How AGA arrived at $9.2B NCAA basketball figure

Whether it’s the size of a crowd at a public rally, a sport event’s financial impacts for a city, or, in the case of interest here, the amount wagered on an NCAA tournament, there’s always the critical question: How was the number calculated?

In the case of the American Gaming Association, though, that’s part of the point. The consumer (that’s you, me and anybody else who ever correctly picked a very low seed to win a first-round game) would be better served if we had more information about who is booking our bet – more than just the phone number of the acquaintance who placed our online (and offshore) bet.

Last week, the AGA issued a press release estimating that $9.2 billion will be illegally wagered on this year’s NCAA men’s basketball tournament. Their point was to call attention to how popular sports betting has become, and to suggest the government re-examine laws that outlaw sports betting, whether it be for games in that tournament, for everyday professional games, or as daily fantasy sports wagers.

The AGA can defend their $9.2 billion figure. Here’s how they calculated it:

The AGA began by going back to the U.S. government’s National Gambling Impact Study, issued in 1999, and using the lowest estimate of illegal sports betting activity, which was $80 billion per year. (The estimates ranged all the way up to $380 billion.) They then used GDP growth to convert that $80 billion into an estimate for 2016 dollars spent on all illegal sports betting. Fair enough. Actually, more than fair.

“There’s only so much info out there,” the AGA’s Chris Moyer said. (Again, it’s not about the number. It’s about the larger point.)

The AGA then looked at the legal dollars wagered through Nevada sports books, and assumed that the amount of money gambled legally has held steady at 3 percent of the total. That’s being conservative – it assumes that even with the Internet, illegal gambling as a percent of total gambling hasn’t grown since 1999. Of course it very well could have — but that would be darned hard to prove. And finally, the AGA used the legal wagering on the NCAA men’s basketball tournament as a percentage of all legal gambling.

So, why publicize the figure of $9.2 billion, as well as the point that more people (over 70 million) fill out NCAA brackets than vote for any single presidential candidate in November?

“We are pointing out that it’s happening in a largely unregulated, illegal fashion yet it’s still an incredibly popular thing people love to do,” Moyer said. “And because current law prohibits it, one could suggest that the law is outdated and a new approach is needed.”

The AGA suggests that sports gambling be monitored, taxed, and regulated, and that law enforcement be given the tools to identify and prosecute violations.

Whether NCAA betting pools are actually illegal varies by state. But pools that generate a profit for the operator clearly are illegal everywhere.

Does the AGA really think people will (or should) stop betting in office pools?

“We don’t want them to; it’s fun and a great way to engage and have a greater investment in the game, and it drives the popularity of the tournament,” Moyer said. The greater concern is the online, offshore sites, which make up the vast majority of betting on March Madness.

The Washington, D.C., organization represents commercial and tribal casino operators, suppliers, and other entities affiliated with the gaming industry. Last November, the AGA shifted opposition to illegal gambling “to creating a coalition to determine if rational, legal alternatives exist,” the AGA’s press release said.

The AGA has also pointed out that sports commissioners, including the NBA’s Adam Silver, acknowledge that changes in sports betting are overdue. As MLB Commissioner Rob Manfred says of gambling: “The landscape is changing.”