Alabama Faces Major Setbacks in Gambling
Alabama is poised to encounter significant losses in the gambling sector.
The state’s approach to regulation and taxation in gambling has been criticized for years. It’s evident that Alabama has not fully embraced the reality of the evolving gambling landscape, resulting in substantial financial losses.
Now, the latest hit comes from the emerging market for forecast betting.
If this hasn’t crossed your radar yet, it’s something to note. All states are experiencing this shift, as federal regulations essentially legalize sports betting.
This trend is gaining traction and proving to be highly profitable, particularly in states like Alabama where sports betting hasn’t yet been legalized. DraftKings’ CEO recently addressed these developments at the Bank of America Games & Accommodation Conference, suggesting that the market for forecast bets is primed for rapid growth, especially in states without established gambling frameworks.
Similarly, FanDuel has formed a partnership with the Chicago Mercantile Exchange, indicating its entry into the forecast betting market, which has already seen involvement from other players.
In simple terms, the forecast market enables gamblers and investors to bet on various predictions, like game outcomes or pop culture events, by purchasing “contracts” for specific forecasts.
For instance, in a recent NFL game between the Baltimore Ravens and Buffalo Bills, forecast market sites offered contracts predicting the more likely winner. Baltimore was a slight favorite, meaning a $100 contract for their victory would yield less payout than a similar contract for Buffalo.
In another scenario, during a weekend game between Auburn and South Alabama, Auburn was heavily favored, with a 94% chance of winning. A victory for them would return a mere $103 on a $100 bet, while South Alabama pulling off an upset would reward that same bet with $1,875.
At its core, this resembles a rebranding of sports gambling. However, the functional differences qualify it under federal regulations governing financial markets.
The Attorney General’s office continues to argue that electronic bingo operates like traditional slot machines and is illegal in Alabama. Meanwhile, the federal government has acknowledged key differences and granted Native American casinos the right to operate them. The local gambling landscape mirrors this situation with sports betting, which is struggling to generate tax revenue.
Alabama has allowed daily sports betting where many player prop bets are already legal through various sites. Now, with the emergence of forecast markets, companies like FanDuel can offer bets on player props through one app, while also collaborating with the Chicago Mercantile Exchange for game outcome betting, all without state approval for traditional sports betting.
Regulators in seven states have attempted to block forecast market firms like Kalshi, but courts in New Jersey and Nevada have not ruled in their favor.
This situation arises because these markets fit the legal definition of financial markets, even if they predict game outcomes. Furthermore, Donald Trump Jr. serves as a “strategic advisor” for Kalshi, suggesting potential political influences at play, particularly as the Trump administration has shown favor towards such markets.
All of this spells trouble for Alabama.
The state faces the prospect of missing out on billions in sports betting revenue and taxes, while also contending with new entrants ready to capitalize on this gambling frontier.
The forecast betting market is a multi-billion dollar industry, especially in jurisdictions without legalized sports gambling. These companies are likely to secure financial backing through campaign contributions, influencing state legislators resistant to comprehensive gaming reforms.
This is, perhaps, a form of karma for voters in Alabama.
Every year, they repeatedly fail to hold lawmakers accountable for neglecting to advance sensible gambling legislation. Instead, lawmakers continue to benefit from out-of-state interests and various organizations, often prioritizing personal agendas over the state’s wellbeing. The situation has left Alabama grappling with unregulated gambling operations that evade tax obligations.
At the same time, there are illegal offshore sports bets amounting to over $2 billion wagered in 2023 alone, none of which contribute to state revenues. And now, due to legislative missteps, Alabama is witnessing a rise in unregulated sports betting facilitated by smartphones.
In summary, it appears Alabama’s lawmakers consistently struggle to make informed decisions regarding gambling regulations.
