Why Sports Gambling Should Be Legalized

It's always good to see Justin Wolfers get national exposure, and he has a great piece on the op-ed page of the NYT today, about the NBA betting scandal. His insight is that it's a lot easier and cost-free to cheat if you're not affecting the outcome of the game, and you're only affecting something unimportant such as whether or not a certain team beats the point spread. He writes:

We have seen similar scandals in other sports, including football, soccer and cricket. The common thread in each case has been the existence of large-scale betting on immaterial outcomes, like the point spread, or how many combined points the two teams will score, or the winner of a meaningless “dead rubber” in cricket, a game that takes place at the end of a best-of-five series after one team has already won three games...
To the corrupt participants, point shaving feels like a victimless crime. The same team, after all, still wins. And this ensures minimal scrutiny of their actions.

Wolfers has a strong conclusion:

Legalizing wagering on which team wins or loses a particular game, while banning all bets on immaterial outcomes like point spreads, would destroy the market for illegal bookmakers and make sporting events less corruptible by gamblers.

This makes perfect sense to me.

Wolfers also never comes out and says it, but given the fact that organized crime is behind most illegal gambling, I wouldn't be at all surprised to learn that the point spread system has become so ubiquitous precisely because it's more susceptible to corruption. After all, my feeling is that from a demand-side point of view, sports fans would rather bet on their team winning – the important outcome – rather than betting on something unimportant like a point spread.

(Related: Carl Bialik, in blog and column format.)