Experts Chime In as Leagues Seek Cut in New Era of Sports Betting

ATLANTIC CITY, N.J. (CN) – The Supreme Court decision legalizing sports betting is barely two weeks old, but leagues that once opposed the paradigm shift have spent months now clamoring for their cut. As states cry extortion, Courthouse News spoke to economists and experts in sports law for their take.

A Libertarian think tank, the Competitive Enterprise Institute noted back in March that the rise of daily fantasy sites gave the leagues an indication years earlier of the profits to be made with legalized sports betting.

The relationship is a straightforward one, according to the article: Fans who bet are more engaged, and more fan engagement in turn leads to bigger television audiences, increased advertising revenue and more lucrative deals for broadcast rights.

Even as the NFL, NHL, NBA and MLB opposed New Jersey’s efforts to decriminalize sports gambling, the institute noted that each of those leagues had formed lucrative sponsorship and advertising agreements going back five years with daily fantasy sports companies.

This past January — shortly after Supreme Court oral arguments boded well for New Jersey’s challenge — an NBA official told the New York Senate Standing Committee on Racing, Gaming, and Wagering that the league would expect compensation from any government that took steps to legalize.

“Sports leagues provide the foundation for sports betting while bearing the risks that sports betting imposes, even when regulated,” NBA senior vice president and assistant general counsel Dan Spillane said in the statement. “Without our games and fans, there could be no sports betting. And if sports betting becomes legal in New York and other states, sports leagues will need to invest more in compliance and enforcement, including bet monitoring, investigations, and education.”

Since then, Forbes reported, lobbyists for all of the leagues have begun pressuring states to impose what they call an “integrity fee” of 1 percent on sports-gambling revenue.

John Wolohan, a professor of sports law at Syracuse University, said to look no further than Nevada, where sports betting has been legal since 1931, for evidence that legalization could lead to better monitoring.

“In Nevada, both the leagues and the state sports books have an interest in keeping the games clean, and work together to monitor and guard against match fixing,” Wolohan said in an email.

“The efforts to weed out match fixing are only going to get better as more states legalize sports betting. For example, as more money is bet through the legal sports books and less with illegal bookies, the state and leagues should be better able to monitor teams and games for problems.”

The Competitive Enterprise Institute made a similar point in its March article, citing evidence that match-fixing “is far more prevalent in illicit betting markets.”

Though some of the world’s largest sports governing bodies rely on official partnerships with gambling associations to spot corruption, the institute says such cooperation is impossible in countries like the U.S. where sports betting is criminalized.

“While some U.S. sports leagues, like the NFL, NBA, and NHL, have utilized the gambling industry for integrity monitoring, the only data available to them comes from licensed bookies in Nevada and those overseas,” the institute reported. “For illegal bookies in the multibillion-dollar illegal betting market in the rest of the U.S., even if they wanted to alert the authorities about potential instances of match-fixing, they could not do so for fear of prosecution.”

New Jersey Senate President Steve Sweeney also cited Nevada in a letter he fired off Wednesday to governors and legislative leaders in all 50 states.

Labeling the leagues’ demand for integrity fees as a “hypocritical attempt to extort” money, Sweeney emphasized that the Silver State has never paid such a fee.

“Essentially, the leagues are asking to be paid to allow games to be played fairly,” Sweeney wrote. “And their demand begs the question of what they would now start doing to preserve the integrity of their games that they have not been doing for years.”

Sweeney also said that viewers would become more skeptical of game integrity if gambling fees were being taken into consideration.

“Taking the leagues at their word,” he wrote, “giving them a ‘piece of the action,’ would make suspicions grow whenever turning-point calls in close games go in favor of the more popular team — whose presence in the ‘big game’ would drive ratings and betting.”

For professor Wolohan, the argument comes down to whether states should send leagues a portion of tax money that they might otherwise put toward police and social services, such as gambling-addition programs.

“If the leagues really want a piece of the action,” Wolohan said, “there is nothing to stop the NBA or other leagues from taking bets themselves.  They would just have to follow all the state laws.”

NFL Commissioner Roger Goodell said Monday that the league is pushing lawmakers to pass “legislation that protects our players, coaches and fans and and maintains public confidence in our games.”

At a minimum, he said, states that choose to legalize sports betting should be made to offer consumer protections, reliable league data for fans, strict monitoring by law enforcement and a way for sports leagues to protect their intellectual property.

Professor Wolohan noted that how legalization will affect players remains to be seen.

“The athletes will benefit only if the leagues do,” he said in an email. “If the leagues can get an integrity fee, it could generate hundreds of millions of dollars. The players would certainly argue in the next [collective bargaining agreement] that they should receive a cut of that. … Think of a professional fight and how much money is bet on those. The fighters do not get a cut of all that money, so why should a basketball player?”

For college athletes, Wolohan noted that gambling on NCAA games would “add more fuel” to debates about amateurism and paying athletes, and “blur the line between college and professional sports.”

In advance of the Supreme Court’s ruling, the boutique research firm Eilers & Krejcik Gaming predicted that a decision in favor of New Jersey would lead 32 states to offer regulated sports betting by 2023.

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