However Much We’re Taxing the Gambling Industry, It Isn’t Enough

There’s a fire raging somewhere out there, and it’s only a matter of time before it arrives on our doorstep with devastating consequences. And we are not ready for it, not at all.

As you might have gathered from the headline, this isn’t about an actual forest fire, but about America’s biggest growth industry: Online gambling. There was a fair bit of coverage in our media earlier this year after legalization took effect, as initial returns suggested that the business was a big hit in Vermont. But what finally got me to write was a recent episode of The Distraction, a studiedly goofy sports-themed podcast with occasional forays into more serious stuff.

Like the November 14 edition, featuring football writer Arif Hasan. He’s a lifelong gambler himself, but he has a clear-eyed view of gambling’s impact on individuals, the sports world, and society in general. There’s a whole bunch of scary stuff in the interview, and more in an article he recently published (which is partly behind a paywall). But here’s the thing that prompted me to write.

Traditional gambling is highly addictive, by many measures more destructive than chemical addictions: Hasan’s friends who’ve been through both believe that gambling is “way more addictive than cocaine.” Suicide rates are higher for gambling addiction than for chemical dependencies.

Online gaming, especially in the smartphone age, is far more insidious. As Seven Days’ Derek Brouwer put it last spring, it’s “a casino in every pocket,” usable at any time on the slightest whim by users who might be too compromised by drugs or alcohol to make good decisions.

But that’s not the bad part.

The bad part, according to Hasan, is that gaming companies know their success depends on frequent users, including people with addiction issues. Especially people with addiction issues. So they’re studying how developers of mobile apps like Candy Crush have induced people to spend more and more time in the game.

And that’s the thing that prompted me to write. This thing is bad, and the industry is actively working to maximize the badness.

Also, side note, the sports journalism industry is deeply compromised by all the ad revenue from gambling outfits and the “partnerships” that include “disparagement clauses” preventing outlets from doing any dispassionate reporting on the effects of widespread gambling. Hasan says that he has “turned down partnership agreements worth tens of thousands of dollars” because he didn’t want his reporting to be limited.

If you consume sports, ask yourself when you last watched a program or gamecast or listened to the radio or a podcast and weren’t exposed to gambling ads or gambling-themed content. States have only been allowed to legalize gambling since 2018, when the John Roberts Supreme Court overturned a federal law that prohibited gambling from expanding beyond Nevada and a few other jurisdictions. That’s how new this phenomenon is, and how rapidly it’s taken over the sports media landscape. Which tells you all you need to know about the profitability of this business.

But that’s a separate issue. Here in Vermont, we have an industry that’s easily outperforming expectations. Which means, hooray, more tax revenue — but it also means more people addicted to gambling. The state has devoted a small portion of gambling-related revenue to addiction-related efforts, but there’s no way it’ll be close to enough.

Indeed, research on problem gambling is far less advanced than research on other forms of addiction — and, as Hasan noted, much of the research now being done is funded by the gambling industry itself. Like a fox commissioning research on henhouse security.

So we’re creating a new category of addiction at a time when we’ve failed to meet the challenge of chemical dependencies. We’ve set up a taxation and regulatory framework that hasn’t at all discouraged the gambling industry from operating in Vermont. In fact, as of last February, most of the sports betting in Vermont was done by out-of-staters, which implies that Vermont may be more industry-friendly than other states.

It says here we should take a firmer hand with the gambling industry. We should look into tighter regulation, especially around discouraging problem gambling, increase the taxes we collect from the industry, and invest that money into addiction research, prevention and treatment. Otherwise, we’re going to find ourselves in a metaphorical conflagration of our own making, and we’ll have no one to blame but ourselves.

3 thoughts on “However Much We’re Taxing the Gambling Industry, It Isn’t Enough

  1. v ialeggio's avatarv ialeggio

    Don’t see the issue here. The industry has assured states and municipalities everywhere they will be able bank millions and millions (pace, Carl Sagan) once the machine really gets going. Why, the brave little state will be able to solve its health care and education funding problems at a stroke — a stroke, I tell you — and have plenty left over for incidentals like affordable housing, electric charging stations and maybe a raise for our hardworking legislators.

    …“partnerships” that include “disparagement clauses” preventing outlets from doing any dispassionate reporting on the effects of widespread gambling.

    How utterly predictable, given the high moral character of the bottom feeders who push this junk.

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  2. Chris's avatarChris

    Reading the Seven Days article, I’ll bet Derek Brouwer called sports, “sportsball” before he wrote that article. He will never use the platforms again. I, on the other hand am wondering if the role of government is to protect me from laying $20 bucks on the Pats.

    Second, your suggestion that Montpelier get even more of a cut after these last two sessions has me wondering if you really understand who the addicts are. Do they need more of a cut of my winnings to create another study about performative virtue signaling? How about they make do with the largest tax burden in the country?

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