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A Sure Bet to Lower Debt

Sept. 02, 1991
Sept. 02, 1991

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Sept. 2, 1991

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A Sure Bet to Lower Debt

The U.S. could make billions by legalizing—and taxing—sports gambling

By William Oscar Johnson

It isn't a question of whether we should legalize sports gambling in the U.S.—the prospect of which incurred the wrath of my colleague William F. Reed in this space last week. It is a question of why we have been so stupid as to leave this lucrative and hugely popular segment of sport to the Mob and the office pool for so long.

This is an article from the Sept. 2, 1991 issue Original Layout

For the record, I am not a gambler. I never bet on anything. Not on horse races, dog races, NFL games, lotteries, presidential elections or the gender of unborn royal babies. This decision has nothing to do with morality, economics, politics or even a deep psychosuperstitious belief that I am by nature unlucky. I don't bet because I learned years ago that I am a certifiable member of the gambling impaired—those people who are utterly bereft of the attention span required to make even the most cursory analyses of odds, point spreads and past performances that are essential to placing a meaningful bet. Thus, my only gambling experience consisted of a few minor losses long ago from wagers placed on teams with quarterbacks named Bill.

Millions of Americans, however, do bet on games, fights and races with lots more insight and, presumably, lots more enjoyment than I have had. Gaining & Wagering Business magazine has reported that gambling in America (everything from church bingo to bets placed with Mob bookies) was a $290 billion business in 1989. Of that total, $57.1 billion was wagered by sports bettors, including pari-mutuel horseplayers. Some $38 billion of that amount was bet illegally. These figures are conservative, and many people think the annual illegal total is closer to $80 billion. But the essential statistic is this: More than twice as much money was spent in '89 on illegal sports gambling than on the legal varieties. And all of it is under-the-table money, no more available to the tax man than were the millions in bootleg liquor profits during Prohibition or are the Colombian cartels' take from the sale of cocaine in America today.

I say we should welcome all this outlaw sports gambling into our homes, introduce it to our families and friends, feed it, hug it, legalize it and then tax the hell out of it. Thirty states have budget deficits, some of them catastrophic. Forty-eight states already have some form of legalized gambling: casinos, lotteries, slot machines, off-track betting, pari-mutuel betting, at least raffles or bingo. (Utah and Hawaii are the holdouts.) However, only a handful of states allow wagering on sports events other than horse racing and dog racing. Obviously, the pittance that sports gambling taxation produces is of little help in stopping our descent into nightmarish debt. But taxing 100% of our sports gambling action would bring in billions of dollars. Those billions might not solve all the woes of our various insolvent state governments, but they couldn't hurt. And, by the way, revenue from gambling is considered "silent taxation"—a type of tax that won't enrage American taxpayers the way a hike in income or sales tax does.

So why not legalize the whole spectrum of sports gambling and make available unlimited over-the-counter wagering on athletic events of all kinds? Why not be like the 37 other countries that operate—and tax—hugely popular sports pools? Why not be like England, which has had its cozy legal betting shops for 30 years? Why not?

In late June, Congress held hearings on a pair of nitwit bills that would ban all states from introducing new forms of legalized sports gambling. The usual crowd was there spouting the predictable gloom-and-doom hyperbole. NBA commissioner David Stern wailed that legal wagering would "transform the betting line into the bottom line" and that fans would "begin to leave games feeling disappointed or cheated even though their team has won." NFL commissioner Paul Tagliabue moaned that legalized sports gambling would distort the image of professional sports so much that soon the NFL, the NBA and major league baseball would come to represent nothing but "the last buck, the quick fix, the desire to get something for nothing." And baseball commissioner Fay Vincent railed that "the legalization of team sports betting by any state or municipality would increase the chances that persons gambling on games will attempt to influence the outcome of those games."

It is hard to understand why these people believe that above-the-table sports gambling, taxed and regulated, is more of a threat to the integrity of sports than the current criminal operators, who would fix every game if they could. So what can these nay-saying nabobs be thinking of? Jim Wimsatt, director of the New Hampshire Sweepstakes, which opened for business in 1964 as the country's first state-run lottery in this century, says the commissioners are thinking of money. "As soon as any state sports gambling operation volunteers to share revenue with the leagues," says Wimsatt, "it will not only be accepted, it will be blessed. They [the professional sports leagues] simply want a slice of the pie."

I think Wimsatt is right. I also think the leagues should get a cut of the revenues once gambling on sports is legalized. After all, it's the leagues' product that generates the action. But mainly the great American gambling pot should be tapped—now—to help bail out our debt-ridden governments. With a cause like that to support, I would happily make a habit of betting on all the quarterbacks named Bill I could find. And on all those named Willie, Oscar, Ozzie, John, Johnson, Williamson et cetera et cetera.

PHOTOJEFFREY LOWE