NCAA President and former Massachusetts Gov. Charlie Baker worries prop bets are hurting college sports. In fact, he’s so concerned that on Wednesday he called for state authorities to ban them. It’s a tough sell for a booming $11 billion legal sports gambling industry that grew by almost 50% last year—and even if Baker does convince states to put the genie back in the bottle, research shows that bettors might just turn to the black market instead.
Proposition, or “prop” bets, allow gamblers to wager on specific events or individual players within a game, instead of more conventional bets such as who the winner will be or the total number of points scored. Regulators worry that prop bets are easier targets for players or gamblers looking to fix outcomes. Indeed, the NBA announced this week it was investigating Toronto Raptors guard Jontay Porter amid speculation he had been illegally profiting from prop betting on his own performance.
“Sports betting issues are on the rise across the country with prop bets continuing to threaten the integrity of competition,” Baker wrote in a statement released Wednesday. “The NCAA is drawing the line on sports betting to protect student-athletes and to protect the integrity of the game—issues across the country these last several days show there is more work to be done.”
How online sports betting took off
Because sports gambling is regulated on a statewide level, Baker said the NCAA would petition individual states to outlaw prop bets on college sports, a policy that regulators Vermont, Ohio, and Maryland already enacted earlier this year.
The Supreme Court overturned a federal ban on sports betting in 2018. Since then, 38 states and the District of Columbia have legalized some form of sports gambling. Prop betting makes up a small percentage of total gambling volume. While there’s no federal data, the Ohio Casino Control Commission reported last month that prop bets comprise about 2% of all sports bets placed in the state.
But prop bets have drawn outsized attention—both good and bad. Zany Super Bowl prop bets such as whether Taylor Swift would make it from Tokyo in time to watch her boyfriend Travis Kelce play and what Usher’s first word would be during his halftime show fueled the focus on prop bets last month. On the other hand, critics say prop bets can subject players to potential harassment, which Maryland cited when it banned such bets earlier this month.
Other high-profile sports gambling scandals have raised concerns about the booming industry in the past few weeks. Last week, Los Angeles Dodgers superstar Shohei Ohtani accused his interpreter of stealing millions of dollars from him to cover his sports gambling debts. NBA head coach J.B. Bickerstaff recently reported that he’d previously received threats from gamblers. All the while, the industry’s continued to grow: the American Gaming Association reported revenues of nearly $11 billion last year, a 45% increase from 2022.
What happens if prop bets get banned?
Widespread college prop bet bans likely wouldn’t be a huge financial setback for what’s proven to be a hugely popular sports gambling industry because prop bans make up such a small share of the market. But a ban could have unintended consequences, such as incentivizing gamblers to make the same prop bets through illegal sportsbooks rather than registered ones.
Illegal bets placed through avenues such as unlicensed bookies, unregistered websites, or sportsbook operations licensed in a different state or country from where a user lives are much more popular than legal sportsbooks, according to data from intelligence platform Yield Sec. A YieldSec analysis of betting data predicted that of the estimated $6.7 billion that will be bet on this year’s March Madness tournament, 63% will be wagered illegally.
Illegal wagering has been a thorn in regulators’ sides ever since sports betting was legalized nationwide in 2018. As interest in sports betting has surged, growth in illegal betting has outpaced legal wagers, according to Vali.
“You’ve legalized and regulated [sports betting]. You’ve now legitimized it and created an updraft of activity into illegal gambling,” YieldSec CEO Ismail Vali told Fortune.
A prop betting ban along the lines of what Baker is calling for could run the risk of accelerating this trend and push prop bettors to illegal platforms that could still offer prop bets.
Even if the NCAA succeeds in convincing states to roll back approvals on college sports prop bets, that likely wouldn’t be the end of the process, says Michael McCann, a University of New Hampshire professor and sports law expert.
“States could alter what is permissible in terms of sports betting, but prospective changes could face opposition in the legislative process,” McCann wrote in an email to Fortune.
