The Role of Government in Sports Betting Regulation

Sports betting is one of the most lucrative industries in the world today. In 2019, the global sports betting industry was valued at around $85 billion despite the hit by the COVID pandemic. Today, almost two years after the pandemic hit the globe, the industry still has numerous growth opportunities. Governments from all parts of the world have their say in sports betting. Some deem it illegal, and others have seen the benefits and legalized the activity. 

Legal issues that surround sports betting can be somehow complicated. Moreover, international sports betting is even more complex. Governments have formed different feels towards sports betting and gambling. Different tolerance levels are sustained, which has led to new policies in sports betting licensing and taxation. Before enrolling in sports betting, it is crucial to determine the regulations and procedures the land law has enacted. 

Regulated and Unregulated Sports Betting Markets

Sports betting started as a hobby but has grown to be the most gainful economic activity in the world today. Despite the heat of the Covid-19 pandemic, the industry has picked up the broken pieces, and more sportsbooks are back in the market with massive gains. By the end of 2021, the US betting industry is estimated to generate up to $1.3 billion in revenue.

The government’s feel towards sports betting affects the operations and profitability the bookmakers make. The legal status of sports betting alone has sweeping effects on the players, operators, the government, and anyone affected by the industry. 

Major bookmakers openly advertise their products in a legal sports betting economy, hire qualified and renowned personnel, and some are listed as public trading. Players enjoy seamless deposits and withdrawals and are assured of fairness in gaming. 

For the outlawed sports betting market, things are pretty different. Bookmarkers operate in a ‘black market’, avoiding any publicity. They operate in secret and in laissez-faire. In this environment, you can never know whether a sports betting firm is legit or not. It is difficult to determine the owners and those who run the betting companies since no one wants to have their credentials associated with illegal gambling. 

Players on the other end find it quite tricky. It is tough to make deposits and withdrawals, though gaming enthusiasts will still find a way. These players have nowhere to run but and in most cases, they are ripped off by rogue and unregulated operators. Online sports betting in an unregulated sports betting market is more accessible but harsh for players since consumer protection laws or local regulations do not apply. 

Sports Betting in a Legal and Regulated Market

A well-regulated market means that the government of the land is effective at protecting the consumers. Some governments will, however, overregulate and overtax the industry. Sports betting regulations ought to have a balance to avoid going too far. Overregulation limits the betting companies, thus creating monopolies in the sector, and players lack the freedom of choosing bookmakers. This forces players to bet at unlicensed foreign sites. 

A well-regulated sports betting market is good for the players, bookmakers, and the government. There are higher chances of better economic development as sports betting is a significant contributor to tax revenue.

Benefits of a Government Regulated Betting Market 

  • Anti-money laundering. Government betting licensing bodies require operators to report any suspicious activities. It is also mandatory that bookmakers implement ‘Know Your Customer’ (KYC) procedures after licensing.
  • Easier dispute recourse. A betting regulator is the first recourse for disputes between the operator and players. They have dispute resolution procedures in cases of payment failures and unfair treatment. The regulation enables all betting related disputes to be handled in-house instead of flocking the legal systems. 
  • Fighting poker-collusions. Government regulations help eliminate the two major collusions in poker. One, if it’s known that an online poker site is not working towards getting collusion in control, it risks scaring off legitimate players. Two, any poker site which allows games corruption risks losing its license. A regulated poker site can detect collusion via modern automated processes. They spot suspicious betting patterns and players who use unscrupulous methods to get a seat at the table. 
  • Responsible financing. Operators must have enough money to pay players at all times. Government regulations help secure players’ trust in the sports betting operator. Some governments require operators to hold pay out cash in a separate account.
  • Fair advertising. Unregulated betting companies advertise with false information to lure customers into making new signups. Regulating bodies provide for truth-in-advertising standards. 
  • Gamblers Problem Assistance. Gambling problem is a result of addiction. It results in crime and uncouth behaviours associated with hunger for gambling. Operators in licensed betting detect and provide resources to assist the affected people. Players can set maximum deposit limits through voluntary self-exclusion programs. 

Sports Betting in a Restricted and Prohibited Environment

Some governments either severely prohibit any gambling activities or impose restrictions to protect government monopolies. Players have a limited choice in such a gambling environment and may choose to bet at unlicensed markets. Most governments with strict limits to sports betting seek to stop money laundering, stop gambling problems, and prevent any form of underage gambling. 

Results of Sports Betting in a Prohibited market

  • No transparency. Betting companies operating in restricted betting economies are illegal. They have no incentive for openness. The companies try to be opaque to hide from authorities. They hide the business ownership status and work with suspicious betting patterns which are likely to hurt new players. 
  • Difficult payment procedures. Players have a tough time depositing and withdrawing funds. Credit card companies, banks and most financial institutions require the provision of a license between incorporating gambling sites into their payment program. Unlicensed and illegal betting sites result in expensive and riskier options. 
  • Corruption-free market. Players have a great base to decide the sports betting operators they choose to register with. The free market, however, has no recourse in times of disputes. Most rogue operators will rip players, and unfortunately, there’s no possibility for a court redress.
  • Little or no background checks. Sports betting companies operating in a restricted betting environment are not vetted before operations. They work in anonymity in the ‘black market’ and allows pro bettors to play without being caught. 

Betting in Unregulated Market

Sports betting is still unregulated in most parts of the world. This means that the government in these nations and developing markets are yet to address the gambling issue. They are silent on sports betting. Players in such economies have great freedom whether paying in land-based or online betting sites. With time, the government will either choose to regulate and control the betting or prohibit gambling. 

Results of Sports Betting in an Unregulated Market

  • Easy payment. There are no laws limiting sports betting; thus, bookmakers are at liberty to embrace any banking options for deposits and withdrawals.
  • International regulations. There are no regulations in home countries, but players can choose to take advantage of strict regulations with foreign bodies. UK betting sites, for instance, are safe to play in an unregulated economy since they are subject to the strict regulations in the UK. 
  • No legal clarity. Bookmakers operate in uncertain circumstances meaning they never reach their maximum potential. Sports betting is neither prohibited nor allowed. Operators cannot make long-term plans since government decisions on sports betting in the area may alter all their development agendas. 

Significant Benefits of State-Legalized Sports Betting

The heightened growth of the online betting industry through the uptake of mobile phones, laptops, and tablets, has led regulatory bodies to think of how to make the industry safer and better. Governments’ input in the fast-paced sector with ever-changing tech advancements is vital. A legalized sports betting framework is an added advantage to a nation’s economy.

  • Increased tax revenue. The federal government and local states have gained massive revenues from sports betting legalizations. Pennsylvania, for instance, taxes betting companies 36% in addition to the $10 million licensing fees. In June 2021, the Pennsylvanian government made over $12 million in tax revenue. The substantial size of the sports betting industry could contribute over $8 billion tax to regulated markets. It’s a significant boost to governments across all levels. With increased revenue, governments can set up support centres to identify and help those at risk of gambling problem. 
  • Creation of employment. The US gambling industry employs around 120,000 people, with the UK counterpart employing approximately 107,000 people. New sports betting casinos open with a wide range of opportunities for residents in the thriving sports betting industry. Positive government influence in the sports betting sector creates more jobs both directly and indirectly. Online sports betting is in continuous need of high skilled coders, web administrators and support staff. The rising industry needs additional legal representation, thus opening up extra job opportunities for legal professionals. 
  • Safe ground for players. Government legislations and laws have made sports betting platforms secure for players to try their luck. Legalizations of sports betting have seen increased signups both in online sports betting and land-based casinos. Players find it easy to place more wagers at the comfort and safety of their homes.

Future of Governments’ Directions on Sports Betting; Legal or Illegal

Some countries continue to deem sports betting illegal as others legalize the same. In our opinion, a government that restricts sports betting at this age would make an unwise decision that will have massive financial implications. Sports betting should be embraced for full economic recovery, especially after the Covid pandemic’s economic shutdown.

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