Sports betting is exploding in popularity across the U.S. with many sites integrating crypto payments, but as the number of Americans participating increases, voices of concern grow louder.
Sports betting has been legal in the U.S. since just 2018, and the young industry has become a major growth sector. In the first six months of 2022, industry revenues hit $3.04 billion, comparing favorably to the $4.3 billion the sector managed in all of 2021.
In a further boost for the industry Morgan Stanley projects revenues will hit $8.5 billion by 2025, but as crypto heads will know, increased revenues invariably come with increased scrutiny.
The 36th state of mind
On Aug. 1, Massachusetts became the 36th state to legalize sports betting. Across the U.S. the pattern is one of relaxing regulation. Massachusetts is the third state to legalize this year, joining Maine and Kansas. California is expected to be next.
Those benefiting from the changes include advertisers and the sports leagues. Over the 2020-21 season FanDuel, DraftKings, and Caesars Entertainment plowed $1 billion of sponsorship revenue into the NFL. They weren’t the only players to open their checkbooks. BetMGM, Fox Bet, PointsBet, and WynnBet were among the rest.
The aggressive marketing of gambling to sports fans is already drawing the ire of some. Timothy Fong, the co-director of the Gambling Studies Program at the University of California worries that the industry is promoting an unrealistic dream.
“On social media, they will show a $10 parlay that made $180,000 and say that ‘this could be you, this is life-changing money,’” Fong told Grid earlier this month. “But in reality, this isn’t going to be you.”
As Fong sees it, this sort of promotion offers customers instant gratification and minimizes or ignores the dangers it poses.
It’s a position that the medical community would seem to largely agree with. According to information from the Mayo Clinic gambling can lead to a range of mental health issues including depression and anxiety, while compulsive gambling “is a serious condition that can destroy lives.”
While the total market for sports betting is already huge, its convergence with cryptocurrency offers additional benefits and opportunities. Moving traditional fiat currencies in and out of gambling platforms isn’t always easy.
Crypto promises a far more efficient system. Earlier this year superstar rapper Drake placed a $1.26 million bet on the Super Bowl with Bitcoin. As industry pundit Anthony Pompliano pointed out at the time, “settlement times are faster and the cost is cheaper. Bitcoin is superior from a technology format.”
That’s a position that industry insiders share. In a recent interview with TechCrunch, Greg Dean of HotStreak said, “getting your money in and out is extraordinarily painful because payouts are tethered to legacy payment systems.”
It’s little wonder then that the industry sees enormous potential in the blockchain. Still, while crypto may offer a brave new betting wonderland, it could also provide critics yet another stick with which to beat it.
Crypto users are no strangers to vilification. Darknet marketplaces such as Silk Road are the grain of truth that for years, has allowed critics to exaggerate its links to the international drugs market. A U.S. gambling boom could increase exposure and demand for cryptocurrency, but at the same time tie it to another of society’s perceived ills.
Is the association with another societal vice something that crypto proponents want? Whether the answer is yes or no, it’s a slightly moot point. Thanks to decentralization, there’s very little anyone other than government agencies can do to halt the convergence.
Expansion and decline
While the gambling industry is expanding in the U.S. the picture elsewhere is more complex. In the U.K., Europe, and Australia the industry is stable or in some cases contracting.
In the U.K. gambling has been legal since the 1960s, but tightened regulations have made the market more challenging in recent years and some sectors are now in decline.
As Morgan Stanley points out, “While today the US regulatory environment is expansionary, in Australia and Europe it is contractionary, highlighting long-term risk.”
If the U.S. follows the U.K. model one potential area for regulatory enforcement could be in advertising. U.S. Federal laws have previously regulated the kinds of language you could use to advertise casinos for instance. It’s certainly plausible that these types of restrictions could also apply to sports betting operators in the fullness of time.
For now, however, any restrictive changes would appear to be highly speculative. Whether for the benefit or for the ill, cryptocurrency and sports betting have a long road ahead of them. Where that road will take them, remains a matter of debate.