Game Fixing and Rumors of Game Fixing. American Sports, it seems, is breaking, already broken or just hopelessly doomed to be caught up in scandal.
Unsurprisingly, the most oft-called for fix is prohibition.
Americans have always loved them some prohibition. There's nothing that Americans don't like that they don't petition the government to ban. Never mind that other people might enjoy it harmlessly, or that a vast majority of sports bettors partake in the entertainment relatively harmlessly, although very seldom profitably it should be noted. Nope, let's just ban it because I don't like it.
Alternatively, Trump's Big Beautiful Bill created an unfair tax burden by limiting the deductions of gambling losses to 90%. What this creates is a situation where a gambler could be taxed on "winnings" that they never actually won.
Let me explain. Let's say you play on a slot machine and you get very lucky and win a jackpot of $2000. You are happy, the machine locks up and you have to wait, provide some identification, sign some paperwork (a W2-G usually) and then a nice slot attendant comes out and pays you $2000 in cash. They then stand there and it is customary to tip them (at least $20) for that service. If you're sitting at a bar, say, a video poker machine, then it's also customary to tip the bar staff for your win. (Irony, under the One Big Beautiful Bill those tips are not considered taxable income).
Then, you continue to gamble and, given the laws of advantage and the house edge, you continue to play but lose that $2000 back to the casino. You go home happy because of the gambler's fallacy, you remember the win and the adrenaline rush that it caused, the congratulations of those around you as you're paid out, the rush of having the machine lock up, then you go home and go back about your life.
Then, tax day comes and you realize just much that jackpot is going to cost you. First, you have to enter that W2-G as income. $2000 worth. If you take the standard deduction, which many do, then you are pretty much shit out of luck because prior tax changes made the deduction of gambling losses below the line calculations. That means that you cannot deduct said losses UNLESS you itemize.
But, here's the kicker, when you take your losses (which will often be more than the wins that you claim) you can only take $1800 of them by law. That means that you are taxed on $200 of income that you never really "won". Think about that for a minute, and the fairness of it.
This is a simple, and low, example but, for many gamblers, the tax on unearned income could be four, five or even six figures given volumes and win.
Here's where things get tricky. Many Americans are OK with this unfair taxation because it's a tax on gambling which many consider to be a "sin". So, Americans have a long history of punishing things unfairly that they take personal issue with.
If the response is not to punish it (through higher taxation at times, sometimes punitive) then the playbook for the USA has historically been to ban it.
And that has not worked out well over the years.
Prohibition of alcohol led to a massive underground market that was controlled by the mafia. Prohibition of drugs led to the rise of the cartels. Prohibition of sports gambling (prior to the Supreme Court's PASPA decision) led to the rise of massive offshore gambling rings that still operate today. Even the legalization of sports gaming however did not end the illegal market. In fact, in many ways, the underground betting market has thrived since sports betting became "legal".
Clearly then, the answer is not as simple as a sports betting prohibition. Nor is it as clear-cut as legalization in all 50 States. The problem is not that sports gambling exists, it's HOW the books are allowed to operate, and the regulatory agencies (State Gaming Control Boards) that are in place to govern them.
Dennis Miller once had a great line regarding prohibition. "You can outlaw all of the bad things in the world and people will still spin around on their lawn until the see God." The key is not prohibiting things we don't like. it's ensuring that legal things with the potential for harm, are regulated in a safe, simple, meaningful way.
I understand that, for people of a certain political ilk, regulation is viewed as a "bad thing" which should be avoided at all cost and, for people of another political ilk, there's no such thing as "too much" regulation even if said regulation is nonsensical and messy.
But I believe that good regulation can happen, provided it's done thoughtfully and designed to be implemented simply. Here are a few ideas on how to start* fixing this issue.
1. Advertising restrictions. We currently have restrictions on the advertisement of a host of things. From alcohol to cigarettes to almost whatever else you can think of. Putting guardrails around how and when a sports book can advertise seems a reasonable step that's pretty easy to enforce.
2. A stop to predatory practices. If you're a bartender you have an obligation to not overserve your clientele and let them get into a car. If you're a sports book you should be under the same obligation to not overserve your clients. Unfortunately the model for modern sports books is "block or bankrupt" where they plan to just limit or refuse the bets of bettors who might win, and bankrupt the poor souls who cannot. They do this through VIP services and retention bonuses for those who try and step away. Putting a stop to this practice would not be difficult. I will say this however, limiting or banning is a stickier wicket. by outlawing that practice books would be forced to reduce their betting menus which would be horrible for bettors, reducing choice and limiting lines where weaknesses can be found.
3. Implement gaming control boards who are more than just rubber stamps for the books. Almost every week there is a new story of a book refusing to honor a bet or cancelling wagers because they claim it was "an obvious error". In many cases however these errors were not obvious until after the fact. In some cases the books just don't want to pay out grossly negative outcomes. In almost all of these cases the local gaming control agencies side with the books and allow them to void the bets, or not pay out. Strengthening the mission of the Gaming Control Boards to include gambler's rights could go a long way in preventing this.
4. A more robust tracking system for problem gaming. This should go without saying. With all of the AI and algorithms these books use identifying potential problem gamblers is not difficult. It's time to stop allowing these books (and casinos FWIW) to pay lip-service to responsible gambling and forcing them to start taking it seriously.
Of course, there are several other steps that could be taken which I'm not going to go in here, as I said earlier, the above suggestions are just a "start*" not a full on subscription for a fix. The problem people have is thinking that you can just ban something and the issue goes away. If anything, now that people have started gambling, if you outlaw legal gambling the illegal problem will get worse.
The issue with that? In MOST (not all but most) cases the alleged improprieties and fixing has been discovered through internal investigations of unusual betting patterns, self-reported by legal sports books. Illegal books, or bookies, would be highly unlikely to report the same, leaving the bad actors unreported and, in many cases, undiscovered. They would just move on to another unregulated shop to continue the scam.
Sports betting is something that needs to be fixed to the extent possible, not prohibited. Sadly, there will always be people who have their lives ruined by it, just as there are those whose lives are ruined by alcohol, drugs, junk food you name it. The key is to limit the damage as much as possible, and have resources available to help those that want out.
