THE BLOG
01/12/2015 03:29 pm ET Updated Mar 14, 2015

The Symbiotic Relationship Between Sports and Gambling

For millions of Americans, the mere mention of football season triggers sweaty palms and stomach churning. Sports betting is the most taboo yet pervasive activity among sports fans and grows in popularity exponentially. It's directly related to the profitability of every professional league, but to acknowledge its importance and interdependence would grate against history. Sports betting is the secret love that everyone in the room is sharing, and it has never been bigger in the United States than it is today. With such a big secret one would think the message would be broadcasted across the wire, but instead sports betting continues to channel in a gigantic whisper.

Let me explain the correlation of sports and gambling from a superficial economic standpoint. I'm going to use the NFL as my example because of its universal appeal and because football betting drives the largest number of bets here in America. The NFL has never been more successful than it is today. The games are now broadcasted up to three times a week, and the viewership of these games allows the league to command enormous sums of money for the privilege of advertising to its fan base. Simply put, the advertising pays the multi-million dollar player contracts and justifies the billion-dollar stadium. Eyeballs drive this marketing monster -- the larger the viewership, the more money media outlets can demand from their advertising partners.

But let's go back to those initial viewership numbers and exactly why they are so great in the first place. Delving into the hot demand for the NFL product, we must move into some basic psychology behind watching a game versus watching a sitcom. Fans are "active viewers" and are engaged on a second-to-second level. They are riding a roller coaster during a speculative course of events, and it's those crucial actions on the field that manifest themselves on both the physical (a racing heart) and spiritual (praying to the Football Gods) plane. All of us have felt the adrenaline surge for a must-have fourth down conversion or seen the handy camera work pan to a fan, whose eyes are closed, and is in solemn prayer. It's awesome.

Consider that the base, and now let's spike that unquantifiable interest with a financial stake in the game. This magical interaction now intensifies, bringing a deeper quality to the game. Everything suddenly matters more, every call and every play. Yelling at the big screen at a dropped pass (that we could've caught, right?) or a questionable penalty, (the conspiratorial referee, right?). All of these factors create the level of drama and excitement that we all secretly desire in our lives. We want this action; we need it.

Perhaps the most troubling part is the negative spin often associated with sports betting. The days of back-room alleys and street bookies are largely over, as even they have moved to the Internet, though they are still breaking federal law. I continue to draw comparisons to any financial market that entertains a speculative investment. In today's fantasy crazed-society, the stats and information available are at worst equal to, but in my opinion better than, information one could obtain before purchasing stock of a company. They both require the responsible management of risk capital and making the best possible investment decisions after a thorough analysis of the information. The days of offering game odds driven by rumor and "on the ground" contacts are over. Those responsible for setting the Vegas line are surrounded by banks of computers running calculations and formulas as complex as those used by hedge funds on Wall Street.

I must assume the NFL throws the public red flag on grounds of morality, though it's completely disingenuous. As the NFL continues its international expansion into the United Kingdom, where they now have a regularly scheduled game, I'm confronted with the reality that the marketing gurus of the NFL know how much sports betting is engrained into the local culture and the integral role it plays for selling tickets. It would be foolish to think otherwise. I would also venture to say that more than fifty percent of those UK fans have laid a bet with one of the publicly traded companies licensed to accept wagers. If morality is truly the reason, can you imagine a scenario where the NFL questions fans before allowing entrance to the stadium, and then denies entrance to the gambler and issues a refund? No chance of that.

The undeniable truth remains that regardless of the public message put out by the league, if miraculously all betting stopped there would be a dramatic decline in revenue and the financial repercussions would rock the league. There has always been, and there will continue to be, an intrinsic relationship between sports and betting. The NFL needs the gamblers just as much as the gamblers need the NFL. I applaud the most recent comments of Adam Silver, the commissioner of the NBA and the legislative efforts of Chris Christie of New Jersey. They openly recognize the existence and the economics behind creating a regulatory framework. Right now, the offshore bookmakers and the underground world are hoping things continue unchanged while they happily siphon millions of dollars each year catering to the voracious betting appetites of the American public.

Fortuitously, when I started to the write this article, my wife relayed to me a funny story about our son. She told me the first thing Ben wanted to know when he woke up was if the Cowboys beat the Bears. At seven years old, and to his frustration, his bedtime curfew cannot embrace the whole game. She told him they had won, and he erupted with absolute glee. She asked him, "Ben, why are you so happy about that?" and he replied with a smile, "My friend owes me a dollar today." Obviously, I do not condone elementary betting, but I'll chalk this up to kids having fun. However, it does go a long way toward proving my point. Do I think Ben loves sports? Without question. Do I think he will ever place action again in his lifetime? I'm betting that he will.

Blayne Davis, Author of Wild Game, an international legal thriller about a sports betting hedge fund.