The Role of Government in Sports Betting Regulation

Sports betting regulation by the government is responsible and important for the growth of sports wagering in the USA.

Sports betting is one of the most lucrative industries in the world today. In 2019, the global sports betting industry was valued at around $85 billion despite the hit by the COVID pandemic. Today, almost two years after the pandemic hit the globe, the industry still has numerous growth opportunities. Governments from all parts of the world have their say in sports betting regulation. Some deem it illegal, and others have seen the benefits and legalized the activity

Legal issues that surround sports betting can be somehow complicated. Moreover, international sports betting is even more complex. Governments have formed different feelings towards sports betting and gambling. Different tolerance levels are sustained, which has led to new policies in sports betting licensing and taxation. Before enrolling in sports betting, it is crucial to determine the regulations and procedures the law has enacted. 

Regulated and Unregulated Sports Betting Markets

Sports betting started as a hobby but has grown to be the most gainful economic activity in the world today. The government’s feelings towards sports betting affect the operations and profitability of the bookmakers. The legal status of sports betting alone has sweeping effects on the players, operators, the government, and anyone affected by the industry. 

Major bookmakers openly advertise their products in a legal sports betting economy, hire qualified and renowned personnel, and some are listed as public trading. Players enjoy seamless deposits and withdrawals and are assured of fairness in gaming. 

For the outlawed sports betting market, things are pretty different. Bookmakers operate in a ‘black market’, avoiding any publicity. They operate in secret and in laissez-faire. In this environment, you can never know whether a sports betting firm is legit or not. It is difficult to determine the owners and those who run the betting companies since no one wants to have their credentials associated with illegal gambling. 

Players on the other end find it quite tricky. It is tough to make deposits and withdrawals, though gaming enthusiasts will still find a way. These players have nowhere to run and in most cases, they are ripped off by rogue and unregulated operators. Online sports betting in an unregulated sports betting market is more accessible but harsh for players since consumer protection laws or local regulations do not apply. 

A well-regulated market means that the government is effective at protecting consumers. Some governments will, however, overregulate and overtax the industry. Sports betting regulations ought to have a balance to avoid going too far. Overregulation limits the betting companies, thus creating monopolies in the sector, and players lack the freedom to choose sportsbooks. This may force players to bet at unlicensed foreign sites. 

A well-regulated sports betting market is good for the players, bookmakers, and the government. There are higher chances of better economic development as sports betting is a significant contributor to tax revenue.

Benefits of a Government-Regulated Betting Market 

  • Anti-money laundering: Government betting licensing bodies require operators to report any suspicious activities. It is also mandatory that bookmakers implement ‘Know Your Customer’ (KYC) procedures after licensing.
  • Easier dispute recourse: A betting regulator is the first recourse for disputes between the operator and players. They have dispute resolution procedures in cases of payment failures and unfair treatment. The regulation enables all betting-related disputes to be handled in-house instead of flocking the legal systems. 
  • Fighting poker collusions: Government regulations help eliminate two major poker collusions. One, if it’s known that an online poker site is not working towards getting collusion in control, it risks scaring off legitimate players. Two, any poker site that allows game corruption risks losing its license. A regulated poker site can detect collusion via modern automated processes. They spot suspicious betting patterns and players who use unscrupulous methods to get a seat at the table. 
  • Responsible financing: Operators must have enough money to pay players at all times. Government regulations help secure players’ trust in the sports betting operator. Some governments require operators to hold pay out cash in a separate account.
  • Fair advertising: Unregulated betting companies advertise with false information to lure customers into making new signups. Regulating bodies provide for truth-in-advertising standards. 
  • Gamblers Problem Assistance: Gambling problem is a result of addiction. It results in crime and uncouth behaviors associated with hunger for gambling. Operators in licensed betting detect and provide resources to assist the affected people. Players can set maximum deposit limits through voluntary self-exclusion programs. 

Sports Betting in a Restricted and Prohibited Environments

Some governments either severely prohibit any gambling activities or impose restrictions to protect government monopolies. Players have a limited choice in such a gambling environment and may choose to bet at unlicensed markets. Most governments with strict limits to sports betting seek to stop money laundering, stop gambling problems, and prevent any form of underage gambling. 

Results of Sports Betting in a Prohibited Market

  • No transparency: Betting companies operating in prohibited markets are illegal. They have no incentive for openness. The companies try to be opaque to hide from authorities. They hide the business ownership status and work with suspicious betting patterns which are likely to hurt new players. 
  • Difficult payment procedures: Players have a tough time depositing and withdrawing funds. Credit card companies, banks, and most financial institutions require the provision of a license between incorporating gambling sites into their payment program. Unlicensed and illegal betting sites result in expensive and riskier options. Cryptocurrencies are a common deposit form at off-shore sportsbooks.
  • Unregulated market: Players have a great base to decide the sports betting operators they choose to register with. The unregulated market, however, has no recourse in times of disputes. Most rogue operators will rip players, and unfortunately, there’s no possibility for a court redress.
  • Little or no background checks: Unlicensed sports betting companies are not vetted before operations. They work in anonymity in the ‘black market’ and allow pro bettors to play without being caught. 

Significant Benefits of State-Legalized Sports Betting

The heightened growth of the online betting industry through the uptake of mobile phones, laptops, and tablets, has led regulatory bodies to think of how to make the industry safer and better. Governments’ input in the fast-paced sector with ever-changing tech advancements is vital. A legalized sports betting framework is an added advantage to a nation’s economy.

  • Increased tax revenue: The federal government and local states have gained massive revenues from sports betting legalizations. Pennsylvania, for instance, taxes betting companies 36% in addition to the $10 million licensing fees. In June 2021, the Pennsylvanian government made over $12 million in tax revenue. The substantial size of the sports betting industry could contribute over $8 billion in tax to regulated markets. It’s a significant boost to governments across all levels. With increased revenue, governments can set up support centers to identify and help those at risk of gambling problems. 
  • Creation of employment: The US gambling industry employs around 120,000 people, with the UK counterpart employing approximately 107,000 people. New sports betting casinos open with a wide range of opportunities for residents in the thriving sports betting industry. Positive government influence in the sports betting sector creates more jobs both directly and indirectly. Online sports betting is in continuous need of highly skilled coders, web administrators, and support staff. The rising industry needs additional legal representation, thus opening up extra job opportunities for legal professionals. 
  • Safe ground for players: Government legislation and laws have made sports betting platforms secure for players to try their luck. The legalization of sports betting has seen increased signups both in online sports betting and retail casinos. Players find it easy to place more wagers in the comfort and safety of their homes.

Some states continue to deem sports betting illegal as others legalize the same. In our opinion, a government that restricts sports betting at this age would make an unwise decision that will have massive financial implications. Sports betting should be embraced for full economic recovery, especially after the COVID pandemic’s economic shutdown.