical wagering, the Rockets stadium might also feature a sportsbook. It will all be very cozy.
Penn National bought a 36% stake last year in Barstool Sports, Dave Portnoy’s sports media franchise, and is reportedly negotiating with Major League Baseball to broadcast national midweek games that will emphasize in-game betting. You get horse racing, sports news, sports betting, casino gambling and baseball all under one corporate roof.
This is already familiar to anyone who watches ESPN on TV or mobile devices. The sports network has its own agreements with DraftKings and Caesars Entertainment Inc. and uses their betting data to display betting lines and odds prominently on screen during its broadcasts. Caesars’ sports-betting partner, William Hill, also helps connect users of all ESPN web and mobile apps to sports betting apps.
DraftKings paid $100 million last year for the right to operate a gambling parlor at Wrigley Field, home of the Chicago Cubs. The Arizona Cardinals said on Monday that it will open a sportsbook at its stadium in Phoenix in a partnership with BetMGM, an online gambling operator. So many similar deals are afoot in media — at CBS, NBC, Fox, the Associated Press and other companies — that the Columbia Journalism Review recently analyzed “how gambling swallowed sports media.” The article also dug into some of the myriad conflicts involving gambling that revolve around Bill Simmons, who sold his sports media company, the Ringer, to Spotify last year for $196 million.
Sports gambling is fun, of course, and when pursued in moderation, harmless. But the U.S. has never before encountered the perpetual motion machine that sports betting and the sports business have become in the digital era. It should force us to ask what we want out of professional sports and what lessons athletics are meant to provide to fans and kids. We should also brace ourselves for some of the damage that might arrive.
Compulsive gamblers have always been significant contributors to the bottom lines of gambling enterprises — and the easier it is to gamble, the greater the incidence of compulsive behavior. Children and teens who were once shielded from gambling, and who aren’t typically fans of moderation, now have easier access to sports betting and marketing than ever before. And, as Hill might have explained, the more money that is circulating, the greater is the temptation to try stealing it.
If “all bets are off” was too extreme back in the old days, that doesn’t mean that allowing the pendulum to swing toward “all bets are on” is a rational or painless evolution. There’s going to be social fallout and corruption ahead, I’ll bet.
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
Timothy L. O'Brien is a senior columnist for Bloomberg Opinion.
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