March 7, 2025
By Jonathan D. Cohen
“Gambling is inevitable. No matter what is said or done by advocates or opponents of gambling in all its various forms, it is an activity that is practiced, or tacitly endorsed, by a substantial majority of Americans.” So begins a 1976 report from the congressionally convened Commission on the Review of National Policy Toward Gambling. American history offers ample evidence of this inevitability. The nation’s past is as full of gamblers, con men, and speculators as it is yeomen, puritans, and meritocrats. No amount of legislation, and no amount of law enforcement activity, has ever been able to stamp out the American addiction to action.
What, then, should be done with this irrepressible activity? Authorize it? Legalize it with restrictions? Surely not prohibit it, right? As Milton Friedman concluded, “Prohibition is an attempted cure that makes matters worse—for both the addict and the rest of us.”
Rachel Lu isn’t so sure. In her tightly argued essay “Online Gambling and the Problem of Sin Markets,” Lu confronts a dilemma over the regulation of the market for so-called vices—sex, drugs, and gambling, with a primary focus on the latter. The obvious inclination—and the trend that seems to be the dominant one in the twenty-first century United States—dictates that pleasurable activities should be basically unchecked, subject entirely to the whims of the market. But, Lu argues, unchecked sin markets provide too many incentives for sellers to prey on and exploit vulnerable or addicted users. An unfettered marketplace ultimately creates negative externalities that will damage society and will require government clean up in the form of law enforcement activity or social services. The alternatives to this capitalist free for all are, for a libertarian, not much more appealing: the vices could be banned outright. Or government could intrude further upstream to regulate the activities in an attempt to prevent the negative externalities from developing in the first place. Letting the market decide is simply not an option. “We’re going to have to pick our poison,” Lu concedes.
Another factor deserves consideration specifically when it comes to sports gambling: the effect on sports themselves. Sports are valuable to society, and gambling has long posed a threat to the integrity of the games that so many people love. This threat drove the passage of the Professional Sports and Amateur Protection Act (PASPA) in 1992. Since the Supreme Court overturned PASPA in 2018, coaches, players, and referees alike have been caught with their hands in the gambling cookie jar, which, to critics like Lu, is evidence that the proliferation of gambling has corrupted our national pastimes.
These considerations lead Lu to a surprising conclusion: A blanket federal ban on sports betting “may actually be the most effective and least invasive option for stemming addiction and protecting real cultural goods.” The caveat is that such a ban would have to be constitutional—in a way that PASPA was not—and that the public seems to support the continued existence of legalized sports betting (even if they want more protections put in place). But, ironically, given the unacceptable catastrophe that would unfold from even more unfettered sports betting, Lu would prefer a full-on prohibition rather than well-meaning but invasive regulation that would ultimately continue the nation’s embrace of “soft libertinism.”
At this point I should confess that while I am sympathetic to some libertarian ideas, I myself am not a libertarian. I was invited to review Lu’s essay on the basis of my gambling policy expertise, not my political sympathies or libertarian credentials (though I am a distant relative of Anna Jacobson Schwartz, Milton Friedman’s coauthor on A Monetary History of the United States, 1867–1960). On this basis, I find myself in the awkward position of arguing against a liberty-driven case for a government prohibition on online sports gambling. The awkwardness is augmented because I share Lu’s overriding concern about the negative externalities that have resulted from the current sports-betting framework, particularly rising rates of gambling addiction and financial insecurity among young men. Nonetheless, I support the continued existence of legal sports betting. I do so because of the practicalities facing a potential prohibition; the utility that gambling can provide; and because I accept the tradeoff of slightly more government involvement in people’s lives in exchange for better sports betting guardrails.
Lu is by no means blind to the actual consequences of government prohibitions. She reaches this conclusion as the least-bad alternative to the vexing problem of the regulation of sin. However, a major problem facing a potential ban on sports betting is that gambling has become an unavoidable part of sports culture and sports fandom. The gambling industry long hung its case for legalization on the premise that Americans were already gambling illegally. They implied—just as lottery advocates did in the 1960s—that legalization would not expand the total handle but rather bring it into a taxed, regulated marketplace. This argument was, of course, nonsense. “Legal markets generally increase use,” Lu writes. The use of gambling has increased indeed, and will increase again whenever California, Texas, Georgia, and other states decide to get into the game.
Thankfully, most sports bettors are able to play safely, with few or no negative externalities from their play. One analysis of over 9 million NFL bettors found that 60 percent of bettors accounted for just 1 percent of sportsbook revenue. (The top three percent, meanwhile, accounted for 82 percent.) People bet because it can be undeniably fun. I can attest that placing even a small bet on a game can increase the excitement of just about any contest. Not everything that is fun should be legal, but sports betting can be basically harmless for participants.
The practical question facing Lu’s proposal is what that 60 percent of bettors would do if legal online sports betting were to disappear from their phones. Some would likely quit, perhaps placing a few bucks down on their favorite team the next time they went to Las Vegas. Otherwise they would simply stop gambling. But now that they have gotten a taste for sports betting, a non-insignificant number are likely going to keep betting. As inconvenient as it can be to bet on offshore sportsbooks or to track down a bookie (and then keep one’s kneecaps intact in the event the bettor can’t pay their debts), even some casual bettors would find a way to keep getting their money down. “The genie of global sports gambling may be out of the bottle for good,” wrote Sports Illustrated’s Steven Crist. And to be clear, he wrote that in 1998, in response to the arrival of illegal gambling over the internet. If he only knew.
A ban would certainly take down the temperature on the nation’s sports betting fever and would slow—but not stem—the flow of new gamblers. But the people who would likely be the most affected are those whose play is the least worrisome. The top three percent of bettors includes people whose dopamine pathways have been rewired such that they are addicted or borderline-addicted to gambling. By hook or by crook, they are going to find a way to place a bet. For a parallel, consider the ban in Great Britain on gambling with credit cards, something advocates have called for in the United States. The results have been decidedly disappointing: people who gamble safely did indeed reduce their gambling with borrowed money, but those suffering from various stages of addiction quickly identified workarounds and kept betting. Many similar regulations intended to make sports betting safer—including ideas that I support—sound good on paper but are not yet supported by real-world evidence of efficacy. Still, reforms like affordability checks, deposit limits, and a reduction in betting options are promising ways to protect players. Lu sees such measures as “leashes imposed by benevolent state babysitters.” I see them as the poison I’m willing to pick.
Would a ban restore the integrity of team sports? I envy Lu’s faith in sports as displaying “excellence of ordered liberty” and imparting the values of “discipline, fitness, perseverance, cooperation, and fair play.” Professional sports are so beholden to corporate interests—particularly advertisers—that the recent infusion of gambling feels more like a change of degree than a change of kind. And the fact that the NBA leveled a lifetime ban on Jontay Porter for gambling while Miles Bridges was banned just 30 games for domestic violence (only slightly longer than Bobby Portis was recently banned for taking prohibited pain medication), suggests a sports infrastructure that uses gambling as a convenient scapegoat but can hardly be counted on to impart proper social values.
Gambling is inevitable. And legal gambling can be offered in such a way that it remains an available, but not predatory, enterprise. Lu herself has been the commissioner of a fantasy sports league since 2009. With some restrictions on marketing, gambling could become an activity akin to fantasy: a fun way to raise the stakes of professional sports, but one that is avoidable for fans who are not interested. Addiction will never be entirely eradicated, and there will always be some people who bet more than they can afford. The question isn’t whether sports betting will exist—or, these days, whether legal sports betting will exist. The question is whether gamblers and their political representations are willing to accept a little more oversight to reduce the already-prevalent harms. It's a chance they should be willing to take.
Jonathan D. Cohen is the author of Losing Big: America’s Reckless Bet on Sports Gambling (2025) and For a Dollar and a Dream: State Lotteries in Modern America (2022). He received his PhD in history from the University of Virginia.