Sports and Gambling
SPORTS AND GAMBLING
The drive in humans to gamble on sports seems to be almost as strong as the drive to participate in them. People have been betting on the outcome of sporting events since ancient times. In ancient Rome the wealthy class wagered on chariot races, animal fights, and gladiator battles. The Romans spread their penchant for gambling across the breadth of their empire, including Britain. In the sixteenth and seventeenth centuries people throughout Europe enjoyed betting on cockfights, wrestling, and footraces. In the eighteenth century horse racing and boxing rose to prominence as spectator sports on which the public enjoyed gambling. The nineteenth and twentieth centuries brought a new emphasis on team sports, and Europeans began risking their wages on rugby, soccer, and cricket games.
Colonists brought their yen for gambling on sports with them to North America. Horse racing was a particularly popular sport among those inclined toward gambling. Most forms of gambling, including sports gambling, became illegal in the United States during the nineteenth century, as laws changed to conform to the morals of the time. Nevertheless, it remained legal to bet on horse racing, and other sports gambling continued to flourish underground. The state of Nevada legalized gambling in 1931, but after a couple of decades it was so tainted by organized crime and other scandals that it was the subject of government crackdowns during the 1950s. A new, highly regulated version of sports betting returned to Nevada in 1975; centered in Las Vegas, this segment of the gambling industry continues to thrive in the twenty-first century.
Modern sports gambling in the United States can be roughly divided into three categories: pari-mutuel gambling on horse racing, dog racing, and jai alai games; legal sports betting through a licensed bookmaker; and illegal sports gambling. The third category makes up the biggest portion of sports gambling in the nation.
Pari-mutuel betting was invented in late nineteenth-century France by Pierre Oller. Pari-mutuel is a French term that means "mutual stake." In this kind of betting all the money bet on an event is combined into a single pool, which is then split among the winning bettors, with management first taking some share off the top before distribution. The share management receives is called the takeout; the takeout rate, which in the United States is set by state law, is usually about 20% of the total betting pool. Unlike placing a bet with a bookmaker, an individual betting on a pari-mutuel event is betting against other gamblers rather than against the house. The house keeps the same percentage of the total bets regardless of the outcome of the event. Another source of revenue from pari-mutuel gambling is breakage. Winning bettors are not usually paid out to the exact penny total; rather, payouts are rounded down. The leftover money, or breakage, is usually only a few cents per bet, but it adds up to a substantial sum over the course of thousands of transactions. Breakage may be split in various ways. For example, breakage generated by California horse tracks is split among the state, the track operators, and the horse owners.
In pari-mutuel betting the total pool in a race depends on how much is bet on that race. Every bet that is placed on a particular horse or player affects the odds; as a result, the more people who bet on a particular outcome, the lower the payout is for those who bet on that outcome. Betting on a long shot offers a potentially better payout, but a lower likelihood of winning anything.
The pari-mutuel system has been used in horse racing since about 1875, but it did not become widespread until the 1920s and '30s, with the introduction of the totalizor, a special calculator that could automatically calculate the odds for each horse in a race based on the bets that had been placed. Before the 1930s most betting on horse races was done through bookmakers. Corruption was widespread. In 1933 California, Michigan, Ohio, and New Hampshire legalized pari-mutuel gambling on horse racing mainly as a way to regulate the industry, decrease corruption, and generate revenue for the state. Many other states followed their lead over the next several years.
Historically, most pari-mutuel betting has taken place in person at the location where the event is happening. However, in recent years bets have been placed at off-track betting facilities, which were first approved by the New York legislature in 1970. Wagering via telephone or the Internet is also available in some states. Many races are simulcast to in-state and out-of-state locations, including off-track betting sites. This allows bettors to engage in intertrack wagering, which means one can bet on a race at one track while being physically present at a completely different track.
The American Gaming Association (AGA) estimates in the fact sheet "Gaming Revenue: Current-Year Data" (October 2006, http://www.americangaming.org/Industry/factsheets/statistics_detail.cfv?id=7) that the total gross revenue from pari-mutuel gambling in the United States in 2005 was $3.7 billion, the vast majority of which came from horse racing.
An increasing share of pari-mutuel wagering has been taking place at racinos. Racinos, a growing phenomenon in the gaming industry, are horse- or greyhound-racing tracks that also offer casino gaming on site. According to Gaming and Resort Development, in "U.S. Casino & Racino Revenue Analysis 2006" (2007, http://casinodev.com/revisedsitework/Articles/National2006Report.pdf), 10.3% of all casino gambling in 2006 took place at racinos.
Thoroughbred Horse Racing
People have been betting on horse races for thousands of years. Horse racing was a popular spectator sport among wealthy Greeks and Romans. Later, knights returning to Western Europe from the Crusades brought with them speedy Arabian stallions, which were bred with English mares to create the line now called Thoroughbred. Thoroughbreds are fast, graceful runners and are identified by their height and long, slim legs. Thoroughbred racing quickly caught on among the British aristocracy, and it was soon dubbed the "Sport of Kings." The sport came to North America with the colonists; there are records of horse racing taking place in the New York area as early as 1665.
Thoroughbred racing remained popular in the United States throughout the eighteenth and nineteenth centuries. The sport was scaled back significantly during World War II (1939–1945), and after the war it remained in steep decline. The reasons for horse racing's loss of popularity in the postwar years include competition from the rise of amusement parks and malls; the failure of the racing industry to embrace television; and the rise of other gambling opportunities, such as casinos and lotteries. However, even though attendance at horse races has declined substantially, the money continues to flow, and has actually increased since the 1990s. Gary Rotstein reports in "How Slot Machines Have Saved Racetracks" (Pittsburgh Post-Gazette, February 25, 2007) that in 1990 the total amount bet (handle) on Thoroughbred races in the United States was $9.4 billion. In "Total Handle, Purses up for 2006" (January 16, 2007, http://www.ntra.com/content.aspx?type=pr&id=22765), the National Thoroughbred Racing Association indicates that in 2006 the total waging on U.S. races was $14.8 billion. According to Figure 10.1, the self-described fan base for horse racing has hovered between a low of 31.4% in 1999 to a high of 37.4% in 2004.
Bill Toland indicates in "Horse Racing Has Grim Underside" (Pittsburgh Post-Gazette, June 10, 2006) that in 2006 there were about ninety Thoroughbred racetracks in the United States. The racetracks in warm parts of the country are open throughout the year, whereas others are active only during the warm months. Some are government owned, whereas others are privately held. The Thoroughbred gambling business is dominated by a handful of companies, the largest being two publicly traded firms: Churchill Downs and Magna Entertainment.
The three most prestigious Thoroughbred races together make up the Triple Crown of horse racing. These races, which take place over a five-week period during May and June each year, are the Kentucky Derby at Churchill Downs in Louisville, Kentucky; the Preakness Stakes at Pimlico in Baltimore, Maryland; and the Belmont Stakes at Belmont Park in Elmont, New York. According to the Kentucky Derby, in "Wagering and Attendance Results from Kentucky Derby 133" (May 6, 2007, http://www.kentuckyderby.com/2007/derby_news/wagering-and-attendance-results-kentucky-derby-133), in 2007 the betting totaled $118.3 million, a slight decline from the record set in 2006. Most of this total—$106.2 million—was bet off-track. Magna Entertainment, in "Preakness Broadcast Highest Rated Sports Program of Weekend" (May 24, 2007, http://www.preakness.com/NewsEvents/FeatureStories/Details/Baltimore052407.htm), notes that $87.2 million was wagered on the 2007 Preakness Stakes, whereas Matt Hegarty reports in "Handle, Attendance down for Belmont Stakes" (June 12, 2007, http://sports.espn.go.com/sports/horse/triplecrown07/news/story?id=2901730) that the 2007 Belmont Stakes drew a handle of $37.8 million.
Non-Thoroughbred Horse Racing
Even though Thoroughbreds dominate the horse-racing scene in the United States, pari-mutuel gambling is available for other types of horses as well. Harness racing, in which horses trot or pace rather than gallop and pull the jockey in a two-wheeled cart called a sulky, uses a horse called a Standardbred, which is typically shorter and more muscular than a Thoroughbred. According to the U.S. Trotting Association (May 2007, http://www.ustrotting.com/trackside/trackfacts/trackfacts.cfm), there were forty-six licensed harness-racing tracks around the country in 2007. Another type of horse commonly raced is the quarter horse, which gets its name from the fact that it excels at sprinting distances under a quarter of a mile. Finally, the Arabian Jockey Club (2006, http://www.arabianracing.org/RacingStats.asp?ID=3) notes that in 2006 about twenty-three tracks around the United States featured Arabian horses, the only true purebred horses on the circuit.
Like horses, greyhounds have been raced for amusement and gambling purposes for centuries. Greyhound racing has been called the "Sport of Queens," probably because it was Queen Elizabeth I (1533–1603) of England who first standardized the rules for greyhound coursing (a sport in which greyhounds are used to hunt rabbits) in the sixteenth century. Greyhound racing was brought to the United States in the late nineteenth century, and the first circular greyhound track was opened in California in 1919.
Greyhound racing is not nearly as popular as horse racing, and its popularity has been declining since the early 1990s. The sport reached its peak of popularity in 1992, when, according to the Greyhound Racing Association of America (GRA-America; September 19, 2006, http://www.gra-america.org/the_sport/history.html), nearly 3.5 million people attended the 16,827 races that took place at more than 50 tracks. Nearly $3.5 billion was bet on greyhound races that year. Revenue has dropped by nearly half since then. The GRA-America (2007, http://www.graamerica.org/the_sport/racetracks.html) notes that there were forty-six greyhound tracks operating in fifteen states in 2007. More than a third of the tracks currently in operation are located in Florida. The decline in the popularity of greyhound racing is in part due to allegations, many of them well documented, of the mistreatment of the dogs. For example, the Greyhound Protection League collects data on cruelty and deaths related to greyhound racing, and lobbies for the sport to be banned altogether.
Jai alai is a sport similar to handball. Like handball, it is played on a court and involves bouncing a ball against a wall. In jai alai the ball is caught using a long, curved basket called a cesta. The Florida Gaming Corporation (February 17, 2004, http://www.fla-gaming.com/history.htm) states that the first permanent jai alai arena, or fronton, was built in Florida in 1926. Jai alai is an endangered sport in the United States. The Committee on Regulated Industries of the Florida Senate notes in Legalized Gambling in Florida—The Competition in the Marketplace (November 2004, http://www.flsenate.gov/data/Publications/2005/Senate/reports/interim_reports/pdf/2005-155ri.pdf) that $430.3 million was bet on jai alai between 1987 and 1988. By the 2003 to 2004 season the handle had decreased to $93.8 million. In the United States, jai alai is confined almost entirely to Florida, where the sport retains a sizeable following. Most of the frontons in Florida, however, rely on revenue from other forms of gambling, such as poker, to help keep them in business.
LEGAL SPORTS GAMBLING
As of 2007 gambling on sports was legal in only one state: Nevada. Nowhere else in the United States is betting allowed on big-time sports such as professional football, basketball, or baseball. In Hidden Revenue: Regulating the Underground Economy of Sports Betting (February 2005, http://www.pfnyc.org/publications/2005_02_hidden_revenue.pdf), Jonathan A. Schwabish and Michael R. Simas explain that this state of affairs was essentially locked into place by the passage of the Professional and Amateur Sports Protection Act of 1992, which banned sports betting everywhere except those states where it was already allowed in some form: Delaware, Montana, Nevada, and Oregon. However, aside from Nevada, the action is limited; it may be part of a lottery game, or fantasy leagues and office pools may be legal.
In Nevada legal sports gambling takes place through licensed establishments (books) that accept and pay out bets on sporting events. Sports books are legal only in Nevada. One must be at least twenty-one years old to place bets with licensed bookmakers. The AGA states in the fact sheet "Sports Wagering" (March 12, 2007, http://www.americangaming.org/industry/factsheets/issues_detail.cfv?id=16) that in 2007 there were 170 locations licensed to operate sports and/or race books, all of them in Nevada.
Bookmaking is the term used for determining gambling odds and handling bets and payouts. The person doing the bookmaking is called a bookmaker or bookie. Bookmakers make their money by charging a commission on each bet; the commission is usually between 4% and 5%.
Most sports bets are based on a point spread, which is set by the bookmaker. A point spread is how much a favored team must win a game by for those betting on that team to collect. For example, if Team A is a ten-point favorite to defeat Team B, the bettor is actually betting on whether Team A will beat Team B by at least this margin. If Team A wins by nine points, then those betting on Team B are winners and those picking team A are losers. In this example, Team B has lost the game, but has "beat the spread." The point spread concept was introduced in the 1940s by the bookmaker Charles K. McNeil as a way of encouraging people to bet on under-dogs. Before the point spread system, bookmakers risked losing large sums on lopsided games in which everybody bet on the favorite to win.
Nevada: The Gambling Capital of the United States
Nevada legalized gambling in the 1930s as a way of generating revenue during the Great Depression (1929–1939). The state's legislature made off-track betting on horses legal during the 1940s. Betting on sports and racing was popular in Nevada's casinos throughout that decade. At the beginning of the 1950s, however, the Nevada gambling world came under the scrutiny of Congress for its ties to organized crime. Senator Estes Kefauver (D-TN; 1903–1963) initiated hearings to investigate the matter. These nationally televised hearings drew attention to a culture of corruption and gangland activity that had settled in Las Vegas. The hearings resulted in the imposition of a 10% federal excise tax on sports betting. This tax effectively strangled casino-based sports book-making in Nevada.
Koleman S. Strumpf of University of North Carolina, Chapel Hill, reports in Illegal Sports Bookmakers (February 2003, http://www.unc.edu/cigar/papers/Bookie4b.pdf) that the sports books mounted a comeback in the 1970s, after the excise tax was reduced to 2% in 1974, and by the 1980s sports and race bookmaking was a booming industry, helped along by another reduction in the excise tax, to 0.3% in 1983. Bookmakers such as Jimmy "The Greek" Snyder (1919–1996) became national celebrities by appearing regularly on television. Between 1982 and 1987 Nevada sports book betting increased by 230%. Betting volume began to taper off in the mid-1990s, in part due to the rise of online wagering, though it has rebounded somewhat in the last few years. For example, the amount of revenue rose from $1.8 billion in 2003 to $2.4 billion in bets in 2006, an increase of 33%. (See Figure 10.2.)
Football is the biggest betting draw among the major sports. According to the AGA, in 2006 football accounted for 47% of sports book wagering, followed by basketball (26%) and baseball (19%). (See Figure 10.3.) The Super Bowl alone is a gigantic gambling event. The Nevada Gaming Commission and State Gaming Control Board notes that $93.1 million was bet on the 2007 Super Bowl, the second highest total in Super Bowl history. Table 10.1 and Figure 10.4 show total Super Bowl betting with Nevada sports books, along with revenue from that betting, for the years 1998 through 2007. In "Sports Wagering," the AGA indicates that the National Collegiate Athletic Association (NCAA) basketball tournament brings in a similar sum, although it involves sixty-four teams and six rounds of games. Industrywide, the AGA notes that about one-third of the bets placed legally in Nevada sports books are on college sports. It is
|Year||Wagers||Win/loss||Win %||Game results|
|2007||$93,067,358||$12,930,175||13.9%||Indianapolis 29, Chicago 17|
|2006||$94,534,372||$8,828,431||9.3%||Pittsburgh 21, Seattle 10|
|2005||$90,759,236||$15,430,138||17.0%||New England 24, Philadelphia 21|
|2004||$81,242,191||$12,440,698||15.3%||New England 32, Carolina 29|
|2003||$71,693,032||$5,264,963||7.3%||Tampa Bay 48, Oakland 21|
|2002||$71,513,304||$2,331,607||3.3%||New England 20, St. Louis 17|
|2001||$67,661,425||$11,002,636||16.3%||Baltimore 34, N.Y. Giants 7|
|2000||$71,046,751||$4,237,978||6.0%||St. Louis 23, Tennessee 16|
|1999||$75,986,520||$2,906,601||3.8%||Denver 34, Atlanta 19|
|1998||$77,253,246||$472,033||0.6%||Denver 31, Green Bay 24|
currently illegal to gamble on high school sports and on the Olympics.
ATTITUDES TOWARD SPORTS GAMBLING
In spite of gambling's reputation as a so-called vice, Americans are overwhelmingly comfortable with sports gambling, though a relatively small percentage actually participate. A 2006 Pew Research Center poll found that 67% of Americans had engaged in some form of gambling over the past year, but that only 14% of those surveyed said they had bet on professional sports in the past year, and 7% had bet on college sports. (See Figure 10.5.) Another 5% had bet on horse racing, and 3% had wagered on boxing. Eighteen percent said they had participated in an office betting pool related to some type of sporting event, such as the Super Bowl or the NCAA basketball tournament. Figure 10.6 shows the general downward trend in sports betting since 1989. Betting on professional sports decreased from 22% in 1989 to 14% in 2006; betting on horse racing experienced a similar decline, from 14% in 1989 to 5% in 2006.
Even though not many people actually participate, a larger percentage of Americans approve of gambling in general, and sports gambling in particular. The 2006 Pew survey found that 42% of respondents approved of legalized gambling on professional sports, and 50% approved of states legalizing off-track betting on horse racing. (See Figure 10.7.)
The potential for government revenue generated by legal sports gambling is the strongest argument for proponents of legalizing betting on professional and college sports in states where it is currently banned. Ari Weinberg estimates in "The Case for Legal Sports Gambling" (Forbes, January 27, 2003) that the 1992 law that locks all states except Nevada out of the sports gambling market deprives other states of taxes of perhaps hundreds of billions of dollars in illegal sports bets each year.
ILLEGAL SPORTS GAMBLING
Even though gambling is legal in one form or another—whether in casinos, at racetracks, or on lotteries—in every state except Utah and Hawaii, illegal gambling nevertheless flourishes as well. The AGA estimates that the Nevada sports books account for less than 1% of all sports gambling in the United States. So prevalent is illicit sports gambling that it is almost impossible to calculate the dollar amounts involved. In "Ban on College Sports Betting Could Cost State Books Millions" (Las Vegas Review-Journal, May 18, 1999), Robert Macy estimates that illegal sports gambling in the United States ranges from $80 billion to $380 billion per year.
Many different activities fall into the category of illegal gambling, ranging from betting on sports outside of the legitimate, licensed bookmaking system to benign office pools. Sports gambling has a long history of association with organized crime, which ran illegal bookmaking operations across the country as early as the 1920s. After Nevada legalized casino gambling in 1931, organized crime quickly took control of the industry. When the federal government made progress in driving organized crime out of the casino business in the 1950s, the mobsters focused their efforts on bookmaking, which was not yet available in the casinos. To this day, a large portion of sports gambling is believed to be controlled by organized crime figures.
FIXING, SHAVING, AND TAMPERING: SPORTS GAMBLING SCANDALS
Shady characters, including prominent organized crime figures, have always gravitated toward sports, sometimes as a means of laundering money obtained illicitly in other industries. The history of sports is rife with tales of gamblers paying off athletes to "take a dive" or miss the crucial shot. Major professional sports leagues and the NCAA have taken measures to distance themselves from sports gambling, but their efforts have not prevented a long list of sports gambling scandals from taking place in the last several decades.
Perhaps the most notorious sports gambling scandal in history was the so-called Black Sox Scandal of 1919, in which gamblers bribed several members of the Chicago White Sox to intentionally throw the World Series. A huge point-shaving scandal encompassing seven schools and thirty-two players rocked college basketball in 1951. Point shaving is a type of game fixing in which players, who are usually bribed by gamblers, conspire to avoid beating a published point spread. In 1978 associates of the Lucchese organized crime family orchestrated a point-shaving scheme with key members of the Boston College basketball team. Another point-shaving scheme involving college basketball was uncovered at Arizona State University in 1994. Lesser-known scandals have taken place in the intervening years.
Many high-profile professional athletes have gotten in trouble over the years for gambling on the sport in which they participate, which inevitably creates suspicion about game fixing. In 1963 the National Football League (NFL) players Alex Karras (1935–) of the Detroit Lions and Paul Hornung (1935–) of the Green Bay Packers were suspended for betting on their own teams' games. Denny McLain (1944–) of the Detroit Tigers, the last pitcher to win thirty games in a season, was suspended for most of the 1970 season for associating with gamblers. In 1989 the baseball player Pete Rose (1941–), who holds the record for the most career hits, was kicked out of baseball for gambling on Major League Baseball games. He denied doing so at the time but has since admitted to betting on baseball games while serving as manager of the Cincinnati Reds. Rose's lifetime suspension has kept him out of the Baseball Hall of Fame, into which he would certainly have been inducted had his gambling activities not come to light. In 1999 the former San Francisco Forty-niners owner Eddie DeBartolo (1946–) was fined $1 million and suspended by the NFL for paying a $400,000 bribe to obtain a license to operate a casino in Louisiana.
The National Basketball Association (NBA) was rocked in the summer of 2007 by revelations that the veteran referee Tim Donaghy (1967–) had been involved in gambling on NBA games, including games in which he had officiated. The NBA immediately took the position that Donaghy's activities represented an isolated case and that gambling among referees was extremely rare. In August 2007 Donaghy pleaded guilty to two felony charges stemming from evidence that he had provided betting recommendations to gamblers based on inside information about game circumstances. Just days after the NBA scandal broke, professional tennis was forced to grapple with a gambling-related scandal of its own when suspicious betting patterns emerged on a match between the high-ranked Russian player Nikolay Davydenko (1981–) and the much lower-ranked Martin Vassallo Arguello (1980–) of Argentina at an Association of Tennis Professionals tournament in Poland.
Since the 1990s college sports have been at the center of the most visible sports gambling scandals. During the 1994–95 season two Northwestern University basketball players were caught shaving points. Two years later, thirteen football players at Boston College were suspended for gambling on college football games. Other cases have involved the University of Washington football coach Rick Neuheisel (1961–), the University of Michigan basketball player Chris Webber (1973–), the Florida State University quarterback Adrian McPherson (1983–), and the University of Florida basketball player Teddy Dupay (1979–).
After decades of taking measures to avoid even the appearance of impropriety by distancing themselves from gambling entirely, there are some signs that the major sports leagues are ready to establish a cozier relationship with the gambling industry, simply because the money in sports gambling is too good to resist. A prime example are the Maloof brothers—Joseph (1955–), Gavin (1956–), and George Jr. (1964–)—who together own both the NBA's Sacramento Kings and the Palms Casino in Las Vegas. Joseph and Gavin run the Kings, while George oversees the Palms. When the Maloofs sought to buy the Kings in 1998, the NBA was willing to give its blessing provided the Maloofs quit accepting bets on NBA games in their casino's legal bookmaking operation. Before the Maloofs, there was the ITT Corporation, a conglomerate that owned three Las Vegas casinos at the time, which was allowed to purchase half interest in two New York teams: the Knicks and the Rangers. In 2005 and 2006 the National Hockey League's Pittsburgh Penguins attempted to obtain a license for a slot machine casino to raise funds to build a new stadium; the effort failed when the Pennsylvania gaming board awarded the only available license to another entity in December 2006. One of the partners in the group that won the license was the Pittsburgh Steelers running back Jerome Bettis (1972–). Bettis's participation in a proposal to open a horse track/casino/hotel complex raised some concern around the NFL, but not as many as would have been raised a few years earlier. Of course, Bettis had a good role model: the Rooney family, owners of the Steelers, also own two horse-racing facilities.
GAMBLING IN COLLEGE SPORTS
The college sports gambling cases noted earlier are probably just the tip of the iceberg. Gambling on sports, which is technically legal only in Nevada and only by adults, is extremely common among college athletes themselves. The 2003 NCAA National Study on Collegiate Sports Wagering and Associated Behaviors (December 2004, http://www.ncaa.org/library/research/sports_wagering/2003/2003_sports_wagering_study.pdf) finds that in 2003 more than two-thirds (69%) of male student-athletes and nearly half (47%) of female student-athletes participated in some form of gambling in the past year; 35% of male student-athletes and 10% of female student-athletes reported having bet on sporting events in the past year, in direct violation of NCAA rules regarding sports wagering. The report includes the startling finding that 20.8% of male student-athletes and 5.7% of female student-athletes had gambled on collegiate sporting events in the past year. About 1% of football players and 0.5% of men's basketball players reported having accepted money to play poorly in a game. About 2% of men's football and basketball players said they had been asked to affect the outcome of a game.
In "A Study of Gambling Activity in a NCAA Division II Institution" (Sports Journal, vol. 9, no. 4, fall 2006), which focuses on gambling among students and student-athletes at the University of Western Georgia, Frank Butts finds even higher rates of gambling in general—including an astonishing 97.3% of male student-athletes having gambled in some form in the past year—but lower rates of gambling specifically on college sports.
The NCAA has long supported a complete ban on college sports gambling. Naturally, Nevada-based gambling interests strongly oppose such a measure. The gaming industry points out that the problems associated with gambling on college sports are mostly related to illegal gambling, not legitimate wagering that takes place through licensed bookmakers. For example, Brady Dennis reports in "March on Vegas Is Bettors' Ritual" (St. Petersburg Times, March 31, 2005) that $90 million was bet legally on the 2005 NCAA basketball tournament, an amount that represented a minute fraction of an estimated $3.5 billion that was wagered when Internet bets and informal office pools were factored in.
Since 2000 members of Congress have advocated banning college sports betting, but they have met with little success. Among the biggest proponents of banning all gambling on college sports has been Senator John McCain (R-AZ; 1936–), who first introduced the Amateur Sports Integrity Act in 2000. Initially, the bill had Nevada gambling businesses worried, but in the end it made little progress in the face of heavy lobbying on the part of the gaming industry and a lack of significant public support. McCain reintroduced the bill during the next two congressional sessions, but it met the same fate. Representative Tom Osborne (R-NE; 1937–), the U.S. House of Representatives sponsor of the bill, reintroduced a version in March 2005 (though McCain opted not to do so in the Senate at the time), just as the NCAA basketball tournament was in high gear. Gaming industry representatives working against the bill claimed that it would have a devastating effect on their business, noting that college sports gambling accounts for a sizeable share of the total bets placed with licensed Nevada bookmakers. Tony Batt notes in "College Betting Ban Resurfaces" (Las Vegas Review-Journal, March 19, 2005) that Bob Scucci, the sports book director at the Stardust Casino, said, "It would be tough to put an exact dollar amount on it, but college football and basketball combine for maybe one-third of our handle." However, Batt reports in "McCain Joins in on NCAA Contest Fun" (Las Vegas Review-Journal, March 15, 2007) that by March 2007 McCain himself had apparently softened his stance on betting on college sports; his presidential campaign Web site invited visitors to join him in picking winners in the NCAA men's basketball tournament.
The new frontier of sports gambling is the Internet. Nobody knows exactly how much money is bet online, and the legal status of some aspects of online gambling remains ambiguous. In "Sports Wagering," the AGA indicates that online sports betting generated about $4.3 billion in revenues in 2005.
Internet gambling first became available in the late 1990s, and the Nevada sports books quickly sensed that it presented a serious challenge. Many authorities argued that, based on the federal Wire Act of 1961, which was originally enacted to get organized crime out of sports betting, online sports gambling is technically illegal in the United States; however, not everybody agreed with this analysis. Moreover, most Internet gambling operations are based offshore, which complicates legal issues. The Internet knows no geographic boundaries—an online gambling operation based in Antigua can be accessed as easily from Dubai, Saudi Arabia, as from Dubuque, Iowa. The U.S. government has attempted to take measures to curb online gambling, both sports betting and other types, but because these businesses are not based in the United States, enforcement is problematic. After all, these businesses are legal in the countries in which they are based.
The World Trade Organization has urged the United States to give up its attempts to ban Internet betting, but some members of Congress continued to champion legislation banning online gambling. The most active proponent of banning Internet gambling has been Senator Jon Kyl (R-AZ; 1942–), who first introduced the Internet Gambling Prohibition Act in 1997. Others in Congress argued that rather than trying to prohibit online gambling, it should instead be regulated and taxed, generating substantial revenue for state and federal governments. In the fall of 2006 the Unlawful Internet Gambling Enforcement Act was passed as an amendment to an unrelated bill, and signed into law by President George W. Bush (1946–). The act does not outlaw Internet gambling, but it prohibits U.S. financial institutions from transferring funds to and from online gambling operations. The impact of the act on online sports gambling was still being assessed as of late 2007, although one immediate result was that a number of prominent online gaming establishments stopped accepting bets from U.S. customers, even though the act did not directly require them to do so.
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