A Broken System: Why U.S. Sports Betting Legalization Gets a C–

Sports betting legalization was supposed to usher in a new era of opportunity, innovation, and consumer-friendly options across the United States. But seven years into this post-PASPA landscape, many industry experts are questioning whether the system has truly delivered on that promise. Instead of open competition, we've seen gatekeeping, monopolies, and a fragmented regulatory approach that often favors established interests over everyday bettors.

We take a hard look at what went wrong with the rollout of legal sports betting in the U.S.-and why industry insiders like Sporttrade CEO Alex Kane give it a less-than-stellar grade.

How Sports Betting Legalization Went Wrong-and What Comes Next

When the U.S. Supreme Court struck down PASPA in 2018, it opened the floodgates for legalized sports betting. State after state began crafting legislation, and in just seven years, sports betting has become legal in some form across more than 30 states.

So why does Alex Kane, CEO of Sporttrade, give the rollout a C-?

Because, he argues, we got the framework all wrong.

"We handed the keys to those who stood to make the most money," Kane said on The Sharps Report. "And that forced American entrepreneurs offshore."

Let's unpack why the U.S. system feels broken-and what a better future might look like.

Designed by Gatekeepers

In Kane's view, the fundamental problem is that the initial wave of sports betting legislation wasn't written with consumers or innovation in mind. It was designed by incumbents-casinos, leagues, teams, and racetracks-who used their influence to shape the rules in their favor.

This led to what's known as market access: if a company wants to offer legal betting in a state, it must pay millions just for the right to operate under an existing land-based casino's license. Only then can it apply for a license, pay taxes, and spend even more on customer acquisition.

"It's anti-consumer. It's anti-entrepreneur. It's anti-innovation," Kane says. "And it's very pro-casino and pro-conglomerate."

Monopoly Models Are Worse

Some states have taken the flawed model even further. Places like New Hampshire and Florida operate under monopoly systems, where a single sportsbook gets an exclusive deal to be the state's only legal option.

That means no competition, no pressure to offer better pricing, and no real incentive to innovate.

"It's crony capitalism," Kane says. "Government choosing winners and losers."

While some see this as a pragmatic solution for raising tax revenue, the reality is that consumers suffer-and innovation stalls.

A Federal Alternative?

Kane argues that the solution is a federal regulatory framework-one that levels the playing field, removes unnecessary gatekeepers, and lets new ideas flourish. That framework may already be taking shape, thanks to the CFTC (Commodity Futures Trading Commission) and platforms like Kalshi, which are building federally regulated prediction markets.

Unlike fragmented state-by-state regulation, a federal model could bring consistency, transparency, and broader access to the entire U.S. market. It's not perfect, and it’s controversial, but it represents a shift toward open competition rather than closed-door deals.

What Should've Happened

Looking back, Kane believes the U.S. missed a huge opportunity. Instead of building a system where innovation and consumer experience lead, we copied outdated models from the casino industry-complete with limited licenses, inflated access fees, and protectionist laws.

"Imagine if Paramount wanted to launch a streaming service and had to ask Netflix for permission," Kane says. "That's basically what we've done with sports betting."

Entrepreneurs who want to build the "next great sportsbook" are often forced to go offshore, unable to compete in the stateside market.

Final Grade: C- (Sometimes a D)

Kane doesn't mince words. For all the progress, the U.S. sports betting rollout has prioritized incumbents over consumers, creating a fragmented and stifled market.

The good news? There's still time to change.

"We're at an inflection point," Kane says. "The future could look very different-if we let it."

The U.S. sports betting system was built to benefit the powerful, not the public. But with new technology, federal opportunities, and pressure from innovation-first companies, a better, more open future is still possible.

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