Online gambling is engineered addiction — here’s how to rein it in

“They fatten upon wretchedness, and have the effrontery to demand that the laws of the State shall be adapted to their purposes.” So said Charles Evans Hughes, Republican governor of New York, about Empire State gambling operators in 1908.

More than a century later, Hughes’ words ring true as the United States faces an explosion of legal online gambling.

Sports betting, decriminalized by the Supreme Court in 2018, has spread to 39 states. Online casinos, which include slots, blackjack, and more, are permitted in seven of those.

Americans now gamble roughly $1 billion a day on state-sanctioned apps like DraftKings and FanDuel — far more if one includes the lottery and meme-stock or crypto speculation.

Many have championed this newfound embrace of financial thrill-seeking. Bill Miller of the American Gaming Association claims gambling is innocuous, “a voluntary entertainment option, comparable to attending a concert, dining out, or going to the movies.”

But gambling is not like attending a concert or going to the movies. It is, like drugs or alcohol, an addictive product that many can enjoy safely — but some cannot.

The dangers of addiction multiply when we can bet on our phones at all hours of the day, and when gambling companies use sophisticated algorithms and troves of personal data to extract the maximum amount of money from customers.

That’s because the gambling industry, like the alcohol industry, is reliant on problem users.

For at least one major US operator, VIP customers represented just 0.5% of the user base while generating more than 70% of the company’s revenue.

In the UK, where online gambling has been legal for longer and better data exist, 5% of users account for 86% of industry profits, and gamblers from the poorest areas are overrepresented among the biggest losers.

Problems are concentrated among young men: As many as one in five male college students are using student-loan money to fund gambling, recent surveys have found.

Proponents of expanded online gambling greatly exaggerate the benefits. Tax revenue is meager and quickly diminishes over time.

The black market, which advocates said would dry up as users move to legal sites, is thriving because more people than ever are gambling — and their play spills over into unregulated spaces.

In response, some commentators have suggested a blanket ban on online gambling.

The logic is simple: Gambling, particularly on our phones, is bad for lots of people and for society writ large.

But prohibition is not a cure-all. While a ban would surely reduce the number of bettors and de-normalize the activity, many would simply continue their play with unregulated operators — especially now that the population of gamblers has expanded from years of legalization.

Instead, like other vices, online gambling should be regulated by focusing on the two aspects that justify government intervention: addiction and predation.

Some gambling products, just like some drugs, are beyond the pale and ought to be banned completely.

Online slots, for example, are engineered to ensnare users, and carry far greater risks of addiction than online sports betting.

In Pennsylvania, the largest state with legal online casinos, residents lost $27 million betting on sports in March, while losing $238 million to online casinos — 75% of which came from slots.

For sports betting, which carries less risk of addiction, regulators should set clear rules about identifying and responding to problem gamblers, and impose hefty fines on operators for noncompliance.

Any gambler who deposits money a dozen times in a single day, drastically increases their stakes after losing, or frequently cancels withdrawals should be automatically flagged and their betting restricted.

Regulations can be modeled after dram-shop laws, which hold alcohol vendors accountable for over-serving obviously intoxicated patrons.

Regulators should also restrict the amount and nature of gambling advertisements. You should be able to watch sporting events without gambling being shoved in your face.

Moreover, like health warnings on cigarette cartons, ads should come with a disclosure that the odds are not in your favor.

Gambling is now regulated at the state level, but just as Congress stepped in to regulate tobacco and alcohol, it should now do the same for online gambling.

In many ways, the fight to regulate today’s online gambling operators echoes Hughes’ fight against racetracks in the early 1900s.

But unlike a century ago, gambling has become frictionless and ubiquitous. Gamblers can gamble day and night, on the couch and in the shower, on NBA-themed slots and Russian table tennis.

Their bookies, meanwhile, know everything about them and can provide personalized inducements to keep them gambling.

The question facing policymakers isn’t whether gambling should exist, but how to prevent addiction and predation while permitting recreational use.

Banning online casinos and more effectively regulating sports betting would strike the balance between personal liberty and necessary protection.

After all, Americans should be free to gamble — but not with loaded dice.

Isaac Rose-Berman is a professional sports bettor and fellow at the American Institute for Boys and Men focused on gambling research and policy. Adapted from City Journal.