University of Massachusetts Amherst: UMass Amherst Researchers Complete First National Review of the Impacts of Legal Sports Betting

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Legal sports betting in Massachusetts is projected to have “far less impact economically” than the state’s two other legal types of gambling – casinos and the lottery, according to a study by researchers with the University of Massachusetts-based Social and Economic Impacts of Gambling in Massachusetts (SEIGMA) project.

In August, Massachusetts became the 36th state to legalize sports betting when Gov. Charlie Baker signed the Legislature’s bill into law. The SEIGMA report – presented today, Sept. 8 – was ordered by the Massachusetts Gaming Commission (MGC) as it creates the licensing process and the rules and regulations to roll out sports betting in the Commonwealth.

“For the last several years, the Massachusetts Gaming Commission has been monitoring proposals that would legalize sports wagering and designate the MGC as regulator in Massachusetts,” says MGC Chair Cathy Judd-Stein. “The MGC saw the potential of sports wagering and requested this study be undertaken in November 2021 in anticipation of being tasked with regulating the industry. This report will aid the MGC as we begin to regulate a sports wagering industry in the Commonwealth with an uncompromising focus on integrity and player safety.”

Sports betting in the U.S. – legalized by a Supreme Court ruling in 2018 – has developed rapidly and in sweeping, diverse ways across the nation, but its social and economic impacts are still largely unclear, the study found.

“We were trying to give a very broad overview of what is known at this point about the social and economic impact of sports betting, and it’s the first nationwide effort to do that,” says lead author Rachel Volberg, research professor in the School of Public Health and Health Sciences and SEIGMA’s principal investigator. “It also summarizes what we know about sports betting in Massachusetts.”

The estimated tax revenue from legal sports betting in Massachusetts – anywhere between $8.6 million and $63 million annually, depending on tax rate scenarios – pales in comparison to the $1.1 billion in revenues from the lottery and $168 million from casinos in 2019. Tax rates at casinos are much higher, the report points out, and far fewer people engage in sports betting than other gambling activities. The report also notes that it is unclear how quickly legal sports betting will capture the illegal market.

Because so little information about the impacts of sports betting is available, Volberg’s team mined data from their own surveys and studies that are part of the robust and unprecedented research agenda ordered by the Massachusetts Legislature when lawmakers passed the Expanded Gaming Act in 2011.

Even though sports betting is not yet legally offered in Massachusetts, the researchers found “a substantial increase” in sports betting participation among an online panel surveyed in March, compared to eight years ago. Volberg, emphasizing that the online panel is not representative of the general population, attributes the increase to the legalization of daily fantasy sports in Massachusetts and a nationwide deluge of sports betting advertising.

A representative survey of 8,000 adults was completed in Massachusetts earlier this year and will provide – just prior to the legalization of sports betting – a snapshot of changes in gambling behavior, attitude and problem-gambling prevalence since 2013-2014.

“We’re being very careful to say we can’t come to a conclusion until we see the general population survey data,” Volberg adds, which is being analyzed in the coming months.

Even though maximizing revenue is not the same as maximizing the economic benefits for the state, for maximum economic impact the report recommends issuing licenses for online operators, since most sports betting is done online, and licensing a variety of online operators.

“While it is likely that sports book operators, including land-based and online operators, will benefit from sports betting legalization in Massachusetts, it is difficult to predict whether sports bettors will add legal sports betting to their repertoire or simply substitute betting on sports for spending on other types of gambling,” the report states.

The report also suggests that advertising be well-regulated to protect vulnerable groups not previously involved in sports betting, including young adults and women, adolescents, immigrants, college athletes and those in recovery from gambling problems.

Volberg notes that only four states have funded any kind of research about sports betting, while 12 have provided funding for problem-gambling services. This stands in contrast to Massachusetts, where 9% of the tax revenue raised from sports betting will go into the Public Health Trust Fund that supports the rigorous research agenda and services to mitigate gambling-related harms.

“We are in a unique position in Massachusetts to be able to monitor the impacts of sports betting as it becomes legal and make adjustments to its provision so as to maximize the benefits and minimize the harms,” Volberg says.

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