Sports betting

Sports betting is a form of gambling in which a person wagers money on the outcome of a sporting event or some aspect of that event. Correctly predicting the winner or other aspect of the contest—such as how many total points will be scored—results in the bettor winning additional money. Wagers can be made using one of several different formats, and can often be placed on both professional and amateur events. Team sports are very popular outlet for wagers, but bets can also be made on individual sports such as boxing and horse racing. Betting on sporting contests has been occurring for thousands of years, but in the modern era, the practice has often been surrounded by controversy. In the United States, sports betting was illegal in most places for decades, mainly thriving only in the city of Las Vegas, Nevada. However, a 2018 ruling by the US Supreme Court allowed states the option of legalizing sports betting. Within a year, many states had either passed laws allowing the practice or were working on such legislation. By the mid-2020s, sports betting had entered the mainstream through a number of different apps and platforms, many of which were advertised during the sporting events themselves.

History

Gambling has likely been around in some form since before the dawn of human civilization. Archaeologists have discovered objects made from bone that may have been used as a type of dice about forty thousand years ago. Prehistoric cave drawings also seem to show early humans engaging in game-like activities that resemble gambling. The oldest-known instance of gambling can be dated to about 2300 BCE in ancient China, where the Chinese used wooden tiles to play a simple type of lottery game.

The earliest documented example of sports betting can be found in ancient Greece, where the first Olympic Games were held about 776 BCE. Betting on the outcome of the Olympic events was a common occurrence among Greek spectators at the games. The practice was also widespread among the Romans, with wagers being made on events such as gladiatorial contests and chariot races. During the medieval period, legal gambling and betting was reserved for the upper classes as the practice was mostly outlawed among the poor. During the fifteenth century, the British Parliament banned wagering on dice and cards, but betting was allowed on sports enjoyed by the wealthy, such as fox hunting and horse racing. Horse racing in particular became a very popular sport in England, and betting on the outcome of races was common.

Early Sports Betting in the United States

When the British began establishing their American colonies in the seventeenth century, they brought many of their cultural traditions with them to the New World. Gambling may have been frowned upon in the religion-dominated New England colonies, but the sport of horse racing did eventually make its way across the Atlantic. A year after the British took over the Dutch colony of New York in 1664, they established the first horse-racing track in the Americas on Long Island.

Gambling and lotteries in some form were commonplace in the early United States, and even played a part in financing the Revolutionary War (1775–1783). However, during the nineteenth century, changing attitudes coupled with periods of economic stagnation prompted the federal government to ban gambling and sports betting in 1860. Horse racing was the only exception to the ban. Within a decade, horse racing was regulated by the states and betting on the outcomes became a growing activity among America’s elite. Some of the most well-known horse races in the modern sport got their start during this period. The most famous, the Kentucky Derby, was run for the first time in 1875.

The nineteenth century saw the rapid growth of organized team sports, including the earliest versions of modern-day standards such as baseball, football, and hockey. With the establishment of the National League in 1876, baseball became the first professional sport in the United States. Though betting on baseball and other team sports was technically illegal, it was still widely accepted and was viewed as a popular form of entertainment. However, the rise of professional sports also increased the influence gamblers had on the players. In 1877, several members of the National League’s Louisville Grays were discovered to have accepted money to intentionally lose games. Four of the players were banned from the sport for life.

By 1910, every state in the United States had cracked down on sports betting by passing laws banning nearly all forms of gambling. Though horse racing was excluded, the practice of sports betting had developed such a bad reputation that attendance at horse races fell drastically and most of the country’s tracks were forced to close. However, illegal gambling continued to thrive and soon became a big money-maker for organized crime. It was in this atmosphere that the most notorious sports-betting scandal in US history occurred. In 1919, eight members of the heavily favored Chicago White Sox were accused of taking money from gamblers to intentionally lose the World Series. In what was dubbed the Black Sox scandal, the players were charged with conspiracy, but were later acquitted by a jury. Despite the acquittal, Major League Baseball imposed a lifetime ban on the eight players. The incident reinforced the unsavory impression of sports betting and made baseball and the other professional leagues distance themselves from any type of gambling to protect the integrity of their sports.

Rise of Las Vegas

To combat the economic hardships of the Great Depression, the state of Nevada made the decision to legalize gambling in 1931. Lawmakers in the sparsely populated state hoped to attract people from other states in an attempt to generate revenue. In southeastern Nevada, the town of Las Vegas drew workers from the nearby Hoover Dam project in Arizona, and quickly grew into a popular resort destination. In 1949, Nevada legalized sports betting and began taking wagers on horse racing as well as the four major professional sports—Major League Baseball (MLB), the National Football League (NFL), the National Basketball Association (NBA), and the National Hockey League (NHL). While Nevada embraced gambling, most other states toughened their laws against it, leaving Nevada as the only place in the United States where people could legally wager on sporting events.

In the 1950s and 1960s, the US Congress imposed a 10 percent tax on all sports betting and made it illegal for wagers to be phoned, wired, or transported across state lines. While the tax was a financial blow to the Las Vegas sports betting industry, the interstate restrictions meant that legal sport bets could only be placed in person. The measures were aimed at targeting organized crime, and while they were successful, they also had a significant negative impact on sports betting in Nevada. Sports betting did not begin to thrive in Las Vegas until the 1970s, when Congress reduced the tax to 2 percent and relaxed restrictions on interstate gambling. The tax was further reduced to 0.5 percent in 1984.

The loosening of restrictions also allowed some other states to begin their own sports betting operations, though none were as expansive as Nevada’s. In 1976, Delaware began a sports lottery, a form of betting similar to a sports pool in which players attempt to choose winning teams from a list of games. Bettors were not allowed to wager on outcomes from one particular contest or include point totals in their bets. Montana and Oregon instituted similar types of games in 1986 and 1989 respectively. As casino gambling began expanding to other parts of the country, many states were also exploring the possibilities of sports betting.

Government Crackdown and Supreme Court Reversal

However, a number of gambling-related sports scandals in the 1980s renewed the worry that gambling was a danger to the integrity of professional sports. With the support of the nation’s major sports leagues, Congress passed the Professional and Amateur Sports Protection Act (PASPA) in 1992. The law banned sports betting or sports-betting-related services in any state that did not already have such laws in place. Horse racing, dog racing, and the indoor ball sport of jai alai were excluded from the ban. As a result, sports betting was made illegal except in Nevada, Delaware, Oregon, and Montana. This effectively made Las Vegas one of the few places in the United States where people could legally bet on individual sporting events.

The ban did little to stop Americans’ interest in sports betting and helped make Las Vegas an even bigger gambling mecca and a prime tourist destination. In the late 1990s, the growth of the Internet opened up a new avenue for sports betting as gambling sites began popping up online. Despite attempts by Congress to regulate the new endeavors, the online sports betting industry blossomed into a multi-billion-dollar business in the early twenty-first century. At the same time, many states that had casino operations were trying to change the law to allow them to offer sports betting. In 2011, New Jersey residents overwhelmingly voted in favor of sports betting and the state attempted to amend its laws to allow the practice.

The state’s decision was challenged by the major sports leagues, and after several court losses, New Jersey eventually took the case before the US Supreme Court. In May 2018, the Court ruled PASPA was unconstitutional and opened the way for legalized sports betting in all fifty states. By 2022, more than half of US states had joined Nevada in allowing all forms of sports betting. Several more states had passed laws allowing it but had yet to implement a system. Hawaii and Utah’s state constitutions expressly banned any form of gambling.

While gambling companies welcomed this reversal, commentators noted that such companies would still have to deal with the different regulations and tax rates imposed within the states that had legalized sports betting. Additionally, some of the states that had been unsuccessful in passing legislation to legalize sports betting faced legal opposition from some in the casino industry wary of gambling competition. At the same time, some professional sports leagues argued that they should receive a share of the revenue earned from wagers placed on their players and teams.

Overview

Legal sports betting in the United States is conducted at a sportsbook, a term born from the early days of sports betting when wagers were recorded by hand in a book. Sportsbooks accept wagers on most team and individual sports, both amateur and professional. They offer many different types of betting, with each usually associated with a specific sport. For example, a form of wagering called pari-mutuel betting is predominantly associated with horse racing. In pari-mutuel betting, all the wagers are placed in a betting pool, with the payouts and odds determined by the total amount of money that is wagered. The managing body, such as the racetrack or sportsbook, takes a small percentage of the total wagers, and the pool is then divided among the winning bettors.

The most common form of wagering is called a straight bet. This type of bet is used in team sports such as football and basketball and involves a betting line, better known as a point spread. After analyzing information about the teams involved, a sportsbook will set a point spread. This is the number of points the favored team is expected to win by. For a bet on the favorite to win, that team would have to win by more than the point spread. The non-favored team, called the underdog, can produce a winning bet by winning the game outright or losing by less than the point spread. For example, if a team is favored by 6 points, it must win by 7 points or more for a bet to be considered a winner. If the favorite wins by just 5, bets on the underdog are considered winners. If the favorite wins by the exact amount of the point spread, the bet is considered a tie and no money is won or lost. Point spreads can change in the time leading up to games and often vary from one sportsbook to another.

Wagers can also be placed with a money line, a form of betting used in all sports but most common in baseball and hockey in which fewer points are usually scored. In this case, sportsbooks set a dollar figure that determines the favorite and the underdog. The money lines determine the amount of risk associated with bets on each team. For example, if an underdog has a money line of +125, a bettor would win $125 for every $100 bet on that team. A line of -150 means a bettor would have to wager $150 to win $100. Negative money lines are always associated with favorites.

Bettors can also place bets on the total number of points scored between two teams in a game, a figure known as the over/under. Money is wagered on whether the total points will be over or under the line set before the game starts. Similar types of bets can be made before sporting seasons begin by betting on whether teams will win more or fewer games than a total set by the sportsbook. Proposition bets can be placed on the likelihood a specific event will occur during the course of a game. For example, a bettor can wager on how many interceptions a quarterback may throw during a game, or how many hits a baseball player may collect. Parlay bets are a series of wagers in which the payouts increase as long as the selected teams continue to win. Once one of the teams loses, the parlay bet is lost.

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