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Addiction comes in many forms and a lot of them are perfectly legal.

Daily, I fight the urge to scroll—for hours—on various social-media apps, yet I can go months without drinking alcohol and not even think about it.

The question of whether to ban harmful behaviors or substances is one laden with competing priorities: How intrusive is the government intervention? How harmful is the substance? Would banning it even work to curb the behavior? What about the economic impact of a ban? What sorts of revenues can be gained from taxation instead?

On today’s episode of Good on Paper, I talk with the journalist Danny Funt, who has been reporting for years on a behavior that’s come under much scrutiny lately: sports betting. Renewed debate over bans on sports betting erupted into public view nearly seven years ago in a pivotal Supreme Court case. The decision opened the door to a variety of new state legalization schemes and the outcomes have been mixed, at best. Although states may have stumbled onto a new source of revenue (albeit weaker than some were expecting), it has come at a cost to gamblers’ financial and mental health. The results have turned even vocal proponents into skeptics.

“I interviewed Charlie Baker, the former governor of Massachusetts who signed the bill legalizing bookmaking there in 2022, and then a few months later became president of the NCAA and has become a really vocal champion for limiting the amount of betting on college sports, particularly in light of the brutal harassment that college athletes and coaches get whenever their performance costs someone a bet,” Funt recalled. “It’s honestly horrifying, the sort of stuff they see on social media and in real life. And he has said point-blank, ‘I wish, in hindsight, this had stayed in Las Vegas.’”

The following is a transcript of the episode:

Jerusalem Demsas: The Super Bowl is coming up, and so today we’re talking about the most important part of sports: gambling.

In 2018, the Supreme Court struck down a federal ban on sports betting that spurred four years of nonstop ads enticing me and you and everyone I know to spend all our discretionary income on FanDuel or DraftKings. At the time, advocates believed that the revenue streams that could come from sports betting were too good to pass up. After the Great Recession, states were cash-strapped and hungry for new sources of money.

States have unevenly legalized, meaning in some places, you can log onto your phone to place a bet, and in others, you might still need to go to a physical location. The Court left open other pathways for the federal government to curb or ban sports betting, and as many of the negative impacts of gambling have metastasized, more policy makers are questioning whether legalization is worth the revenue.

My name is Jerusalem Demsas. I’m a staff writer at The Atlantic. And this is Good on Paper, a policy show that questions what we really know about popular narratives. My guest today is Danny Funt, a journalist who has tracked the rise of sports betting for The Washington Post and is now working on a wide-ranging book on the topic.

[Music]

Demsas: Danny, welcome to the show.

Danny Funt: Thank you for having me.

Demsas: So I have actually never bet on sports. I grew up in a Christian household—I am Christian—and it’s just not a thing that my parents ever allowed. We couldn’t even make dollar bets at home. Like, it was just not allowed. And I feel like I knew later on that I had kind of an addictive personality. So I was like, I’m not going to do this. I’m just never going to get into betting or gambling. Have you bet on sports? Is this something that you do?

Funt: Oh yeah. I’m trying to be more honest about that. I used to be like, Well, if you were a restaurant reporter, you’d have to eat out. You’d sort of be obligated to see what the culinary scene is like. So I do the same with sports betting. But truthfully, I was betting on sports long before I ever wrote about it.

I will say that the more you learn about how significant the house’s upper hand is, it definitely gets in the back of your head, and I do a lot less now just knowing I don’t stand a chance.

Demsas: How significant is it?

Funt: It depends on what you’re betting. The standard is actually pretty low. They’ll win $5 for every $100 you bet. But nowadays, that’s getting jacked up. So you might have heard of things like parlays. The parlay hold percentage, which is like the house revenue or the house edge, can be as high as 20 percent. So you’re getting beat pretty bad if you bet a lot of parlays.

Demsas: So sports betting, I feel like, I really did not hear a lot about, other than just when the World Cup is on, and your friend might bet you 20 bucks about the outcome or something like that. And now I feel like it’s everywhere. I feel like I’m seeing ads everywhere. I feel like every time I look over on the Metro, like, there’s some 17-year-old guy on DraftKings—well, let’s hope he’s 19, not 17. But it feels like it came out of nowhere. What happened?

Funt: It really did. That’s really what got my attention: It just felt like, overnight this went from something that we had all been taught was this existential threat to sports, that the professional leagues and the NCAA would never support—there were basically a century’s worth of scandals involving gambling that motivated that concern—and then, suddenly, there was a Supreme Court decision in 2018 that struck down a federal ban on bookmaking outside of Nevada.

And that really was a starting gun for all of these states to say, Hey. This is a way we can raise money and cash in on this opportunity. And it was incredible how night and day it was, where what I described as this existential evil was suddenly repackaged as this wholesome way of enjoying sports that every sports fan ought to consider.

Demsas: So take us back to 1992, where that federal ban was enacted. It’s called the Professional and Amateur Sports Protection Act. What led to that effort? Who was pushing for it, and why did they think it was necessary?

Funt: Yeah, I was surprised to learn that it was the professional sports leagues, mainly the NFL, that went to Congress and said, Hey—we need this. So a lot of states back then were facing severe budget deficits. You know, it’s the tail end of the Reagan era; there’s a lot of resistance to tax hikes.

And naturally, when you need to raise money, but you don’t want to raise taxes, states will look at gambling. And there was sort of a groundswell of loosening the laws around tribal casinos and state lotteries. And a lot of states began looking at, basically, a version of state-sanctioned sports betting, where a state lottery is giving people the chance to wager on sporting events.

And the sports league said, We hate this idea. We’ve allowed it in Nevada because it’s been there forever, but we don’t want this to be the way that our fans engage with our product.

Demsas: Why? Why were they opposed?

Funt: For one, the 1919 Chicago White Sox scandal, where, famously, the team rigged the World Series in cahoots with gamblers—that is front and center still. Pete Rose had just been banned for life for betting on baseball as a player and as a coach. Really every decade, if you look back in the history books, there’s a major scandal involving college sports or professional sports or whatever. Beyond that, they just thought, We like the idea of fans liking the games for the games’ sake, and if they’re looking at it through this cynical gambling lens, it’ll kind of cheapen their relationship with sports and diminish our product.

Demsas: That’s very altruistic, right? I mean, I would imagine these sports leagues are just like, What can make us money? You know what I mean?

Funt: Definitely. At the same time, that does make them a lot of money. Think of all the jerseys and pennants and other merch that people buy because they’re lifelong sports fans. It fuels a lot of irrational, obsessive behavior. And then again, so does gambling.

So you can understand why it was very tempting, over time, for the leagues to flip-flop and come around on that. But the Senate and the House held these really robust hearings to evaluate the threat of gambling, the benefit that state-sanctioned gambling might pose. And it was just so striking, to me, that they laid it all out on the table in the early ’90s, and then fast-forward: 25 years later, there was really none of that. It was just, Okay, let’s cash in.

Demsas: So Nevada, you mentioned, has always been exempt from PASPA. What has been their experience?

Funt: Around the ’50s, when casinos were taking off in Nevada, sports betting was sort of an amenity, kind of like an all-you-can-eat buffet, you know? It’s just one more thing to draw people in so that they go to the table games and the slot machines that really make money. So in a lot of ways, sports betting was an afterthought.

And yet, many of us thought, If we ever wanted to bet legally on sports, that’s the place to do it. So people would schedule March Madness trips to bet on college basketball, or they’d go during the Super Bowl to bet on that. So it was a pretty big draw, but it was also very marginal in terms of the bottom line for Nevada gambling operators.

But gambling on sports still existed well beyond Nevada in the U.S., because there’s this thriving black market. And one of the big arguments for legalization, just like with cannabis, was, People are going to find a way to do it, so let’s bring it above board, tax it, implement consumer protections. And at least that was a pretty convincing argument in favor.

Demsas: You mentioned the Supreme Court decision, Murphy v. NCAA. That’s the Supreme Court decision that basically strikes down this federal ban. What was the legal argument at issue there? Why did the Supreme Court find that the federal government cannot ban sports betting?

Funt: So crucially, they very explicitly said they can ban sports betting—they had just gone about doing it with a defective bill. So naturally, Supreme Court decisions tend to get oversimplified in the public conscience, but this one is so crucial because sports betting’s advocates took the decision and said, Aha! The Supreme Court has given the green light for sports betting or okayed sports betting.

Really, the case turned on a fairly obscure Tenth Amendment concept about states’ rights. And sports betting was the focus, but it was also kind of beside the point. So New Jersey said that what the federal government has done, in essence, is said, We want to ban sports betting, but we don’t want to regulate it. So we’re going to commandeer the states to do the federal government’s bidding. If they had legalized sports betting before 1992, that’s grandfathered in; it can remain on the books. If they hadn’t, they’re prohibited from changing their mind and legalizing it.

So this argument before the Court wasn’t, Should the federal government be allowed to ban sports betting? It was, Should they be able to tell the states that if they have an existing law, they can’t change it? And, you know, it sounds like the most thrilling Supreme Court oral argument. It was actually pretty dry because it’s so obscure in that way. But the effect was to overturn this ban that had been on the books for a quarter century.

Demsas: What was the state interest in legalization? This is Murphy v. NCAA. That’s Governor Phil Murphy of New Jersey, a Democrat. Why was he so hell-bent on taking this on?

Funt: The funny thing is: It was really Chris Christie, his predecessor, who was hell-bent on taking it on, and it really annoys Christie, who views bringing sports betting to New Jersey as one of his crowning achievements. It pains him to this day that the title of that case was updated to reflect Murphy because he took office before the decision came out.

But they had this long-standing economy, mainly in Atlantic City, that was really struggling. They looked at Nevada and were quite envious that sports betting brings people to the state around these major sporting events, year after year, and they said this would be a way to revitalize Atlantic City.

So the argument they brought to the Court wasn’t, Let’s have online sports betting across the country. It was, Let’s have in-person sports betting in these casinos in Atlantic City to jumpstart this ailing economy. As you can imagine, after that, all these states said, Hey—we also could use a lot of tax revenue and jumpstart our economies. Especially during COVID, when so many states were facing pretty dire budget deficits, they said, This is a fairly easy way to snap our fingers and have access to this influx of cash.

And that tends to happen a lot with gambling—is you’re facing some sort of economic or state budgetary issue, and this is a quick fix. So once New Jersey did it, and Delaware and Pennsylvania and a number of other early adopters, there was this ripple effect, where states look to their neighbors and say, Hey—they’re making money off this. We feel like chumps because we’re not. Let’s get on board. And the bandwagon really got off and running.

Demsas: So one thing that’s interesting is that—I’m confused why there’s been such a big focus or why sports betting has been so central to this story, when it feels like all types of online gambling are legal in lots of places now. So can you help me understand why that’s been so front and center?

Funt: I mean there’s so many video games or phone-based apps where it’s like, Hey—do you want to buy some tokens with real money? And then you’re playing with tokens, and then you convert the tokens back to real money, so it’s very sly.

There’s this whole phenomenon of what are branded as sweepstakes, where it’s essentially a loophole to allow people of all ages to risk money on sports, but it’s not called gambling. And you might remember: There’s a long history of things finding loopholes to offer gambling by a different name, most notably the whole daily-fantasy-sports boom that paved the way for sports betting.

So you’re right. It is part of a wider phenomenon. It’s interesting that true online casino gambling, like slots and roulette and poker, was predicted to follow from legal sports gambling. That was what a lot of these companies were banking on. And although about a half dozen states have legalized it, it hasn’t caught on quite as quickly as some of their investors’ hopes, and we could get into that.

Demsas: Yeah, why not?

Funt: The main reason is that the brick-and-mortar casinos think it’ll cannibalize their business, that if people can bet on those games on their phones, they’re not going to bother to make the trek to a retail casino to do the same thing. So I still think that’s going to be in the headlines a lot in the coming years, as states look for more ways to bring in tax revenue.

But to your question about why sports betting seems so dominant, part of it is just: The advertising is unbelievable. These companies are spending billions of dollars every year to get it in front of potential customers in as many ways as possible. As you were saying, you see it on the train. Same here in North Carolina. Billboards, signs downtown—everywhere you look there’s an appeal to get you to start betting on sports, not to mention all the TV ads. So the marketing is just overwhelming.

And then beyond that, it is startling, in that this was seen as something that was done in the shadows, and now it’s so mainstream and really being rammed down people’s throats in a way that a lot of people are quite concerned about.

Demsas: So what is the landscape now, right? Like, after Murphy, states had to pass their own legalization schemes. Right now, D.C. and 27 states allow online sports gambling, and there’s some regional concentration here that I thought was interesting—basically, the entire Northeast and the mid-Atlantic, as well as the Midwest. But lots of the South hasn’t. The Pacific Northwest hasn’t. California and Texas haven’t. What kind of explains this regional variation?

Funt: I think in the Northeast, state lotteries are so deeply rooted. Massachusetts, for example, has the highest-grossing state lottery per capita. So I think it’s easier to transition people into a new form of gambling. In a lot of parts of the country, like California and Texas, tribal interests are so powerful—they’re resisting anything that would threaten their business. In parts of the South, there’s a strong conservative Christian aversion to gambling still, although I think that’s dissipated a lot from one of the main reasons why the country didn’t adopt more gambling sooner. So yeah, it’s a lot of cultural and political reasons.

Demsas: One story of yours really kind of shows how haphazard the legalization process has been. Can you tell us about the Abunai gambler in D.C.?

Funt: Yes, so as you mentioned, D.C. is one of the places that legalized sports betting. Like many places, they did it quite hurriedly and sort of made things up as they go. And one interesting decision the D.C. government made was to have a city-sponsored sports-betting operation, as opposed to letting these companies like FanDuel and DraftKings run the show. So you could bet through those companies at stadiums and arenas, but if you are out and about on your phone or at a lot of these betting terminals in cafés and restaurants and bars, you are betting with a city-sponsored sportsbook called Gambet[DC].

And these terminals—they sort of look like ATM machines. They popped up all over the place, including at this tiny poke shop called Abunai. And one of the interesting things about betting terminals that professional gamblers were quick to pick up on is: Unlike if you’re going to a brick-and-mortar sportsbook, where you give your ID and they pay close attention to who it is betting, you bet anonymously through these terminals. So if you’ve sort of cracked the code and figured out an edge, you can bet anonymously, basically limitlessly, through these terminals and make a killing.

And this one guy found deficiencies in the odds in this poorly run city-sponsored sportsbook. It’s kind of incredible how bad the odds were compared to the rest of the market. Like, it didn’t take a genius to pick off vulnerable games to bet on. So he just finds a list of places in the city that have these betting terminals. Abunai was the first alphabetically on the list. So he says, Okay, great. They have a nice owner and staff, who didn’t mind him basically turning it into his home office.

And day after day, he would just dump cash in this machine and bet as much as he could—so much so that it swung the entire city’s betting numbers so that an overwhelming amount of money was being bet through this one store. He was winning so much that the entire city-run sportsbook was net negative for an entire month, which is unheard of. We all know the house always wins. D.C.’s sportsbook was run so poorly the house lost, in a month.

Demsas: How does that happen? Like, what is going on there?

Funt: So basically, sports-betting odds are often like efficient markets. So just like it’s really hard to beat the stock market, it’s really hard to beat who’s gonna win, you know, a football game or a basketball game, over the long haul, because, basically, the world’s collective wisdom is informing the spreads and the odds on these games.

But the people who are running Gambet[DC], this D.C. sportsbook, were very slow to update the odds. Sometimes, they would just have errors in how they input the information, so they just clearly have the equivalent of a typo in inputting the odds. Just not a lot of oversight. Even though it’s a pretty airtight business, you still need a lot of smart people running it and automation to manage it.

So this guy just picked off all these bad lines and bad odds. And statistically, he gained the upper hand, because if Gambet[DC]’s odds are way out of sync with the rest of the market, chances are the rest of the market’s right.

Demsas: So you literally just have to look at what the market is telling you, what the odds are in other places, and then just go sit down at Abunai Poke and just say like, All right, looking at my phone, what’s going on, on DraftKings or whatever, and then just do that.

Funt: Precisely. He was betting on sports that he didn’t follow at all. He had no expert insights into them. It was just, A respected sportsbook has the odds at this number. Gambet[DC]’s are off in this way. I’m gonna err on the side of the respected sportsbook and bet against Gambet[DC]. And it was hugely profitable, at least as long as he got away with it.

Demsas: Do you know how much money he made?

Funt: Yes, so thanks to some public records that were turned over, only over the course of three months, he profited more than $400,000—pretty unheard of, even for an incredibly successful bettor. That rate of return is just remarkable.

Demsas: Wow. So I went down a rabbit hole, when I was researching for this episode, about American history on sports gambling. And I did not know the role of Attorney General Bobby Kennedy—the OG Bobby Kennedy—his crusade against sports gambling. And learning that, kind of in the middle of the 20th century—you touch on this a little bit, but—that the real focus on outlawing sports gambling was about combating organized-crime syndicates.

Bobby Kennedy wrote an article in The Atlantic in April 1962 about this issue. And just quoting from it:

As I sit down today to write this article, a business executive with an industrial firm on the Eastern seaboard is telephoning a bookmaker to place a fifty-dollar bet on a horse race; a factory worker in a Midwestern town is standing at a lunch counter filling out a basketball parlay card on which he will wager two dollars; a housewife in a West Coast suburb is handing a dime to a policy writer who operates a newsstand as a front near the supermarket where she shops.

These people, and millions like them who follow similar routines every day, see nothing wrong in what they are doing. Many of them can afford the luxury of this type of gambling. They look upon it simply as taking a chance.

He continues:

But they are taking a chance which the nation and its economy cannot afford. They are pouring dimes and dollars day by day into a vast stream of cash which finances most illegal underworld activities. The housewife, the factory worker, and the businessman will tell you that they are against such things as narcotics, bootlegging, prostitution, gang murders, the corruption of public officials and police, and the bribery of college athletes. And yet this is where their money goes.

So I did not have a sense that this was a big part of the modern conversation around sports gambling. Is this kind of resolved, or are we still worried about gambling, kind of, going to these underworld activities?

Funt: Yeah, first of all, it’s a great article you turned up. I’m excited to find it myself and read it. That was definitely one of the arguments for legalizing sports betting around 2018, after that Supreme Court decision, because a huge amount of money was being bet through offshore sportsbooks that operated illegally online, taking tens of billions of dollars in wagers from Americans. And there was some evidence that the criminal syndicates that were operating those sportsbooks did a bunch of other criminal activity.

So just as RFK was saying, you’re, in effect, patronizing those sorts of criminal activities. That’s not always the case. Some of them were just Americans who were bookmakers in the U.S. and got tired of getting arrested, so they went to Latin America and set up websites where they could take bets. It wasn’t quite as sinister as that. But at least as the argument went, it was a real boogeyman, that you’re funding criminal organizations, and, Why not fund taxed, legitimate companies by making this legal? So yes, that was definitely a significant argument.

And I think as far as that kind of conscious capitalism goes, well, the sportsbooks that operate today definitely aren’t, you know, also selling drugs and prostitution and all those things. There definitely is some hand-wringing among people of, Does gambling exploit vulnerable people? Do we know that this is making problem gambling more prevalent? And by betting safely, are you still, in effect, funding companies that take advantage of people? So it’s not quite as potent as the argument RFK laid out, but it’s definitely still relevant.

Demsas: And what has the impact been on legalization? Has legalization reduced off-book gambling. Can we even really measure that?

Funt: So you’re right. It’s impossible to know exactly how much gambling is going on under the table. It always has been. I think some of the estimates were inflated to make the argument seem more convincing, but it by no means has eliminated it or even put the dent in it that a lot of the advocates for legalization promised.

Again, in 1992, they looked at all these different types of cause-and-effect things to think about, and one of them was: If you legalize an illegal activity, do you snuff out the black market, or do you just grow the pool of people doing it and, in fact, actually convert some people who might not have been doing it, who are then going to look to the black market, for a variety of reasons? So when it comes to sports betting, yes—there are definitely those offshore, illegal sportsbooks that are hurting because of this.

But there are also people who took up sports betting because they saw ads everywhere and all these generous new-customer offers and started legally, and then they said, Hey. There’s a bunch of different reasons why betting illegally might be advantageous. Maybe I don’t want it showing up on my bank statement. Maybe I don’t want my winnings taxed. Maybe I want to be able to bet much more illegally than you’re able to do so legally, if I’m a winning bettor. So yeah, in some respects, it’s put the offshore business on the ropes, and in other respects, it’s sort of created a funnel of new customers for them.

[Music]

Demsas: After the break: what’s gained and what’s lost in states where online sports betting is legal.

[Break]

Demsas: I want to delve into the welfare harms of people who are engaging in sports gambling. But before I do that, I think because of your articles and a lot of other arguments being made and research coming out, there’s a growing narrative about the potential mistake that this was in legalizing gambling. But I think that can be helpful to go back and think in the minds of states who were interested in legalizing gambling. What was going on with them? Like, how much money are they actually making off of this? And what sorts of things is it going to?

Funt: Yeah, that was definitely the No. 1 argument, was, Hey. Let’s just bring in more revenue without taxing people—always, you know, a strong selling point for at least some people.

So whether tax revenue has exceeded or failed to meet expectations varies state by state. In total, since that Supreme Court decision and all these states started legalizing, a little more than $7 billion has been raised in taxes from sports betting for state governments. It’s important to note that $2.6 billion of that has gone to New York State alone, the largest legal sports-betting state, which also has the largest tax rate, so they’re just getting an epic windfall compared to the rest of the country.

Many states simply send the money to their general fund. Some states, like Colorado, specifically earmarked it—in Colorado’s case, for water-conservation issues. But you know, tax revenue is definitely a worthwhile thing to look at, but it’s not the whole picture. I think it’s appropriate to look at a more holistic view of, Sure, states are generating this money, but it’s not like loose change they’re finding in their couch cushions. This is coming from somewhere. It’s coming from their constituents.

We know gambling is, in many respects, kind of a regressive tax in that it, you know, pulls money from a lot of vulnerable people, as opposed to a more progressive tax that proportionately takes from people who can afford to lose. And that’s why some states, like Washington State, have been much more restrictive in the way that, yes, they’ve legalized sports betting, but you can only do it on the grounds at tribal reservations. So their idea was, Let’s give a boost to tribal economies, but we don’t want to depend on revenue from gambling to fund our state’s growing needs. We’d rather do that through progressive taxes, more sustainable, healthier for our society, something that definitely not all states have taken into account.

Demsas: I have seen a lot of that research around the regressivity of these sorts of tax revenues, but I was surprised with sports betting. And there was a Pew poll looking at the demographics of people who engage in sports betting. And they don’t really find any significant differences in educational attainment or household income. They see that men are more likely than women to say they have bet on sports, and adults under the age of 50 (when compared to those over 50), and Black Americans and Hispanic adults are more likely than white and Asian American adults. But I’m surprised that there’s not more of a difference in household income here.

Funt: You’re right. In some respects, I think sports bettors skew a little bit more middle class and well-educated, compared to other forms of gambling. But when we think about the regressivity of it or just whether it’s the healthiest way for society to generate money, it’s not just that the poor are the ones doing the gambling. It’s also—think about that people with gambling problems are, in many respects, these companies’ best customers. They’re losing such a disproportionate amount of money, compared to the rest of the clientele.

Are we comfortable generating money on the backs of people who just find this ruinous, in a lot of ways beyond financially? So that, I think, should give people pause. But you’re right—for a lot of cultural reasons, the people who bet on sports tend to be much more middle class than the people who, say, do scratch-offs or play the lottery.

Demsas: So I want to now turn to all of the harms that have now become evident over the past several years. Can you walk us through the financial impacts of gambling? What are we finding about the legalization of sports gambling on the impact on households’ financial well-being?

Funt: Yes. So last year, I’d say two of the most-buzzed-about studies that came out on that topic—one of them found a direct correlation between states that had legalized sports betting and a demonstrable impact on credit scores and other measures of financial health. A similar study, also last year, found that household savings go down in places where sports betting is legal. So you are seeing a demonstrable impact on people’s financial well-being as a result of the availability of sports betting.

Part of what I find, honestly, quite frustrating about the way this has played out in the U.S. is it’s been treated like this experiment where, We’re entering an uncharted territory. We’ll see how it goes. We’ll discover things. Like, Does this hurt people financially, or does this create a public-health problem that we didn’t anticipate? There’s a whole bunch of countries that are far ahead of the U.S. in terms of legalizing, and there’s a vast body of research that looks at the consequences. This didn’t have to be this shot in the dark for the U.S. We could have looked at Europe and Australia and Latin America and Asia and a lot of other places that are farther along and have had to reconcile the consequences of making gambling so accessible.

So in the U.K., for example, where online gambling was legalized in 2005, one study recently found that Brits lose about £5.5 billion every year betting online, which results in lost economic activity of £1.3 billion. The government estimates conservatively that gambling-related health consequences cost the population more than a billion pounds every year. And again, the people who did that study said: If you actually look at the second- and third-degree consequences, on a mental-health level and all the family trauma that it causes, it’s probably much bigger than a billion pounds, but we can safely say that.

So yes, again, the evidence is starting to trickle out in the U.S., but it’s been there overseas, and I think it’s pretty irresponsible that the states that were establishing regulations didn’t heed those warnings before getting this off and running.

Demsas: Yeah, I mean, I want to underscore this. I can imagine someone going like, All right, someone is going to, you know, buy some bad fast food out there rather than cook, or they might gamble on some sports. These are all just consumption, and they’re different levels of bad, but is it really that big of a deal?

You know, one of the studies you referenced, a Northwestern University study by Scott Baker and his co-authors—they’re finding that it’s not just displacing other gambling and consumption. People are falling into debt over this. So for every dollar spent on betting, households are putting a dollar less into investment accounts. You’re more at risk of overdrafting your bank account, maxing out credit cards.

And these effects are strongest among households that are already kind of financially precarious. Charles Lehman actually wrote a great article about this for us in The Atlantic. And this is not a situation, I think, where it’s, you know, We’re just getting money reallocated from other places. People are experiencing a lot more debt delinquency over this.

The other study that you referenced, the economist Brett Hollenbeck at UCLA and his co-authors also find, similarly, that the increase of the risk that a household goes bankrupt [goes up] by 25 to 30 percent. I mean, these are really big numbers that we’re seeing here. And can you just walk us through this kind of gambling addiction? Is this a situation where it’s a very small number of people who are getting addicted, and that’s what’s driving these stats? Or are large shares of Americans experiencing financial precarity here? What do you think?

Funt: Right. So the rate of problem gambling is definitely increasing. So for a long time, it was perceived that about 1 to 2 percent of the population is prone to problem gambling. In states that have had legal sports betting and other legal online gambling for a while, they’re seeing that rate closer to 6 or even 8 percent, and it’s even higher among young men, who are often the target audience for sports betting.

But I think it’s important to look beyond problem gambling. Even though those numbers are quite alarming, it can sort of make it seem like a marginal issue. Like, As long as I’m not in that sliver of the population, I’m good. I think that those sorts of consequences that you were describing go beyond people who have diagnosable problems.

So I find quite striking or even alarming the explosion of gambling among college students. And there was a survey recently that found that one in five college students who bet on sports dips into their tuition funds to fund their betting. So obviously, fewer than 20 percent of college students have gambling problems, but you’re still seeing people affect themselves financially because of their betting. So it’s a vast problem, and it’s an under-researched area.

It’s also something that is a developing story. So you’re not going to get a full picture out the gates. Gambling disorder, unlike some addictions where you might experience something once and become hooked on it—that can happen with gambling, but—it’s often a progressive disorder, so it can take several years or even longer to develop a problem. So if you think about it, we’re really in the early innings of this. And that sort of data and that sort of picture of how this is affecting society as a whole is still going to be emerging in the coming years.

Demsas: And, I mean, you talked a little about the mental-health impacts of gambling addiction here, but there was a paper that came out recently—it’s actually what spurred me to want to do this episode with you—about domestic violence. Can you talk to us about what that found?

Funt: Yes, it’s one of those things that’s terrible but, honestly, not totally surprising—that, again, you can see a correlation between the states that have legalized sports betting and those that haven’t, and when people lose bets, they’re more prone to commit acts of domestic violence.

There’s, similarly, a correlation, in that same respect, where sports betting is legal and higher rates of binge drinking. So you can think about it either fueling or just coinciding with a lot of other problematic activity. And it’s why, to really take stock of what this means for society, you’ve got to look at the bigger picture, not just some of these raw numbers that are thrown in our faces all the time.

Demsas: Yeah, I mean, I think that most people have probably heard there’s an older study that’s not about sports betting, but it’s just about, you know, an NFL home team’s upset loss can cause a 10 percent increase in the rate of at-home violence. This is a famous David Card study.

And the thing that I think is really interesting about the Card-Dahl study is that when we’re talking about upset losses—these are, like, unexpected losses, when the home team was predicted to win, and then they lose—you would think, Oh well, maybe in the states where there was an upset win, when the home team was predicted to lose and they actually win, maybe you see a decline in domestic violence, but that doesn’t happen. There’s basically an asymmetry here—

Funt: Oh gosh.

Demsas: —in the gain-loss utility function. So it’s like: You’re actually just gonna get more domestic violence. You’re not gonna even it out or something like that. And that, I think, becomes a really big problem when you are thinking about this paternalism issue here, because I can imagine people hearing this episode are just like, Yeah, this sounds really bad, but do I think the government should be in charge of banning something just because people are making bad decisions?

The downstream effects here are what I think are really convincing. You know, no one consents to having domestic violence happen to them, obviously, ever. But that that might increase as a result of someone else choosing to bet on sports seems, you know, even beyond the pale.

Funt: Yeah, absolutely. I think this debate often gets reduced to, Should this be outlawed, or should it be legal with hardly any restrictions? And I think it oversimplifies the argument, and it—we’re really past that. I don’t know how many states that have legalized it are going to go ahead and say, This was a mistake. Let’s outlaw it.

But there’s such a spectrum within that dichotomy, of: Should there be restrictions on advertising? Should there be restrictions on the enticements for customers? Should we require affordability checks to make sure people are betting at least vaguely within their means? All these different regulations that ought to be debated instead of, Should we ban this? which, of course—you’re right—is going to get a bad reaction from a lot of people who don’t like the government overstepping in the decisions we make.

I think consumer protections were the main argument for legalization. So whether we’re living up to that promise and delivering actual protections that protect the people who were betting illegally, and now we’ve said this is a safer way to do things—that, I hope, is where the conversation goes.

Demsas: I actually was surprised. I was trying to look up what people actually want to happen with legalization here, and I was shocked. Only 8 percent of people—there’s a Pew poll about this—only 8 percent of people thought it was good for the country that sports betting was legal. And 34 percent said it was a bad thing. The rest said they thought it was neither good nor bad. I would not have expected that. Is that what you find when you’re reporting, that people are saying that they think it’s bad that we’re allowing this?

Funt: Yeah, I try not to put too much stock in the anecdotal. Even though I’ve interviewed so many hundreds of people for my work, I’d rather rely on an academic who’s doing a proper study.

That said, yeah, I find it interesting, not only how many average people feel that way, but how many professional bettors, who you’d think would be the biggest evangelists for legalization and defending the way they make their livelihood—a lot of them are some of the most vocal about, This has gotten out of control. It’s crazy that there aren’t more guardrails to protect ordinary people.

I even hear plenty of people who work in the industry say, States and even perhaps the federal government could be doing more to protect customers. So it’s not just casual people who see all the ads and say, Gee, this has run amok. It’s people who are right in the middle of it who feel that way.

Demsas: So you mentioned that other countries have had experiences with this as well. Are there regulations you would copy from other places that maybe can improve our situation?

Funt: Yeah, and I try not to be, you know, a public-policy advocate as a reporter, but I will just say things that a lot of people, whether they’re health experts or player-safety advocates, are encouraging to at least be debated.

So one of them is: Countries that have banned advertisements that use expressions like free or risk-free or no sweat or bonus deceptively—so they’re basically making it sound like a can’t-lose proposition, when either you can lose the money you’re betting on the bonus, this offer, or you might get a little money through the bonus, but you’re obviously going to lose money over time—some countries have tried to weed that out.

There have been a lot of countries that have restricted when and how you can advertise, to try to minimize the number of young people that are seeing gambling ads day after day. So they might say you can’t advertise during sporting events or during certain hours of the day when kids are more likely to be watching TV.

Affordability checks are a polarizing one because that does tend to feel quite paternalistic, but in a lot of the places that have imposed those, the thresholds are sky-high. They’re not telling you, You should spend your money here or there. They’re saying, If someone’s spending hundreds of thousands of dollars within a day of signing up, maybe you ought to check in and see if they can afford to be doing that—things that are a lot more palatable than you might think when you hear a phrase like affordability check.

So there’s so many different reforms. Another one that is getting a lot of buzz at the federal level is this idea of a national self-exclusion list. So one thing that’s quite helpful for people with problems is they say, I’d like to cut myself off from gambling, to remove that temptation. But currently, let’s say I live in New Jersey—I can do that in New Jersey, but if I drive 15 minutes into New York or Pennsylvania, that exclusion doesn’t apply in those states. So it’s enormously tempting to do that. It might make sense to have a national self-exclusion list. So operators that are functioning across state lines have to honor exclusion, no matter where you are.

Things like that, again, it’s not about, Should we outlaw this? or, Should we backpedal on the decision to legalize? There’s this whole host of consumer protections that might be worth considering.

Demsas: Yeah, one thing I’d heard talked about is also not allowing people to make bets with credit cards, such that you have to have the money, so you can’t run up these large bills that you literally cannot pay back. And it seems like something about allowing it everywhere you are is a problem, right?

There’s a level to which I don’t know that we’re putting the genie back in the bottle on online betting, but the idea that you can pull out your phone at any point when you’re stressed out, that you don’t have to go somewhere, seems like a problem. And maybe creating some sort of temporal bounds, like maybe you can’t do it on college campuses or something like that—you can’t do it in schools in general, or you can’t do it at bars or something—you know, that might create some backlash here, but it indicates that, you know, there are ways to reduce the problem here.

Funt: You’re right that you have to use geolocation when you use these apps so that they can tell that you’re in a legal betting state, and it’s extraordinarily precise and effective. So if you’re in D.C. and you go into a federal building, suddenly your sports-betting app no longer works. It literally, like, works if I’m in a yard within the okay zone versus the not-okay zone. It’ll pick up on that.

There’s a state delegate in Maryland named Pam Queen, who’s also a professor at Morgan State University, who had the idea of: We could use this to either ban sports betting on college campuses or do something even more modest, like ban it in classrooms or in underage dorms or dorms during certain hours. The possibilities, as you were saying, are limitless, and it doesn’t have to be as severe as, you know, You can’t bet at a stadium or at a bar. It could be things that I think most people would agree sound appropriate, like, You shouldn’t bet in a freshman dorm or, you know, during class.

So yeah, that is a really potent tool that hasn’t caught on anywhere, but I think she and other people are going to be pushing for that.

Demsas: I then also want to ask you about your experiences interviewing legislators. So there are a lot of legislators who are involved in this effort, a lot of governors who have signed bills to allow sports betting or to allow online betting in their states. Have you talked to anyone who’s exhibited any kind of concern with how things have gone?

Funt: Buyer’s remorse, in some cases. Most notably, I’d say: I interviewed Charlie Baker, the former governor of Massachusetts who signed the bill legalizing bookmaking there in 2022 and then a few months later became president of the NCAA and has become a really vocal champion for limiting the amount of betting on college sports, particularly in light of the brutal harassment that college athletes and coaches get whenever their performance costs someone a bet.

It’s honestly horrifying, the sort of stuff they see on social media and in real life. And he has said point-blank, I wish, in hindsight, this had stayed in Las Vegas. As you were saying, it’s pretty commonsense that if you can bet from literally anywhere at any time of day, that’s gonna be quite a different situation than if you have to go to a casino, or even go to Las Vegas, in order to bet—or hunt down a bookie and find ways to bet through crypto or other sort of sketchy things that a lot of people are uncomfortable doing.

The idea that you can swipe to deposit money on your phone and then tap a couple of times and bet limitless amounts at any time of day is such a game changer. He was saying, We didn’t really process what a difference that would make, and I wish we had. So yes, he’s maybe the most forthcoming about that, but there are a lot of lawmakers who are seeing the fallout, in a lot of different respects, and saying, Maybe we need to re-regulate, as a lot of the rest of the world has decided is appropriate.

Demsas: Well, Danny, always our last and final question. This has been an episode chock-full of ideas that were good on paper. But what is an idea that you had that you thought was good at the time but ended up being only good on paper?

Funt: All right, so I was living in New York after college. I had a tiny balcony. I went and bought seeds to grow. I think it was, like, cucumbers and basil. And I was getting breakfast with my buddy Brian, and I was like, Dude, you will not believe how cheap these seeds are. We could totally grow vegetables and herbs and whatever else and sell it, and the margins would be crazy, and we’d make a killing. And he was like, So your business idea is farming? And I was like, Touché, Brian. You’re right. This is maybe not the most groundbreaking business idea. So he set me straight on that one.

Demsas: Oh my gosh, you didn’t live out—I actually, so my first house when I moved out of college was this group house, and we had the idea to farm some vegetables for the house, and it was successful in that we had some kale and sweet potatoes. But I have never in my life been like, I am never getting my food from my own labor. Like, this is just never happening again.

Funt: Oh, yeah.

Demsas: It’s a lot of work, and I feel like it caused so much strife in our household, too, because people were like, Who’s gonna harvest? What do we do with all this, like, extra kale now that no one wants to eat, because we have 20,000 bushels of kale. And you’re just, like, giving it away. But I’m glad that you did not actually have to execute your good on paper idea. You just figured it out beforehand.

Funt: I liked it, the basil I grew, but it wasn’t scalable. Brian was right.

Demsas: Danny, thanks so much for coming on the show.

Funt: My pleasure. Thanks again for having me.

[Music]

Demsas: Good on Paper is produced by Rosie Hughes. It was edited by Dave Shaw, fact-checked by Ena Alvarado, and engineered by Erica Huang. Our theme music is composed by Rob Smierciak. Claudine Ebeid is the executive producer of Atlantic audio. Andrea Valdez is our managing editor.x

And hey, if you like what you’re hearing, please leave us a rating and review on Apple Podcasts.

I’m Jerusalem Demsas, and we’ll see you next week.

Subscribe here: Apple Podcasts | Spotify | YouTube | Overcast | Pocket Casts

Last month, Donald Trump appointed the venture capitalist Sriram Krishnan as his senior AI-policy adviser. Krishnan, an Indian immigrant and U.S. citizen, was seen by some as being friendly to H-1B visas, which are often used in Silicon Valley to allow skilled laborers to work in the tech industry. This sent part of the MAGA faction into a frenzy, spurred by troll in chief Laura Loomer, who declared the appointment a betrayal of the “America First” movement.

The argument over H-1Bs exposes an important fissure in the MAGA alliance that worked together to help elect Trump. How Trump navigates this rift will give us clues about what his real priorities will be as president.

In this episode of Radio Atlantic, we talk with Ali Breland, who writes about the internet, technology, and politics, about this new rift in Trump’s camp and other places it might show up. And we’ll go beyond the politics, with staff writer Rogé Karma, to discuss what a solid body of research shows about the relationship between immigrant labor and the American worker—because even though some prominent Democrats, such as Bernie Sanders, agree with Loomer that there is a negative effect from H-1B visas on American workers, research doesn’t back them up.

The following is a transcript of the episode:

Hanna Rosin: There are already cracks starting to show in the MAGA alliance, and those cracks happen to show up in the issue that Trump has declared one of his top priorities, which is drastically reshaping U.S. immigration policy. Trump appointed to a senior position someone seen as being friendly to H-1B visas, the visas that allow people with specialized skills to work in the U.S. People in Silicon Valley love these visas. They depend on them. And maybe more importantly, the H-1B visa lovers include Elon Musk.

But the “America First” wing of Trump supporters—sometimes known as the nativist right—they do not love these visas. “America First,” to them, means, literally, Americans first. No exceptions.

I’m Hanna Rosin. This is Radio Atlantic. On today’s show, we’ll talk about this MAGA infighting. In the second half of the show, we’ll get into what’s actually true about the relationship between immigration and the American worker, because it turns out that even a lot of Democrats don’t get that one right. But first, let’s dive into the recent news and what it means. To help me with that is Ali Breland, an Atlantic staff writer who writes about the internet, politics, and technology.

Hey, Ali.

Ali Breland: Hey. Thank you for having me.

Rosin: So, Ali, this fracture in the MAGA alliance seemed to start around Christmas, when Trump announced a senior AI-policy adviser. Who is he, and how did people respond?

Breland: Yeah, his name is Sriram Krishnan. He’s this Silicon Valley figure who has a long history. He works in tech, and he was being appointed to be an adviser on Trump’s AI team, which is being headed up by another big guy in tech: David Sacks, who’s a part of the infamous “PayPal Mafia” that includes Peter Thiel, Elon Musk, etcetera.

Rosin: So these are, like—this is a faction. Like, these guys are becoming more and more powerful, sort of Trump’s tech allies.

Breland: Yeah, there’s some different ideological things happening, but for the most part, they’re largely on the same page. And a lot of people right now are kind of calling them the “new tech right,” or just, like, the “tech right.”

Rosin: So they’re on one side, and then how did the discussion around H-1B visas get going?

Breland: Yeah, so there’s this provocateur troll in Trump World called Laura Loomer. She’s been kind of this weird thing on the right for a long time. She’s chained herself to the headquarters of Twitter in protest of her account being banned at one point. But she sees this appointment, and she decides to make hay of it.

She pulls out a tweet that Krishnan made about country caps for green cards, rather, and high-skilled immigration. And she points to these things and says, This is not what we want. This is not “America First.” These things are not good for our constituency. And so that’s, like, the sort of obvious bit of it.

The other bit, too, is you can kind of see how race is this animating issue in this fight. David Sacks had already been appointed by Trump to be his chief adviser on issues of AI and crypto. David Sacks has talked about H-1B visas. He’s pushed Trump on this. He’s successfully gotten Trump to say that he would support the continued use of H-1B visas.

But Loomer didn’t attack him on that and didn’t turn this into a huge issue. Instead, she went after Sriram Krishnan, who is South Asian. And I think, you know, her targeting him, specifically, on this issue and associating him with that kind of speaks to the sort of nativist sentiment undergirding all of this.

Kind of right after the election, I sort of thought that maybe there was a chance that there was going to be some sort of fractious element at some point in the future, because these are two sides that kind of believe sort of different things.

The tech right is reactionary, like the nativist right that includes people like Laura Loomer, people like Steve Bannon. They sort of all have this streak of being frustrated with the progress that’s taken place in America. They are frustrated with what they see as, like, American weakness. But the distinction is that the tech right also loves business. They love being rich. They love making a lot of money and having their industry be benefitted.

The sort of nativist right cares much more about the American constituency and, specifically, the white American constituency—and benefitting what they see as, like, the natural order of whiteness and the average American, and things that some people in the tech right kind of care about but prioritize less than their own companies and less than their own industry.

Rosin: It’s really complicated because they both have ideas like, There’s an optimum society; there’s a right way that things should be. And then they’re slightly different. So what is each side’s ideal “America made great again” look like?

Breland: Yeah, I think it on the sort of nativist right, the ideal America is this place that prioritizes—with some exceptions, more so now—but fundamentally, it’s this white, sort of very classic, conventional, conservative vision for what the United States is. It’s this, like, return fantasy to a version of the 1950s America that prioritizes white American interests above other people—again, with exceptions. There’s—you know, these people would all say that they’re not racist, that they’re just meritocratic, or things like that.

The tech right is more agnostic to those kinds of things. People like Marc Andreessen and Peter Thiel kind of, to some degree, see value in that. But they only see value as far as that doesn’t get in the way of their vision for creating this sort of all-star team of Americans that can sort of dominate the global stage in technology and dominate economically.

And so they’re willing to go to look to other countries to bring people in; to try to, like, get the best talent, according to them; to try to solve the toughest engineering problems; and to do things like beat China, which is something that they’re all very obsessed with.

Rosin: So they’re less concerned about where people come from. I mean, what makes it especially complicated and charged that this came up so soon is that it came up in immigration. Trump has made controlling immigration one of his top priorities. How did Trump himself end up weighing in on this?

Breland: After a few days of silence—perhaps because this was happening literally over Christmas and the days after—Trump did say that he does support H-1B visas. And he seemed to kind of take Elon’s side on this.

I wasn’t super surprised, because on an episode of the All-In Podcast—which is a sort of who’s who of the tech right; it includes David Sacks—Trump was pressed on the H-1B visa issue, and he did say, Yeah, I support it; I’m down for this. This was in the summer. And so it was consistent for him to come back up with this. And the other thing it’s sort of consistent with, in a sort of more general, patterny kind of way, is that in the past, when there is sort of tension between his sort of more nationalist, nativist base versus the wealthier interests that are in his coalition—not always, but—he often tends to go with the sort of interests of the wealthy, the people who have given him the most amount of money, people who he probably respects because he has a great deal of respect for people who have built wealth.

And so it wasn’t super surprising to see him break that way, especially because it seems like his larger immigration priority is not regarding H-1Bs, and he seems more flexible on that. His larger immigration priority is people who, as he would say, came here illegally and are not quote-unquote “high-skilled workers.”

And so on the sort of issue of mass deportation, this doesn’t signal that he’s, like, going to break from that at all. He’s talked a lot, very aggressively, about conducting mass deportations and quote-unquote “securing the southern border.” And they talk about the southern border, specifically, because they’re talking about a different kind of immigrant, and they have a different set of priorities when it comes to people coming across the southern border.

Rosin: Interesting. So then, maybe, the thing to explore is the nativist right, not just Laura Loomer. Laura Loomer is, you know, a little more on the fringes. But what about someone like Stephen Miller, who will be Trump’s deputy chief of staff for policy and who is credited with shaping a lot of the more draconian immigration policies in the last administration. He has solid power in this administration. Have we heard from him or someone closer to power about what they think about H-1B visas?

Breland: Miller hasn’t weighed in directly on this specific moment and this specific issue. He sort of gave a cryptic tweet that signaled that he is still anti-H-1B.

But he’s been very consistent on this in the past, and there’s no reason to believe that he would change, as someone who is, like, motivated primarily by this sort of nativist perspective that is, again, sort of galvanized by racial animus and, in many cases, just outright racism. I don’t think he’ll change his perspective, and he’s going to fight on this, and so there’s going to be weird tension moving forward.

Elon seemed to—I don’t want to say he walked back from this position, but, like, after a few days of fighting, he did seem to try to want to soften the blows and sort of extend an olive branch. People in sort of fairly influential but niche figures in this sort of nationalist, reactionary wing of the party also tried to sort of smooth over the tension and make it seem like there was common cause being found. And so they have an interest among themselves in trying to come together and paint themselves as a united front and sort of reach a consensus on this.

Rosin: Yeah, I mean, it’s still early. He hasn’t even taken office yet. But could you imagine a universe where, then, it just moves forward, and we quietly make an exception for elite workers and do mass deportations for everyone else? Like, is that where immigration policy could land?

Breland: Yeah, exactly. I mean, I think that—from my perspective and the things I pay attention to—that seems exactly the direction it’s going to go in.

The tech right is aware of the mass deportations [but] has not really talked out against them. Elon Musk has tweeted acknowledging them and sees them as an inevitability that he doesn’t seem to have a clear problem with. That could change when we sort of get, like, harrowing images of ICE conducting raids and things like that, but right now, that’s the track that we’re on.

Rosin: So if what you said is true, and if the past history holds, he is going to make an exception for elite immigrant workers. What does that imply about how he might handle other economic issues?

Breland: Yeah, if we extrapolate this out, which we can—both from this example but then, also, from how 2016 through 2020 went—Trump is probably going to side, I guess, with more of the wealthier faction, which includes the tech right, which includes people in his coalition, who are people like the hedge-fund manager Scott Bessent, who also sort of have this prioritization of more, like, economically laissez-faire issues. They have this sort of more traditional, conservative perspective on economics. And that’s something that’s going to run into tension with what the nationalists want. They want this sort of economic nationalist perspective that is a departure from this hyper-free-market sort of way of viewing the world that’s been the dominant conservative perspective for the past several decades.

Rosin: So essentially, this rift that you pointed out in the MAGA world—between, you know, Is he going to take the side of the elites, or is he going to take the side of all the workers? even if that means the nativist right—that’s a rift you can track kind of up and down various issues for the next many years, just to see, Okay, whose side does he take on a lot of these issues?

Breland: Exactly. Yeah. AI and automation is going to be a really big one in this area, too, because the tech right obviously cares a lot about AI and automation. They’re very pro-AI and automation. They see this as, like, an existential issue in the United States versus China, and that the U.S. must—to continue its being, like, the most important country in the world—that must beat China on this.

But a lot of the sort of more nationalist right doesn’t agree with this. They see this as a different kind of issue. Tucker Carlson, who I think kind of squarely falls in this nativist camp and is one of its most influential members, has outright said that he opposes—not necessarily the development of AI and automation but—its implementation and use.

He’s talked directly about never using AI for, like, things like driverless trucks. But Elon at Tesla is directly making self-driving trucks. And so yeah, there’s a lot of weird places where these sort of fractures are going to play out.

Rosin: And Tucker Carlson takes that issue because it’s a betrayal of the American worker.

Breland: Precisely.

Rosin: Interesting. So this is, actually, the central fissure of the Trump administration, basically?

Breland: Yeah. Yeah, it seems like that. I do want to say that this is kind of a unique issue, in that it draws in race, which is a very big thing, and it draws in immigration. And so it might get a uniquely high amount of attention. But there’s still going to be versions of this fight that might not play out as aggressively that are going to happen over the next four years.

Rosin: Well, Ali, thank you for pointing out this line to us. We’ll be watching it for the next four years, and thank you for joining me.

Breland: Yeah, thank you so much for having me. I appreciate it.

Rosin: After the break, we explore what’s behind the politics. Trump and his allies made the argument often in the campaign that immigrants take away jobs from Americans. It’s an argument that, on the surface, has some intuitive logic. But it actually doesn’t work like that. More soon.

[Break]

Rosin: Joining me is Atlantic staff writer Rogé Karma, who mainly covers economics. Rogé, welcome to the show.

Rogé Karma: It’s great to be here. Thanks for having me.

Rosin: Sure. So an early rift broke out in the Trump administration over H-1B visas, which we’ve been discussing on this show, with the nativist right saying what people say about all kinds of immigration: These immigrants take jobs away from American workers. So what do we know about the relationship between H-1B visa holders and the American worker?

Karma: Well, luckily, the H-1B program allocates workers randomly to companies based on a lottery. And that allows researchers to study what actually happens to the companies that did get workers, as opposed to the companies that didn’t.

And I agree with you. I think there’s a real sort of “man on the street” argument. There’s a sort of view that there’s a fixed pool of jobs, and so any immigrant that we bring in is going to take away a job that would otherwise go to an American. But when researchers have looked at this, the overwhelming majority of the studies have actually found no negative impact on either employment or wages, which I think at first sounds a little bit counterintuitive.

But the reason is a few fold. One: Companies who get H-1B workers actually end up growing and scaling up faster than the companies who don’t. And then because of that, they have to then hire a bunch of more native-born workers around that immigrant. The second reason is innovation.

One of my favorite statistics comes from Jeremy Neufeld, who’s a fellow at the Institute for Progress. And he pointed out that 30 percent of U.S. patents, almost 40 percent of U.S. Nobel Prizes in science, and more than 50 percent of billion-dollar U.S. startups belong to immigrants. Now, not all of those are H-1B holders, but there’s a lot of evidence that the companies who are awarded H-1B visas—they produce more patents, more new products, get more VC funding, and all of that actually creates jobs. So on the whole, I actually don’t think there’s a lot of evidence for this broader nativist claim about this program.

Rosin: Let’s make this a little more concrete. So let’s just play out a theoretical company. Here’s a theoretical company, hires H-1B visa holders. How does it work? Like, innovation is a vague word. How does it actually play out?

Karma: I think what’s important to remember here is that getting one of these H-1B visas is actually pretty difficult. And so the idea that a company is going to be able to systematically bring in foreign workers to replace their native ones using this program—it’s just really hard to do because there’s such a low chance they’re even going to get those workers in the first place. And so a lot of times when companies use this program, what they’re doing is they’re looking for a very important skill set.

So let’s use semiconductors as an example. This is an industry, when it comes to the manufacturing of semiconductors, that U.S. companies haven’t really done for a while. A lot of the most advanced chips are made in places like Taiwan, and so a lot of the best talent is abroad. And so if you’re a U.S. semiconductor manufacturer, the industry in the U.S. estimates that even if we had the best job-training programs possible, that would only fill about 50 percent of the high-skilled demand for the labor force in this field.

And so you need to bring in folks who have this highly specialized knowledge, probably because they’ve worked in other countries. But then, what that allows you to do, once you have a subset of foreign-born workers who can do this sort of specialized manufacturing—what you then have is people to come in and support around them. And then because a company has that need met, they’re able to then hire a bunch of other workers to fill other needs that they have but that don’t require that same kind of specialized knowledge.

And on the other flip side is that we actually have some studies that look at: What happens to the companies that don’t get H-1B visas? What happens to those companies? Do they hire more native workers? Do they invest in more job training? And it turns out that they don’t. In fact, they end up often just either (A) producing less or growing less quickly, or (B)—and this is a finding of a lot of the recent literature—they end up outsourcing the jobs instead. And so instead of bringing in this new worker and then hiring more native workers around them, they just say, Well, look, we have an office in China, or we have an office in Singapore, or we have an office in Hong Kong or India. Let’s just hire more there because we’re not going to be able to get the talent that we need here.

There are a handful of outlier studies, but I think, right now, the broad consensus in the field is that the H-1B program, even for all its flaws, doesn’t seem to have these negative employment or wage effects.

Rosin: So that’s what the research shows. It’s fairly definitive until now, and yet even some Democrats have repeated the line, The H-1B visas take away American jobs—for example, Bernie Sanders. What do you make of that?

Karma: Well, I think where Bernie’s coming from—and I think where a lot of Democrats are coming from and, quite frankly, some Republicans—is that there are two things that are true here at once. The first thing that’s true is that we don’t find these huge negative effects from the H-1B program. And the second thing that’s also true is that, despite that, the H-1B program has a lot of flaws, a lot of loopholes that companies have learned how to game.

So one of these is that a significant portion of H-1B visas are used by so-called outsourcing firms, which are these companies that basically bring in foreign workers. They train them here, and then, when their H-1B visa expires, they employ them in their home countries for a fraction of the cost. And so they’re functionally using the H-1B visa to train workers here and then employ them at lower labor costs elsewhere.

That’s just bad, on the face of it. The fact that we still don’t see negative effects, overall, is really telling, but we should fix that loophole by, among other things, raising the minimum wage for H-1B visa holders, making the program merit-based instead of random—like, you can more closely regulate how companies use those workers.

So I think part of what Bernie Sanders is getting at, part of what some of these critiques are getting at, is that this program does have a lot of flaws that allow corporations to game it. And it’s actually kind of shocking that, despite all these flaws, it still hasn’t produced these horribly negative results.

But imagine how much better it could be if we fix them. So I really think that this might be a place where you see the sort of messy realities of immigration politics running up against what, really, people all across the political spectrum agree is a pretty common-sense set of reforms. But that doesn’t always mean it makes good politics.

Rosin: Right. Right. Okay. So we’ve been talking exclusively about the H-1B visas because they came up in the news, but the whole of Trump’s promise is not specifically about H-1B visas at all; it’s a promise of mass deportation and immigrant labor, in general. I know that you’ve been looking into the research about the relationship between immigrant labor and the American worker. What did you find?

Karma: Well, I went into this because I kept hearing Donald Trump, J. D. Vance, Stephen Miller make these kind of claims that sound kind of intuitive—that when immigrants come in, they take jobs from natives, right? There’s a sort of Econ 101 logic, which says that when the supply of any good goes up, including labor, the price of that good, like wages, goes down.

And so I kept hearing these arguments and thinking, Well, maybe there’s something to this, and so let’s actually look at what is happening. And it turns out that the sort of Trump-Vance view was pretty much the conventional wisdom for most of the 20th century, both among policymakers and economists, until a study came along that sort of shattered the consensus.

And so to tell you about the study, I’m gonna go back a little bit. So in 1980, Fidel Castro, the president of Cuba, opened up emigration from his country. He lifted the ban on emigration. And what that allowed is for 125,000 Cubans to leave from Mariel Harbor to Miami, Florida, an event that ended up becoming known as the Mariel Boatlift. And in just a few short months, Miami’s workforce expands by about 25 times as much as the U.S. workforce expands every year because of immigration. And this created the perfect conditions for what economists call a “natural experiment.” It was like this big, massive shock that only happened to Miami.

And so what the economist David Card later realized is that you could compare what happened to workers in Miami to workers in other cities that had not experienced the boatlift, track how wages did in both, and then see what actually happened. And his view was, Look—if there is a negative effect of immigration on wages, Miami in the 1980s is exactly where it should show up. It’s this big, unprecedented shock. That makes what he ended up finding so shocking, because he ends up finding that this huge influx of immigrants has virtually no effect on both employment or wages of native-born workers in Miami, including those without a college degree.

Rosin: And why? I mean, it seems counterintuitive.

Karma: It seems completely counterintuitive. There are a few reasons, but I think the big one—and the big thing that the common-sense view of immigration misses—is that immigrants aren’t just workers. They’re also consumers. You know, they’re people who buy things, like healthcare and housing and groceries. And so at the same time that they’re, you know, competing with Americans for jobs, they’re also buying lots of things that then increase the need for more jobs.

And I think this sounds counterintuitive, but we think about it in other contexts all the time, right? When’s the last time you heard a Republican politician railing against the upcoming group of high-school graduates because they were about to come in and compete with, you know, people currently in the workforce?

You probably haven’t, because we understand that population growth has these two sides to it: that people are consumers who create demand for jobs and workers who take jobs. And so I think that’s the gist of the problem with the conventional view.

Rosin: So that was a singular study. Has that held up over time?

Karma: It has. And so after that study, it got a lot of researchers interested, and this has now been studied in countries all over the world, from Israel to Denmark to Portugal to France, and almost all of the high-quality studies come back with very similar results.

I think the one complication in all of this—the one challenge—has been, Well, what about the least-skilled workers? What about: Okay, maybe on average, immigrants don’t hurt the employment prospects or the wages of native-born workers, but what about the least-skilled workers? What about high-school dropouts, folks without a high-school diploma? And a lot of the more recent literature has shown that even that group doesn’t suffer when immigrants come in.

And so I think the broad consensus in the literature now is that immigration does have costs. It can exacerbate inequality. Tellingly, the wages of other immigrants often get hurt by new immigration. You could see some negative effects in certain sectors, even if it’s balanced out by other sectors, but on the whole, it appears to be really beneficial for basically all classes of native workers.

Rosin: So at this point, there’s a large body of research saying the arrival of immigrants—even sudden arrival of immigrants—doesn’t have a great effect on the American worker, may even have a positive effect. Now, what about the disappearance of immigrant labor? Because Trump’s promise is mass deportations. I’m not sure if you can just flip, you know, the findings of this research. Like, is there a similar natural experiment or study that shows how that might affect workers or the economy?

Karma: There is, actually. And I think the claim from Trump and his advisers is that the ultimate pro-worker policy is mass deportation, right? Because what happens when you get rid of a bunch of immigrant laborers is now those employers have to hire natives at higher wages, because there’s a sort of artificially created labor shortage.

Rosin: Right.

Karma: And again, very intuitive. But when we actually look at what happens in the real world, we see something very different. So the best study on this, I think—although there’s a few—is from the Secure Communities program, which is a Department of Homeland Security program that between 2008 and 2014 deported about 500,000 immigrants. And because the program was rolled out community by community, it created this really nice natural experiment where you could see what happened to the communities that had experienced it and the ones [that] hadn’t.

You could compare them and see what the overall effect [was]. And what researchers found, actually, shocked me—it shocked many of them—was that for every hundred immigrants that were deported, you actually ended up with nine fewer jobs for natives. That’s not just temporary work. That’s, like, nine jobs permanently gone in this community.

And there are many studies that reinforce this finding from all across history, from the Bracero program, studies on the H-2B program—which is like H-1B, but for lower-skilled immigrants—studies going all the way back to the Great Depression that all find similar things.

And the reason is that immigrants are deeply interwoven into their local economies. And so take the restaurant industry. If you’re a restaurant owner, and suddenly you lose a big chunk of your workforce, to the point where you either have to have higher labor costs and at the same time you have less demand, there’s a good chance you have to go out of business altogether. And when you go out of business, that doesn’t just hurt the immigrants who are working for you. That also hurts the native-born workers.

And so there are all these sort of synchronicities, all of these interconnections, that allow immigration to have this positive sum effect. But then as soon as you—if you rip out the immigrants, then native workers often get caught in the crossfire.

Rosin: Yeah. So if the research is so consistent—so strong—and makes a lot of sense, if you think about it a tiny bit more deeply, why do you think this sentiment persists? Is it just a feeling, you know? Because it persists on both the right and the left. It’s not as if the left is fighting back. They don’t necessarily advocate mass deportations, but they are also not fighting back against this idea that immigrants take away American jobs.

Karma: I think part of the fixation on the economics of immigration is a way for many people like us—elites, people in the media—to try to find a more materialist explanation for a set of instincts that I think many of us are uncomfortable with. And I think that is actually kind of a tragedy.

I think if people oppose immigration or feel strongly about immigration because of certain cultural beliefs or concerns about national identity, it’s important to take those concerns seriously. And I think it’s actually a problem, and even a bit patronizing, that we tend to project these sort of more wonky economic concerns onto that.

Rosin: Yeah. I had a conversation with Representative Ritchie Torres of New York right after the election, who talked about how a lot of the immigrants in his neighborhood had a surprising amount of anti-undocumented immigrant sentiment.

And it made me wonder about—I don’t even know how to define this, but sense of chaos, just a feeling of things not being in control. It’s sort of the way people feel about crime. There just seems to be a sense that things have run away, and you can’t get ahead. It’s a vague thing, but it is related to—There’s just so much out of control, and I need someone to stop it.

Karma: I actually think that’s a really important point. One of the greatest shifts in public opinion on immigration has happened in the last few years, where in 2020, according to Gallup, only 28 percent of Americans said they wanted immigration decreased.

Four years later, that number was 55 percent. So it had almost doubled. And that is much larger and much faster than even the public-opinion shift on something like gay marriage. So this is a huge, almost unprecedented shift. And as I dug into why, what came up over and over again is this feeling of chaos, this feeling that we are not in control of our own border. And when you actually look at questions about how people feel towards immigrants themselves, they hadn’t changed nearly as much.

People weren’t necessarily anti-immigrant, as much as they felt like the immigration process had gotten out of control and the immigration process was no longer serving the country. And so I think it is really important to distinguish [between] those two things. And I think a lot of the public-opinion shift we’ve seen over the last few years—it isn’t about economics. It’s really about this sense of control and chaos.

Rosin: Yeah. So maybe the place to end is this: Have you talked to anyone or done any thinking about how, in a situation like this, you close the gap? Because we, as journalists—it’s frustrating to us to know that there is an answer. You know, there’s an answer that research has provided. There are truths and facts. And separate from that, there is a perception. So have you thought of or seen anybody talk interestingly about how you bridge a gap like that, where people feel one way that is discordant with what the reality is?

Karma: Unfortunately, like any good journalist, I’m not quite as good at the solutions as I am about identifying the problems. But I will say, I think at the root of a lot of this is the fact that there’s an underlying scarcity. Right?

So I think an example of this is housing. Recently—you know, we haven’t talked about this, in particular—but J. D. Vance and Donald Trump made a big deal in their campaign about how immigrants were responsible for driving up housing costs. That argument has never held weight in American politics before, because it is only over the last decade that housing costs and a housing shortage has become a big problem. When there is material scarcity, people look for a villain; people look for someone to blame. And so I think one answer to, for example, the blaming [of] immigrants for housing costs is to say, Well, if we fix the housing shortage such that people don’t feel that scarcity, maybe we can avoid some of that.

I think the other sort of way I’d look at this is: In some senses, one of the most pro-immigrant things you could do is reduce the amount of chaos, right? So I think there’s actually a sort of middle ground here where you could reduce a lot of the chaos at the border while expanding legal immigration in a way that keeps immigrants coming in but creates a more orderly process that people feel comfortable with. And you can actually get more positive sentiment as a result.

I just think what makes it difficult is the politics are almost perfectly aligned to make that difficult from happening. And it’s been, you know—immigration reform is something that politicians have been talking about for more than 20 years now, and it hasn’t happened.

Rosin: Well, that was really helpful. Rogé, thank you so much for joining me today and talking about this.

Karma: Thank you so much for having me. It was a pleasure.

Rosin: This episode was produced by Kevin Townsend and edited by Claudine Ebeid. Rob Smierciak engineered, and Sara Krolewski fact-checked. Claudine Ebeid is the executive producer of Atlantic audio, and Andrea Valdez is our managing editor.

My thanks to Ali Breland and Rogé Karma for joining me. If you’d like to hear Rogé go even deeper on the research into immigration’s economic impact, you can hear him on another Atlantic podcast called Good on Paper. It’s hosted by staff writer Jerusalem Demsas, and that episode is linked in the show notes.

I’m Hanna Rosin. Thank you for listening.