The NCAA needs to start planning for a world where sports betting is widely legal
NOTE: This posting has been modified from a Clips eFlash that was bulk-emailed to all Clips subscribers on 7-1-17.
Today's Clips eFlash—about the potential legalization of sports gambling in New Jersey (aka: PASPA*)—comes from the loquacious and dynamic Andy Staples of Sports Illustrated. Below Andy explores the more pragmatic aspects of the possible legalization.
*PASPA: Professional and Amateur Sports Protection Act
On Thursday we ran two Clips eFlashes about the Supreme Court's agreement to take this case. One eF was from attorney-author (or is it author-attorney?) Mike McCann of Sports Illustrated, in which Mike expertly posited on the "if-then" ramifications of the case. The other eF was from author-attorney (or is it attorney-author?) Clay Travis of Outkick the Coverage, and his comments went from ground level to 30,000-feet, and then back again.
Andy intro's his article by praising NBA Commissioner Adam Silver for having been a prophet (my word) on the legalized sports gambling. Silver has long advocated that sports gambling cannot be controlled, and we're better off having it out in the open instead of letting the bad guys take control.
Here's some of the Staples' pragmatism:
. . . . legalizing sports betting in more states would put more regulatory eyes on games and might reduce incidences of point-shaving. "Any time there’s irregular betting patterns with large amounts of money coming in on second- or third-tier games, it’s immediately going to raise red flags and cause concern,” Fuhrman said. "That’s part of what sportsbooks do to try to protect their balance sheet.”
Have a good 4th weekend.
a world where sports betting is widely legal
By Andy Staples, Sports Illustrated, 6-30-17
So if the Supreme Court ultimately rules the Professional and Amateur Sports Protection Act to be unconstitutional, the NBA would have few problems in a marketplace where every state that currently has a lottery allows some form of sports betting (which is probably what would happen). The NFL and Major League Baseball also could monetize sports betting, either by offering online games—which could be difficult because state laws will differ—or by selling sponsorships to sportsbooks, as English Premier League soccer teams do.
But what about college sports? The NCAA—the other sports organization fighting the New Jersey case that, if successful, would allow individual states to determine whether to allow sports betting—probably wouldn’t monetize legal gambling even though there is a fortune to be made in officially licensed NCAA men’s basketball tournament pools. As the schools and conferences that make up the membership fight in federal court so they can keep colluding to cap athletes’ compensation, the optics of making money from gambling would look terrible. Plus, any such deal would go against the stance the NCAA and schools have taken on betting for decades. That stance is essentially this: Gambling is bad, mmmmmkay?
That position makes sense because the breadth and depth of the NCAA’s sports offerings dwarf what the pro leagues offer. Those leagues can establish tighter controls and keep more eyes on players and officials. Plus, the players make significant salaries in the pro leagues. The value of a scholarship is a big enough incentive to keep most college players from even considering shaving points, but it isn’t the kind of deterrent NBA or MLB salaries are. How many eyes are on a Radford-Campbell basketball game in January? Toledo’s long snapper could alter the final score of a game at Akron considerably if he wanted to sail a few punt or field goal snaps. That is why the NCAA’s knee-jerk response is to fight anything that might help betting proliferate.
Here’s the problem with that attitude. Like any other banned vice, the people who want to partake in said vice are going to seek it out anyway. This creates a thriving black market. The NCAA and schools should know all about enabling black markets, because the aforementioned collusion to cap compensation created an underground economy that has endured for decades in the student-athlete labor market for revenue sports. The American Gaming Association—which, we should note, has a reason to want sports gambling legalized everywhere—estimates that at least $150 billion a year is bet illegally on sports in the United States. It’s quite possible legalizing sports gambling might not increase sports gambling by any appreciable measure. It might only increase the percentage of sports bets that get taxed at the state or federal level.
If that were the case, the concern that legalized sports betting could lead to more fixed games might be overblown or just plain wrong. Todd Fuhrman, who once helped set the lines at Caesar’s Palace and now discusses the gambling business for CBS and on his Bet The Board podcast, believes that while nothing can stop the occasional fixing of a high point-spread game deep in a mid-major league—the recent scandal at the University of San Diego is an example—legalizing sports betting in more states would put more regulatory eyes on games and might reduce incidences of point-shaving. "Any time there’s irregular betting patterns with large amounts of money coming in on second- or third-tier games, it’s immediately going to raise red flags and cause concern,” Fuhrman said. "That’s part of what sportsbooks do to try to protect their balance sheet.”
Fuhrman explained that a casino would happily take a large bet on Alabama against LSU in football, but a bettor trying to wager five figures on North Texas against Louisiana-Monroe might have his bet refused or limited to a few hundred dollars. This isn’t only because sportsbook staffs worry about game-fixing. They also may not have enough information about the Sun Belt game to properly assess the risk of taking that large a bet.
Scott Spreitzer, a professional gambler who runs WagerTalk.com, said games played closer to legal sportsbooks are less at risk. "It’s more likely to have a fixed game now outside the state of Nevada,” Spreitzer said. Logic dictates that if New Jersey and Florida and Arizona and others legalized sports betting, it would become even tougher to fix a game because the size of the network of legal sportsbooks would increase. Even if someone fixed a game, it could get around the sportsbooks that a person or group is seeking big action on a game that wouldn’t normally get big action. The sportsbooks likely would turn over that information to their regulatory bodies to investigate. These state regulators would have heavy incentive to catch anyone trying to game the system. After all, it would be a revenue stream worth protecting.
Some new businesses could pop up should the Supreme Court strike down PASPA. Spreitzer said that just like anything else, the buyer should beware. "You’re probably going to see a lot of sites pop up claiming to have great information,” he said. "You’d see someone claiming to be a Big 12 specialist.”
The biggest question is how the schools and the NCAA would handle gambling if this came to pass. They likely wouldn’t change any of their rules against athletes, coaches and officials gambling on sports even though such activity would be legal for people 21 and older in certain states. This makes sense. It’s vital to the enterprise that the games be straight up, and having coaches, players or officials gambling on sports could cast doubt on the integrity of the games. That’s bad for business. What could be good for business are the same kind of sponsorships that the pro leagues would inevitably seek from gambling entities. But the schools and NCAA would be unwise to keep that money. Fuhrman proposed a potentially workable solution for this sticky issue. "If the NCAA is anti-gambling,” he said, "what better way is there than to work with states and put together a players pension where you’re giving back to the athletes?”
The schools and NCAA might need a lot of convincing before they take that step, but athletic directors and NCAA officials need to begin talking about how they might handle legalized sports betting. Because it could be coming, and there may be nothing they can do to stop it.
This article has been reprinted on Clips with the author's permission.
AMERICAN GAMING ASSOCIATION'S STATEMENT ON SUPREME COURT'S DECISION TO HEAR NEW JERSEY'S CHALLENGE TO THE FEDERAL SPORTS BETTING BAN
PRESS RELEASE | 06.27.2017
Washington, D.C. – American Gaming Association (AGA) President and CEO Geoff Freeman released the following statement today following the Supreme Court's decision to hear New Jersey's challenge to the Professional and Amateur Sports Protection Act (PASPA), which bans sports betting outside Nevada:
"The Professional and Amateur Sports Protection Act (PASPA) of 1992 has failed to protect sports and fans. PASPA, which is approaching its 25th anniversary, is fueling an unregulated $150 billion illegal gambling market that continues to deprive states of vital public funding for services such as law enforcement and infrastructure.
We are pleased the Supreme Court appears to have responded favorably to our arguments as to why they should hear this important case. And we are hopeful their engagement will provide further encouragement for Congress to take the steps necessary to create a regulated sports betting marketplace in the United States.
The gaming industry, and the American Sports Betting Coalition, is committed to working with all relevant stakeholders to build a system that protects states' rights, fans and the integrity of sports."
In 2016, the AGA sent an Amicus Brief to the Supreme Court in support of New Jersey's efforts to repeal PASPA.
Earlier in June, AGA launched the American Sports Betting Coalition (ASBC), a collection of a diverse group of stakeholders dedicated to ending the 25-year-old failing federal sports betting ban. The ASBC unites law enforcement, states rights' advocates, state and local policymakers and gaming industry leaders.
In April, the AGA outlined policy principles outlining the industry's approach to legalized sports betting. The principles are intended to create clear guideposts as discussions with key policymakers, allies and interested parties become more granular.