The Battle for Missouri

In Missouri, the primary group opposing Amendment 2 is called Missourians Against the Deceptive Online Gambling Amendment, or MADOGA. Brooke Foster, the group’s spokesperson, explained MADOGA is not opposed to legalized sports gambling; they just believe that Winning for Missouri Education — the group backed by the sports teams and the gambling companies — is promising money that will not materialize.

“After all the deductions for free play and promotional credits, there could be literally zero for schools,” Foster said. “It’s a particularly cynical play because Missouri is in dire need for education funding.” Missouri’s teachers’ average salaries are among the lowest in the nation, ranking dead last in 2023; over half of its students struggle with proficiency in math and English.

According to the Missouri State Auditor’s Office, under Amendment 2, no matter how much Missourians bet, there is no minimum amount guaranteed for education in the ballot measure, nor is there any mechanism explicitly ensuring any money that did come in would go to schools.

American Federation of Teachers Missouri, a union representing 3,500 Missouri teachers, has joined MADOGA to come out against Amendment 2. In a statement, one local chapter president said, “There isn’t even language in Amendment 2 that guarantees additional dollars will go to education. These folks are using students and teachers as a gimmick to pass online sports gambling while giving themselves huge tax deductions.”

Missouri’s professional sports teams are pushing Amendment 2 because they stand to gain financially, albeit indirectly: if sports gambling does become legal, big operators like FanDuel and DraftKings will then pay the teams handsomely to help them market gambling to the teams’ loyal fanbases. The teams’ support, via actions like the mascot gimmick, has been integral to support for Amendment 2, Foster said: “In a place like Missouri, your identity is so closely tied to your sports teams.”

But the pro teams are not the ones driving Amendment 2. “As best we can tell,” Foster said, “the measure was written by FanDuel and DraftKings.”

Within Missouri, infighting between existing gambling factions has benefited MADOGA’s cause: The group has received millions in support from Caesars, which owns physical casinos in Missouri and is opposing Amendment 2 because it would allow operators like DraftKings and FanDuel to run a sports gambling platform without the costs of operating a brick-and-mortar operation. MADOGA has used the money in part to run ads featuring Missouri educators somberly picking apart Winning for Missouri Education’s revenue promises.

The issue goes beyond sports gambling in Missouri: economists have argued that tax revenue from gambling — of any amount — has not historically been a significant factor in filling state budget holes. A 2021 analysis from the National Council of State Legislatures’s Jackson Brainerd explains that the promises of the industry often fall short.

“Justifications for gaming expansion are often rooted in how the money will be used,” Brainerd wrote,

and states have been known to direct gambling dollars to important spending categories such as education or retirement programs. However, expenditures in these areas often grow faster and gambling revenues cannot keep pace. . . . States looking to close budget gaps with sports betting revenue may be disappointed, especially as more and more states legalize and take their slice of the market.

Nationwide, the pushback to sports gambling focuses less on the fiscal issues and more on a familiar argument: legalization is hurting people. In just the last few months, several studies have revealed the impacts of the post-2018 sports gambling legalization explosion.

Researchers at Northwestern University and the University of Kansas found that in states where sports gambling has been legalized, households — particularly “financially constrained” ones — are seeing reduced savings and increased credit card debt. Researchers at the University of California, Los Angeles, and the University of Southern California found a “decline in credit score” and “a substantial increase in bankruptcy rates, debt collections, debt consolidation loans, and auto loan delinquencies” in states that have legalized sports betting.

The industry uses a term called “GGR,” or Gross Gaming Revenue, to quantify its sales. It represents the total amount that people bet, minus the amount the companies pay out in prize money. Put another way, it’s the amount Americans lose to gambling. Industry analyst group H2 Gambling Capital told the Lever it estimates that the collective GGR from sports betting in the United States in 2024 will be $14.7 billion. Forecasting for additional legalization, H2 predicts that by 2027, GGR could top $27 billion a year.

That growth is predicated in part on the freedom the industry currently enjoys. Flutter Entertainment, the parent company of FanDuel, is a Dublin-based corporation that has been active for decades in the United Kingdom, where it operates under a bevy of regulatory constrictions. According to a Reuters investigation, in the UK, Flutter is legally required to determine if its clients are compulsive gamblers, if they are using stolen money to gamble, or if they are gambling beyond their means — but in the United States, where the industry has largely promised to regulate itself, Flutter doesn’t have to abide by any of those rules.

One telling example: In the UK, Flutter caps the amount a customer can bet on one spin of a slot machine game at around $10. In the US, a Flutter customer can bet as much as $800 on a single spin.

Online sports gambling took off in the UK after the passage of the 2005 Gambling Act; in the decades since, stories of lives devastated by gambling have abounded. The UK protections only came about after “a whole generation of young people” was “destroyed by predatory gambling operators,” Bernal said. “The growing backlash is because of the incredible suffering. Families devastated financially have come forward to demand reforms.”

Effectively, in the United States, Flutter gets to roll back the clock to its early, preregulatory days and to offer up all manners of mobile gambling free of any meaningful constraints. “They’re taking these business practices that cost so much harm in the UK,” Bernal said, “and they’ve jacked them up extremely.”

Meanwhile in Missouri, with just a few weeks before voters go to the polls, both Amendment 2’s backers and its opponents are still scrapping for support. While the opposition group, MADOGA, has shifted away from television advertisements in favor of community outreach, the pro-gambling group, Winning for Missouri Education — now officially the richest ballot-measure campaign in the state’s history — is pumping out new ads, including one featuring beloved former baseball player Ozzie Smith.

Looking directly into the camera, Smith promises $100 million for Missouri’s schools and “no more broken promises.”

How to Sue FanDuel for $250 Million

The consumer protection attorney Matthew Litt works out of a low-slung office building in suburban New Jersey separated by a neat hedge from a spacious 7-Eleven. The fluorescently lit conference room is in a windowless basement. It’s an inauspicious place to launch a regulatory salvo against a deep-pocketed industry that has been having its way nationwide, legislatively, for years. But that’s precisely Litt’s plan.

A Florida man named Amit Patel is currently serving a six-and-a-half-year prison sentence in a federal prison in South Carolina for embezzling $22 million from his former employer, the National Football League’s Jacksonville Jaguars, in part to fund his gambling addiction on Flutter’s FanDuel. On behalf of Patel, Litt is suing FanDuel for $250 million.

Litt does not argue that Patel is blameless. His contention is that FanDuel knew Patel was an addict and used that addiction to their advantage. FanDuel “actively and intentionally targeted and preyed on [Patel] with incentives, credits, and gifts” to “exacerbate his addiction,” Litt writes in the lawsuit, “with the only possible outcome that he would ultimately hit rock bottom.”

There is no law in Florida against predatory gambling (or, for that matter, in most states). Litt is arguing this case under standard consumer protection laws. “Targeting an addict knowing that it’s causing harm,” legally, is an “unconscionable business practice,” he said, and a violation of the Florida Deceptive and Unfair Trade Practices Act.

Once Patel began gambling and losing large amounts of money, FanDuel assigned him a “VIP host” named Brett Krause, whose job it allegedly was to urge Patel to gamble more. As Litt writes in the lawsuit, Patel and Krause “often communicated as much as 100 times” a day; the messages “frequently began first thing in the morning and continued throughout the day until late at night.” Krause and Patel went on FanDuel-paid trips together to a Formula One Grand Prix event, the Super Bowl, and the Masters golf tournament twice. Patel also received a basketball jersey customized with his FanDuel username.

When he first took on the case, Litt recalls combing through Patel’s history with FanDuel, adding up the amounts the company offered Patel to keep gambling: “I’m at $300,000 . . . $400,000 . . . it keeps going up and up . . . holy. . . .” Over the four years he was active on the platform, Patel ultimately received $1.1 million from FanDuel. Under the loophole present in Missouri’s Amendment 2, and in many other states throughout the nation, that $1.1 million could be used by FanDuel to reduce their tax liability. Effectively, the more the industry spends luring problem gamblers, the less it spends on taxes.

According to internal data provided to the Wall Street Journal, one gambling company, PointsBet, made 70 percent of its revenue off of less than 1 percent of its customers. “Casinos aren’t making their money with my $25 bet on the Buffalo Bills last Monday,” Litt said. “Their business model is to milk what they call the ‘whales’ for as much money as they possibly can.” The gambling platforms have a suite of tools to identify compulsive gamblers, Litt added: “In fact, they’re using a lot of it — but they’re using it to identify people for promotions instead of to cut them off.”

The industry’s courtship of problem gamblers is so well known that savvier gamblers are actively attempting to come off as if they have a problem in order to lure the gambling companies into giving them money with which to gamble. In his newsletter How Gambling Works, the gambler and writer Isaac Rose-Berman has laid out strategies: “One pro bettor I know set up a bot which logs in to his accounts every day between 2 and 4 a.m., to make it seem like he can’t get through the night without checking his bets.”

Rose-Berman offered up this analogy for the gambling industry: “Imagine a liquor store that gives you discounts for drinking every day, drinking before noon, and going back to drinking after trying to quit — while refusing service to people who ‘only’ want a bottle of wine.”

Litt has said he hopes to “change the industry” with the lawsuit. “We’re on the cutting edge with this. We’re in a new world and the law needs to evolve to protect people.” At a minimum, he said, “There has to be regulation, if not the wholesale elimination, of the VIP-host relationship. It’s absolutely insidious.”

Litt believes there’s a lot we have yet to find out on how companies like FanDuel are set up to extract money from addicts — and is hopeful that through the case’s discovery process, more will be revealed. As of now, Litt knows the gambling companies are controlling the discourse. “They have too much money,” Litt said. “Their machine’s too strong. The message is out there: if you’re anti-casino, you’re anti-revenue.”

After reaching out to Winning for Missouri Education, I emailed back and forth with Jack Cardetti, a veteran Missouri lobbyist who joined up with the team mascots to deliver the Amendment 2 signatures last May. (His Twitter bio identifies him as “an active participant in democracy.”) At first, Cardetti, who is serving as the campaign’s spokesperson, seemed eager to participate, writing, “We are happy to provide information and interviews going forward.”

A half hour before our scheduled on-the-record interview, Cardetti canceled, and, soon after, stopped responding altogether.

“There Is an Explosion About to Hit”

New York State senator Joseph Addabbo Jr is the chair of the Senate Racing, Gaming, and Wagering Committee. He has done as much as anyone to legalize sports gambling in the state. His district office is on Jamaica Avenue in Woodhaven, Queens, a densely populated main drag underneath the shadows of the elevated J train where the culinary options are kaleidoscopic — Mistura Peruana, Mr Wonton, Geordie’s Joint Irish bar — and handwritten signs promise “we have goat + lamb.” When it comes to a state-by-state issue like sports gambling, it’s places like Jamaica Avenue where the decisions get made.

When I visit, Addabbo is wearing a gray suit and a crisp white shirt. His mustache is tidy; at sixty, his hair flows nicely to near-mullet length. Above his desk, there is a surprising sight: a bunch of shovels hanging on a wall. When I ask about them, he answers with perfect drollness: “Well, you see, when we have a problem with one of our constituents . . .”

The shovels are not, of course, weapons of vengeance: they represent various construction projects that Addabbo helped actualize, most notably a Queens casino, Resorts World New York City, which opened in 2011. That was the project that radicalized him as to the benefits of legal gambling, he said. Now as New York continues to see a financial windfall from sports gambling, Addabbo is motivated to push for more than ever.

“I’d love to do prop bets; I’d love to incorporate NASCAR; I’d love to figure out a better synergy with horse racing,” he said. “Never should legislators sit back and say, ‘Oh, we finished, we passed the bill.’”

Most actively, Addabbo wants to legalize iGaming. He’s currently on his second attempt to pass an iGaming bill through the New York legislature. As the fight for sports gambling continues in Missouri, Addabbo believes New York is ready to embrace the next phase of corporate gambling expansion.

“We’re not done,” he said. “Because of the technology of mobile gaming, it can evolve in so many ways.”

Nationwide, the industry has partnered with pro-gambling politicians like Addabbo in state after state. There’s even an advocacy group called the National Council of Legislators From Gambling States. Its president, Shawn Fluharty, is both a member of the West Virginia State Legislature and the head of government affairs for a gambling company called Play’n GO.

As the industry pushes friendly legislators to push iGaming state by state, experts are increasingly warning of its risks.

Harry Levant is a gambling addiction counselor and the director of gambling policy at Northeastern University’s Public Health Advocacy Institute. He said that iGaming does two primary things differently than sports betting. First, it “minimizes the appearance of gambling” by offering simplistic, childlike video game products for users to bet on. One particularly notorious product is called Rocket, where the aim is to guess when an animated rocket will crash. Levant says patients he’s treated for addiction have called it “the crack cocaine of online gambling.”

Second, iGaming offers gambling “at speeds never delivered before.” Levant mentioned one gambling product that allows the user to play seven hands of blackjack at once. Levant himself is a recovering gambling addict. “At my worst moment, I couldn’t play seven hands of blackjack at once! If you’re delivering to someone a known addictive product at light speed, you are going to cause harm.”

Levant now fears that a wave of iGaming legalization could supercharge addiction. “There is,” he said, “an explosion about to hit.”

In New York, casinos and gaming have been stalwart supporters of Addabbo over the course of his career; to date, he’s received over $150,000 in political contributions from those industries. Before New York legalized sports gambling, Addabbo advocated for a lower rate than the current 51 percent. After it was passed, he ineffectually attempted to halve it via new legislation. He also wanted to introduce that same familiar loophole allowing gambling companies’ promotional spending — the kind that helped crush Amit Patel — to go toward reducing their tax liability. The results would have likely saved the gambling companies hundreds of millions of dollars.

His iGaming bill suggests a tax rate of 30.5 percent, lower than the sports gambling tax rate of 51 percent. According to New York Focus, a nonprofit publication, Addabbo once introduced pro-gaming legislation copied, in parts word-for-word, from a Microsoft Word document pushed by a lobbying group working for Resorts World.

“My support for gaming existed even before I was a state senator,” Addabbo told me. “Even before the first check came in. I chair the committee irrespective and solely disconnected with any kind of contribution. My job is to create jobs. I do my job.” As evidence of his independence, he referenced a time he criticized Resorts World for laying off workers after closing a buffet.

Just this past September, Rep. Paul Tonko (D-NY) introduced the SAFE Bet Act, a bill proposing national curbs on advertising from the gambling industry, regulations to ensure people aren’t gambling beyond their means, and prohibitions against the use of AI to individually target gamblers with customized promotions. But there’s no widespread push for this kind of gambling regulation and no indication the SAFE Bet Act will become law anytime soon.

Nearly every state allocates some of its gambling tax revenue to fund services for gambling addicts. What they don’t do is create regulations to try and prevent addictions from forming in the first place. A pro-industry lobbying group, the American Gaming Association, called the mere introduction of the act’s regulations a “slap in the face to state legislatures.”

As Addabbo continues his push for iGaming in the state of New York, he’s trotting out a familiar playbook: he’s promising its tax revenue as the solution to any problem that currently exists or may yet one day appear.

Gambling revenue in New York currently goes to education. Revenue from iGaming, however, could be classified as a new kind of revenue, Addabbo said, happily ticking off would-be usage. Subsidizing prescription pill costs! Filling the massive hole in the New York City transit budget! Boosting health care spending!

So this would be kind of like your magic wand, I suggest?

“Yes!” Addabbo smiled:

But they don’t wanna give me the wand. It is significant, sustainable money and it’s available for anything that the government deems worthy. At any given point, you can consider health care a crisis; you can consider public transportation a crisis. There’s always a need. It can be earmarked for anything.