While ping pong balls splashed into cups of beer under a sea of white tents at the Pi Kappa Phi fraternity house on a fall Saturday morning, a bet on truck racing at Talladega Superspeedway had left Auburn alum Mike Mlotek and his former pledge class in a state of shock. Mlotek had won $30,000 from the efforts of Pi Kapp brother turned Nascar Truck Series driver Brett Holmes.
“I saw a book that had him pretty mispriced in terms of what he should have been at this time,” Mlotek said. He had placed a combined $250 on three separate bets, including $200 on a top five finish, $40 for a top three finish and ten dollars for Holmes to take the crown.
Holmes finished third.
“Being at the Pi Kapp house at the time, I can’t remember a much better hit coming in my entire life,” Mlotek said.
Placing the bet in Illinois, a state with legal betting in retail and online operations, Mlotek is expected to pay taxes on his winnings. In 2022, Mlotek filed more than $70,000 in gambling winnings. He will pay nearly $20,000.
Newfound State Funding
Mlotek’s winnings will be taxed close to 28% in Illinois, a state with the third highest tax revenue in a 2021 snapshot. Although different states have differing tax rates, the prospective economic gain holds weight in state governments as the push for legal gambling grows nationally.
“You hear the proponents kind of throw out these giant numbers, whether it’s the estimated amount that people are wagering in the black market, or the projected amount that they can bring in for taxes from sports betting,” said Legal Sports Report writer Pat Evans. “Those are kind of shot in the dark because one, how do you really know how much has been wagered in the black market? And two, how do you have any idea how much people in your state are actually going to wager whether or not they were wagering before?”
While 36 states and Washington D.C. have given the go-ahead for wagering on professional and collegiate events, southern states are weary in their legislation. Alabama, historically conservative, is a poster child when it comes to the southern mindset in regard to the legality of sports betting.
“Gambling goes against this sort of relatively conservative, relatively strong religious culture,” said Auburn University political science professor Soren Jordan commenting on the prospect of legal sports betting in Alabama. “It’s really built around, like conservative viewpoints, especially with respect to societal behavior.”
In March 2022, Senate Bill 294, dubbed The Gaming Control Bill, was passed by the Senate Tourism Committee, but ultimately was indefinitely postponed by the Alabama House of Representatives and the state Senate.
The Gaming Control Bill would allow for the implementation of sports betting, in person and virtual, for those 21 and over while betting operators would pay a 20% tax on gross revenues. As illegal sports betting continues nationwide, Alabama State Sen. Greg Albritton emphasizes the need for control in hopes to generate revenue.
“Can you imagine how much money was won or lost in the last three minutes of the Iron Bowl, played in Alabama, by Alabama players — Auburn and Alabama — and the money went to Las Vegas?” Albritton said in Gaming Today.
The Winners
In 2018, the Supreme Court repealed the Professional and Amateur Sports Protection Act (PASPA). Rooted in the actions of Major League Baseball star Pete Rose betting on his own games in the 1980s, PASPA acted as a federal ban on sports betting. As it was deemed “unlawful” for individuals to wager money on outcomes or individual player performance.
The no longer enacted PASPA was the dam holding legal sports betting from reaching the common citizen and subsequently creating an influx of businesses directly and indirectly involving sports betting.
DraftKings, FanDuel and MGM have emerged as the face of the betting industry. As the blue bloods of the industry, these Vegas based companies must keep up with local books worldwide whether that be legal or illegal books.
“They (DraftKings) always remind customers to send the lines for them in certain markets on today’s game that’s up or down,” said former DraftKings employee Mlotek. “When it comes to college football player props or obscure markets, that would just be like random dudes in a room, picking sports, or (saying), ‘I'll just set this number here.’”
While big gambling corporations profit, the gambling advice industry is beginning to thrive. Organizations like Blackbook Sports offer advice regarding where to wager money through professionals.
“Essentially, what we’re trying to do is take that (advice) away from Twitter, which is how people are usually buying advice from,” said CEO of BlackBook Sports Charlie Katz. “The people on Twitter will either get access to a private Twitter account, or they literally just add them to an Excel spreadsheet and text these guys plays every day.”
BlackBook strives to limit fraudulent advice frequently occurring on Twitter. “What Blackbook does is when you go to, ‘give advice and make a pick,’ we save that pick to your profile, so your record is right there when somebody goes to potentially subscribe. It’s the very first thing I see,” said Katz.
Mitigating Losers
With the implementation of legal sports betting, the question turns to ‘player safety’ for high-risk betters. “We’re legalizing all this stuff, and we’re not putting all the necessary prevention and education things in place,” said Director of the Center for Gambling Studies at Rutgers University Lia Nower.
A major aspect of online sports betting is the ability for individuals under the legal age limit to bet on these platforms without consequence. “As you legalize more forms of gambling that are accessible from your mobile phone in particular, it’s easier to hide it, it’s more difficult for any operator or regulator to police,” said Nower. “So, if you are 21, and you let a buddy gamble and he’s 17, who’s going to know, right?”
As states begin to create legislation to diversify this new income, many states want to use their earnings to pump money into safe gambling organizations as well as funding formerly underprivileged aspects of their communities. Minnesota Rep. Zack Stephenson proposes 40 percent of revenue will go to gambling rehabilitation programs and another 40 percent will go to youth sports programs. On the other hand, Georgia believes profits from gaming should be ‘supplementing existing lottery funds for pre-K and higher education.’
“The most important thing about legalizing this is making it safe and providing resources for those who are in trouble, who have a problem, because in a lot of ways, you know, yes, it will probably create more better,” said Evans. “But if you can kind of put the support backbone in there and make it a little bit better than even it is now.”
“There wasn’t tons of room for growth and development in that role,” said Mlotek now an employee for grocery corporation Aldi in Illinois. “Overall, I’d say a big factor for me was probably (I was) not a huge fan of living in Vegas.”
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