The Rapid Expansion of Sports Betting After 2018
Following a 2018 Supreme Court ruling, states swiftly moved to legalize sports betting, driven by the potential for substantial tax revenue and a desire to avoid losing revenue to neighboring states.
The May 14,2018,Supreme Court decision in murphy v. National Collegiate Athletic Association (Oyez) effectively overturned the Professional and Amateur Sports Protection Act of 1992 (PASPA), which had largely restricted sports betting to Nevada. this opened the door for individual states to regulate sports wagering. Delaware was the first state to capitalize on this change, with Governor John Carney placing a $10 bet on a Philadelphia Phillies game on June 5, 2018 (Delaware Online).
The initial rush to legalization often prioritized speed over comprehensive regulation, as states aimed to launch sportsbooks before major sporting events like the Super Bowl and March Madness. Journalist Danny Funt explores this dynamic in his book, Everybody Loses (Simon & Schuster), detailing the consequences of this rapid expansion.
Early State Responses and revenue Generation
States responded to the Supreme Court decision with varying degrees of urgency and regulatory frameworks.
New Jersey was among the first states to fully implement a sports betting system, launching its first sportsbook in July 2018. Mississippi followed closely behind, also in August 2018. West Virginia and Pennsylvania quickly joined, establishing regulatory structures and accepting wagers before the end of the year. The initial focus was on establishing a legal market to capture revenue previously flowing to illegal offshore operators. New Jersey quickly became a leader in sports betting revenue.
By December 2018, New Jersey had generated over $16.4 million in tax revenue from sports betting (New Jersey Division of Gaming Enforcement). This demonstrated the immediate financial potential for states willing to embrace the new market. Pennsylvania followed, generating $3.7 million in tax revenue in its first full month of operation in December 2018 (pennsylvania Gaming Control Board).
Concerns Regarding Regulation and Consumer Protection
The rapid rollout of sports betting raised concerns about adequate regulation and consumer protection.
Many states initially adopted minimal regulatory frameworks, focusing primarily on licensing operators and collecting taxes. Concerns were raised about responsible gambling measures, problem gambling treatment, and the potential for fraud and money laundering.The American Gaming Association (AGA) advocated for stronger regulatory standards to ensure the integrity of the market and protect consumers (American Gaming Association).
A report by the National Council on Problem Gambling highlighted the need for increased funding for problem gambling treatment programs as sports betting became more accessible (National Council on Problem Gambling). The AGA estimates that over $65 billion was wagered on sports in the US in 2023 (American Gaming association), underscoring the scale of the industry and the importance of robust regulation.
