Is America’s Problem Gambling Crisis About to Explode

The sports betting industry has been attempting to curb problem gambling for years, but are its efforts about to be undone?

The rise of sports prediction markets means residents in all 50 states can now legally wager on sports. This is changing the debate in states where mobile betting remains illegal, with lawmakers from both parties acknowledging the bans may be doing more harm than good. 

While this is good news for eager bettors in states without legal markets, responsible gaming advocates fear a new problem gambling crisis is about to be unleashed.

State Debates Take Somber Tone

For years, proponents of sports betting have touted the tax revenue the industry generates. States use those funds to support their schools, infrastructure, and other key programs. It was the driving reason behind the industry’s quick expansion, but it also led to a massive spike in problem gambling.

Over the last 7+ years of legal sports betting in the US, a connection between legal mobile sportsbooks and problem gambling has been well established. Lawmakers in states without legal markets have spent years in debates and hearings, but now their tune has changed. 

With sports prediction markets already live, a spike in problem gambling is coming. Unfortunately, more and more lawmakers believe the only way to handle the impending crisis is by legalizing mobile sports betting, which would unlock more funds for programs designed to help fight gambling addiction. 

That has led opponents in several states to flip their votes while acknowledging the risk they are taking. 

Prediction Operators Less Concerned Over Issue

The general feeling among prediction operators is that Americans should be allowed to spend their money as they see fit. As a result, they have pushed back against calls for bet limiting and protocols to detect gamblers struggling with addiction. They have softened that tone amid legal battles and a sinking public image, but no action has been taken.

Regulated sportsbooks monitor betting habits but have been unwilling to share how they decide to limit bettors. There has been growing concern that operators use bet limits almost exclusively on winning bettors, allowing losing bettors to continue spending.

If we haven’t found clarity over the practice after 7+ years of legal sports betting, there is no reason to believe prediction markets will provide clarity over their own policies.

Sweepstakes Bans May Prove Costly

States across the US have been cracking down on sweepstakes casinos and sportsbooks over the last few years. While states with legal mobile sports betting have an incentive to drive these free-to-play operators away, those without legal markets have joined the effort.

One example comes from California, where the state's powerful tribal gaming lobby helped pass a bill outlawing sweepstakes platforms. While tribes operate large casinos across the Golden State, none offer sports betting. 

Since the ban, those using sweepstakes sportsbooks were left without an alternative. Prediction markets have now provided that, but require those bettors to stake their own cash. This can be a dangerous transition, especially since prediction markets and sportsbooks operate differently. 

While sweepstakes platforms are still a risk for those dealing with gambling addiction, they're nowhere close to the dangers they face with unregulated prediction platforms.