Sports Betting
Massachusetts is opening a new chapter in its long history of gambling as legal sports wagering expands across the Commonwealth. In-person sportsbooks opened their doors on January 31 at the state’s three casinos: MGM Springfield, Encore Boston Harbor in Everett, and Plainridge Park Casino in Plainville. Online betting via computer or phone app will commence on March 10, just in time for March Madness.
While legal sports betting is new to the state, Massachusetts is no stranger to gambling. Lotteries were common throughout colonial New England. Faneuil Hall in Boston as well as several buildings at Harvard University were built using lottery proceeds. Card rooms were common in inns and rest stops across the Commonwealth in the 1700s and early 1800s, and betting certainly took place at horse races across the region. Gambling gradually died off across the state and the rest of the country in the 1800s as concerns about the morality of gambling as well as notable cases of fraud and corruption arose, but gambling returned to Massachusetts in 1935 when the legislature legalized betting on horse races in an attempt to increase employment, consumer spending, and most importantly tax revenue during the Great Depression. In 1971, Massachusetts was also one of the first states to relegalize a state lottery after the last of the games disappeared in the 1890s. Casino gambling has been legal in Massachusetts since 2011 with the first of three casinos in the state opening in 2015. The adoption of statewide sports gambling is just the latest step.
While legal sports betting is new to the state, Massachusetts is no stranger to gambling.
The amount that people in states with legal gambling wager each year surprises most observers. For example, last year Massachusetts residents purchased a record $5.9 billion in lottery tickets. That works out to just over $1,000 for every adult in the state. The amount wagered by sports gamblers in states that have legalized a full range of online options is similar. Both Arizona and New Jersey have well-developed sports betting industries that generated over $1,000 in wagers per adult resident in 2022. Massachusetts is likely to experience similar betting figures as the industry here matures.
So what can a typical Holy Cross student expect to experience when online gaming goes live next month? Eleven different online betting companies will be competing for sports fans’ dollars including well-known names like DraftKings, BetMGM, Caesars, and FanDuel. All potential gamblers will have to be 21 or older to bet either in person or online. Bettors will be able to bet on nearly all major sports with the exception of regular season college games involving Massachusetts teams, so placing a bet on Holy Cross games in any sport will be prohibited unless the team is involved in a major tournament like March Madness or the Frozen Four.
While students in general will be able to bet on any college game not involving Massachusetts teams, the NCAA itself strictly prohibits athletes from gambling on any sport.
While students in general will be able to bet on any college game not involving Massachusetts teams, the NCAA itself strictly prohibits athletes from gambling on any sport. The NCAA also partners with monitoring services so that the use of a betting app by a current NCAA athlete will be automatically flagged if it matches up with an active NCAA roster in any sport. Of course, the NCAA’s stance against sports gambling is more than a bit hypocritical considering that the organization generates over $1 billion per year from the sale of media rights for the men’s division 1 basketball tournament, an event that commands such fees due to the popularity of betting on the tournament through March Madness brackets.
Sports gamblers can also expect the experience to be expensive. While the high level of competition between various sports betting apps is likely to lead to an initial flurry of promotions and free betting opportunities, all of these are designed to entice players to become long-run customers. The sportsbooks in Massachusetts expect to earn roughly $400 million per year once the market stabilizes, and every dollar of net revenue comes from one place and one place only – out of bettors’ wallets.
To the extent sports betting makes watching sports more exciting, it is fairly harmless entertainment option.
It is tempting to think that, unlike lottery tickets or slot machines which are completely based on luck, sports betting rewards people for skill. But study after study has shown that sports betting markets are extremely efficient turning every bet into basically a coin flip, but a coin flip where the house has a built in edge. Last semester the students in my Economics of Gambling class ran a gambling simulation where they wagered (an imaginary) $10 on 14 NFL/college football games every week. After 10 weeks, over 5,300 individual bets, and $1,400 wagered per student, 34 out of the 38 students in class ended up losing money with the average student out $144 over the course of the semester. In fact, most students did worse than a handful of bot accounts that were set up to bet on completely random aspects of each game like the alphabetical order of teams or how fearsome a team’s mascot was. And nothing about the students was related to their winnings. Students with high GPAs, more interest in sports, a background in football, or experience in betting did no better than students who knew nothing about the NFL or sports betting coming into the class. The only factor that was even close to being a good predictor of gambling success was whether the student was a varsity athlete… and those students actually did worse than non-athletes. That is yet another reason for athletes to listen to the NCAA when it says, “Don’t Bet On It.”
Sports gambling is here to stay and will be a temptation to college students from here on. To the extent sports betting makes watching sports more exciting, it is fairly harmless entertainment option. But the oldest rule in gambling is that you can’t beat the house, and lots of college students will be learning that rule the hard way.
Professor Victor Matheson is nationally known expert on the economics of lotteries and gambling.
The National Council on Problem Gambling operates the National Problem Gambling Helpline Network (1-800-522-4700). The network is a single national access point to local resources for those seeking help for a gambling problem. Help is available 24/7 and is 100% confidential.
By Professor Victor Matheson