The Scourge of Online Sports Betting
This article appears in the February 2026 issue of The American Prospect magazine. Read more from the issue.
WASHINGTON – The room checks all the dive-bar boxes: cheap beer and cocktails, big-screen TVs, high-top tables, and one scuzzy restroom. The rain-splattered Liberty Bowl, with Navy battering Cincinnati, is on ESPN and turned up loud, while the rest of the muted screens feature competing teams of sharp-dressed sportscasters.
There’s nothing worth Instagramming here. The low lighting doesn’t set a mood, but it does help you read the large sports boards near the betting windows across from the bar. The multiple screens list the day’s NFL and NBA matchups, along with the spreads, the money lines, the over/unders. If this vibe isn’t working, you can head to the self-service betting kiosks next door.
Mostly solo Black and white men of all ages perch at the bar or one of the high-tops, mostly staring and swiping on their phones. One older Asian man studies what could be betting sheets, with a receipt and his phone splayed around him on his table. A Black middle-aged couple arrives, and the man and woman spread out papers and phones.
Caesars Sportsbook at Capital One Arena is an unremarkable destination in Washington, D.C.’s Chinatown. The venue opened several years ago, proclaiming the arrival of the first “state-of-the-art Vegas-style” sportsbook located in a professional U.S. sports operation. It’s one of the area revitalization projects that Ted Leonsis of Monumental Sports & Entertainment launched after he failed to move his teams, the NBA’s Wizards and NHL’s Capitals, to Virginia.
Going downtown to bet on games might seem redundant; even the Caesars Sportsbook website urges bettors to “get the app.” But a report from the Center for Gambling Studies at Rutgers University’s School of Social Work found that sports bettors who frequent “mixed venues,” in both online and physical locales, have higher rates of developing problem gambling. Yet even in this physical space, the gamblers are online, glued to the bets they’re making.
Smartphones have been the catalyst for an explosion of sports gambling, providing always-open portals to separate people from their money. Two companies, FanDuel and DraftKings, control over 70 percent of this online market, using sophisticated surveillance and marketing techniques to keep people betting, even when losing eats up money for groceries, utilities, rent, or the mortgage. A small but statistically significant number of bettors generate the profits that online sportsbooks haul in.
The Supreme Court unleashed this craze in 2018, ruling in Murphy v. National Collegiate Athletic Association that federal prohibitions against states legalizing sports betting were unconstitutional. Eight years later, 40 states and the District of Columbia have allowed some type of online gambling. The Bureau of Labor Statistics has reported that gambling was the second-highest service-sector industry for GDP growth between 2019 and 2024, behind only software publishing.
Nearly 40 percent of men and 20 percent of women gamble online daily. Two percent of these bettors gamble more than ten hours a day.
According to the American Psychiatric Association, nearly 40 percent of men and 20 percent of women gamble online daily. Two percent of those bettors gamble more than ten hours a day. Sports bettors have wagered over $600 billion since 2018. The National Council on Problem Gambling notes that about 2.5 million Americans “meet the criteria” for a severe problem; five to eight million more have mild to moderate issues.
As the country’s affordability crisis deepens, individuals and entire families can slide into cycles of addiction and debt. Bank of America warned in a November research note that gambling is creating “emerging credit risks” across the economy; an April paper from UCLA and USC found that credit scores in states that have adopted online sports betting are down, and bankruptcy rates and auto loan delinquencies are up. Eight U.S. studies found that 1 in 5 problem gamblers have tried to commit suicide, the highest rate for any addiction disorder.
Most bettors are men. They’ve gotten younger and younger as sports betting companies gamified gambling. Pokémon, the trading card and video game mega-franchise, co-opted slot machine and casino imagery in the 1990s, and technology companies latched on, eager to bring in young gamblers to replace the old heads. Public schools see problems with boys, and sports betting stokes some school officials’ fears of it becoming as ubiquitous as cellphones and as poisonous as social media.
State politicians have largely looked the other way: The attractive tax revenues from the relative handful of bettors reduce the need for broad-based taxes. Conveniently ignored are the profound contradictions between safeguarding the public welfare and the mental health and financial problems gambling can exacerbate. “It’s a system of taxation by exploitation, and it’s been an epic public-policy failure,” says Les Bernal, the national director of Stop Predatory Gambling, a national advocacy group.
Professional sports executives don’t help, wringing their collective hands about the “integrity of the game” while sportsbook ads wallpaper stadiums and arenas, promotions blast during games, and teams seek out television partnerships. These deals end up serving as a dirty-hands backdrop to the inevitable scandals involving players and coaches betting on, it seems, every moment of the game. Many league officials and state lawmakers refuse to accept that this festering integrity crisis cloaks a spreading public-health emergency. But a reckoning is coming.
IN THE UNITED STATES, SPORTS BETTING peaks in the fall, when portions of the baseball, football, hockey, and basketball seasons all dovetail. Many fans still watch sports for love of the game, but the love of money is now a major factor, making the finer points of home-team runners on base with one out in the bottom of the ninth inning of a tie game more interesting for people who usually wouldn’t care.
Online sports bettors are subject to state regulations on college and pro games. Prop bets are wagers on individual or team performances that don’t depend on the game’s outcome. As they watch live games, gamblers can also bet on nearly every aspect of the match. These micro bets aim for a slot machine–like experience, hinging on things like the next home run, pitch, or stolen base. Parlays link multiple wagers together; combining micro bets give the allure of a big win, but rarely pay out.
Bettors can tackle lesser-known or bizarre sports: water polo chessboxing, axe throwing, even pickleball, e-basketball (video game competitions), or table tennis. The last two are too much for Vermont state Rep. Thomas Stevens (D-Waterbury). “It’s frightening that this is available on a phone,” he says.
Stevens has proposed a bill that would end Vermont’s online sports betting, legalized in 2024, and the state lottery, launched in 1978. Three sportsbooks operate in Vermont: DraftKings, FanDuel, and Fanatics. State lawmakers wanted to keep gambling revenues at home, especially since residents tended to drive to casinos to bet (or even parking lots for online gambling) in Canada, New York, New Hampshire, or Massachusetts. “I was hoping to be able to limit the exposure, knowing full well that human nature is built to work around whatever enforcement mechanisms are in place,” Stevens says.
States have options on sportsbooks provider partners; Oregon has just one, DraftKings, while New Jersey allows more than a dozen to operate. Tax rates on sportsbook revenues are 50 percent or higher in Delaware, Oregon, New Hampshire, New York, Illinois, and Rhode Island, but just in the single digits in Iowa, Michigan, and Nevada.
In most states, excise tax revenues are small, comprising less than 10 percent of a state’s budget, and in many cases 5 percent or less. Sin taxes on gambling, alcohol, and marijuana are especially volatile and can often level off or plummet (as in the case of cigarettes) depending on the market or changes in social attitudes. In the sports betting sector, companies could pass their costs on to bettors in the form of higher odds. Such a shift could drive bettors into grayer areas. “If you can get better odds by betting with the bookie down the street, then maybe you’ll do that instead of participating in the legal market,” says Adam Hoffer, director of excise tax policy studies at the Tax Foundation, a Washington think tank.
But the “legal” market isn’t exactly generous to its customers either. DraftKings uses AI to learn which micro bets will entice users. Apps carpet-bomb promotions for “free” money that cannot be redeemed unless bet multiple times. “There’s been plenty of stories over the last couple of years on the people who do sign up [to bet] and are on losing streaks and get emails from DraftKings bots basically saying, ‘Here’s another $1,000!’” Stevens says. “That kind of business model that essentially poisons you if you are so addicted; it is something to me that the state should have no interest in from a public-health perspective.”
Vermont’s sports betting revenue goes into its general fund, a Responsible Gaming Special Fund, and industry regulation. In 2024, Vermont bettors did well enough that tax revenues were under projections at $6 million, still a healthy sum for a small state.
Stevens believes that young men, the targets of all this psychological warfare, think they can handle betting constantly on their phones, but they ignore the ever-present dangers. It’s the same for state officials, who dismiss the negative impact of gambling because it brings in money they wouldn’t be able to get otherwise. Can Vermont decouple itself from these revenues?
“What it really comes down to is we would rather tax, whether it’s by choice or not, with lotteries and gambling,” says Stevens. “That’s the way our culture is, and I don’t see that changing.”
THE PURITANS CONDEMNED GAMBLING. So did the Quakers. But they were outliers in the British colonies. Native American tribes had their own games, and white colonists gambled on horse racing, cockfights, and other forms of entertainment. Lotteries were serious business—they helped finance the American Revolution.
Nevada legalized gambling in 1869, backed off under political pressure in 1909, but reinstated it in 1931, in a bid to stimulate the economy during the Great Depression. Sports betting would follow in 1949, as fan interest in professional baseball and football soared. But outside of Las Vegas, gambling on sports was largely under the table.
State lawmakers elsewhere wanted to rake in the kind of dollars that Nevada did, but Congress stepped in to restrain them in 1992 with the Professional and Amateur Sports Protection Act, prohibiting sports betting from migrating into new locations. New Jersey challenged the law and prevailed when the Supreme Court ruled that Congress had overstepped and interfered with state powers under the Tenth Amendment.
At the same time, the sums that state regulators dedicate to problem gambling vary widely across the country. In Vermont, $250,000 went to the state mental health department for these programs in 2024; that expenditure doubled last year. Massachusetts devotes millions to problem gambling, but tracking spending, raising awareness about treatment options, and finding out who benefits remains a challenge. At least those funds exist: The District of Columbia zeroed out its budget allocation for similar programs through fiscal year 2028; instead, the city plans to pursue a $300,000 study.
Few parents consider that their children could be spending money and time on sports betting. But Tony Cattani has been thinking about it quite a bit. For nearly 20 of his 30 years in education, he has been the principal of Lenape High School, which serves students in Mount Laurel Township, New Jersey. Last July, he was named the 2025-2026 National High School Principal of the Year.
Cattani often hears teenagers talking about point spreads, individual players, over/unders, and prop bets during informal classroom conversations and at lunch. “Kids talk about how they were betting on this one player,” Cattani says. “He made this shot, but it was after the buzzer.” Otherwise, he would have won $50. “You hear kids talking about this at 15 to 17 years old.”
These bets should be illegal. Sports betting apps ban wagers from anyone under the age of 18. But that can be difficult to enforce since many young people can find their way around parental controls and may have bank accounts or credit cards in their names.
Cattani believes that sports betting has the potential to become as big a problem for schools as cellphones, which were banned statewide this year. Adolescents’ brains are not fully developed, so they struggle with constructive decision-making, don’t necessarily understand the consequences of their actions, and focus instead on the perceived reward, he says. “They’re just manipulating it on some account like it’s a video game.”
This next generation of gamblers is the fastest-growing age group. Last year, Virginia unveiled one of the country’s more comprehensive gambling education programs with lessons focused on probability, get-rich-quick myths, and other risks. Cattani notes that New Jersey has optional gambling education standards that schools can implement as part of their health curriculums, but the time spent on the subject varies. A school can do a short survey, or the deep dives that Lenape High does.
Instruction is crucial, but schools need involved, supportive parents to make real progress. “We can take the phones away. You’re not gambling during the day, but then you go out and as soon as you leave, it’s an open book,” Cattani says, adding, “But we all know people that gamble. They tell me when they hit big, but they don’t tell me that they were down in Atlantic City for the past 12 nights losing.”
In families where gambling is an intergenerational experience, young people have been going to racetracks with their parents or grandparents since they were very young. “Sports betting is where alcohol was in the ’50s and cigarettes were in the ’40s,” says Lia Nower, the director of the Center for Gambling Studies at Rutgers University’s School of Social Work. “In the Mad Men era, everybody had a bar in their office, and little kids were given drinks at the family table.” But now, Nower says, “fathers are placing sports bets with their 10- and 11-year-old sons.”
Nower and her team have analyzed every bet placed in New Jersey since 2014 for online casinos and since 2018 for sports betting—some 22 billion bets. Most sports bets lose; most of those bets are parlays, and most parlays lose. Young men are big fans of micro bets, which FanDuel and DraftKings constantly push. In-game betting represented the majority of all wagers on those two dominant apps in the middle of last year; an estimated $14 billion in revenues will come by the end of the decade.
“In-game betting is highly based on impulsivity,” Nower says. “You’re betting with changing odds that are algorithm-driven in the heat of the moment. You may be drinking, maybe with peers—it is not a thoughtful way to bet.” These gamblers typically don’t keep track of how much they’re spending, especially when they’re using third-party payments or credit cards, as most do.
The country’s focus has been on college and high school students, yet one of the more stunning elements of the Rutgers research is this: Middle school students are definitely at risk. Nower has studied kids who started gambling with their parents at age ten. “Most school counselors aren’t trained to recognize gambling addiction, don’t know the signs to look for, or don’t believe that gambling can be an addiction,” she says.
ON A JANUARY NIGHT AT THE RITZ-CARLTON, the Economic Club of Washington hosted a Baltimore Orioles “insider” panel discussion featuring Hall of Famer and Orioles minority owner Cal Ripken Jr., manager Craig Albernaz, and several team executives. David M. Rubenstein, the Economic Club’s president, co-founder of private equity giant The Carlyle Group, is the owner of the Orioles, and he moderated the evening’s trip down Birdland’s memory lane.
After about an hour of softballs, Rubenstein finally asked a solid question, about three players’ chances to get into the Baseball Hall of Fame. Pitcher Roger Clemens and outfielder Barry Bonds were both accused of steroid use, and the late infielder Pete Rose bet on baseball as a player-coach with the Cincinnati Reds. He had maintained his innocence for years, only admitting gambling addiction in his autobiography 15 years after he retired.
“Do you expect any of those ever get in the Hall of Fame? You’re on the Hall of Fame board or something, right?” Rubenstein asked. Ripken laughed, “Yes, yes, I am.” After some nervous laughter, he turned to another panelist and punted, saying, “What would be my answer to that question?”
Betting has been a no-go zone for baseball since the 1919 Black Sox scandal. Eight players, including superstar Shoeless Joe Jackson, were banned for life for fixing the World Series. But in May, MLB Commissioner Rob Manfred removed Jackson, and Pete Rose, from the ineligible list for the Hall, amid pressure from President Trump.
Considering how deeply ensnared the pro leagues are in the architecture of sports betting, team executives publicly wringing their hands about gambling evils and the integrity of the game is premium-level hypocrisy. Sports networks hype the latest odds or the greatest apps nonstop. Dozens of teams have their local games broadcast on the FanDuel Sports Network. NBA Commissioner Adam Silver wrote an op-ed endorsing legalized sports gambling over a decade ago; FanDuel and DraftKings have been the league’s “official sports betting partners” since 2021. The MLB has gone all in with FanDuel and DraftKings partnerships, too.
Rep. Stevens of Vermont has no time for the MLB. “The integrity of the game thing is one of the biggest bullshit things that’s ever happened to that institution,” he says. “OK, fine, then have DraftKings build a new hall attached to the Hall of Fame and just let the so-called cheaters get in there.”
With betting available throughout games, scandals followed, and baseball’s latest is in court. Two Cleveland Guardians pitchers, Luis Ortiz and Emmanuel Clase, have been charged with allegedly conspiring with bettors who made prop bets on the speed and outcome of pitches they threw. The Justice Department’s indictment asserts that the two men “betrayed America’s pastime.” Convictions could land them in prison for up to 20 years.
Basketball is all fouled up. This past October, Miami Heat guard Terry Rozier and former player Damon Jones were arrested, in part for leaking nonpublic information about injuries to players like LeBron James and Anthony Davis, which gamblers can bet on. Rozier also left a game early so his conspirators could win the “under” on his stats; similar activity got the Toronto Raptors’ Jontay Porter banned for life in 2024. Several college basketball players have also been arrested and banned for point-shaving.
Harms to the game don’t end with gambling players. Last year, two MLB players and their families received death threats, one from an inebriated bettor angry about losing his bet. Teams have had to boost security measures at games. Players say sports betting is the source of the online abuse; nearly half of all NBA players surveyed last year said gambling partnerships hurt the sport.
Leagues are scrambling to pick up the pieces. The MLB reached an agreement with most sportsbooks to limit micro bets to $200 and prohibit those bets from parlays. The NBA moved to limit prop bets and change injury reporting rules; the NFL imposed limits as well. But prop bets are so profitable that voluntary restrictions are unlikely to make a difference.
One moment stands out. An ESPN segment reported on the NBA betting scandal, with the host fretting about the impact on sports. But while he was talking, a promo for ESPN BET, the company’s gambling app, played on the bottom of the screen. “New players: Bet $10, Get $100,” the promo promised. The show’s producers got wise to the disconnect and eventually took the promo down.
AMERICA’S LOVE AFFAIR WITH GAMBLING has spawned another horror show: prediction markets, which handle bets on whether a future event will occur. Using Polymarket or Kalshi (whose tag line in a now-notorious AI-spawned ad is: “The world’s gone mad, trade it”), bettors can wager on anything from whether Nicolás Maduro would be deposed in Venezuela to the length of a press conference held by Karoline Leavitt, the White House press secretary.
But the main attraction for prediction markets is sports betting. And with Kalshi and Polymarket claiming that they are merely commodities exchanges that offer “event contracts” on future developments, they can evade existing state gambling regulations and even allow betting in states where online sportsbooks are illegal. Kalshi has argued that it’s only subject to federal regulations under the Commodity Futures Trading Commission (CFTC), a famously light-touch agency.
The argument is absurd. Kalshi and Polymarket have a licensing deal with the NHL. Trading volume on Kalshi for sports last summer, when the NFL and college football seasons began, was $1.81 billion; for everything else, it was $250 million. The two companies are figuring out parlays and micro bets. The giants of online sportsbooks, sensing competition, are buying up smaller prediction markets. In December, DraftKings launched DraftKings Predictions, and FanDuel joined with derivatives marketplace CME Group to roll out FanDuel Predicts.
States have pushed back against the prediction markets, which currently are not subject to the levies that sports betting companies pay. Hoffer, of the Tax Foundation, noted that “it’s only a matter of time until [prediction markets] become regulated under some umbrella that is similar to where sports betting finds itself.” That’s not the posture prediction market companies are taking, however; Kalshi has said in legal filings that losing in any one state would lead to the company shutting down sports event contracts on the app permanently.
The time may have run out on Kalshi’s betting disguised as contracts: In mid-January, a Massachusetts superior court judge issued a preliminary injunction blocking state residents from using Kalshi to wager on sports since the firm doesn’t have a Bay State gaming license, noting that federal law doesn’t “displace traditional state police powers.”
A New Jersey district court had ruled in favor of Kalshi and its assertion that it falls solely under the purview of the CFTC. New Jersey regulators appealed that case, which is now pending in the Third Circuit Court of Appeals, the same court that decided Murphy. Nearly a dozen states have acted to stop prediction market sports betting; Tennessee recently filed a cease and desist with Polymarket and Kalshi that threatened criminal prosecution for offering wagers without a license.
In an amicus brief in the New Jersey case, 34 state attorneys general explain that Kalshi’s argument merely sets a market for contracts between two bettors on opposite sides of an outcome. “This amounts to a distinction without a difference,” they write. “Kalshi’s position is indistinguishable from that of a Las Vegas poker room that simply operates as the venue in which willing participants play a card game.”
The attorneys general also described another serious issue: If Kalshi prevails, the gambling age in most states would effectively drop. Most states limit gambling to ages 21 and older. Kalshi stipulates that it’s open to anyone who’s reached the “age of majority,” otherwise known as the legal age. In nearly every state except Mississippi, Nebraska, and Alabama, the age of majority is 18.
WITH INCREASING PUBLIC ATTENTION on the harms—last fall, a Pew Research Center poll found that a plurality of Americans believe that legal sports betting is bad for society and sports—there appears to be a faint acknowledgment that something has to change. But the way ahead is unclear.
Eleven states considered sports betting measures last year: None of them advanced. This year, lawmakers in Vermont and Maryland continue the push for bans on online sportsbooks. New York is considering several bills, including one that would stop sportsbooks from putting limits on bettors or banning them entirely because they win too much, a disturbingly common practice. But the lure of tax revenue remains strong
Although Congress has careened into irrelevance in most areas of American life, some members have stiffened their spines on sports betting. This past October, three House committee chairs sent a letter to NCAA President Charlie Baker about a proposal to allow student-athletes and staff to gamble on pro sports, incredible as that may seem with scandals piling up. Less than three weeks later, a majority of NCAA Division I schools voted to drop the plan. In November, Senate Commerce Committee leaders went after the MLB and its “new integrity crisis,” while the House committee took on the NBA’s Silver.
On the legislative front, the SAFE Act (Supporting Affordability and Fairness with Every Bet) proposed by Sen. Richard Blumenthal (D-CT) and Rep. Paul Tonko (D-NY) includes prohibitions on sportsbook ads during live events and the use of AI to track bettors’ gambling habits or create micro bets, and mandates the surgeon general to study sports betting’s public-health consequences. Sen. Brian Schatz (D-HI) has a prop betting proposal in the works.
Nower, the Rutgers researcher, suggests that federal legislation establishing a framework for gambling regulations that is “at a parity with the architecture constructed for substance abuse” would be a start, in addition to establishing firm playing rules such as whether a player can actually afford to gamble.
League officials and state lawmakers are in too deep with sports betting companies to process that online gambling has gone too far—at least until the courts settle it. Again. Bloviating about the integrity of the game, though, obviously soothes the conscience. But words don’t mean much to the high school principal worrying about students or to the athlete hiring security guards to protect his family. As for the gambler stressing about his losses, he’s one of the millions of people the sportsbooks count on to tune out the debate and head right back to the bar since tonight just might be the night.
The post The Scourge of Online Sports Betting appeared first on The American Prospect.