Scratch & Win

DESCRIPTION: Lotteries are part of a long trend toward more and more legal gambling: bingo helped open the door for lotteries, just as lotteries helped open the door for casinos. And by that logic, sports betting is just the latest addition to that trend. So why does it feel so different?

In the first of three interview episodes expanding on themes from the series, host Ian Coss speaks with gambling historian Jonathan Cohen about why this latest expansion of legal gambling is unlike anything that came before it.

Cohen’s new book is called "Losing Big: America’s Reckless Bet on Sports Gambling”

NARRATION: When we did our last series about the Big Dig, after it was done I found myself having a lot of conversations -- some very casual, some out in public -- but often about how that whole story spoke to our current moment. What it says about now.

With our new series, Scratch and Win, I very much wanted to have those conversations, but this time, share them with you. We've got three coming up, each on a different theme from the show.

So one of the arguments I’ve been making is that lotteries are part of a long trend toward more and more legal gambling. Bingo helped open the door for lotteries, just as lotteries helped open the door for casinos. And by that logic, sports betting is just the latest addition to that trend. But to me, it feels like something else.

In 2018, the Supreme Court effectively legalized sports betting when they overruled a decades-old law blocking it in basically every state. The effect has been dramatic to say the least, and in many ways, concerning.

To put a couple numbers on it…In states that have legalized sports betting, bankruptcies have increased by 28%; in households that have gotten into sports betting, investing has dropped by 14%. It’s clear to me that we are living through a massive social experiment. And as my guest today explains, that experiment is just getting started.

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NARRATION: From GBH News, this is Scratch & Win, I'm Ian Coss. Today, I pick up my conversation with gambling historian Jonathan Cohen.

You may recall hearing Jonathan throughout the series, discussing his book on state lotteries. But he has a new book coming out this year that's all about sports betting. It's called "Losing Big: America’s Reckless Bet on Sports Gambling."

My question for Jonathan is: why does sports betting feel different from all the gambling that came before?

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Ian: Jonathan Cohen, thank you so much for coming back to do a second interview for the same podcast.

Could you start by giving us a sense of the scale of sports betting today?

Jonathan: Yeah it's big and it's getting bigger. And with the caveat that California, Texas, and Georgia haven't legalized sports betting yet. So the market is like basically going to double in size when the nation's two most populous states uh, get into the game.

Ian: Wow. And that's when, not if.

Jonathan: I think it's a when, not if, we might be talking like 2036, but it's a when,

Ian: Okay. So with that in mind that the two biggest states are still coming, how big is it now?

Jonathan: we're still talking about a multi or hundreds of billions of dollars per year. A large percentage of that controlled by just two companies, DraftKings and FanDuel. DraftKings, of course, being based right here in downtown Boston. And polls indicating that anywhere from 20 to 40 percent of American adults Again, without the large, two largest states by population included um, have legally placed a bet sometime in the last five years.

Ian: So, I was surprised when I was researching the lottery series, Scratch and Win, when I was digging around in the archives, I found this There's like this roundtable conversation about legalized gambling from 1973. And we play a clip of it in the first episode. And they're debating, should we have a numbers game? How should the lottery operate? How are we going to take this over from the mob? And as part of that conversation in 90, in 1973, there is very serious talk about sports betting: that this should be part of the state lottery um, that if we really want to get the mob out of the gambling business, we have to offer legal sports betting. And that was surprising to me that that conversation was happening that long ago. And so maybe the question I have is, why did it take so long?

Jonathan: Okay, so a couple things to know about sports betting that sort of account for the difference and why one of the reasons why it took so long is that it's just not as profitable on a percentage basis compared to casino games or something like the lottery.

It's just a really slim margin. business. Companies expect to make five to 10 percent on out of every bet. And that's it. And then it's about volume. And we can talk about how sports betting works and why that is, but it's a different kind of game than the lottery, which started at a, 40 or 50 percent margin. And it is now down to 25, 30. So first of all, there, there's not that sort of alacrity by legislators to legalize it because it's as a percentage basis, not as money making for the state. And then there's sort of a parallel track with the lottery in that, in the 70s and 80s, people are batting around what they called a sports lottery idea, which is sort of like a pool, like a pick em pool, where you're picking the results of various games. And the payout is determined by the total amount bet by all players. Uh, which is what makes it a lottery, and you have to pick all these, 14 games, and it's crazy. And, basically, that's the idea that is being bounced around and Oregon finally gets into the game in 1989 and I promise I'm going to get to the point here. Oregon finally legalizes it in 1989 and everybody freaks out and by everybody I mean Congress and the four major sports leagues.

And they freak out in such a way that they pass a bill called the Professional Amateur Sports Protection Act in 1992 that bans states from legalizing sports gambling.

Ian: Right.

Jonathan: So. There was, let's call it momentum as early as the 70s into the 80s for sports betting, sports lottery, some version of it, and then any chance that Massachusetts or other states would have had to legalize it earlier is immediately stopped by PASPA, by that bill in 1992. And it's only in 2018 that PASPA is overturned

Ian: will be the

Jonathan: for states to finally get back in the game.

Ian: the game. Yeah, I feel like this is so important and something I didn't really understand until reading your book and reading some of the other work around this is I just casually thought of sports betting as a 2018 story because I associated it with that Supreme Court case that then opened the doors, but it's really a 1992 story. That's when the like, organic momentum among the states was happening, that then obviously creates this backlash that leads to the passage of the, of PASPA, Professional Amateur Sports Protection Act.

Jonathan: gotta protect the states or we gotta protect our athletes, or we gotta protect, it's a nice framing.

Ian: And when you think of it as an 80s, 90s story, then suddenly the through line with state lotteries becomes so much more clear. Could you draw that connection? You mentioned Oregon. So how is it that the lottery system, the state lottery system really tease up the first attempts at, at sports betting?

Yeah,

Jonathan: So it's, so Oregon passes a lottery in 1984 and as you cover on the show, states are, and state lottery commissions have a mandate to make more money and basically by hook or by crook, any way that lottery commissions can make more money and sell more tickets, they are mandated to do so. so the Oregon lottery. Sort of reasons. Hey this game this sort of sports parlay card has been around for decades Why couldn't we just as you know, Massachusetts figure out how to sort of market the supermarket scratch game and turn that into a scratch ticket Why couldn't we turn a parlay card? Into a sports lottery and sell it through the lottery commission and make money off of it for the state but, that it's it sets up a trip wire this the fact that the Parley card, the sports lottery, is being tied to an actual real life sporting event that has actual real life stakeholders like the NFL, the NBA, NHL, and MLB, and NCAA, and they're the ones who say, Oh, this is a bridge too far.

This is not just another lottery game, quote unquote, just. This is not like the introduction of scratch tickets or lotto or numbers games. This is something that they argued threatened the integrity of our business and of the games that we offer. So you. Need to stop it, and rather than trying to go state by state and stamp out sports lottery proposals in every single state, they went to the head of the chain, went to Congress, and got a blanket ban for the entire country.

Ian: I'm curious when you look at that. That resistance to sports betting it and maybe this is impossible to tease out. But it seems like on the one hand, there's this organized lobbying resistance specifically from the sports leagues. But the reason that works is that there is also maybe a cultural resistance to it. And how does that tie in with this organized lobbying campaign?

Jonathan: Yeah, betting certainly has its moments where it is as scandalous as something like the numbers, like the illegal numbers. Um, And there are moments going back to the 1960s when two of the most famous players in the NFL are banned for a season for gambling or for being associated with gamblers. It has this sort of seedy reputation. And it's Never quite able to shake it in the way that the lottery I think was able to shake it or maybe I think it's you're arguing in the podcast that the lottery did the cultural clearing work for things like sports betting and the normalizing of the activity of gambling in general such that what. I mean, The clearest illustration of this is the and Roger Goodall said this at a press conference, the Patriots have won so many Super Bowls, I can't remember which one this was, I think it was 2014, maybe 2016, where he said, the number one, this is after the concussion crisis sort of revelations, the number one threat to the integrity of football is gambling.

Ian: Wow. so

Jonathan: it's, the NFL uses it as a convenient scapegoat for years. I'm saying, oh, you can count on the integrity of our games because we are so opposed to gambling and we keep gambling as far away from our operations and from our games as possible. Lo and behold, the Supreme Court decision comes down and it's a complete 180. It's now the NFL believes or seems to believe or behaves in such a way that It needs to be as close to gambling as possible so that it can monitor gambling. And the new way to protect the integrity of its games is to give gambling a big hug rather than keep it sidelined on the side. So that is change in the legal landscape that leads to a change in the cultural landscape, or it's a change in the cultural landscape, the change in the legal landscape. So they're all sort of mixed up together. And then of course the answer is wherever there's money to be made, the leagues are going to try to make it.

Ian: It's funny how, in some ways, it parallels the states themselves.

It's that, that same kind of like, if you can't beat them, join them mentality, where like, the states, tried to fight gambling and, bury gambling. And then at some point, they're like, all right, we might as well just do it ourselves. And it seems like the leagues. Went on a similar journey with sports betting.

Jonathan: So the, and this is maybe the post 1992 but pre 2018 story that's important is the rise of fantasy sports and then daily fantasy sports, which are not quite gambling, but they sure, especially DFS, feels a lot like gambling and looks a lot like gambling and certainly seems to set the stage for, or in the same way, let's say that the bingo cleared the stage for the lottery and then the lottery cleared the way for casinos, casino cleared the way for DFS, and then DFS cleared the way for sports betting.

Ian: And DFS, remind us one more

Jonathan: Sorry, that's the daily fantasy sports pioneered by Draftkings and FanDuel.

Ian: it.

Ian: Yeah, I feel like this is turning into like the domino theory of gambling.

Right. Could you talk about fantasy how that gets started and why that is so crucial in changing the landscape for sports betting?

Jonathan: Yeah. Well, It gets started by a bunch of like media nerds who are like obsessed with sports and are, they're people I would do this too, who are like, who the game isn't enough. They need to like game the game somehow, so they like This guy Daniel Ockerend is the founder of Rotisserie League Baseball, named for La Rotisserie, a French restaurant where they met and created the rules for the fantasy baseball league.

But it spreads over the course of the 1980s and 1990s, really helped by the proliferation of the internet and the fact that you no longer need to tally all of your players results by hand using newspaper box scores. It's sort of Yahoo Sports or whatever will update it for you. Um, That's also what allows The expansion of fantasy into sports other than baseball because it's only baseball that has those meticulous box scores in such a way that you need them But what's important here, more important than the sort of the technological shift is the cultural shift in that what fantasy provides and the DFS even more so is this mind shift where you're no longer having Routing interest only in your team to win the game, you now have a stake in this wide receiver over there in Cincinnati to get a certain number of yards, and this quarterback in San Francisco to get a certain number of touchdowns, and so on, and you've changed the calculus of the routing interest beyond your team to win the game, and I think it's clear how that translates really well to, to sports betting.

Ian: Yeah, that idea of rooting for something other than your team to win is a big mental shift I hadn't thought about that.

Jonathan: and then DFS takes us one step further where no long, so at the, for Fantasy at least, you're building a team, and you're building at the beginning of the season, you're gathering with your friend, Probably not at a French restaurant, but you're like meeting up with your friends, and you're building a team, and you're gonna stick with these guys, these wide receivers, quarterbacks, whoever, for the whole season.

For DFS, the whole point is you're building a team on Sunday morning for that day, or maybe even it's for the 1pm slate of games, and it's faster, it's, you're putting money on the line, so with DFS you would challenge another player head to head to say, Oh, I can build a better lineup than you, and whoever's roster of players does the best, or performs the best, gets the most points by a certain metric uh, wins, and they could win literally a million dollars, it was in 2014, 2015, through FanDuel

Ian: And that is real money.

Jonathan: money. That was real money, because, I mean, you're paying an entry fee. And then the house, DraftKings Vandal, keeps a rake, a small percentage of it. And again, this explodes in popularity in 2014 and 2015. And, it sure feels a lot like gambling.

Ian: I was going to say what is the, is it really just a semantic difference at that point?

Jonathan: You wanna talk about semantics? Okay there's a law passed in 2006. It's this is out of the Simpsons. It's like tacked onto a port security bill that's being passed, like in the war on terror, wake of 9 11 at the, like the last part of a port security bill passed on the last day of the congressional session of 2006 is a anti money laundering statute and what it does is it cuts off The online payment processors for offshore sports books and online. So it was meant to attack these, the illegal online gambling that was persisting uh, after PESPA, but there's a specific carve out for fantasy sports, for games, on the basis of knowledge and skill are the words.

So DFS companies, FanDuel and DraftKings insisted for years, these were not gambling games. These were knowledge and skill fantasy games. And through that Eye of the Needle that Campbell wrote through, I don't know what the metaphor is, but they, double, triple down on that exemption exemption. And as a result of they were not gambling, that they were fantasy sports.

Ian: So it's like, we're a pinball machine, not a slot machine.

Like, You have to know how to play the game in order to win. a game of skill, not a game of chance. But from there though, you've already, you've primed your market. You've created a whole culture around it. And so, it's a very subtle shift at that point to say Now you can just bet on everything, and we're not actually going to claim that it's a game of scale anymore.

Jonathan: And, post Murphy, the Supreme Court decision that overturned PASPA, not only is it a short jump, culturally, now that people are used to betting, But DraftKings and FanDuel have every potential sports better's email address and social security number and they already are trusted with credit card deposits and they're ready to rock. And I've talked to sources who worked at FanDuel and DraftKings at the time that said as early as 2017 when the court was basically taking up what would become the Murphy decision, the company started building online sports books and online casino.

Ian: Anticipation

Jonathan: anticipation of the decision and anticipation that they were going to try to dominate the sports betting market in the way that they were dominating the DFS market.

Ian: So take us inside the Supreme Court case. What is the like the legal logic for challenging paspa in 2018? And why does it happen then?

Jonathan: Isn't that true

Ian: isn't that true of like half of the landmark Supreme Court cases like the right. The legal logic is not what you would expect,

Jonathan: in this case it all comes down to what's called the commandeering statute of the 10th amendment, which is basically whether Congress can tell states what to do. Or the degree to which Congress can tell states what to

Ian: states rights issue.

Jonathan: A hundred percent. And part of the problem for PASPA was that it had carve outs. And it made an exemption for Nevada. It made an exemption for New Jersey. So it'd be one thing if Congress had said sports betting is illegal, full stop. But what it said was, basically states cannot pass sports betting. Except for these states who already have it. And that's basically what it boiled down to.

Ian: One of the things you capture really well in your book is just how fast the situation unfolds after that Supreme Court case. So could you take us to like the moment the starting gun is fired in 2018 how quickly do states start to legalize and DraftKings and FanDuel start to build out these

Jonathan: Yeah. So really fast and the comparison with lottery I think makes this really poignant, which is Delaware for example is the first state to get, off, off the line or to get things legalized. And I think it's a matter, it's less than six weeks from the Supreme Court decision from May 14th, 2018. And. By comparison, it took many decades for 38 states to become lottery states and we now it's seven years and we already have, we're gonna have our 39th sports betting state next year or this year in 2025.

But what's cra what's even crazier so what when states first started up, it was all in person, it was all retail. But what's really crazy is like out of nowhere within a matter of, let's say, two to three years, Less in some states they're up and running online in addition to retail. And that is like totally new ground basically for American gambling. Other than a couple states that had done online lottery sales. It's like completely untested, completely unproven, and they just walked right into the open door, sort of no holds Barr.

Ian: That's, yeah. That kind of blew my mind because, Massachusetts, for example, just authorized online lottery sales last year. You know, we've had a state lottery, a brick and mortar paper ticket lottery for over 50

Jonathan: and you had to pay cash until like two years ago,

Ian: exactly.

And then we're just getting to that point of Okay, we've come this far, let's make this accessible online. And yet with sports betting, that's like almost a given from the jump in many states that it's immediately online, kind of leapfrogging ahead. Like we were talking about this almost like domino theory of, you know, one thing leading to the next, but sports betting feels like a kind of step change

Jonathan: Yeah. and you could attribute this to whatever you want, but certainly and I show that my case study on this for my book is focuses on the state of Colorado, but certainly this was a. Desired outcome of the sports betting companies that they wanted to go online right away. They didn't want to sort of bother with a retail period or in Colorado, they batted around this idea that you'd have to like, go and register at a casino and then you could play online. no, No, they're trying to like, as fast as possible, get your DFS customers who are used to playing online and betting on their phones and let them stay betting on their phones and keep betting on their phones again, in a way that has been totally never seen before, never tried before in this country.

Ian: Could you walk through the case study of Colorado, just to give us a clear example of how quickly it moved in that state in particular.

Jonathan: I was gonna say, I picked Colorado because I was trying to think of, We're trying to identify, okay, where is the emblematic case of the degree to which sports betting legislation and regulations were shaped by the industry and multiple sources, independently of one another, recommended Colorado,

Ian: and unlike me, you don't exclusively tell stories about the state where you grew up,

Jonathan: Right. In fact, I have I have never been to Colorado, and I did all this reporting from my attic in New Haven.

Ian: So walk me through the Colorado

Jonathan: Yeah, So this is actually very relevant in that in 2015 2016, 2014 2015, sorry DFS sort of comes under legal scrutiny by multiple states and as a result goes to state legislatures and in that process they meet in Colorado. This lawmaker named Alec Garnett, who until recently was the chief of staff to the governor, Jared Polis out there, and he's just like genuinely loves betting on sports and it's like genuinely huge Broncos fan and is like all in on sports betting. And he goes like on a Denver. Sports talk radio station the day of the Supreme Court decision be like, this is awesome. I can't wait for Colorado to get in the game.

So, taking advantage of his genuine enthusiasm and his position at the time in the state legislature. The DFS companies now sports betting companies basically get to work right away to draft legislation and I don't have a picture or a video but I know who is in the room like drafting the legislation and providing comments on it.

It was a couple lawmakers, the COO of the Colorado Gaming Association, which is the advocacy group for state casinos The chief legal officer for DraftKings, who happens to be a Denver resident, and they're providing comments on draft legislation and Shaping it to their whims, basically, and that's one of the reasons why you end up in Colorado with a low tax rate on sports gaming. This is a huge point of contention, is the rate at which sportsbooks are going to be taxed for their gaming revenue. In Colorado, it's just 10%, and it actually ends up being even lower because of this crazy exemption that the sportsbooks get added to the bill. It goes online right away. Huge point.

You don't have to do this crazy thing that they talked about where you have to go to a casino, register, come back uh, and then you can bet online. And then crucially, like we've been talking about, it also, it's gonna get up really fast. I've heard from sources that this legislator, Alan Garnett asked if the bill passed in November, he asked if sports betting could be up by the Super Bowl. He was like, could we have it up in two months?

And the answer was no, and took six months. But even six months is like an insanely short time. When it took, ironically, 420 days from the passage of the marijuana, the referendum to the sale of marijuana in Colorado.

Ian: especially in, the 2020s like, you know, we think of this as an era of painfully slow government. And the idea that you would, set up this whole new industry that had been illegal up to that point.

Jonathan: And bring online gambling for the first time to people's phones like, yeah, no, it's like, no, faster, faster, faster.

Ian: I wonder, in hindsight, however you feel about the outcome, whether you think sports betting should be legal or not,

Jonathan: I do.

Ian: do you feel like PASPA ultimately caused just A lot of harm and chaos by like it like put a stopper in this thing that was clearly coming. But the pressure keeps building, the industry, as you described, keeps building just through this kind of side avenue of fantasy sports, the interest keeps building um, the technology keeps building, so that then in 2018 you take the lid off and it just goes nuts.

Jonathan: Right, meaning could, this is interesting counterfactual, right? Had we

Ian: Had we just let it develop in the 1990s and say, let Oregon try it and let them do it on paper and let them do it, in person or whatever it is. Let New Jersey try it. Let it do what lotteries did. Which was gradually creep from state to state and the states learn from each other and gradually the technology, gets more sophisticated and adapts and the industry gets more established and adapts. But there is that there's like a little bit more of a control mechanism on it. And again, it's a counterfactual. So who knows? But I wonder what you think of that.

Jonathan: I would say Passport clearly wasn't working in as exemplified by DFS like the stopper was not stopping people from gambling both like regular people who are playing DFS, but also people who really want to get their kicks and are just going offshore and are finding other ways to bet it just genuinely was not working in the way that suppressing the numbers game in the 1950s was not working to actually suppress the numbers game in any real way.

So was the answer to. Open the floodgates all at once and, with, And let states just say go hog wild. I don't think so. I would have, I know this is not how our system of checks and balances work, but, you know, shortly after the Murphy's decision comes down, Orrin Hatch, Republican senator from Utah and Chuck Schumer, Democrat from New York, propose a federal sports betting framework that wouldn't Put passport back in place, but would set a floor under sports betting regulations.

So if a state is going to legalize sports betting, it needs to devote a certain percentage of their revenue to problem gambling. They need to allow only, allow this much advertising and so on. But we didn't get any of that. All be, maybe because of this sort of. Uncorking the wine bottle effect that you're describing where everything just comes wine bottles don't gush out, but everything just comes gush the champagne bottle. Thank you Clearly i'm a very cultured individual where everything just comes gushing out in a rush and it's uncontrollable and yeah, I do think you're right.

I think it's a great point had we Allowed sports betting to develop organically people would have been making some of the same mistakes in the 1990s that we're making now,

Ian: they're just, there would not have been smartphones

Jonathan: At the time, yeah and, and even so, like, people insist all the time that we're, Or industry insiders, insist to me all the time that we're still in our honeymoon phase. And I'm like, that's great, but like, there are a lot of people who are, this is like the White Lotus honeymoon where a lot of people are getting stabbed on the honeymoon.

there's a lot of people who are getting hurt. You can't justify all the like, the addiction and the financial insecurity of like, oh, we're still in our honeymoon phase, we're still figuring it out. So maybe that honeymoon phase would have happened without online, to your point, and we would have culturally been more acclimated to gambling and sports gambling specifically in a more gradual and careful way, such that once it did arrive on smartphones and presumably, the 2010s or so, we're ready for it and people are ready and like parents are ready to talk to their kids about in the way that they talk about pornography or because of the arrival of the internet, whereas all of a sudden I talk to high school teachers and parents all the time who are basically caught flat footed by this because they don't realize that like 16 year olds are finding ways to like bet and develop like gambling addictions.

Ian: It's an interesting use of the phrase honeymoon period. I'm still kind of, stuck on that a little

Jonathan: year honeymoon? Yeah.

Ian: so just like, you could phrase it as a trial period or like a beta period. You know what I mean? There's something about honeymoon that implies that like. All is forgiven But I think that's not exactly what's going on. We are in an experimental phase. But as you say, harm can be done in an experimental phase, right? That's not what you think of when you think of a honeymoon.

Jonathan: honeymoon. Yeah. I mean, The obvious parallels people make all the time to the modern sports betting industry are to alcohol and tobacco. And specifically industry sources who I've talked to say, Oh, the alcohol industry had decades to figure things out. And they only came, for example, to the drunk driving campaigns. I think it was the eighties and nineties and how long had legal alcohol been available before then? So give us time to and that's, so I don't know if the honeymoon face is their way of like pleading for more

Ian: asking for a honeymoon

Jonathan: And I'm saying, Hey. Someone just got stabbed at the resort, or whatever the, again, I'm just rewatching White Lotus, so that's on the brain. Yeah.

Ian: You've had a chance to talk with folks inside these companies . You're obviously not coming into this naive. You've studied gambling for a long time, but were there really eye opening moments, specifically when you're, when you're talking to folks at the big companies at FanDuel or DraftKings, where it. It like really hits you what was going on inside and it was just wild.

Jonathan: You know that phrase, never attribute to maliciousness what can be explained by incompetence? The people I talk to they're not sitting at a boardroom stroking like a white cat, like trying to plot how they can increase rates of gambling addiction to extract more money from people. They have kids of their own, they're worried about their own kids developing gambling addictions like, these are, like, real, normal people, as crazy as that sounds to say.

But then, to try to explain to them but they're always, oh god, what's that Upton Sinclair quote you can never explain to someone something upon, when their when their livelihood depends on them not understanding it that I cite to them all these papers that came out over the summer about rising rates of financial insecurity from gamblers and evidence that the rise of online gambling in the state increases rates of bankruptcy in the state, and they say, Oh that's showing a correlation, but there's no causation there.

And it's okay, but you claim to get it, you claim to be worried about these issues, and yet you just fundamentally will never accept evidence. There's just no evidence that I think that's ever going to be good enough that will let them say, Oh, you know what? We actually need to make this change that will really affect the bottom line of our company for the good and safety of the American people. There does not. There's just like a blockage and they can't get past sort of the corporate speak into what people actually need.

Ian: And that was, that was surprising to you. You thought if once that evidence did start to come out, if you could, show them the, the numbers and show them the data, that they would agree with you, that they would

Jonathan: or that they would laugh and say, haha, this is what we plotted all along.

Ian: or the other, right? You either want them to be a villain or you want them to, to be seeing what you

Jonathan: Right. And instead they're well-meaning, but refusing to acknowledge it seemed to me like what is happening.

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Ian: So the fundamental tension of legalized gambling, and this is true of the lottery, casino, sports betting, seems to me is that, there's the libertarian argument of, people should be free to do what they want with their own money. And there is the reality that there are social costs that are often borne by relatively few people. Could you tell me about the costs that we are seeing right now? of sports betting.

Jonathan: Yeah. Yeah. It's really tough. There are lots of people, particularly young men between the ages of 35, 18 through 35, starting from the, the very, very, let's say, the low levels of harm to higher levels of harm.

There are people who just get in a little, a little over their head and like, lose a bet, they chase their losses, they lose a couple hundred dollars, and then they sort of wake themselves up and they're like, oh, that was bad I lost a little bit more money than I intended. That would be sort of a low level of harm, and it's really hard to track the number of people that it's happened to, but polling indicates that it's actually happened to a lot of people. That there are a lot of people as a percentage of sports betters who have at one point Bet more money than they intended or bet more money than they can afford to pay

The next level sort of a more hazardous play the National Council on problem dealing would call these at risk or problematic players Who basically have that same phenomenon, but it happens for a longer period of time

and then the highest level of harm are people who, develop full blown gambling addiction, some of whom do have this sort of episodic character to their betting, but their dopamine pathways in their brains are sort of like permanently rewired, and they will never be able to like bet safely, and every ad is like a potential trigger for them to bet again. And they need to. You know, Self exclude themselves which is the process by which a, an individual can tell a company or tell a state you cannot offer me gambling services because I know I'm not able to control myself um, and the rising rates of self exclusion, particularly among young people, is some of the best evidence that we have that gambling is causing harm to, to young people in particular.

Ian: And those are just the people who are able to take that step to self exclude that we're seeing in the data.

Jonathan: And that's, again, presumably if you're self excluding, you've reached a point of harm, and you've reached a point of self awareness of this harm, that you're willing to do something about it, and then how many others are just not there yet

Ian: yeah, I was talking about this with somebody recently, and they used, I want to say they used the phrase, a lost generation of young men. And that, that seemed dramatic to me in the moment, but I don't know, does it seem dramatic to you? Are we really seeing, is this phenomenon so widespread with young men in particular, that like, decades from now we'll look back and there will be this generation that was totally transformed by the rapid availability of this game?

Jonathan: I hope not. Um, But, to put it into broader context, sports betting seems to be one of many risky financial behaviors that is disproportionately popular among young men and that seems to negatively be preying basically on them and on their mental health and on their finances. So I would include in this bucket, like video game loot boxes cryptocurrencies day trading on things like, on apps like Robinhood.

Um, These are all sort of highly risky behaviors that are, again, popular among young men, particularly those who are very online or chronically online and I think too many people have made that sort of same realization that it is becoming sort of a generational phenomenon.

Ian: There's a story that Don Hayes told me. So Don Hayes is the longtime sort of legendary broadcaster of the Massachusetts Lottery. And um, She told the story about how at one point Wheel of Fortune came to do a live taping in Boston, and she was invited to be the local talent that presided over the evening. She came out and warmed up the crowd and introduced them, and she was thrilled because these are her heroes and so afterwards she went up to meet them and get a photo op, and Pat Sajak and Vanna White refused to have their photo taken with her. She could go and look at the set, she could touch the numbers, but they refused to be associated with her. And that story, I found it so striking. And the reason I bring it up is because in that moment, I'm assuming this was in the 1990s, say there was this hard line, a bright hard line between what is gambling and what is not gambling. And in that moment for Pat Sajak and Vanna White, Wheel of Fortune was a game. And the state lottery was gambling and they did not want to be associated with the other. And it seems like in this moment, that line has gotten totally blurred in the way that you described with sports betting, fantasy, crypto video games, we've sort of lost that cultural divide and maybe the cultural divide was always artificial. That we drew this hard line that like, that's gambling, that's vice and oh, betting on the stock market, that's just good

Jonathan: Buying soybean futures, or

Ian: Right, right. It was always kind of artificial, but now it seems like even the artificiality of it has gotten blurred over and we can't really tell what's gambling anymore and what's not.

Jonathan: Yeah, and this is where, that libertarian idea seems to have won over that people should be free to do whatever they want, and, gambling is here and people should be free to gamble, and then, the obvious question is, okay, but how much is too much and when does it stop?

Ian: I'm curious, as someone who, who wrote a whole book about state lotteries, and uh, you go, deep into the political mechanisms and why states were so driven to, you know, build those games and bring in more customers now, as you take in this much more for profit, corporate driven form of gambling, does it Soften your view at all on the lotteries.

Jonathan: Interesting. Yeah yeah, I think that if if, and I reached this conclusion at the end of my lottery book, if lotteries are going to continue to exist, I argue it's better that they be run by the state than by entirely corporate actors. Um, Sorry,

this is not, that's not gonna make it for good audio, but I, it's a good question.

Ian: and think about it for a second. I'm not sure what I make of it. Because part of what always seemed so weird about lotteries to me, and we say this at some point in the podcast, is just that, in theory the state is the body that's looking out for the well being and interest of its citizens. And yet it also has this strong financial stake in, accelerating and growing this activity that, as we discussed, can have real social harms. And so there's like, this weird double handed split personality nature of state run gambling, where the incentives are all scrambled. And so, in some ways, it seems cleaner to say like, let a company run it, and then the state's job is to watch out for the people and be the advocate of the consumer. But I can also see the argument for this is, a sensitive industry that can have harm. Maybe it is safer to, as you say, run it in house inside the government. And I can see both those arguments.

Jonathan: okay. So, right. So, I think it's a trade off where it's, it seems to me preferable to have a, let's call it more bureaucratized politically accountable part of government that is charged with making money for the state, but it's not supercharged by accountability to stockholders. So that, that's one side of it. But the trade off being what you're describing, which is the state leveraging its imprimatur of legitimacy to induce people to gamble.

Ian: Yeah.

Jonathan: And it's one thing for DraftKings to try to get people to gamble, it's another thing for like, the Commonwealth of Massachusetts to try to do that. And that, and all things considered, it seems like that's probably worth the trade off. But What I don't, it's hard to quantify what we lose when it's the state that's inducing you to play what we lose about trust, what we lose about government functionality and, and sort of faith in government's role in, in providing for the well being of people

Ian: when the state is the house. Yeah. Yeah. I was talking to somebody who works in Massachusetts state government about this recently, and his feeling was that he wished that the state had taken it over that it was. I think Finland maybe has a system like this or some European countries do where it is just a state run sports book. And then, that's controlling the revenue and it's controlling how much advertising and how it's targeted and where it's old. And

Jonathan: I'll tell you, it'd be a lot worse. It'd be a lot worse of a consumer product, which is probably for the better, in terms of, it

Ian: way that the friction of government would be in there somewhere.

Jonathan: Right, or like, for example, do I think that a sports book run by the Commonwealth of Massachusetts would allow you to bet on Malaysian women's doubles badminton at three in the morning? No, because they're out to make money, but there's some Consideration for like common sense, I guess, that is lost in service of the almighty dollar when it's a corporate enterprise.

Ian: Wow. One of the questions I've been wrestling with is, sports betting feels different that in some ways it is just like the logical culmination. Of this whole history that I've been talking about in the podcast and talking about with you. And on the other hand, the feeling that, that this one is different.

you know, So something you talk about in your book is, in both your books is there's kind of a pendulum effect to America's attitude towards gambling, you know, and this towards vice in general, drugs, pornography we open up. But then we clamp down, we open up, we clamp down, and I feel like we're beginning to see. Like in drug policy, the pendulum is not swinging all in the same direction anymore, right? Like some states are actually rolling back some some drug legalization or liberalization programs. And I wonder if, if you see any hints of that with sports betting, that the way it hit the market so fast in this turbocharged fashion, could that actually prompt, I don't want to say backlash, that's maybe too strong a word. And buyer's Buyer's remorse. Could it actually change the narrative or, or could this one be a little different somehow?

Jonathan: Yes, I think you're certainly seeing backlash and revisions to the sports betting infrastructure states that have already or have been proposed to increase their tax rate, states like Maine have considered or adopted restrictions on advertising, which I think is, It's just to take the domino metaphor again, often the the first regulatory domino to fall is to do something about advertising. But even states that are not exactly known as hubs of strong regulation, like Kansas have talked about revisiting their sports betting frameworks on this assumption that something is amiss, or that we maybe The lawmakers got hoodwinked a little bit and built a little too liberal of a sports betting framework that does now need to be rolled back a little bit.

Ian: And that is different from the trajectory of lotteries like lotteries started in the most slow encumbered form possible, you know, and then gradually the advertising comes online. Gradually, it goes from weekly to daily to multi times daily. Um, And so then in sports betting, It's like it started at the maximalist version and now, like you said, states are actually clawing it back, which does make me wonder if, like, where does that process lead? Does it resolve at some steady state or is this the beginning of, states taking a harder look at how much gambling is too much gambling?

Jonathan: Yeah, this, this is what actually got me interested in the topic in the first place to write the book was it seems like we were making the classic American mistake of letting the market decide in sort of a free for all fashion, and then government would have to come back in and clean it up. The obvious comparison here would be the opioid crisis of letting, This addictive product run rampant and then, oh, shoot, look at all these negative externalities now. Now let's do something about it. Let's fix it upstream. We'll fix it downstream. And it seemed like that was happening again.

Ian: So, What are Is there an indicator or a sign that you're kind of watching and waiting for that the pendulum is maybe swinging the other way on this?

Jonathan: I would say there are, there's two. The first being there is a bill in Congress proposed by this group out of Northeastern, actually the Public Health Advocacy Institute, that has taken up the cause of sports betting. The industry really does not like the bill. The bill like, might violate the Murphy decision and the commandeering statute. It's really heavy handed in its regulation of gambling.

So I'm not suggesting that the safe bet act as it's called is actually going to pass necessarily, but it does seem like from sources I've talked to sports betting regulation of some kind at the federal level is inevitable. And so the question is what that looks like and what the momentum that it generates

and then the second part of that, the thing to track would be, let's call it public attitudes. The reckoning that it's currently underway in the United Kingdom over sports betting was really started by a couple of really high profile suicides by young ish men with gambling addictions. And so the question is, if those kinds of stories. Were to become more prevalent in the United States or they're more features like I have one in my book about a gambler who develops a gambling addiction, loses 330, 000 as more stories like that come to light and more people come forward and there's a de stigmatization of gambling addiction in the way that we've de stigmatized opioid addiction and change their attitudes and make them want to do something about it.

Ian: And, um. to close, this episode will come out right in the middle of of March Madness. And so I'm wondering for folks at home who are considering putting a bet on a basketball game, do you have any insight? Or, uh,

Jonathan: know who's gonna win?

Ian: going to win, but any insight you'd offer on how to, how to think about your relationship with sports betting.

Jonathan: Yeah. And I suggested this before, but I'll be really clear like, I think sports betting is fun like, I think sports betting should be legal like, I really think PASPA wasn't working like, don't ask how much money I lost in the Denver Nuggets to win the Western Conference Finals last year like, I'm, like, I'm in on sports betting, and I think it's, it can be great, and just to be clear, most people are able to do it safely and responsibly and that's great, also.

I would say to, to the folks at home, to the potential Betters first of all I think people many people just don't even understand gambling addiction that like is a thing. This is the fault of these terrible responsible gambling ads that don't do anything and don't teach anyone anything But truly when you win your first bet and you feel super excited and you get this massive rush of dopamine That's how they get you It's because you get this overconfidence that you're good at this and that you're smart, and it's going to be really, really hard to shake that initial high from that first win in a way that people often will chase their losses and lose more than they intended. This is literally the plot of The Gambler by Fyodor Dostoevsky from the 19th century.

Ian: And so be aware in that moment that you have that feeling. Notice it.

MUSIC: gambling is fun. Win or lose, gambling can be fun. But know that it's at your highest moments that they're the most dangerous.

Transition

Ian: How much did you lose on the Denver Nuggets?

Jonathan: The Nuggets beat the Celtics at home in March, and I was like, oh my god. If they, the Celtics, they can just out execute the Celtics in crunch time there's no way the Celtics can beat this team. Turns out, the Minnesota Timberwolves were built to beat the Denver Nuggets. (Fade)

NARRATION: True to form: Jonathan had a detailed rationale for this losing bet. But the short answer, is 150 bucks.

Ian: There's a moral in there somewhere.

Jonathan: Yeah I'd like my 150 back, how's that?

Ian: Great. Thank you, Jonathan, for doing this. I really appreciate it.

Jonathan: Thank you, thanks. The series is amazing. and thanks for having me back on.

MUSIC: Post

NARRATION: Jonathan Cohen's new book is called "Losing Big: America’s Reckless Bet on Sports Gambling." His previous book is "For a Dollar and a Dream: State Lotteries in Modern America."

I will be back next week with another conversation expanding on the political themes of the series, specifically: machine politics. What ever happened to it, and what did we lose when it went away?

This episode was edited by Lacy Roberts. Mei Lei is the project manager, and the Executive Producer is Devin Maverick Robins. Scratch and Win is a production of GBH News and distributed by PRX.