Las Vegas and the coming gamblification of American pro sports

Someday soon, you might be able to attend an NHL or NBA game in Las Vegas — and bet on the outcome from the comfort of your stadium seat.

After years as one of the country's largest metro areas without a pro team, Las Vegas is building a new arena and is viewed as the favorite to get the NHL's upcoming expansion team. But whether it's the NHL or another league that makes the jump, the move to Vegas would be part of a clear trend: gambling is become more and more acceptable in American culture.

"there's an enormous revenue source to tap into"

Leagues are already promoting forms of pseudo-gambling that encourage viewership, such as fantasy sports and NCAA brackets. On-site gambling could be the next step. "The leagues recognize that there's an enormous revenue source to tap into if they can figure out a way to allow on-site betting," says Dennis Coates, a professor of economics at the University of Maryland who studies sports business. "I think it can be done, and eventually it will be done."

If Coates and other experts are right, it's very likely that on-site betting will happen first in Las Vegas — and that the NHL's possible move to that city could be the first stage of a much bigger shift in American sports.

Pro sports leagues have long been terrified of Vegas

The 1919 Black Sox Scandal scared sports leagues away from Vegas for decades. (Underwood & Underwood)

Leagues have historically avoided Las Vegas for two main reasons. Until recently, it wasn't a particularly large metro area by population. Now, however, it ranks 30th — and is bigger than 12 areas (including Salt Lake City, Raleigh, and Buffalo) that do have pro teams.

The other factor, though, has been the simple fact that Nevada law allows gambling on sports.

The worry is that the proximity of gambling would lead to match fixing, in which people with a stake in the outcome pay players to lose on purpose — like in 1919, when eight players on the Chicago White Sox were allegedly paid to lose the World Series. This episode led Major League Baseball to take the strongest stance against gambling of all the major sports: Pete Rose, for instance, was banned from baseball for life for betting on games while he was the manager of the Cincinnati Reds.

(Getty Images/Ken Levine)

There's also some reason to believe that Las Vegas in particular presents temptations. The closest thing the city has ever had to a pro team is UNLV's Running Rebels, who won the 1990 NCAA basketball championship and lost in the final the next year. But shortly afterward, the team was investigated for point shaving (intentionally scoring or allowing certain numbers of points, depending on bettors' point spread). The NCAA never uncovered any evidence, but for many, the rumors tarnished the team's legacy.

In 1992, lobbying by leaders of all major leagues led Congress to pass a law that prohibited gambling on sports anywhere that it hadn't already been legalized — banning it virtually everywhere besides Nevada. They argued that such a law was necessary to ensure the legitimacy of their sports.

But gambling has permeated American culture

(John Greim/LightRocket via Getty Images)

"Times have changed," NBA commissioner Adam Silver wrote in a landmark New York Times op-ed last year. "Congress should adopt a federal framework that allows states to authorize betting on professional sports."

In his argument, Silver cited several key cultural trends: the proliferation of legal casinos and lotteries across the country, the ease of gambling on sports in other countries like Britain (where you can bet on games on your phone), and the huge amount of money (estimated to be somewhere between $80 and $380 billion annually) that's illegally wagered with offshore bookmaking operations by American sports fans.

"times have changed," wrote NBA commissioner adam silver

But Silver left out a few trends, too. "It's not just the offshore, illegal sort of gambling," Dennis Coates says. "It's things like FanDuel.com." The "daily fantasy sports" site, not technically considered gambling, allows users to effectively bet on individual players' statistics in each game, and took in some $57 million in net revenues in 2014 — the same year the NBA bought a stake in the company.

Silver and the leaders of other leagues know that both illegal betting and the surging fantasy sports industry help them by giving lots of people reasons to watch games. But they likely want more — a piece of the gambling pie for themselves. "I'm sure that somewhere in their minds, they're thinking, 'Since we're providing the basis for the gambling, we ought to be able to generate some payment,'" says Robert Baade, a sports business professor at Lake Forest College.

How sports leagues might someday profit from gambling

In Britain, you can place bets at soccer stadiums. (Nigel Roddis/Getty Images)

The leagues could pursue two different strategies in this area. One would be to push for the legalization of sports gambling nationwide, as Silver has done. The other, easier route would be to put a team in Vegas. "As teams move around and leagues expand, Las Vegas keeps entering the conversation," Baade says.

Though the NHL seems like to expand to Las Vegas, there are very good reasons to wonder whether the desert city has enough hockey fans to support a team. At other times, it's seemed more likely that the NBA would move there first.

For either league, though, Baade thinks on-site gambling would eventually be part of the plan: "In the competition between stadiums and watching games at home, television quality continues to improve, and stadiums need to keep up," he says. This competition has led to things like T-shirt guns, mascot races, and the kiss cam. "I have a hunch that in the future, they're going to offer some sort of in-seat gambling opportunities," he says.

A rendering of the Las Vegas Arena. (AEG)

This would presumably give fans the ability to bet on teams, but might even involve fantasy-esque betting on individual players and other sorts of creative wagering. If the current popularity of fantasy sports is any guide, it's easy to imagine this boosting attendance and interest in the game. And if ongoing efforts to overturn the 1992 congressional ban on sports betting are successful, we could eventually see this sort of in-stadium — and perhaps even online — gambling experience across the country.

But just because gambling has ceased to be a cultural taboo doesn't mean that the risk of match fixing has miraculously disappeared. In 2007, for instance, NBA referee Tim Donaghy was sent to prison after selling inside information to professional gamblers — and perhaps affecting the outcome of games.

Adam Silver, the NBA commissioner, says he supports legalizing gambling because it'll make this sort of illegal activity — which often leads to unusual betting patterns — easier to track and prevent. But the hard truth is that the more money that flows into gambling, the greater the temptation for players, coaches, or referees to fix games.

"It's a dicey proposition," Baade says. "But teams and leagues see gambling as a potentially significant revenue stream, and they're not going to ignore it."

Correction: This article previously referred to FanDuel's net revenues as profits, not taking into account customer acquisition and other operating costs.

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