Legal and Ethical Considerations in Business-Sports Betting Partnerships
The sports betting industry has taken the United States by storm over the past five years, with nearly 75 percent of states in the country voting to legalize it in some form or fashion… and more than half of all the states voting to permit mobile sportsbooks to operate.
Many of the last few holdouts in the battle to legalize sports betting across the country are doing so on a moral basis, whether it’s states down south in the Bible Belt resisting change on the basis of religion or progressive states like California who don’t want to bring potential harm to their voters by paving the way for struggles with gambling addiction because of the all too easy to access nature of mobile betting.
The onus is on the gambling industry, then, to prove that the benefits of the industry outweigh the potential downsides. With the industry growing at a rapid pace, new concerns are sure to spring up (and already have) beyond the often cited ethical concerns regarding gambling addiction.
Starting with the business side of things, many state legislatures have wrestled with how to address the topic of betting promos. Viewed from the marketing perspective, they’re an excellent way to get new customers to take part in the pastime using offers like deposit matches and risk-free bets, or to get returning customers to bet again with limited time only promotions. They also give the sportsbooks a potential windfall that goes beyond the influx of new business.
If they’re handing out these promos at a loss, bookies can use them as write-offs when it comes time to file their tax returns, cutting down on the amount of taxable income they leave up for grabs for Uncle Sam and the various respective state legislatures.
It’s an excellent business move, and generally speaking the way corporations operate here in the states, but that doesn’t change the fact that many units of government aren’t happy about the outlet for dodging having to pay taxes.
It’s one thing if a business is an entrenched staple that’s been doing it for years: at that point, the practice becomes something along the lines of settled law where it would become difficult to reverse.
With a fledgling industry that’s just getting started, though, the gambling market is subject to an extra layer of oversight and review, with legislators closely overseeing what takes place on a year by year basis. As such, many states are changing their laws on the fly, limiting the amount that sportsbooks can write off when it comes to promo losses in an attempt to recoup tax revenue.
As with any interaction between a multi-billion dollar business and those in place to keep an eye on them, it’s an elaborate game of cat and mouse that will continue to play out, state by state, in the coming years.
Another potential ethical holdup when it comes to the relationships that sports betting platforms form with other businesses is the way that the various sports leagues have embraced them with open arms.
It’s a marked change in approach, given the terse relationship between sportsbooks and sports leagues that dates back more than a century in the United States. It began, in many ways, with the scandal-ridden 1919 World Series, wherein members of the Chicago White Sox intentionally threw games following bribes from a gambling syndicate.
Later controversies included the various point-shaving scandals that racked NCAA basketball throughout the 20th century (and as recently as 2007 in the NBA with official Tim Donaghy), as well as the lifetime ban that Major League Baseball afforded to all-time great Pete Rose for betting on games.
Now that gambling is back in a big way (and with explicit endorsements from leagues like the NFL and MLB, among others), accessible to just about anyone with the tap of a button on your mobile phone, it feels like the next scandal in this vein is just waiting to break.
The past few years have seen a rash of NFL stars like Calvin Ridley, Jameson Williams (among a handful of others) suspended for betting on games, including contests involving their own teams.
While it appears that they weren’t throwing the matches in the case of betting on their own team, instead betting on themselves to win, it’s an awkward case of the NFL telling players to do one things (not gamble at all) while doing another thing entirely (receiving millions, if not billions in ad revenue from betting platforms). Players have even received suspensions for betting on unaffiliated leagues, if they placed the bets while on the premises of league property like practice facility.
It’s a black eye and a bloody nose to the NFL with every passing suspension, and they’ll have to find a reasonable middle ground as the industry continues to grow.