Most Maryland Ravens fans were disappointed this season. We watched the Ravens lose badly to the Chiefs in the playoffs. The loss stung, but those who bet on the Ravens felt the pain more acutely.
Sports betting has entered a new realm in American society. It is ubiquitous and encouraged. The owners of sporting franchises know that betting will generate more interest in the sport and their team. Each ESPN show includes a segment touting best bets. ESPN even has a show dedicated to sports betting, much like CNBC offers programming recommending certain investments. All televised sporting events feature advertising by FanDuel, Fanatics Sportsbook, Draft Kings, Caesars, or other Sportsbooks. Most NFL teams sponsor a betting site.
How did this happen so quickly?
Online sports betting was made possible by two Supreme Court decisions in 2018. The Supreme Court struck down the Professional and Amateur Sports Protection Act (PASPA) and allowed each state to enforce its own sports betting laws. At the same time, the Supreme Court ruled in favor of a New Jersey law allowing sports gambling. To date, almost 40 states and the District of Columbia have legalized some form of sports betting.
In 2022, it was estimated that $75 billion was gambled on sports. An estimated 50 million people bet $16 billion on this year’s Super Bowl.
At present, only one Sportsbook has reported a profit, but this is believed to be due to the cost of customer acquisition. Online betting is more flexible and easier to access than illegal bookies. The revenue potential is through the roof.
To be successful, a Sportsbook app must set the arbitrage precisely. Sites make their money by taking the losses and charging a percentage fee from the winnings.
Online bets fall into several categories. The simplest is win/lose (betting on which team will win). Another well-known bet is the point spread (for example, the Ravens were 4½ point favorites in the NFL playoffs, so—to add insult to injury—bettors had to give up 4½ points if they bet the Ravens to win).
Another popular bet is called over/under. Gamblers bet if the total number of points will exceed or go under a number set by the Sportsbook (e.g., if 30 points is the over/under for a game, gamblers can bet that the total points from both teams will be over 30—called over or less than 30—called under)
Another popular bet is a future bet, for example, betting on which team will win the Super Bowl early in the season.
The most unusual bets are prop bets. They are limited only by the imagination. For example, you can bet the color of the Gatorade in the Superbowl, the number of receptions for a particular receiver, the total number of yards gained by a team, etc. Prop bets can be anything associated with the game.
For seasoned and frugal gamblers, parlay bets combine two or more straight wagers into one bet. Parlays are popular because there are bigger payouts while risking less money. The number of legs (bets) in a parlay and the odds attached to each of those legs determine the winnings.
What makes online betting unique is both the breadth of possible bets and the ability to make bets during the game. That’s right, you can bet on a game while it is happening. Online gambling websites are capable of recalculating odds in real-time.
But the question that always follows is, what is the risk of this online betting?
Short answer: we don’t know yet.
It is logical to assume that with greater access, there will be more betting. But how much more will be difficult to assess. Before 2018, betting was illegal in most of the US. And we can’t compare legal to unreported illegal gambling. For one thing, it is more likely that a person will admit to legal betting than illegal betting.
A longitudinal year study is assessing the impact of online betting on gamblers, and some results may be available by the end of this year; until then, data about gambling issues are anecdotal. We are dealing with a growth industry with an uncertain past.
Many experts are concerned about the rise in gambling addiction, especially among youth. Current estimates of gambling addictions are between ½% to 2% of the population. But the American Psychological Association reports that 96% of gambling addicts already suffer from other disorders.
One thing that we do know is that the country is not prepared for a gambling addiction crisis. NIH (National Institutes of Health) has agencies dedicated to alcohol and drug use, but none for problem gambling, and there are no federal regulations for sports betting advertising (e.g., tobacco).
So for now, we have to watch and wonder. Is this a form of entertainment or a potential crisis?
I don’t know. But I enjoy vicariously watching my betting friends and relatives cheer heartily for games and prop bets. As a statistician, I know that the house stacks the odds in their favor and I hate to lose. Many fans are still smarting from the recent playoff losses, in my view, losing money would have only added to the misery.
Caroline County native, received her PhD in Mathematical Psychology from the University of Maryland and worked as a scientist at Bell Labs, and other high-tech companies in New Jersey before retiring as a corporate executive. Angela and her dogs divide their time between St Michaels and Key West Florida. Her daughter lives and works in New York City.