Schuetz: For The Bettors, The Good Old Days Are Right Here, Right Now

“Competition brings out the best in products and the worst in people.”

— David Sarnoff (1891-1971), chairman of Radio Corporation of America (RCA)

David Schwartz of UNLV is a noted author and authority on gaming. He is also a friend of mine, though we don’t see each other much anymore because we live in different parts of the country.

I was once listening to David give a lecture in which he suggested that archeologists had discovered a set of dice dating back about 5,000 years. He then added the joke that they had also discovered a shaved die dating back 4,999 years. In other words, things resembling gambling have been around for a very long time, as have people looking for an edge.

Contrary to many people’s belief, I was not around when those dice were made, but I have been around for what seems like a long time. I became a casino employee in 1971, and I am still involved with gaming today. I bring this up to make the point to anyone who has not been around the gaming space too long that, yes, what is going on now is crazy. And I think “crazy” may be an understatement.

In looking to isolate the forces that have made gaming crazy, the Supreme Court’s decision in Murphy v. NCAA gets an assist. The apparent insatiable need for state governments to raise money to spend is also a contributing factor. With the rapid expansion of new forms of gambling and the delivery of many of those products over the internet, we seem to have gone from “gold standard” regulation to “regulatory lite,” where many regulators neither understand the products nor the challenges of delivering those products over the internet.

The role of political contributions in buying things like laws, rules, judges, and politicians is also a factor. While that has always been part of the game, it has been amplified and put on steroids by the Supreme Court’s 2010 case, Citizens United v. FCC, which basically said there are ways to get serious money to politics on the lowdown if you try hard enough.

Impact of November 2024

I would also suggest that the election of Donald Trump has introduced a whole set of new rules for how things are done, not only in gambling, but in many, many dimensions of our reality. These rules also seem to be evolving every day, changing shape and form on the fly. Politics has always been transactional, but never at this scale.

Presently, we are seeing the incursion of prediction markets and related products (which fall under the regulatory umbrella of the Commodity Futures Trading Commission) offering their services to sports bettors. To an extent, this touches on the topic mentioned above: President Trump. As in many areas today, the president and/or his family members’ involvement becomes confusingly entangled with public policy issues. These often appear to be related-party transactions.

What is noteworthy is that the Trump family appears to have had its best year financially, with Forbes estimating a net worth increase of billions of dollars. And again, to a simple person like me, many Trump transactions seem to involve related parties. And some of these transactions would seem to be important in the betting space. Who knows, it may be a coincidence. And, as an aside, I consider pardons and commutations as transactions.

Regardless of the causes, however, much of what is going on is of great value to the sports bettors, at least in the short run. And as the famous economist John Maynard Keynes once noted, “In the long run we are all dead.”

Economics tells us that the greater the number of suppliers in the market, the better it is for consumers of the product. The opposite extreme is a monopoly, where there is only one source of the product, and the consumer has the choice of paying the price, doing without, or looking for some type of substitute.

What has happened in sports betting of late is that there is a growing number of suppliers selling bets, and these suppliers are the prediction folks. And these additional suppliers offer a differently designed product. What this means for the bettor is more pricing options, allowing them to value shop and manage risk as the actors participating in the exchanges create more price and value opportunities.  

This not only increases the field of choice for consumers but also offers a more economical option for bettors. CFTC-regulated entities do not bother a bettor with required problem gambling messages, expensive state taxes, snoopy state compliance auditors, annoying 800 numbers to call, extraordinarily intrusive background investigations for operators and their sources of finance, or any other irritants. For you casino folks, think of the prediction folks as the old Las Vegas $2.99 all-you-can-eat buffet, so to speak, so hog it up.

There are other advantages. You can now visit your brother and his many children in Utah, who is married to the Mormon woman, and get down with a bet on your cell phone while sitting in Temple Square, listening to the Mormon Tabernacle Choir. What a world the CFTC is bringing us!

Where do we go from here?

There are some good guesses out there about the potential reality of this brave new betting world, and it has become something of a hobby to speculate on what this all means, but these guesses and speculations are not yet facts.

One is the tax implications for winners. First of all, this issue may be the subject of future legislation. Secondly, just because the CFTC defines a transaction one way does not imply that the IRS will follow suit. I will believe the potential tax benefits of prediction markets for betting when the IRS says how these transactions will be handled, and not a second before. I have had some interesting interactions with the tax folks over the last 50 or so years, and it has taught me that they have their own unique way of doing things.

So, go for it, bettors: These are the best of times, and get it while the getting is good … for this may change.

The question becomes, is what appears to be going on in the here and now sustainable? In this bifurcated system, is this a stable equilibrium? I do not believe it is, in which case we may want to reflect on Charles Darwin’s insight about change: “It is not the strongest or the most intelligent who will survive but those who can best manage change.”

Moreover, I would suggest considering whether forecasting these potential states of change falls within the realm of risk or uncertainty. My sense is there is a lot of uncertainty about where all of this is heading. In contrast, many people want to talk about it in the context of risk. Predicting is fun, but as the unknowns pile up, it often shifts into wild-ass guessing.

One of the actors in this drama is the court system, and when one looks to the Supreme Court, one understands that it is often difficult to anticipate its behavior. Moreover, even if it seems to have established law to look back upon, it may decide to change that. Take a look at the variety of opinions by the court on issues of abortion, racially segregated schools, interracial marriage, minimum wage laws for women, and a raft of other things that the court once zigged on, only to return later with a zag.

The states, which have a financial stake in all of this, are becoming more organized and vocal, and I predict that will not be good for prediction markets. The states will also use their existing gaming regulatory systems to serve as hit squads against licensed gaming firms wanting to play in the prediction space, and that will cause some folks to lose sleep.

The Trump family’s involvement could become a suit of armor in all of this for the prediction models. Or it could become a poison pill. In 1984, I worked for a casino with an Atlantic City presence next door to Trump’s, and over the years, I have noticed that he has had his good runs and his very bad runs.

My point is that this is a great discussion topic, and it will generate millions of words going forward. And that is a fun exercise. But if you want to operate in the real world, the thing to do presently is take advantage of this, for I don’t know how it will change or the speed of that change.

But, I assure you, it will change. And it most certainly will not change to benefit the bettors.

So, understand that today is one of the good old days, and go for it. It will have a lifespan, and it may not be long.

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Richard Schuetz entered the gaming industry working nights as a blackjack and dice dealer while attending college and has since served in many capacities within the industry, including operations, finance, and marketing. He has held senior executive positions up to and including CEO in jurisdictions across the United States, including the gaming markets of Las Vegas, Atlantic City, Reno/Tahoe, Laughlin, Minnesota, Mississippi, and Louisiana. In addition, he has consulted and taught around the globe and served as a member of the California Gambling Control Commission and executive director of the Bermuda Casino Gaming Commission. He also publishes extensively on gaming, gaming regulation, diversity, and gaming history. Schuetz is the CEO of American Bettors’ Voice, a non-profit organization dedicated to giving sports bettors a seat at the table.