Running Head: LEGALIZED SPORTS BETTING 1

Nebraska’s Debate: Legalized Sports Betting

Alek Timm

April 3, 2019
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Nebraska’s Debate: Legalized Sports Betting

When looking at the pressing issues in modern athletics, Nebraska’s legislators are not

focussed on their alma mater’s performance this basketball season or an upcoming pickup game.

Instead, the United States Supreme Court striking down a ban on sports betting has stirred great

debate as to whether or not Nebraska should legalize one of America’s most valuable

underground markets. “While the total value of the sports industry is projected to hit $73.5

billion in 2019, the illegal sports betting market reportedly hit $123 billion in 2017” (Heitner,

2018, para. 1). With significant money currently funneling through illegal channels, advocates

for legalized sports betting have argued the government should instead regulate the industry and

generate revenue from it rather than waste funds as they struggle to prosecute those currently

involved.

The federal ban, formerly declared as the Professional and Amateur Sports Protection Act

of 1992 (PASPA), was overturned by the Supreme Court’s decision in Murphy v. National

Collegiate Athletic Association in May 2018. As a result, 32 states are expected to pass

legislation that allows for regulated sports betting within the next five years (Hammel & Nichter,

2018, para. 11-12). At this point, Nebraska legislators’ efforts to decriminalize sports betting

have failed at the hands of Governor Pete Ricketts and other state senators. Despite concerns

from the state's leaders, it is imperative that Nebraska considers legalization for the sheer

economic and social benefits brought forth when sports betting is brought out of the shadows.

Economic Impact

The potential for direct economic value from sports betting makes new legislation a

lucrative idea for the state of Nebraska. In terms of value created, Nebraska could pursue
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increases in state tax revenues, licensing availability, product diversity, and labor force. This tax

revenue, along with profit generated from various state-sanction products, serve as a solution to

several issues in the state legislature. The economic benefits derived from legal sports betting are

difficult to ignore, and they raise questions as to why certain legislators oppose the change.

In each of the forms of economic benefits mentioned, increases in state tax revenue

would provide the greatest amount of fiscal support for Nebraska. Currently, the state does not

collect a single tax dollar from sports betting because it is considered an illegal form of personal

income. In a state-regulated system, Oxford Economics (2017) projections show that Nebraska

would earn $21.5 million in tax revenue with a moderate base tax rate of ten percent on earnings.

Nebraska also projects to see $116.9 million in annual sales, 790 new jobs created, and a $15.4

million increase in the state’s gross domestic product (p. 33). Legislators argue that this revenue

comes at the cost of the citizens who are betting their own income. Regardless of the legality, the

American people have proven that they will bet on sports. Rather than allowing that money to

contribute to an underground market, the state government can tax the revenues earned through

sports betting to solve budgetary issues and add money into the economy.

Specifically, Hammel and Nichter (2018) argue that the tax revenue from legalized sports

betting could “bring in millions in state revenue that could be used to finance schools, offsetting

high property taxes, but other states . . . will take advantage of it” (para. 29). According to

Loughead (2018), Nebraska ranks tenth of all states with the highest property taxes in the nation

(para. 3). With a new influx of tax revenue from legalized sports betting, tensions in the state

budget are eased; therefore, senators are able to successfully pass legislation that lowers property
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taxes. In turn, Nebraska becomes more appealing for businesses, and more funding is available

for expanded education, health care, and infrastructure opportunities.

Beyond the direct economic benefits of legalized sports betting, Nebraska would likely

see an economic ripple effect. Hauf (2018) reports that “a legal sports betting system [in the

United States] would create 125,000 to 152,000 jobs paying between $6 billion and $7.5 billion

in total wages. That’s an average salary of roughly $48,000 for a typical worker in a new sports

betting industry” (para. 6). With hundreds of new jobs of all skill levels created in Nebraska,

more disposable personal income is created as well. The total labor income estimate for

Nebraska upon legalization equates to $32.2 million (Oxford Economics, 2017, p. 33). New job

growth and increased supply of disposable income translates to more money spent at Nebraska

businesses. Legalizing sports betting would ultimately be viewed as an investment in the state.

A majority of opposition is based upon ethical issues with gambling. However,

Nebraska’s opportunity cost of maintaining this stance is remarkably high. “Americans bet an

estimated $4.76 billion on Super Bowl 52 in February, with only three percent of that fortune

gambled legally” (Hauf, 2018, para. 4). States do not earn one cent from all of the money

gambled illegally. Legalizing sports betting opens up an untapped market of $4.62 billion in

taxable earnings from a single sporting event. While Nebraska’s market is only a fraction of that

total, it remains a considerable amount of money to overlook in a state with severely high

property taxes and billions of dollars lost in recent natural disasters.

Consumer Protection

Among legislators’ concerns of Nebraska legalizing sports betting, fears of addiction and

the consequences associated with it cause the greatest amount of uneasiness. Nebraska Governor
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Pete Ricketts is quoted by Georlett (2019) as saying, “Things that go along with gambling for

every dollar you collect in tax revenue you spend three in social services. Whether it's an

increase in child abuse, increase in spousal abuse, embezzlement, things like that” (para. 7).

Ricketts is correct in the identification of the harmful effects of gambling addiction; however,

cases of abuse and embezzlement occur significantly more often when the gambling is done

through illegal betting rings and bookies or via offshore betting websites (Ponseti, 2019, para. 5).

“Americans bet illegally on sports around $123 billion per year - more than 20 times

greater than the legal, regulated sports betting market” (Minton, 2018, p. 1). Minton (2018)

continues to write that, by forcing bettors to gamble illegally, state governments are driving

citizens into using gambling outlets that lack a motive to prevent underage gambling, discourage

problem gambling, or safeguard player data (p. 1). Essentially, citizens are not protected from

betting with money they do not have or engaging in dangerous bets involving large amounts of

money. As a result, abuse and embezzlement occur much more often when betting is not under

regulation of the state government. For example, state-regulated lotteries experience the fewest

amount of gambling addiction victims, and are generally viewed as beneficial to public works

(Grovum, 2015, para. 4). Nebraska supporting lotteries is hypocritical considering the stance on

sports betting as Governor Ricketts pushes the narrative that sports betting would only cause

more social issues than it would solve.

By allowing the state government to oversee sports betting, Nebraska would be able to

impose restrictions that protect its citizens. Minton (2018) reports that in each state with

legalized sports betting, laws set by the state government require licensed operators to comply

with certain requirements. These requirements include a complete verification of a bettor’s age,
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identity, and location before making a wager, placing limits on stakes, following self-exclusion

lists, and providing assistance resources for problem gamblers and educational material about

safe gambling to bettors. Each of these requirements are at the cost of the operator (p. 15).

Minton (2018) also examines the effectiveness of these regulations:

Licensed online casinos . . . are required by law to recognize “self-exclusion lists,” which

enable consumers to voluntarily block their own access to gambling sites and ensure they

do not receive enticements to play. Researchers have found that players who signed up

for lifetime exclusion bans had significantly reduced gambling-related problems. While

not legally required, online casinos can also utilize behavioral tracking tools, such as

PlayScan and Observer, that track player behavior and alert operators or customers when

they identify patterns of play that may signal problem gambling (p. 15).

By legalizing sports betting, operators are able to track bettors and alert the necessary authorities

when problems could potentially occur.

Rather than forcing citizens, who have shown they will continue to bet on sports despite

it being illegal in Nebraska, into using illegal betting outlets, Nebraska can actually provide

greater consumer protection and care. Compliance with set regulations has proven to lead to

fewer abuse and embezzlement cases in legalized states. Meanwhile, those who need help with

addiction can find support much easier once the government has oversight over sports betting.

Integrity of Sports

Legalization of sports betting has faced opposition from certain athletic leagues out of

fear that match-fixing will occur at a higher rate. The National Collegiate Athletic Association

has taken a particularly strong stance in this regard, citing that the intent of prohibiting sports
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betting was to promote sports integrity. While that is the stated intent, Minton (2018) argues that

“by creating an enormous and largely unobserved black market, the regulatory regime has

actually had the opposite effect, with match-fixing more likely” (p. 8).

Match-fixing occurs when bettors pay athletes or officials to purposefully lose or

influence a game in one direction, and is arguably the greatest threat to the integrity of

professional and major amateur sports. Typically, the bettor will place a large wager on the

opposing team; therefore, they earn a large payout. This illegal form of corruption is commonly

fostered in an environment where sports betting is strictly prohibited (Anderson & Ross, 2015,

para. 6). While match-fixing does transpire in legal settings, its prevalence is much higher in

illicit betting markets.

Foreign markets serve as a clear example of the adverse effect prohibited sports betting

has on match-fixing. Anderson and Ross (2015) compare:

In many countries, sports wagering is legal and regulated, with scandals more readily

exposed and violators punished. Sports in two such countries, the United Kingdom and

Australia, are generally seen as fair and clean. In contrast, the two nations with the largest

population of sports consumers - China and India - outlaw all forms of sports gambling.

Gambling thrives unregulated in these markets, and corruption has flourished (para. 3).

The reason for this increased corruption in unregulated markets stems from government

involvement. Minton (2018) further writes that integrity measures in the regulated markets

typically consist of cooperation agreements between the industry, government, and outside

entities across national borders (p. 9). Various organizations have access to immense amounts of

data gathered by sports books and utilize analysis software to spot irregular betting patterns that
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could signal match-fixing, money-laundering, and fraud. Upon spotting this behavior, sports

books alert law enforcement (Anderson & Ross, 2015, para. 12). This system only works if the

government is involved and works with sports books and analysis organizations. If bets are

placed illegally and match-fixing occurs due to a lack of government interference, the integrity

of sports is compromised.

Match-fixing is also less likely to occur in a regulated market because the government

would lose consequential amounts of tax revenue. Silver (2014) points out that bettors would be

much less likely to place a wager if the prevalence of match-fixing has recently increased.

Without wagers, the government would miss out on the economic benefit of legalized sports

betting (para. 8). Additionally, in the current climate, “even if [sports books] wanted to alert the

authorities about potential instances of match-fixing, they could not do so for fear of

prosecution” (Minton, 2018, p. 9).

While Nebraska does not feature many professional sports organizations, the state does

host prominent sporting events such as the NCAA College World Series, United States Olympic

Swimming Trials, and the NCAA Men’s Basketball Tournament. If match-fixing were to occur,

Nebraska would be less likely to play host to these events in future, a crushing blow to the state’s

economy.

Legalize Sports Betting

Following the United States Supreme Court decision to overturn PASPA, state legislators

across the country have had to ponder the same question that numerous Nebraska State Senators

have asked their fellow leaders. Would legalizing sports betting be beneficial to the state? Thus

far, each government that has passed legislation allowing for it has seen impressive results.
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Specifically, Rhode Island, a state with a population that is half that of Nebraska’s, has already

projected earnings of $23 million in the 2019 fiscal year (Helsel, 2018, para. 25). As ten other

states have seen similar success in legalizing sports betting, Nebraska must consider the benefits

that new legislation would bring to the state.

Prospects of taxes on revenue earned through legalized sports betting make the argument

quite favorable and remunerative for a state that has struggled to maintain its budget historically.

By bringing sports betting out of the shadows and into the hands of the state government,

Nebraska would be able to erase the stigma behind gambling addiction and create a safe, healthy

environment for fans to wager on their favorite sports. The goal of a government should be to

protect the interests of its citizens, and Nebraska can do just that by passing legislation that

authorizes sports betting.

References

Anderson, A., & Ross, S. (2015, February 16). Strong regulation could inject integrity into sports

gambling. Sports Business Journal. Retrieved from https://www.sportsbusinessdaily.com

/Journal/Issues/2015/02/16/Ross-Anderson.aspx

Georlett, P. (2019, January 2). The discussion of sports gambling in the state of Nebraska.

KLKN-TV Lincoln. Retrieved from https://www.klkntv.com/story/39721832/the-discussion

-of-sports-gambling-in-the-state-of-nebraska

Grovum, J. (2015, April 4). Do state lotteries take advantage of gambling addicts?. USA Today.

Retrieved from https://www.usatoday.com/story/news/nation/2015/04/04/stateline-

lotteries/25291687/

Hammel, P., & Nichter, E. (2018, May 14). After U.S. supreme court ruling, could sports betting

become legal in Nebraska?. Omaha World Herald. Retrieved from https://www.omaha

.com/news/nebraska/after-u-s-supreme-court-ruling-could-sports-betting-become/article_7

4ba06d2-2715-5800-85b2-a88e7af9c2d6.html

Hauf, P. (2018, August 31). The economic benefits of legalized sports betting in the U.S. would

be huge. Retrieved from the Foundation for Economic Education website: https://fee.org

/articles/the-economic-benefits-of-legalized-sports-betting-in-the-us-would-be-huge/

Heitner, D. (2018, October 19) Sports industry to reach $73.5 billion by 2019. Forbes. Retrieved

from https://www.forbes.com/sites/darrenheitner/2018/10/19/sports-industry-to-reach

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Helsel, P. (2018, August 21) Sports betting is now legal in several states. NBC News. Retrieved

from https://www.nbcnews.com/news/us-news/sports-betting-now-legal-several-states-

many-others-are-watching-n894211

Loughead, K. (2018, October 24). Ranking property taxes on the 2019 state business tax climate

index. Tax Foundation. Retrieved from https://taxfoundation.org/ranking-property-taxes-

on-the-2019-state-business-tax-climate-index/

Minton, M. (2018, March 15). Legalizing sports betting in the united states. Retrieved from

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%20%281%29.pdf

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Ponseti, C. (2019, January 30). Sports betting in 2019: Americans overwhelmingly support legal

sports betting. American Gaming Association. Retrieved from: https://www.american

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-betting/

Silver, A. (2014, November 13). Legalize and regulate sports betting. New York Times. Retrieved

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