Why is the gambling age 21?
The gambling age is 21 because that is what it is for a lot of traditional gaming. Additionally, with the drinking age set at 21, that also closely aligns with gambling as a newly legalized vice. With the nationwide push to also raise the tobacco purchasing age to 21, it further entrenches the idea that legal vices should have a minimum age of 21. Of course, a few states have blazed their own path and set the age at 18. Right now, this is mostly a fun party fact. However, in a few years, we could get very granular and interesting data from the states that set the age at 18 vs 21. For example, Rhode Island has a minimum age of 18 and Connecticut has a minimum age of 21. Both of these are smaller east coast states that share a border, have a few colleges, and are generally economically well-off. In short, they have a lot in common except the minimum gambling age. That means that we can isolate the minimum gambling age in a quasi-natural experiment.
We would be interested in seeing two potential dependent variables. The first would be problem gaming issues. Obviously, if there were higher levels of problem gaming in Rhode Island, it would be easy to point at that as evidence that the age should be 21 and that would legitimately cause us to change our mind at The Handle. The second would be interest in the offshore bookmakers from each state. If interest in offshore shops went down, it would mean that people were not entering the offshore funnel once they turned 18, but rather just choosing to join the legal books. Again, none of this would necessarily be conclusive there are other relevant factors in the market, but this would be an informative exploration for policy makers and operators.
Why we support lowering the sports gambling age
Generally, we agree that regulated operators are a tiny bit better on problem gaming than offshore operators. All else equal, money is safer in a regulated book than an offshore book. Encouraging the payment of local taxes (even if they aren’t that significant at the end of the idea), is still better than nothing. So all else equal, we don’t want to criminalize betting offshore, but we do want to make it as enticing as possible to use regulated books. This is where our key Gen-Z insight can come in. Based upon our conversations with students across a wide variety of universities originally hailing from a multitude of states, age simply is not predictive of whether or not someone has recently placed a sports bet. If a kid has an older brother who has a buddy in a fraternity with a PPH book, this kid might start betting as early as 16. On the other hand, if a kid joins a fraternity for the first time at 18, he might be encouraged by his brothers to take part in sports gambling and they will show him how to do it. The key point here is that there is no issue of access even if the legal books have a requirement for 21. Younger adults can simply use offshore accounts or pay per head accounts where the bookie is someone who is loosely in their networks. Because this is true, interest in sports betting and access to sports betting are simply not correlated to a large extent with age. 21 is simply an arbitrary number at which time someone can switch from betting offshore to betting legally, not an on-off switch for access to legal betting. This is where sports betting differs from alcohol or tobacco. Generally, these are purchased from licensed vendors with no alternatives easily available (getting a fake ID is an order of magnitude more challenging than placing a sports bet offshore).
Let’s pretend that we wanted to make it impossible for 18 year olds to bet. What are our options? First, we could shut down all of the offshore books and PPH books. We’ve seen enough criminalization in the United States to know that criminalization doesn’t work for minor offenses. So that means going after operators. Again, see last week’s newsletter for going after offshore operators. It’s a challenge logistically and probably isn’t the best use of prosecutor resources. Going after PPH books is a very challenging game of whack a mole. These are often tiny operations, with maybe as few as 50 bettors on one book. These are also often how 17 year olds get access to betting infrastructure. One of their buddies knows someone and hooks them up with an account. There is simply no real way to prevent offshore betting without arresting American bettors.
Of course, the counter argument to all of this is that brains are not reliably developed before the age of 25 and are not ready to confront the full litany of risks encouraged by gambling. Gambling is inherently risky behavior. It can be addictive and challenging to stop. At the same time, the crux of our argument is that there is no gambler turned off by the current legal age requirement. Okay, maybe that is an exaggeration and there are a few gamblers turned off by the legal age requirement but the sum, based on our conversations, is incredibly insignificant. Instad, we would prefer to see a world, where those people are gambling anyway, and are using legal operators. In addition, many of the PPH bettors often used credit based sites rather than deposit sites. Credit is different in that it can encourage chasing losses without the need to put up more capital. This encourages more risk taking behavior and is not available on the legal books.
Overall, we are making a pragmatic argument. People are going to gamble between the ages of 18-21 no matter what. There is no real way to stop it and no one is deterred by the current age requirements. Arresting 19 year olds for placing sports bets is simply not possible nor desirable. Instead, legislators should lower the age to 18 to encourage responsible gambling and to dip into offshore marketplaces because, as we can’t repeat enough, it is going to happen anyway. As a fun little aside, this is probably the most pro regulated operator piece we have ever written!
