Economic reasoning explains why sports gambling reliably makes the average bettor poorer. Point-shaving scandals and information asymmetries reveal why the odds are stacked against participants.
Sports betting has become an epidemic, especially among young men. The Guardian recently aggregated some alarming statistics about its prevalence. The story notes:Somewhere between 60 and 80 percent of high school students reported having gambled in the last year, the National Council on Problem Gambling reported in 2023. A study commissioned by the NCAA found that 58 percent of 18-to-22-year-olds had bet on sports – although it should be said that in most states this is illegal before the age of 21.Prediction markets have contributed to the normalization of gambling by blurring the line between investment and gambling. You can now essentially place betting parlays on Robinhood, an app previously dedicated to retail stock trading.
In order to see why this uptick qualifies as an epidemic, we can use some economics to see how sports betting will necessarily make the average participant poorer.
Investing vs Gambling
To see why, it is helpful to contrast gambling with investing. After all, what makes betting on your favorite team different from buying some index funds for retirement?
Well, first of all, investing has the ability to be a positive-sum game. In other words, when you buy stock, it can be a win-win. If you buy stock in a company, the company receives money today, which it can use to grow, and in exchange, you get equity in a company that grows in value. It’s a potential win-win. If you buy from a broker, this same logic holds, just with more steps between you and the company.
This ability to have a positive-sum game is why, when individuals diversify into a large number of stocks, their portfolios grow. If someone invests in an index fund like the S&P 500, their money has historically grown at an average of 10 percent annually. This doesn’t require any special insider information or in-depth research. It’s just riding the wave of positive-sum exchanges.
...read more at thedailyeconomy.org
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It’s absolutely a zero sum game. I think that’s part of the appeal. It’s like sports competition one side wins and one side loses. Like sports, unless you are amongst the best in the world at it, it is probably best to do it just for fun.
that's also where I'm sort of sympathetic to restricting/banning/removing it as much as possible... why markets benefit society is that they're mutually beneficial, plus-sum games. While there's enjoyment involved so to some extent peeps' perogative to enjoy burning money as they please, it's also like not great... maybe don't do it, and the world is better, I dunno
I'd saying losing money gambling should have a somewhat lesser stigma than losing money on hookers or blow.
Well, any argument about sports gambling = bad/ban/get rid of is gonna be 10x on those things, no??
Sure, but if those things shouldn't be banned...
They shouldn't? Perhaps not. But they kind of are, no??
Per dollar spent, gambling objectively is less costly than almost any other leisure activity.
Is this really true? Some people lose their shirt gambling.
If I spend $100 on blow, in expectation, I lose all $100.
If I spend $100 on gambling, in expectation, I lose about $10.
You gotta weight it by the per unit of entertainment per time though
What units are entertainment measured in?
FUs. Fun units, or Funits for short
as always, Mr. Undisc finds a good relative-to-what comparison that sort of flips the switch on the whole topic
I heard some version of this argument on EconTalk a long time ago and it instantly flipped my opinion about gambling as a pastime.
I still don't particularly enjoy gambling, but I don't think it's any more wasteful than leisure activities generally are.
Feels different somehow... Imagine the movies or a restaurant meal or even alcohol at a bar (if we all assume alcohol is bad and we'd be better off without it etc); there's a worker and an income on the other side of the tx... While in sports gambling there's a better also trying to have fun, no obvious benefit to society.
Anyway, I feel dirty even saying these things (subjective value, etc)
So, an automated restaurant would be less good because it required less labor?
This is sounding like some commie-ass nonsense.
It is, right. I take no responsibility for the commie shite I may or may be sputteringr on a random Friday evening
No, there's nothing socially beneficial about using more of people's time than is needed for a service.
This used to be true until the markets themselves turned into casinos. Where “smart” money uses “dumb” money for exit liquidity
The SEC has done a horrible job regulating the equity markets so many zombies companies exist that should have never be allowed to publicly trade.
Then you get scams like Enron. Trying to take the moral high ground with investing falls short