By Katy Popovitch

Jan. 1, 2023, not only marked the start of a new year, but also the birth of sports gambling in Ohio.

SSI hosted “Economics of Sports Gambling” event on Thursday at University Hall where guest speaker Brad Humphreys, an economics professor at West Virginia University, discussed the sports gambling market 10 months into Ohio’s experience.

Humphreys’ research on the economics of sports and the economics of gambling has been published in a variety of academic journals.

Nevada was the first state to officially legalize sports betting in 1931, Humphreys said. There are now 30 states with legalized sports betting.

“A lot of it is driven by cross-border competition,” Humphreys said. “Those states realize ‘hey, we are losing potential tax revenue here, so we need to legalize sports betting so our residents are not going into another state.’”

Original opposition to legalizing sports betting came from professional sports leagues because they thought it would decrease the legitimacy of their sport. Humphreys said this reasoning is odd since sports gambling results in more people watching sports, which increases revenues.

“I always thought that was a pretty interesting claim because betting on soccer in Europe has been legal since soccer professionalized more than a hundred years ago,” Humphreys said. “That hasn’t seemed to harm the integrity of professional soccer in Europe.”

Humphreys said point spreads or betting odds are extremely good predictors of actual game outcomes, contributing to the efficiency of sports gambling markets and making it difficult to win big.

“I am not saying it is impossible to win a bet,” Humphreys said. “I am just saying on average, it is unlikely that you could continually win if you are wagering in these markets because they are efficient.”

Problem gambling occurs when participants have difficulties controlling their actions resulting in extreme negative financial consequences, Humphreys said. The annual prevalence rate of problem gambling is nine percent among active gamblers, which was likely increased because of the expansion of sports betting.

“I think the expansion of things like in-play prop bets that people can make allows people to make sequential bets really quickly,” Humphreys said. “It is a lot like slot machine gambling, you can continue to feed coins into that. It allows people to rack up substantial losses quickly.”

Humphreys said he believes that state decision makers do not care about problem gambling.

“I don’t think it enters into their mind at all,” Humphreys said. “What they see is ‘here is a new revenue stream for me that I can do what I want with.’”

Ryan Ruddy, the assistant director of SSI and organizer of the event, said many students participate in sports gambling, and that it is interesting to look at its economic effects and why states allow people to bet on sports.

“People have always been betting on sports, but to the degree that it’s so readily available, that there are advertisements on TV and things like this, is a huge change in how it’s perceived,” Ruddy said.

Although sports betting often results in a negative outcome, Humphreys said people who are risk lovers receive satisfaction from placing bets.

“There is some utility that consumers get from gambling, and that explains why people want to participate in this market,” Humphreys said.