Despite strong religious influences and the power of determined lawmakers, sports betting has been a part of the American culture for a very long time. Today, Las Vegas casinos and gambling rooms process millions of bets each year; across the internet, sports betting is an industry that generates billions of dollars in revenue.
There are many reasons why sports betting is so popular. Early English, Irish, French and Italian immigrants brought a culture of betting that focused primarily on horseracing, boxing, games of chance, cards, and sporting contests. This, along with certain trends, tendencies, and developments in what was a brand new country, created an environment where betting would prosper.
Love of Sport
After gaining independence, American actively looked to differentiate itself from England and Europe. There was an effort to define America through its art and culture, as millions upon millions of people emigrated from various nations, bringing with them various forms of entertainment, including gambling.
By the middle of the nineteenth century, the stage was set for the development of various American sports. Baseball became popular by the mid-century and dominated the professional sports scene. Professional hockey was established in Canada in 1917, and it expanded into the U.S. in 1924. Football followed in the early part of the 20th century, and basketball became a pro sport by the mid-40s. Each would capture the interest of fans and those looking to make a buck or two on betting.
In the Beginning
The first type of betting involved horseracing, games such as roulette and cards, and boxing matches. Meanwhile casinos sprung up in unincorporated parts of the country. Parisian roulette proved to be popular, and at some point in the 19th century, someone in the U.S. used their ingenuity to create American roulette, a game that added the double zero – which doubled the house edge.
Sometime between 1887 and 1895, Charles Fey invented the first slot machine in San Francisco. It was named the Liberty Bell, and the novelty captured the attention of the public. Also in 1891, Sittman and Pitt, a company located in New York City, created a slot machine that had five drums. Each drum had 10 face cards as found in a deck of 52.
Players put a nickel in the machine, pulled a bar, and the five drums spun around. The drums eventually came to a stop with each displaying a card. Players got payouts depending upon what type of card hand they made, with a pair being the smallest that would garner an award. The first slot machines were placed in bars, and payouts included drinks, cigars, and other items awarded by the bartender.
Baseball and Betting
By the 1850s, baseball had become the first professional sport in the U.S. The sport created a craze, and as more and more people became fans and rivalries developed, the sport spread from the East Coast to Middle America. New York, Philadelphia, Boston, Chicago, and other cities formed teams.
As the game developed further, so too did the interest of bettors and bookmakers. Pool cards were initially offered in the populated cities in the East. The cards were much like today’s parlay slips, providing a wide range of choices for the person looking to make a quick dollar or more on a bet. You could play a pool card for as little as 10 cents. Because pool cards were similar to parlays, it was impossible for bettors to win consistently. The house had a major edge when it came to these first betting slips.
The Honesty of the Sport
A major problem occurred for baseball with the 1919 Black Sox Scandal. Members of the heavily favored Chicago White Sox fixed the World Series so that certain big time bettors could make a killing. The White Sox lost the series to the underdog Cincinnati Red Legs, 5 games to 3.
This scandal gave sports betting and sports bettors a black eye. It’s true that sports betting was illegal at the time, but like many “victimless crimes,” laws against the activity often went unenforced.
Despite the fact that the fix was on in the 1919 World Series, sports betting continued to show healthy growth. As the U.S. entered a golden age of sport in the 1920s, the sports betting public welcomed more chances to make cash.
Football and More Opportunities
In 1920, the American Professional Football Conference was founded, and not long after that, the league changed its name to the American Professional Football Association (APFA). In 1922, the APFA became the National Football League (NFL). Around the same time, college football started to gain popularity. Football would capture the imagination of U.S. sports fans and bettors.
By the 1920s, sports betting was well established in the U.S., with baseball and boxing being of primary interest. Football was a growing sport, however, as was clear in the popularity of such movies as Harold Lloyd’s college football comedy, The Freshman, the Marx brother’s Horse Feathers, and the football drama Knute Rockne All-American. From the 1920s to the 1960s, college football would become the amateur sport of choice in America. In the 1960s, the American Football League would create professional expansion of the sport that was unlike anything seen before or since.
From Boom to Bust
In the early 1920s, America was home again after its involvement in World War I. With the Armistice signed on November 11, 1918, Americans came back home and the country looked inward, not wanting to get involved in the politics and history of that part of the world ever again.
America in the early 1920s experienced the glitz, glamour, and riches of the Jazz Age. It was a time of extravagance, as dance crazes, publicity stunts, booze, and nights on the town seemed to define a country that was growing quickly and without reservation. However, that all came to a sudden end in 1929, when the stock market crashed, millions lost their jobs, and a worldwide economic depression gripped the globe.
In hard times, gambling is often an industry that experiences growth. The Depression proved that point, as football pool cards became the choice of sports gamblers around the country. Much like earlier baseball betting slips, these cards offered numerous football games from which sports bettors had to choose at least five winners. In those days there was no spread, but that did not make picking a five-team parlay easy. Like the baseball pool cards, football cards heavily favored the bookmakers.
The payouts were small compared to today, as a 10-team winner earned 100 to 1. Today’s 10-team parlay pays around 900 to 1. Plus, in those days any tie was considered a loss. With the deck stacked against them, those who tried to hit it big on a football card usually found that by the end of the day they were even more down and out.
Post World War II: Opportunity Beckons
The 1930s and 40s would define the United States – and the world – for the rest of the century. The global economic depression, the rise of Hitler, dominance of Mussolini, and aggressive expansion efforts by the Japanese occupied the rest of the world during the end of the 30s to the middle part of the 40s. When World War II ended, America’s citizen soldiers came back home and focused on trying to build a middle class life that included a wife, children, and homes with modern conveniences.
This was a time of invention in the U.S., and that inventive spirit included sports gambling. In the 1940s, the modern-day Las Vegas was envisioned and funded by mob money. Nevada had legalized gambling in the 1930s, making it the perfect spot for casinos, sports betting parlors and bookmakers of all kinds. Plus, telephone usage soared after the war, as Americans switched from party lines to private lines. Homes and businesses communicated quickly over private phone lines, and that made placing a bet easier than it had ever been before.
It was now easy to communicate much needed information over the phone system, and the U.S. economy was booming, which meant there was disposable income at the ready for entertainment purposes.
The Spread and the Vig
A major problem for bookies as the economic depression eased had to do with the manner in which they took bets. Along with pool cards, bookmakers began offering odds on individual games. Cash became plentiful, radio made football and baseball games instantly accessible, and newspapers and movie newsreels captured the excitement and created the mythology of big games and sports stars.
But the manner in which games were offered to bettors proved to be problematic for the bookmaker. A single bet might present the favorite at 2-1 odds and the underdog at 10-1 odds. With enough action on the underdog, bookmakers could make a profit when the favorite won. But if the underdog was victorious, a bookie could face a tough day of payouts that might break them. That is why in the 1940s, with Vegas on the rise and a new and expansive generation of bettors looking to make cash on sports betting, the point spread was invented.
The spread did a few things. First, it helped to balance the number of bets on both teams in a contest. Now a betting slip for the game between the New York Football Giants and Chicago Bears no longer listed the favored Giants at 2-1 and the underdog Chicago Bears at 10-1. Instead, with the spread, New York would be at -7 ½ points and Chicago at +7 ½ points, with the payouts being the same for each at 10-11, or as we normally see them listed today, -110.
That -110 on a point spread bet meant that for every $1.10 bet, a winning wager would return a profit of $1.00. Bet $1.10 and win, and you got $2.10 back (your bet and your profit). The less than even odds payout meant that the bookie was always assured that they would get a commission of 10% (10 cents on the dollar). That commission, which is also known as juice, vigorish, or vig, along with the spread, made the world a lot safer for the bookie and ensured them that they would make cash on every wager. The modern age of sports betting had begun.
A Whole New World
After the 1950s, sports betting became increasingly popular and mob influence grew. In an attempt to control gambling, lawmakers put numerous restrictions in place. Even so, sports betting continued to prosper with local bookmakers in towns across the U.S. taking and processing bets.
By the 1960s, sports betting was extremely active on the four major U.S. professional sports. College football and basketball were also heavily bet. Las Vegas was the odds center, but there was a lot of betting traffic that crossed state lines. Because betting was illegal in most states, the U.S. government got involved and created a new law.
The Wire Act
The Interstate Wire Act of 1961, which is often referred to as the Federal Wire Act, is a United States federal law that prohibits the operation of specific kinds of betting businesses in the United States.
The text of the Act reads, in part:
“Whoever being engaged in the business of betting or wagering knowingly uses a wire communication facility for the transmission in interstate or foreign commerce of bets or wagers or information assisting in the placing of bets or wagers on any sporting event or contest, or for the transmission of a wire communication which entitles the recipient to receive money or credit as a result of bets or wagers, or for information assisting in the placing of bets or wagers, shall be fined under this title or imprisoned not more than two years, or both.”
Although the law was designed to stop the transmission of bets from states that prohibited gambling to Nevada, where it was sanctioned, it did little to slow sports betting.
The AFL and the Expansion of Football
From the 1960s through the 1980s, football expanded at a rapid pace. This occurred on the professional level with the founding of the American Football League, which managed to compete with the NFL for ten years before they merged.
When the two leagues merged fully in 1970, there were 28 teams. With 15 new teams, the football league started to expand its game schedule. Although it continued to play most of its games on Sundays, it added a game on Monday night.
Eventually, the league started to also offer games, late in each season, on Thursday nights and Saturdays. Monday Night Football, a staple for more than 40 years, became the game in which many sports bettors attempt to make up for their Sunday losses.
College football also saw major expansion. The popularization of cable TV and creation of specific sports networks meant that there were many more broadcast venues for games. This development greatly expanded viewership for NCAA football games, and eventually for college basketball as well. College football, which had pretty much been a Saturday event, started holding games on various days of the week.
The college bowl season expanded each decade. In 1960, there were eight major college bowl games, but by 1970 the number had increased to 11 games. The number of bowl games continued to grow. There were 15 games in 1980 and 19 games in 1990. By 2000, 25 bowl games were on the schedule. The number of bowl games since 2010 has been right around 35.
The increase in bowl games, the expansion of the NFL and MLB playoff system, and the long playoff series in both the NHL and NBA have created incredible new betting opportunities. Also, the NCAA Basketball Tournament, which started in 1939 with 8 teams, has expanded to the point where there are now 68 teams involved.
This major expansion of leagues, teams, and betting opportunities coincided with the expansion of TV coverage that was a result of cable and digital advancements. On the heels of this, the creation of high-speed internet service allowed for an increase in sports betting opportunities, as websites were now able to handle a lot of traffic.
In the early 1990s, sportsbooks started to appear online. Those days were the Wild West of the internet, and much activity went unchecked as rules were being made up on the fly. At the same time, various resource sites were developed, including those offering sports picks, providing information about betting, and publishing previews of seasons, series, and games.
There was an information explosion and an increase in wagering in the U.S. and across the world. More and more entrepreneurs set up websites licensed by countries where gambling was legal, while offering services to those in the United States, which did not allowed such sites.
Although there were various attempts to stop internet gambling in the U.S., none were completely successful. The Unlawful Internet Gambling Enforcement Act of 2006 (or UIGEA) made it illegal for a bank or financial services company to transfer funds from the U.S. to a foreign betting site. Wagering across the internet was not made illegal, but the transfer of money for such purposes was.
Still, savvy sports betting, casino, poker, and horserace site operators continued to outsmart law enforcement. Today, most people fund their sportsbook account through either a wire transfer via Western Union or by utilizing a debit card that can be used for internet purchases in foreign countries.
To be clear: The sports bettor is not breaking the law as outlined. Those institutions that fall under the UIGEA are those that are considered to be engaging in illegal activity.
In September 2011, the U.S. Department of Justice released a formal legal opinion on the scope of the Interstate Wire Act of 1961 noting, “interstate transmissions of wire communications that do not relate to a ‘sporting event or contest’ fall outside the reach of the Wire Act.” That was seen as perhaps a sign that transferring money to play online casino games and poker would be allowed. However, the UIGEA still does not permit the transfer of such funds by financial service companies and institutions.
On the Horizon
In recent years, many sites have added live betting options, where sports bettors can put money down on games as they are being played. Also, various books offer a range of sports from across the world. Thus, avid basketball bettors can wager on NCAA hoops, the NBA, and leagues in Asia and Europe.
What’s on the horizon for the sports bettor? It’s difficult to say. The truth is that online sports betting is not going away. It’s a growing industry, and it’s a great buyer’s market for consumers, as their sports betting cash is desired by many sites. Before setting up an online sports betting account, educate yourself on sportsbooks. Before wagering on a game, understand the sport on which you’re betting, and always know the risk involved in any wager that you make.