Politics Foreign Affairs Culture Fellows Program

Runaway Horses

Gambling liberalization—especially in the digital age—is a race to the bottom.

Dr Syntax
(Photo by Hulton Archive/Getty Images)

In the spring of 2018, a thoroughbred racehorse named Ice broke free from his halter at a Maryland competition. He galloped down Maryland 170, a state highway running through Anne Arundel County just a bit south of Baltimore. A horse loose in traffic is a dangerous thing requiring immediate attention. A 16-year-old girl at the event, one Caroline Shoults, chased Ice down on Tink, her 4-year-old mare, bringing the runaway to heel near Baltimore-Washington International Airport in Hanover.

Maryland, settled by cavaliers sixty-five years before the Revolution of 1688 (the so-called Glorious Revolution), was one of the cradles of horse racing in America; Samuel Ogle, the Proprietary Governor, is credited both with importing the first thoroughbreds to the continent and with the introduction of “English style” races, the first of which he organized in 1745. The oldest sporting association in the country, the Maryland Jockey Club, was founded at Annapolis in 1743.


Maryland is still the home of storied race tracks at Laurel and Pimlico, which annually hosts the second leg of the Triple Crown of Thoroughbred Racing. Three of the twelve Triple Crown winners have hailed from Maryland stables—two of whom were, coincidentally, stabled at Belair, the stud farm attached to Ogle’s estate. Man o’ War, popularly monikered the greatest racehorse in history, was foaled in Kentucky but stabled in the Old Line State. 

Thoroughbred racing is not the only equestrian sport with a home in Maryland. The state hosts seven foxhunts and the American Grand National Steeplechase. Two harness racing tracks grace the land of the crab and the black-eyed susan, including one not far from Man o’ War’s home in Berlin, outside Ocean City. 

A recurring phrase in the 19th-century jockey clubs’ charters is the consecration of their organizations to “improving the breed of horses.” Horses with a thoroughbred strain outperformed their fellows in the era’s many commercial and military applications. Racing was a method of proofing, determining which bloodlines were best to carry forward. 

Curiously enough, the considerations of livestock-rearing came to be less important than the racing itself, and particularly the wagering on races—Arne Lang, in his lively history of sports betting in America, reports an old track joke. The first jokester would point to a man at the betting window and ask, “What is that man doing?” To which the fellow-wag would reply, “Improving the breed of horses.” Horse racing in America, particularly since the Civil War and the introduction of European betting methods (pari-mutuel and the English-style sports book), has always been tied to—and dependent on—gambling. 

Yet the agricultural basis remains. Cricket Goodall, treasurer of the Maryland Horse Breeders Association PAC, noted that a traditional ecosystem sits behind the races—an ecosystem she works to preserve. “We represent the farm, the ag community, the various jobs that supports. People focus so much on racing—it’s a much bigger industry,” she said. “It’s our mission to make sure people realize that. It’s a contribution to the way of life—Maryland would be a very different place without our big green spaces.”


In Maryland, horse breeding supports roughly 16,000 farms and stables and almost 30,000 jobs. A quarter of the state’s agricultural land is horse pasture. The tracks, for their sleaze and occasional scandals, are load-bearing supports for a centuries-old trade and way of life.

Horse racing has encountered hard times in Maryland, as in much of the country. In the 2003–2004 legislative session, Gov. Robert Ehrlich introduced a bill proposing the permitting of slot machines at the state’s race tracks, leveling the playing field with competing tracks in neighboring states that host slots parlors. The bill failed, causing significant uncertainty for the racing industry; there was even some discussion of turning the Bowie Race Track, “the cradle of American thoroughbred racing” adjoining Ogle’s estate, over to real estate developers. 

After almost ten years of lobbying and legislative back-and-forth, the tracks were permitted to install slot machines in 2012. After the first year of on-track slots, the Maryland Jockey Club reported a 7.5 percent increase in on-track wagers. Simulcasting revenues theoretically ought to help offset the decline in on-track attendance. Yet the industry is still ailing—the Canadian gaming conglomerate that owns the Laurel and Pimlico tracks is threatening to abandon them without concessions from the state government.

The story doesn’t end there. Sports gambling—not just on horses, but all sports—has experienced a period of explosive growth. Since 2018, when the federal ban on sports betting was overturned by the Supreme Court, the amount wagered has increased twenty-three-fold. Tracks and casinos, despite their reputations as hotbeds of social dysfunction, have for decades been regarded as job-making programs and tax opportunities by deregulation-happy state legislators; sportsbook was embraced as a similar windfall.

But is that rosy perspective in fact the case? Does the push towards freer and freer gambling actually bring revenue boosts? Especially in the internet era, does it even make jobs? And what are the harms—not only to existing traditional industries that depend on wagering, but to individuals and communities? 

Like a racehorse loose on a rural highway, the gambling industry is careering—where? Forwards, yes, but at what cost?

Gambling has always been a disreputable business. Commentators on the Ramayana, the Sanskrit epic, raised their eyebrows at the noble king Nala’s propensity for dice; in Constantinople, the enthusiasm for chariot racing threatened to spill into open civil strife. The New York constitution banned most games of chance outright from 1821 on, although an exception was made for pari-mutuel betting on the horses in the 1894 state constitution.

Horse racing has been tied to wagering for centuries; the desperate and illicit measures taken by bettors, bookies, and horse owners were once so prominent in the public imagination that they became a recurring object of satire of P.G. Wodehouse. Other forms of American sport have mixed poorly with gambling. The first commissioner of Major League Baseball, the starchy retired federal judge Kenesaw Mountain Landis, was appointed in response to the 1919 Black Sox Scandal, in which an organized criminal syndicate under the eye of Arnold Rothstein paid the White Sox to throw the World Series to the Cincinnati Reds.

The Reds underwent their own gambling scandal seventy years later. In 1989, Pete Rose, Cincinnati’s former offensive star and its then manager, underwent an investigation for betting on sports, including baseball and his own team. The resulting dossier—the Dowd Report—ran to over 200 pages. The overwhelming preponderance of evidence showed that Rose bet tens of thousands of dollars on nearly a third of his own games in the 1987 season in flagrant violation of the game’s rules. He remains permanently ineligible for involvement in Major League Baseball, and barred from the Baseball Hall of Fame.

These episodes aren’t just the stuff of history. The thoroughbred trainer Bob Baffert, who has notched a record-setting six Kentucky Derbys, eight Preaknesses, and three Belmont Stakes, has faced over thirty charges of doping horses and has paid over $20,000 in fines. He was issued a 90-day suspension from the entire sport and a two-year ban from Churchill Downs in 2022 for apparently doping Medina Spirit, the 2021 Kentucky Derby winner. This year, Baffert again came under scrutiny after his horse in the Preakness’s sixth race, Havnameltdown, had to be euthanized following an injury. (Over seventy of Baffert’s horses have died untimely deaths since 2000.) 

Meanwhile, in late April, the head coach of the University of Alabama baseball team was caught betting on the outcome of his own team’s game against Louisiana State University. The same month, five NFL players were suspended for partial or full seasons for sports gambling; three bet on NFL games. Last year, Calvin Ridley, the Atlanta Falcons’ star wide receiver, received a one-year suspension for betting on NFL games. Ridley made the bets during a break that he had taken for alleged mental health reasons, and said in an interview after his reinstatement that he had regarded including the Falcons in a parlay bet as a way to “root for his boys.”

These all underline one of the basic reasons fielded for gambling regulation: Money changing hands invites the corruption of a sport itself. This was the foremost reason that Roger Goodell, the NFL commissioner who has overseen the league’s growing cooperation with sports betting companies, cited in his suspension announcement for Ridley: “Your actions put the integrity of the game at risk, threatened to damage public confidence in professional football, and potentially undermined the reputations of your fellow players throughout the NFL.” 

Goodell fielded similar comments in his strident opposition to sportsbook legalization—statements that are not so very old. In 2012, he argued, “If gambling is permitted freely on sporting events, normal incidents of the game such as bad snaps, dropped passes, turnovers, penalties, and play calling inevitably will fuel speculation, distrust and accusations of point-shaving or game-fixing.” He added that a kind of spiritual purity of sports fandom would be compromised, and that interest would shift away from the games themselves towards “an interest first and foremost in winning a bet.”

“We've been very open about our position that we oppose legalized sports gambling,” Goodell reiterated at his 2015 annual meeting with the Associated Press Sports Editors. “We haven't changed our position on that, and I don't anticipate us changing that going forward at all. We think the integrity of the game is the most important thing.”

These were the sorts of argument used in support of the law that banned sports betting in most of the country until just a few years ago. In 1991, New Jersey sought to revitalize its ailing tourism industry by allowing sports gambling at the Atlantic City casinos, which would give them an opportunity to offer the East Coast equivalent to the Nevada sports pools. The federal legislature quickly sprang into action, passing the Professional and Amateur Sports Protection Act in 1992, also known as the Bradley Act. 

PASPA forbade states from repealing on-the-books bans, which allowed sports gambling to remain legal in its long-standing contexts—sports book in Nevada, pools in a few other states—while preventing its expansion. Senator Bill Bradley, the New Jersey Democrat and former Princeton basketball star for whom the bill was nicknamed, argued that sports betting would lead to shaved points and thrown games.

Bradley also perceived that legalizing a vice does not necessarily obviate illegal underground markets: “Legalized sports betting would teach young people how to gamble. This, in turn, would lead these children to illegal gambling once they discover that the odds and pay-offs are better.” There is an intuitive truth here: Unregulated markets will always be cheaper and more flexible; in the case of formerly illegal industries, existing vendors will have an edge over new vendors founded legally. (In the case of cannabis, this has meant the persistence of criminal drug dealers despite widespread, basically legitimate distribution networks.) As it turns out, Bradley’s instinct, that existing vendors with better action would not go away, was correct. What he did not count on was the explosion of the internet. Rather than organized criminal syndicates, it was existing casinos and foreign bookmaking conglomerates that carried the day. 

The moral force with which supporters argued PASPA now seems as antiquated as the temperance movement. “I have no illusion this bill will have any dent on sports gambling,” said Senator Dennis DeConcini, an Arizona Democrat and former prosecutor who sponsored the bill. “You can’t stop it, and that’s a fact. But that’s not really the intent. The intent here is not putting a public stamp of approval on gambling. What we can do is not sanction it.” 

The arguments evinced in favor of legalized sports betting in the subsequent years were predictable: the appetite of the American people for gambling; the massive sums involved and concomitant opportunities for profit; and the intangible threats of unregulated industry. Adam Silver, the visibly villainous National Basketball Association commissioner, fielded the typical panoply in a 2014 New York Times op-ed. “Times have changed since Paspa was enacted. Gambling has increasingly become a popular and accepted form of entertainment in the United States,” Silver wrote. “Most states offer lotteries. Over half of them have legal casinos. Three have approved some form of Internet gambling, with others poised to follow.”

The Garden State’s perennial attempts to revive Atlantic City’s fortunes have been a recurring driver of American gaming policy. It was New Jersey again, under the leadership of the Republican Governor Chris Christie, that fielded the challenge to PASPA with a 2013 law legalizing sports betting at Atlantic City. The ensuing suit resulted in the 2018 Supreme Court case Murphy v. National Collegiate Athletic Association, which voided the law. The Court found it unconstitutional per the Tenth Amendment for the federal government to tell the states what laws they could or could not make, gutting PASPA’s central mechanism.

“It is as if federal officers were installed in state legislative chambers and were armed with the authority to stop legislators from voting on any offending proposals,” Justice Samuel A. Alito Jr. wrote for the majority. “A more direct affront to state sovereignty is not easy to imagine.”

Affronted or not, state legislatures were unprepared for their sudden empowerment and the new regulatory environment. The gaming lobbyists weren’t. Per Bloomberg, between June 2018 and October 2021, the amount wagered on sports went from $310 million to $7.1 billion. In 2021, Goldman Sachs projected that it would rise to $39 billion. Yet the revenue benefits in many states have in fact been minimal. Kansas’s cut of the $350 million wagered by its residents in January to October 2022? $271,000. In 2022, $478 million was wagered in Maryland; in 2023 through March, $386 million. What are the benefits to the state? Since December 2021, sports betting has brought Maryland $21 million for the state’s education development program, which aims to increase school funding by $3.8 billion annually. The overall Maryland budget for fiscal year 2024 will be $63 billion. Two years of sportsbook revenue have amounted to a budget rounding error. As a kicker, in many states, the free bets offered as promotionals by the apps are tax deductible. 

This environment is, to say the least, advantageous to the gambling companies; how it ended up that way is no mystery. For example, in 2021, Arizona’s Department of Gaming hosted gambling lobbyists and industry workers to “give comment” on their sports betting regulations, promising “significant changes” based on their comments. 

Who is in charge here—the horse or the regulatory rider?

The traditional calculus for allowing gambling is that the pathologies associated with it are outweighed by a special benefit that cannot be replicated without gambling—fostering a traditional industry and sport in the case of horse races, or giving tribes tied to reservations that otherwise are without commercial prospects an industry. State lottery and casino liberalization changed that calculus: State revenues are themselves a goal that can be achieved through gambling, in the case of the lottery gambling administered directly by the state. Despite the lip-service to the old calculus—state revenues from lotteries and gambling taxes are most often earmarked for those dear bipartisan cash bonfires, public school system budgets—public funds are fungible; deregulation makes gambling just another taxable business in the eyes of the state. 

One of the unintended consequences of creating a freer market for gambling is that the previous beneficiaries of state-protected rents are often consigned to be, at best, junior partners or competitors with enormous multinational corporations. This dynamic is familiar from casino deregulation—when a state liberalizes casino construction, MGM, Caesars, and Gaming and Leisure move in from out of state, and neighboring states see concomitant dips in their casino revenue. New Jersey’s race to the bottom—itself a product of Pennsylvania, New York, Connecticut, and Maryland picking away at Atlantic City’s casino traffic—is the rule rather than the exception. 

(Photo by William Thomas Cain/Getty Images)

As with every other aspect of modern life, the internet is what’s different now. The annihilation of the restraints of time and space is the most fundamental work of technological innovation. Live music is replaced by physical recordings that can be played at any time, while radio allows faraway listeners to hear performances as they occur; eventually digital technology liberated us from the fetters of physical disks and tapes and limited-range broadcasting. (It is not difficult to imagine a future in which a chip in the brain pumps electric stimuli right into the auditory centers, including car parts jingles for non-premium subscribers. This will bring about the final and inevitable union of palinacousic schizo cases and people who listen to music on public transit.) 

For gambling, innovation shows the same development. One of the dearest totems of your old-fashioned track rat, the Daily Racing Form, was itself a product of the late 19th-century explosion in telegraph networks, which allowed the swift collation of racing odds and results from across the country. (The Racing Form thus holds the dubious honor of being, arguably, the first news aggregator.) The proliferation of casinos meant action was no longer tied to the racing season and the post times on the handful of race days in a week. The current onward rush of the gaming industry means that Caesars is always on—and can compete with the tracks and casinos anywhere. 

Unlike horse racing or casino construction, however, online sports gambling creates few jobs—and none of the blue-collar jobs that state legislatures have traditionally coveted—let alone informing land use or agricultural practices, or supporting entire reservations. 

The Indian Gaming Regulatory Act of 1988 allowed Native American tribes to strike deals with the states to build their own casinos. The spread of off-reservation gambling options has brought economic catastrophe especially to smaller tribes in sparsely settled states. The New York Times reported that the Mandan, Hidatsa, and Arikara Nation in North Dakota had already lost 70 percent of gaming revenues and jobs after Bismarck legalized pull-tab machines similar to slots across the state. The legislature has declined to consider an exclusive tribal concession for online sports gambling and is instead taking up statewide legalization, which promises to eat further into tribal revenues.

In Florida, even the wealthy and powerful Seminole tribe has run into headwinds. In 2021, the state’s Republican governor, Ron DeSantis, proposed a thirty-year compact with the tribe giving them exclusive rights to online sports book and other forms of online gambling in the state. Per the deal, the Seminoles would have paid the state $2.5 billion over five years for this privilege. After vigorous lobbying from DraftKings, lawmakers reduced the concession to exclusive rights to in-person and online sports wagering. The entire deal was nullified in Florida state court, under the reasoning that the Indian Gaming Regulatory Act specified that gambling had to occur on tribal lands.

The abolition of time and space has brought similar types of uncertainty to racing. While simulcasting and online bookmaking opens new sources of off-track revenue to the sport, it further undercuts the economic viability of the actual physical race tracks. “I don't think horseracing really contemplated all these changes,” said Goodall of the Maryland Horse Breeders Association PAC. “We’re all concerned about the preponderance of gaming out there.”

The Friday after the Preakness, I drove down to Baltimore with my daughter and my wife’s grandfather to watch the horses. It was a fine day, warm and almost cloudless, but the grandstand was nearly empty. There I met April Smith of the Friends of Pimlico Race Course. She doesn’t bet on sports; she doesn’t even gamble on the races. Her enthusiasm is given over to the sport itself—its history, its trappings, the athleticism of horse and rider. “You smell the manure coming off the track?” she asked dreamily, making a wafting gesture toward the circuit.

When I asked whether she thought online betting would hurt the sport, Smith shrugged. “It’s not the same. You can’t have a beer with your phone,” she said. “This is the track where Man o’ War ran. This is where the history is… where the ghosts are.” 

She rattled off the non-sport programming based at the track—bringing groups of patients at nearby Mt. Sinai Hospital to meet the horses, free historical tours during Preakness Week, therapy riding for PTSD sufferers. She thinks Pimlico could be an anchor for mixed-use development in the city; for her, the track is more than an economic chess piece or a place to localize vice and social dysfunction. It is the home for a tradition and a community. That is something difficult to measure in tax revenue.

If we imagine a world in which all these problems are solved, where simulcasting and remote betting are sufficient to support the horse industry and the tribes can pivot to online gambling, where the athletes act with perfect integrity and the casinos attract no criminals and the state coffers burst with revenue, one inconvenient stakeholder remains: the gambler himself. There are always losers. Some are persistent losers; some refuse to stop losing.

As Christopher Caldwell wrote in a recent survey of the industry in Compact, digital sportsbooks eliminate the time and space constraints on gambling—the dynamic we noted above. No longer does an inhabitant of, say, Westminster, Maryland, have to drive forty minutes to Pimlico to watch one of the ten live races on a Thursday, Friday, or Saturday; he doesn’t need to take himself to the off-track betting parlor in Greenmount; he doesn’t even need to go to the bar, gas station, or liquor store to play Keno. 

The National Council on Problem Gambling said in its 2021 annual survey report that about three quarters of Americans have engaged in some form of gambling in the past year; about 26 percent of those gamblers reported problem behaviors like lying about the amounts they wager or gambling beyond their means. Online sportsbook gamblers were three times more likely to display these behaviors than other bettors.

In concrete terms, the increase in availability seems to be causing an increase in pathological betting. Caroline Hawley of the Virginia Council on Problem Gambling, the National Council’s state affiliate, reported a precipitous increase in gambling problems in her state. “You’re talking about legal gambling, right?” she asked wryly. In 2019, there were 335 calls to the problem gambling hotline that VCPG operates. Between 2020 and 2021, the hotline saw a 387 percent increase in calls, from 1,150 to 5,602. In 2022, there were 8,780. She noted that the funding for the hotline has not increased commensurately with the increase in gambling venues—state support for the program is still drawn solely from the Virginia Lottery, with no funds allocated from revenues derived from sports wagering, video slots, or casinos. The rest of its funding comes from donations—including from corporate gambling giants like Bally, Penn National, and Fanduel.

The explosion in gambling reflects a familiar trend in American life—gutting complex systems rooted in the physical world for increasingly abstract and pure economic activities. People once bought stocks for the dividends, disbursements of the profits from the actual activities of the companies; now speculative trading dominates. I asked a friend whether his brother gambles. “No,” my friend said. “But he’s very active in stocks.”

There have been scattered efforts to domesticate both liberalized gambling and financialization. Sen. Richard Blumenthal of Connecticut, a Democrat, has called for an end to sportsbook advertising on college campuses, and several states are considering legislation to bring about such restrictions. The American Gaming Association, an industry group, is revising its code of conduct to endorse a ban on “risk-free” betting promotions. (Not all industry players, however, are members of the AGA, Caesars being a notable example.) Last year, New York increased its gaming taxes to bring in record revenues. These things may reduce the amount of pathological gambling and cut state deficits, but do they help the horse farms? Do they help the Indians?

After I returned from Pimlico, driving through the paddocks and fields fitted for steeplechase in Hunt Valley, I idly wondered whether Ice and Tink, the erstwhile escapee thoroughbred and his pursuer, were stabled there. For a runaway to be brought to heel, two conditions must obtain: the will to pursue it, and a faster or longer-winded horse. Does the state have the will to challenge the gambling industry? Does it have the speed or strength?