This article examines why many policymakers and analysts argue that sports betting should be legal rather than banned. It sets out the core policy trade-offs, the evidence emerging from jurisdictions that have moved to licensing, and practical recommendations for designing regulation that manages risk while preserving oversight. The question matters because prohibition and regulation produce different practical tools. A ban limits legal market activity but also removes the regulatory levers that enable reporting, tax collection, and targeted prevention and treatment. The sections that follow lay out how regulated markets work in practice and why they are often a more pragmatic response than blanket prohibition.

Legalization allows regulators to collect transparent revenue data that a ban cannot produce.

High channelization rates show licensed sites can capture most market activity when regulation is well designed.

Regulated markets enable funding for treatment, research, and enforcement against illegal operators.

What we mean when we say sports betting should be legal

When we say sports betting should be legal, we mean that states authorize and regulate wagering activity rather than relying on blanket criminal bans. Legalization describes a framework in which state authorities license operators, set rules for consumer protections, and collect data that would not be available if markets were driven underground, and that distinction matters for oversight and accountability NCSL overview of legalization and regulation.

Legalization is not the same as laissez-faire. Regulation defines who may offer services, how consumer safeguards are applied, and what reporting operators must provide. Channelization is one of the key regulatory objectives: it is the share of wagering that occurs on licensed platforms rather than through illegal or offshore sites. Saying sports betting should be legal signals a preference for a controlled, transparent market operated under state authority rather than a ban that leaves demand unaddressed.

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Read on for evidence and practical policy steps that show how regulation helps manage risks while preserving oversight and revenue for public priorities.

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How legalization changed the market and what regulators now track

Once states moved from prohibition to licensed markets, operators became subject to reporting rules that produce regular statistics on participation and gross receipts (see Vanderbilt Law School analysis). Regulators now require clear financial reporting so policymakers can see taxable activity, monitor operator compliance, and build enforcement cases when rules are broken AGA State of the States report.

That reporting translates into public accountability. Several jurisdictions publish monthly and annual results that show how much is wagered, how operators perform against responsible-play obligations, and where revenues flow to state budgets. The availability of transparent data is a practical change from a ban, where most play and revenue remain hidden from official oversight.

The economic case: how regulation generates taxable, reportable revenue

Regulated sports betting creates taxable, reportable revenue streams that states can use for public purposes, including education, infrastructure, or health programs. A regulated market makes it possible to measure gross revenues, apply tax rules, and channel funds to priorities rather than leaving money in an unregulated economy.

One concrete example is New Jersey, which reported $1.09 billion in sports wagering gross revenue for 2024, illustrating how licensing can produce sizeable, transparent receipts for oversight and potential public use New Jersey Division of Gaming Enforcement report.

Why shouldn't policymakers simply ban sports betting?

Banning does not remove demand and reduces regulators' ability to collect data, enforce consumer protections, and fund treatment; regulated markets provide tools for monitoring, enforcement, and public-health investments that a prohibition lacks.

For policymakers weighing costs and benefits, the predictable tax base from a licensed market can be modeled and monitored in real time, which supports both budgeting and targeted investments in prevention and treatment.

Channelization: moving play from illegal operators to licensed platforms

Channelization measures how well regulation shifts player activity from unlicensed sites to licensed operators. A high channelization rate means that licensed platforms capture most of the market, which makes enforcement practical and consumer protections effective. Regulators monitor channelization because it is an indicator of how much market activity is visible to oversight bodies.

Ontario is a clear international example: after licensing and market reforms, iGaming Ontario reported an 86.4 percent channelization rate in 2023-24, showing that most play moved to licensed platforms once a regulated market and consumer protections were in place iGaming Ontario annual report. Higher channelization reduces the share of transactions that occur in jurisdictions with weak oversight or no consumer safeguards.

Public health and responsible-play systems under regulation

Legal markets allow part of the fiscal proceeds to be allocated to prevention, research, and treatment programs; that funding supports helplines, treatment providers, and population surveys that inform policy. Large-scale official surveys help regulators and public-health authorities understand participation patterns and design targeted interventions UK Gambling Commission survey page.

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Monitoring systems and helplines provide real-world indicators of need. For instance, helpline contact volumes in the United States have underscored ongoing demand for support services, which strengthens the case for dedicating regulatory resources and some tax receipts to treatment and prevention National Problem Gambling Helpline report.

Regulatory design: rules that reduce harm without banning

Regulatory systems use multiple tools to reduce harm while preserving consumer choice. Common interventions include age verification, self-exclusion programs, mandatory operator reporting, deposit and staking limits, and clear advertising standards; each tool addresses specific risk pathways and can be adjusted as evidence accrues.

Because legalization brings reporting and data collection, regulators can test interventions and refine them. For example, mandatory reporting of operator activity and consumer complaints creates a feedback loop that supports policy changes grounded in observed behavior rather than assumptions NCSL overview of legalization and regulation.

Enforcement and channeling demand away from illegal operators

Licensing gives regulators tools to target illegal operators through market access controls, fines, and information requests that are difficult to pursue under a ban. Agencies can use licensing conditions and penalties to disincentivize noncompliant behavior and protect consumers who use licensed services.

Track licensed market statistics and enforcement actions

Licensed operators
Reported gross revenue
Channelization rate
Enforcement actions
Treatment funding

Use for basic monitoring

Effective enforcement is paired with public reporting: when agencies publish channelization and revenue statistics, the public and legislators can see how enforcement is working and where gaps remain. Enforcement alone is not enough; it must be coordinated with licensing and consumer protections to sustain high channelization.

Common arguments for banning sports betting - and evidence-based counterarguments

Calls to ban sports betting often cite moral concerns, worries about increased problem gambling, and the potential for corruption in sports. Those concerns are real and shape public debate; they deserve careful consideration rather than dismissal.

The evidence suggests regulation can address many of these concerns more effectively than bans; see a sensible policy framework. Regulation creates monitoring systems, funds for treatment and research through taxed revenue, and transparent reporting that helps detect irregularities in operator behavior and market trends AGA State of the States report.

Typical policymaker mistakes and how to avoid them

One common error is assuming a ban will eliminate demand. Experience shows that unless enforcement is comprehensive and resourced, bans often leave a sizable illegal market in place, limiting consumer protections and reducing public knowledge about participation levels NCSL overview of legalization and regulation.

Another frequent mistake is underfunding prevention and treatment when revenue streams are foregone. Without a transparent taxable base, jurisdictions lose a practical source of funds that can be earmarked for helplines, treatment services, and research that public-health agencies need to respond effectively National Problem Gambling Helpline report.

How advertising, product design, and mobile access are being monitored

Regulators are actively studying how advertising and product features affect participation and harm, and they use operator reports and surveys to inform limits on marketing and product design. Mobile availability increases access, which is why product controls and advertising standards are central to ongoing regulatory work UK Gambling Commission survey page.

Open research questions remain about the long-term effects of mobile delivery and specific product features. A regulated market enables systematic study by combining operator data, public surveys, and helpline metrics so policymakers can adapt rules as evidence evolves; see related research that examines global channelization and regulatory outcomes.

Case studies and scenarios: lessons from regulated and newly regulated markets

Minimalist infographic pie chart illustrating channelization shifting from offshore to licensed platforms on a dark Funded Plays background sports betting should be legal

New Jersey shows how a mature regulated U.S. market produces public data on participation and revenue; its published results are used by analysts and policymakers to evaluate tax policies and compliance frameworks New Jersey Division of Gaming Enforcement report.

Ontario’s experience after licensing illustrates successful channelization and the benefits of capturing play on licensed platforms, which in turn improves consumer protections and enforcement visibility iGaming Ontario annual report.

What responsible platforms and challenge-based alternatives do differently

Some platforms emphasize skill-based challenges and structured evaluation rather than direct wagering with real money. These models focus on transparent rules, progress tracking, and user controls that reward consistent forecasting ability and disciplined decision-making (see our blog).

FundedPlays is an example of a funded sports simulation platform that uses virtual bankrolls and evaluation challenges to let users demonstrate forecasting performance; it operates as a skill-focused option that sits alongside licensed markets without promising earnings or guaranteed outcomes. Learn more on how FundedPlays evaluations work and visit FundedPlays for more details.

Minimalist 2D vector helpline illustration with telephone handset speech bubbles and lifebuoy in Funded Plays colors on dark background representing treatment and support services sports betting should be legal

A practical policy checklist for lawmakers who want regulation, not prohibition

Short-term steps include establishing clear reporting requirements, creating licensing standards that specify consumer protections, and setting aside part of tax receipts for treatment and prevention programs. Clear public statistics should be published regularly so legislators and the public can see how the market performs NCSL overview of legalization and regulation.

For the longer term, dedicate funds to ongoing research, support helplines and treatment networks, and plan regular policy reviews that adjust advertising rules and product-design limits based on evidence. Building enforcement capacity to target illegal operators is part of a comprehensive package that supports high channelization and consumer safety National Problem Gambling Helpline report.

Conclusion: why banning is a blunt instrument and regulation is pragmatic

Banning sports betting removes the regulatory tools that make oversight, enforcement, and public-health funding possible. Evidence from multiple jurisdictions shows that licensing produces visible revenue, enables monitoring of participation, and supports targeted interventions that a ban cannot deliver AGA State of the States report.

Regulation is not without challenges; it requires funding for treatment, strict advertising and product rules, and sustained enforcement. Still, for policymakers aiming to protect consumers and preserve public resources, designing a robust licensed market is a more practical and evidence-based approach than a blanket prohibition iGaming Ontario annual report.

Does legalization increase problem gambling?

Legalization changes how problems are tracked and treated; it enables funded prevention and treatment programs but does not eliminate risk, so regulators pair market rules with support services.

Will regulation stop illegal offshore operators?

Regulation makes enforcement more effective and can reduce illegal market share, but continued enforcement and international cooperation are required to limit offshore activity.

Can non-wagering alternatives reduce harm?

Skill-based and challenge models provide alternatives that emphasize discipline and transparency, and they can coexist with regulated markets as part of a broader approach to reduce harm.

Policy choices about sports betting reflect values and practical trade-offs. Evidence from multiple jurisdictions suggests that a regulated approach gives governments more tools to protect consumers, support treatment, and keep activity within visible channels. For policymakers seeking to reduce harm while addressing demand, a careful, evidence-driven licensing model combined with funded prevention and strong enforcement is a more effective route than an unsupported ban.