Down The Sports Betting Lane: The History Of A Rapidly Growing Form Of Gambling

October 5, 2021

By a Biometrica staffer

In what bodes well for the industry, two-thirds of American adults view gaming as a positive economic contributor that provides high-quality jobs and 73% support legalized sports betting in their state, new research by the American Gaming Association (AGA) shows. Americans also believe that the legal gambling and betting industry goes beyond generating economic value for the public — nearly seven in 10 Americans believe the gaming industry behaves responsibly and a majority (57%) believe it gives back in the communities where it operates, the AGA’s research added.

One of the key chapters in the history of gambling, in fact, is how the American Revolutionary War was partly funded by taxes on lotteries. In older posts, Biometrica has already traced the oscillating history of gambling in the United States and, cutting to present times, written about how widespread legalized betting is becoming, and how the National Football League (NFL) season is already whetting that appetite this year. Sports betting, like all kinds of gambling, has also had a rather tense history.

In today’s piece, the first of a two-part series, we take a quick trip down the sports betting memory lane, making stops at the Revolutionary War, horse racing, and the growth in all manner of gambling that further advanced sports betting, such as the slot machine and card rooms. In the second part of this mini series, we will cover the other crucial aspects in the evolution of sports betting: how tourism led to its legalization, the laws that were passed to rescue it from the grips of organized crime groups, the Professional and Amateur Sports Protection Act of 1992 and its repeal, and the march of sports betting into the online era.

Of Wars, Horses, Slots And Perceptions

The word gambling is said to have been derived from the Middle English word gamen — “to amuse oneself” — according to an article published in 1992 by Ronald J. Rychlak, a University of Mississippi professor of law. It’s said that for as long as people have been playing sports, there have been others betting on them. Various games
of chance are said to have existed among ancient Egyptians, Chinese, Japanese, Hebrews, Greeks, Romans, and early Germanic Tribes. Some authorities have even gone as far as suggesting that artifacts dating from the Stone Age were used for gambling, Professor Rychlak’s article says.

Back in those days, it may have been something as simple as a casual pool between friends who were betting on a game being played by other friends. Even the Olympic Games — which, of course, was exponentially larger than a game between friends — is said to have had people in the audience betting with each other on outcomes. That would make it, perhaps, one of the most widespread historic forms of sports betting. Even today, the appetite behind the bets and the reasons remain largely the same as in the olden days: it’s fun, and there’s a chance you could win some money. Many, if not most, people bet for similar reasons even today and could be called “recreational bettors.” Of course, there are serious bettors who do so with the intention of making long-term profits, too.

On the other hand, through the course of history, governments too have tended to be torn between a desire to tap gambling’s enormous revenue potential, and fear over the associated social ills that come with it. As a result, the gambling industry has oscillated between periods of governmental promotion and sponsorship, to ones of complete prohibition. But when the gambling industry did have the government’s support, it has been put to a lot of good use. Sample these two separate paragraphs from Professor Rychlak’s article:

“Two hundred years ago, government-sanctioned lotteries were
common throughout America. Lacking a strong central government
and burdened with a weak tax base, early Americans viewed lotteries
as legitimate vehicles for raising revenue. Lottery proceeds were
used to build cities, establish universities, and even to help finance
the Revolutionary War.”

“Between 1746 and the Civil War, American lotteries were authorized for such projects as the establishment or improvement of Harvard, Yale, Kings College (Columbia University), Princeton, Rutgers, Dartmouth, Rhode Island College (Brown University), the University of Pennsylvania, the University of North Carolina, and the University of Michigan, the benefit of the Masons, the fortification of New York City and Philadelphia, the construction of roads, hospitals, lighthouses and jails, the promotion of literature, the improvement of navigation on rivers, the development of industry, and even the construction of churches.”

Another ancient sport that has close ties to sports betting is horse racing. For the most part, horse racing has remained legal across the United States, per an article by Sports Handle. At Biometrica, too, we’ve written about the long-standing, storied relationship between horse racing and wagering. Horse racing is one of the few forms of entertainment whose inception and endurance is directly linked to betting on the outcome of bouts. And today, it is a multi-billion dollar industry that generates revenues for private enterprises and public entities alike.

In the late 19th and early 20th centuries, all forms of gambling appeared to be picking up steam. In the late 1800s, formalized betting was introduced to horse races as another draw for spectators. Most of the early crowds in this era were from the middle and lower classes, mainly people looking for a quick way to make money. Cardrooms had begun to open, and the slot machine made its debut just before the turn of the century. By the end of the 1800s, slot machines that actually paid patrons in coins came into existence. Betting on boxing was not legal at that point in time, but nor was it illegal, per the Sports Handle article.

However, even as advancements were being made on sports betting and gambling in that era, challenges arose in the form of scandals, fraud, and concerns over social ills. In the wake of these challenges, though, sports betting fell into a cycle, according to Sports Handle: It would start with a rise in anti-gambling sentiment, then lead to an increase in illegal betting, anti-gambling legislation that would drive it further underground, followed by the belief that outright prohibition is impossible, and finally a general acceptance of sports betting by the public.

How did sports betting evolve, then, from the scandals that marred the late 19th and early 20th centuries into today where, in under three years of a key law that banned it being struck down, it is already legally operational in 27 states and D.C. (and is legal but not yet operational in five other states)? That’s a story we will cover in part two of this mini series on the history and evolution of sports betting in the United States.