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Hold Your Bets

2009 August 24
by Brad Humphreys

A three judge federal appeals court ruled today that betting on individual football games in Delaware is illegal, according to an Associated Press report. The NFL and the NCAA filed for an injunction stopping Delaware from allowing bets on single games. But rather than rule on the injunction, the appeals court upheld the NFL/NCAA claim that allowing bets on individual games violated federal law.

At one point I thought I understood the legal aspects of sports betting in the US. I thought that the the Professional and Amateur Sports Protection Act (PASPA) of 1992 outlawed sports betting in all states except Nevada, Oregon, Montana, and Delaware. And I thought that those four states were grandfathered into legal sports betting because they had previously allowed some form of legalized sports betting. So much for my knowledge of the law. It’s a good thing I’m an economist.

As an economist, I have trouble understanding the resistance to sports betting in the US. Watching sports and betting on sports are complementary activities. Sports betting is legal in the UK and the Premier League seems to function well in that environment. The NCAA’s rabid anti-gambling stance arises because they continue to pay student-athletes a fraction of their marginal revenue product. As long as that continues, there will be incentives for NCAA student-athletes to shave points. Never mind that office pools contribute heavily to interest in the NCAA Men’s Basketball Tournament, which happens to pay a lot of the bills at NCAA headquarters in Indianapolis. Kids, don’t bet on sports. Bettin’ on sports is baaaaaad, m-kay?

But the NFL caters to betting on one hand, and deplores it on the other hand. What’s up with that? In the major North American sport leagues, the famous gambling scandals involve Tim Donaghy, Pete Rose, and the Chicago Black Sox. One is a certified numbskull, and the other two might not have happened if not for relatively low pay. Beyond that, what are the big gambling scandals in the pros? Paul Hornung and Alex Karras in the early 1960s? See my comment about low salaries.

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