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States can now legalize sports betting, so what does that mean for baseball?

Sports betting is legal now, what are the odds?

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The Supreme Court has handed down a historic ruling today, striking down a federal ban on sports gambling, paving the way for states to legalizing the practice. Writing the majority opinion in the 6-3 decision in Christie v. NCAA, Justice Samuel Alito wrote that the Professional and Amateur Sports Protection Act of 1992 (PASPA), the federal law that prohibited all states from legalizing sports gambling but Nevada, which was grandfathered in, was an “affront to state sovereignty” that violated the Tenth Amendment, which reserves rights to the states. The case was originally brought by former New Jersey Governor Chris Christie, who sought to legalize sports gambling for his state before he left office.

So can you run down to your local bookie and put $5 on the Royals tonight? Well not yet (and I wouldn’t advise it the way the Royals are playing!) Sports betting is now left to the states to regulate. Six states - Connecticut, Pennsylvania, New Jersey, New York, Mississippi and West Virginia - have already passed laws that will legalize sports betting, contingent on this decision.

However those laws may not go into effect immediately, as those states will now have to set up regulatory frameworks for the industry. The legislatures in both Kansas and Missouri both introduced bills on the subject, but Kansas has adjourned its session with no further action, and Missouri is winding down their session this week with the odds against a bill being passed. Iowa could be the Midwestern state to jump on sports betting first, and if it goes well there, expect others to follow. The court decision also leaves some room for Congress to impose some regulations.

Baseball and other sports leagues have done an about-face on gambling, as the writing seemed to be on the wall that the Court would rule this way. Major League Baseball, the NFL, and NBA have all given approval to sports betting legislation in various states, so long as they include a 1% “integrity fee” to be paid to leagues, to preserve the integrity of the sport. The NCAA, on the other hand, has adamantly opposed efforts to legalize sports betting.

So what will this mean for baseball? Baseball has a sordid history with gambling going back to the 19th century, with numerous scandals in the early 20th century involving the World Series. Those concerns came to a head in 1918, when eight White Sox players were accused of throwing the Fall Classic, leading to their permanent banishment from the sport.

Since then, baseball has doubled-over backwards to avoid any appearance of impropriety. Even legends like Mickey Mantle and Willie Mays were temporarily banned merely for associating themselves with a casino. Popular Reds manager Pete Rose agreed to a lifetime ban in 1989 for admitting he bet on baseball - even on his own team. Even with sports betting becoming legal, don’t expect Rose’s ban to be overturned, since baseball will have even more reason now to show it is tough on players and managers who bet on the sport.

The concerns about gambling in baseball are understandable, although some concerns may be outdated at this point. Any impression that games are not being legitimately played may be severely damaging to the industry. A game-fixing scandal in Taiwan’s fledgling professional baseball league nearly destroyed their industry recently. Match-fixing in soccer has been a problem in Europe, where sports betting is legal, but sports books have actually been quite useful in helping root out the problem. Also, game-fixing is still illegal, as it has always been. All this does is allow the fan sitting at home to bet on sports, bringing the industry out of the shadows.

When the White Sox threw the 1918 World Series, players only made a few thousand dollars, causing some of them to turn to illegal means to make more money. With players making millions of dollars now, perhaps that is less of a concern. However, you still have minor leaguers being paid below minimum wage, could they be much more susceptible to the influence of bookies once they reach the big leagues? Umpires could also be subject to target - NBA referee Tim Donaghy faced felony charges for helping manipulate point spreads. Even a handsomely paid ballplayer can be targeted by bookies if they fall into major debt - athletes tend not to be great at handling their money.

For now, you can expect Major League Baseball to do all they can to ensure players and umpires are prohibited from betting on baseball, educate them on the dangers of gambling, and give all assurances to fans that games are legitimate. You are likely to start seeing more ads for sports books at ballparks. Baseball coverage may have an eye towards gambling (and not just for entertainment purposes!). In Australia, coverage of sports betting became so ubiquitous, some games had an actual bookie in the broadcast booth. This could provide a different perspective on games, but it could also become obnoxious to the point of de-emphasizing winning over the spread or prop bets.

Baseball is also due for a big windfall. The American Gaming Association estimates $36.5 billion is wagered on baseball games illegally by Americans each year. Just 1% of that - without any additional work on their part- is quite a cash cow for baseball clubs. And this ruling is great for daily fantasy sports sites like Draft Kings and FanDuel, who have partnership agreements with MLB, and can now get a foot into the sports gambling industry. Players will likely want to get their cut too, so watch for the added revenues to be an issue when the next labor deal is negotiated.

There are significant downsides to allowing more gambling of course. Lives have been ruined by bettors hoping to cash in on a big win. About 2% of the population will suffer from gambling addictions, and according to Dr. Keith Whyte, executive director of the National Council on Problem Gambling, “the average problem gambler that seeks treatment has gambling debt twice their average annual income.”

The landscape of sports has changed dramatically today. How exactly things will pan out remains to be seen. Hopefully sound policies and a responsible industry will ensure that sports betting can be a fun diversion for fans that doesn’t overwhelm the game itself.