Sports betting occurs when gamblers make wagers on the results of games and contests played by other persons. The results of the games and contests are completely independent from the wagering activity of the gamblers. In other words, the gamblers have no control over the outcome of the games – that is, as long as the wagering is honest. Whether it is legal or not is another matter.
There are sports betting opportunities with a wide variety of games and contests. Although in a generic sense sports betting includes wagers made on the results of horse races and dog races, these games (contests) are usually considered to be different than other contests. In this encyclopedia, they are discussed separately, as are jai alai contests and betting on dog fights (pit bull fights) and cockfighting.
Sports betting in North America involves many kinds of games. It may be suggested that making wagers on the results of games is the most popular form of gambling in North America. It is certainly the most popular form of illegal betting in the United States.
In Nevada, there are 142 places, almost all within casinos, that accept bets on professional and amateur sports contests. Nearly $2.3 billion was wagered in these sports books in 1998. The casinos kept $77.4 million of this money; that is, they “held” 3.3% of the wagers, owing to the fact that the players bet on the wrong team and also that the casino structures odds in its favor. The sports wagers constituted just over 1% of all the betting in the Nevada casinos. About two-thirds of the wagers were on professional games and the rest on college games (National Gambling Impact Study Commission 1999, 2–14). Although the profits casinos realize directly from sports bets seem to be low, sports betting is very important in Las Vegas and Reno. The major gamblers like to follow sports, and the wagering possibilities draw them to the casinos. Also, the casinos sponsor championship boxing matches and give the best seats to their favorite gamblers. Superbowl weekend is the biggest gambling weekend in Las Vegas each year, as the casinos have special parties, usually inviting sports celebrities (retired) as well as other noted personalities to come and mingle with their gamblers. Of course, many of these invited celebrities turn out to also be heavy gamblers.
In 1998, the Oregon sports lottery sold $8.5 million worth of parlay cards on professional football and basketball games, and the state retained over $4.2 million (50 percent) as its win. This is less than 1 percent of total lottery winnings, but 4 percent of the winnings on non-video lottery terminal lottery games. The sports lottery is structured to produce a return of 50 percent to the players on a pari-mutuel basis.
The National Gambling Impact Study Commission suggested in its 1999 Final Report that illegal gambling activities draw wagers of several hundreds of billions of dollars each year, perhaps as much as $380 billion (National Gambling Impact Study Commission 1999, 2–14). It is likely that the operators of these games hold 3 to 5 percent of the wagers as profits. The illegal sector commands considerably more activity than the few legal outlets for sports gambling in the United States.
Betting has developed rapidly in recent decades. In 1982, the Nevada sports books attracted $415.2 million in wagers and kept only $7.7 million (less than a 2 percent hold). The hold increased an average of 16.6% every year until 1998, after which it leveled off. Only California card rooms and Native American gambling operations had greater annual increases. In comparison, casinos increased 10.4 percent each year and lotteries 13.5% (Christiansen 1999). The added interest in sports betting has been affected by an added interest in sports in the United States. Although individual sports have different experiences with their growth, one factor that has affected all sports has been television access to games and news media on odds and points spreads. Most Nevada sports betting was confined to small parlors outside of the major casinos until the late 1970s. The gambling activity was discouraged by the fact that the federal government imposed a 10 percent tax on each sports wager; however, this was lowered to 2% by 1975. In that year, the amount wagered in Nevada quadrupled. The state of Nevada changed laws in 1976, making it easier for casinos to have sports books. Then, a final breakthrough came in 1982 when Congress lowered the federal betting tax on sports contests to 0.25%, which is where it is today. Major sports betting areas were constructed in many casinos, the largest books (in physical size) being found today in the Las Vegas Hilton and Caesars Palace.
Ironically, given the widespread nature of sports betting, the gambling is also very controversial. Popular opinion on betting is very mixed, and indeed, opinion is more strongly against legalizing this particular form of gambling than are negative factors on any other type of gambling. The survey taken for the Commission on the Review of the National Policy toward Gambling in 1974 found majority acceptance of several forms of gambling – bingo, horse racing, lotteries – whereas fewer than half of the respondents supported legalization of casinos (40%) and offtrack betting (38%), and the fewest supported legalized sports betting (32 percent) (Commission on the Review of the National Policy toward Gambling 1976, App. II). A 1982 Gallup poll found majority support for all other forms of gambling but only 48% approval for betting on professional sports events (Klein and Selesner 1982). Opponents of sports betting suggest that the activity may have a tendency to corrupt the integrity of games, as those making wagers could try to influence the activity of the players in the contests.
Sports betting is authorized in Canada, Mexico, and other parts of Central America and the Caribbean region; however, sports betting is very limited in the US. Actually only in Nevada can a gambler legally make a wager on an individual contest or game. In Oregon the lottery runs a sports game in which the player must select several professional teams playing basketball or football on the same day or weekend. Nonetheless, sports betting is very pervasive in the United States, as bets on almost all sports events take place among friends or fellow workers or among social acquaintances in private settings. Almost all of these wagers, as already discussed, are illegal, as are wagers made through betting agents known as bookies. The appearance of the Internet and the worldwide web, which provide services in a form available to most residents, has led to a substantial increase in the amount of sports betting by Americans, most of which is also clearly illegal. There is some debate, however, as to whether Internet gambling, which is controlled by an operator in a jurisdiction where it is licensed and legal, is always illegal if the player is in another jurisdiction.
The greatest amount of sports betting – both legal and illegal – in the United States consists of wagers made on American football games. The National Football League (professional) games attract the most action, with the championship game (the Superbowl) being the initial attraction, the most wagering “action”. The Superbowl attracts wagers approaching $100 million in the casinos of Nevada, and perhaps fifty times that amount or more is gambled on the game illegally. Most of the illegal gambling on the Superbowl consists of private bets among close friends or participation in office “pools” in which the participants pick squares representing the last digit of scores for each of the two teams. Following the Superbowl in importance for the gambling public are the college basketball championship series, the World Series for professional baseball, and the National Basketball Association (NBA) championship series.
Each kind of game has different structures for gambling. Basically, wagers are made on an odds basis, on a basis involving handicapped points for or against one of the contestants (teams), or on a combination of odds and handicapped points.
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