Sports Betting, Prediction Markets, and ‘Repugnant Transactions’--a conversation at Covers.com

 I was recently interviewed at the gambling hyper-site Covers.com about the growth of sports gambling both on dedicated sites and on prediction markets.

A Nobel Laureate Talks Sports Betting, Prediction Markets, and ‘Repugnant Transactions’ by Geoff Zochodne -  "Nobel Prize-winning economist Alvin E. Roth has published a new book that can help put the raging debates about sports betting into a very relatable context." 

"It’s not often, or ever, you see a Nobel Laureate writing about his ties to match-fixing. 

That is until you see Nobel Prize-winning economist Alvin E. Roth writing in his new book that he feels “a certain connection” to point-shaving. It's just for reasons that have less to do with economics or match-manipulation and more because of a shared name.

Another Alvin Roth, nicknamed "Fats," was banned from the NBA because of a college basketball point-shaving scandal that came to light in the early 1950s.

“He (Fats) was also sentenced to jail, but a judge permitted him to join the army instead,” Roth writes in his recently released book “Moral Economics: From Prostitution to Organ Sales, What Controversial Transactions Reveal About How Markets Work.”   

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Roth spoke to Covers over the phone recently about his book and his framework for approaching “repugnant transactions,” which, yes, can include sports betting. 

“Remember that when I say something is repugnant, I don't mean that I don't like it or that you shouldn't like it,” Roth said. “I mean that some people don't like it, and I think that gambling falls squarely into that category. Lots of people like to gamble, and lots of people, other people, think they shouldn't be allowed to, so it's a repugnant transaction, and there have been laws of all sorts allowing or banning it. And we've gone back and forth with the United States on lotteries, and more recently on sports betting.”  

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“I fear that online gambling will have much to teach us about addiction,” Roth writes.  

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Again, gambling is not the focus of Roth’s work. Nor are prediction markets, which critics often describe as a new form of gambling. Yet Roth says one of the things he writes about is that it is hard to ban something in a given jurisdiction when it’s legally available and within reach in another jurisdiction.

“And, of course, the internet makes everybody a neighbor to everybody else,” Roth says. 

In other words, the fact that prediction markets have popped up offering de facto sports wagering in states that have yet to legalize sports betting is not some new phenomenon. It’s all in keeping with society’s ongoing tug-of-war with morally contested markets. You can ban, you can regulate, but somebody will probably be unhappy in the end with what you’ve done and may still seek out what you’ve forbidden or restricted.