Sports. Honestly. Since 2011

Legal Sports Gambling is Another NFL Loss

Late last month a federal appeals court denied New Jersey’s bid to legalize sports gambling at racetracks and casinos.  It was the latest setback in a growing movement that, for now, seems like a finger in the crack of an exploding dam. Legalized sports gambling is gaining momentum, and it’s difficult to see how anything can stop it. One thing is sure. The fight is on, and it’s an epic confrontation between cash-poor state governments and cash-rich sports leagues.

The four major sports leagues have argued against legalization for decades. In 1992, the Professional and Amateur Sports Protection Act (PASPA) banned betting on sporting events except in those states where such betting was legal at the time the law was approved, or in any state that legalized sports betting within a year of that date. Four states – Nevada, Oregon, Delaware and Montana – qualified for this exemption.

The plaintiffs in the lawsuit against New Jersey were the four major professional sports leagues – the NFL, NBA, MLB, and NHL, along with the NCAA and the U.S. Department of Justice.

The leagues, along with the Justice Department, stated in their lawsuit:

“Amateur and professional sports are an integral part of American culture, particularly among the country’s youth who often look up to athletes as role models,” the leagues said in their complaint.

They asserted that allowing and promoting sports gambling “would irreparably harm amateur and professional sports by fostering suspicion that individual plays and final scores of games may have been influenced by factors other than honest athletic competition.”

The argument that sports gambling would “irreparably harm amateur and professional sports” is patently ridiculous. According to The Washington Post nearly $4 billion is bet on sports legally in Las Vegas yearly, and an estimated $80 billion to $380 billion is wagered illegally through a shadow industry of offshore online betting houses, office pools and neighborhood bookmakers. That water is under the bridge and on its way to the creaky dam.

There are several developments that completely contradict the leagues’ arguments. Sports fans are going to gamble. The internet already provides the infrastructure for a massive transition to legal sports gambling.

“Technology is a factor,” says Joe Asher, CEO of William Hill US, the American affiliate of the United Kingdom’s largest bookmaker. “You have this massive illegal market that exists. Type in ‘sports betting’ on Google, and you can find a way pretty quickly to make a bet illegally.”

Three of the four major sports leagues and the NCAA have voiced more progressive views on sports gambling. In November NBA Commissioner Adam Silver wrote an op-ed in The New York Times arguing for the legalization and regulation of sports gambling. He wrote:

In light of…domestic and global trends, the laws on sports betting should be changed. Congress should adopt a federal framework that allows states to authorize betting on professional sports, subject to strict regulatory requirements and technological safeguards.

In February, MLB commissioner Rob Manfred created room for discussion, saying:

“Gambling in terms of our society has changed its presence on legalization, and I think it’s important for there to be a conversation between me and the owners about what our institutional position will be.”

Gary Bettman flat-out dismissed the “integrity of the game” argument:

“I don’t worry about the integrity of the game,” Bettman said. “Our players are professionals. Their integrity, their values are right on, so that’s not the issue from our standpoint…I’m not a prude on the subject, but if people are running off thinking that they’re going to make lots and lots of money off of this then that may be another sports’ agenda but it’s not ours.”

Last week the Mountain West Conference sponsored a proposal to have NCAA basketball championships in states with sports wagering. This measure would specifically look to get Nevada involved in hosting.

“The Mountain West proposal is about the opportunity to host NCAA championships events.  It would provide additional western locations as potential NCAA championships sites, which would decrease travel costs and missed class time,” the conference office said in the NCAA’s release. “Furthermore, Nevada is home to the nation’s most elite gaming enforcement agency (Nevada Gaming Control Board) which governs Nevada’s gaming industry through strict regulation of all persons, locations, practices, associations and related activities.  This type of regulation decreases significantly the likelihood of any elicit gaming behavior related to the conduct of NCAA championships events in the state.”

The explosion of fantasy sports has considerably muddied the waters of the sports gambling debate. According to the Fantasy Sports Trade Association, Americans spend about $15 billion annually on fantasy sports. Most of that — $11 billion — is spent on the NFL. The industry has drawn 57 million players in North America. Rep. Frank Pallone on Monday called for a congressional hearing to explore the legal status of fantasy sports which are promoted and advertised by the same professional sports leagues that are fighting legalization.

“Fans are currently allowed to risk money on the performance of an individual player,” Pallone said. “How is that different than wagering money on the outcome of a game?”

The website Awful Announcing noted that ESPN is now airing “cover alerts” to notify gamblers about the latest scores that threaten a betting line. ESPN is the single most powerful entity promoting NFL and college football, the NBA, and Major League Baseball.

We also now live in a time when ESPN is doing live updates to not just show highlights and the latest scores, but to do so in the context of the spread.  A little history was made on the mothership last night as Adnan Virk gave us an ESPN “COVER ALERT” from the Michigan State-Western Michigan game.

So, who has their finger in the cracked dam? As usual, it’s the legal prowess of the NFL that is holding back the flood – the flood of money that would pour into states’ coffers and sports gambling websites and out of the NFL’s control. That’s the plug. Ryan M. Rodenberg, writing for Vice Sports, summarizes the simple math that keeps the NFL heels dug in against legalized gambling.

Why is the league digging in? Simple. The status quo is incredibly lucrative for the NFL and its team owners. The league is first among non-equals. First in revenues. First in television ratings. First in team valuations. First in the underlying value of its broadcast agreements. The NFL’s incentive to deviate from a long-held policy position developed over the course of decades is relatively slight. By continuing to publicly decry sports gambling, all while privately reaping its consumption benefits, the league can have it both ways and steer clear from doing anything potentially risky. All the better to let another sports league stumble along the learning curve—and then avoid their missteps years later, when there is greater certainty on how to directly monetize sports betting.

Judging from its latest forays into the federal courts it’s a good bet that the NFL will lose this battle. There is too much momentum behind the legalization of sports gambling. The guiding principle in these affairs is best summed up by the line from All the Presidents Men. “Follow the money.” In the case of legal sports gambling the NFL’s big middle finger is no match for the impending gush of online cash.
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