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USSPORTSleaguesBETTING.pdf
U.S. Sports Leagues, Fretting Over
Revenue, Warm Up to Legalized
Betting Many top professional sports are softening their stance on gambling,
which could help them boost fan interest and forge
future licensing and sponsorship deals; all eyes on the NFL
By BRAD REAGAN and CHRIS KIRKHAM
The Final Four will determine the outcome of billions of dollars in bracket pools
and other wagers related to college basketball’s marquee event. The vast majority
of those bets, as they have been for decades, are illegal.
That could change soon. In recent months, the prospect of legalizing sports betting
has picked up momentum. The most notable shift has come from some of the
sports commissioners who once staunchly opposed gambling in all forms but now
covet new revenue streams in the face of dwindling television ratings. That desire
is overriding the sports industry’s gambling taboo stemming from several
damaging game-fixing scandals.
“There is definitely forward motion,” said Dan Spillane, a National Basketball
Association senior vice president who has led the league’s efforts to study the
issue. “Five years ago, no one saw this as something that could realistically
happen.”
The matter could come before the U.S. Supreme Court this year, after it asked in
January for a written argument by the U.S. solicitor general in a case involving
New Jersey’s attempts to legalize sports betting. President Donald Trump has
previously expressed support for legalized sports betting.
“I’m OK with it because it’s happening anyway,” Mr. Trump said in a 2015
interview with Fox Sports radio-and-television host Colin Cowherd after being
asked about daily fantasy sports and sports gambling. “It’s all over the place.” In a
separate radio interview after his election, Mr. Trump said he would talk to the
sports commissioners to “see how they feel about it.”
The commissioners’ opinions are increasingly favorable. Major League Soccer’s
Don Garber said in March he was adding his voice to “the chorus” of those in
sports who are open to legalization, joining Major League Baseball’s Rob
Manfred, the NBA’s Adam Silver and the PGA Tour’s Jay Monahan.
U.S. professional sports have long considered gambling verboten because of
incidents that threatened the integrity of competition, including the “Black Sox”
scandal involving a fix of the 1919 baseball World Series, the 2007 revelation that
NBA referee Tim Donaghy bet on games he officiated, and several point-shaving
scandals involving college players.
The lifeblood of the sports industry is the billions of dollars leagues collect from
broadcast networks. With ratings softening in the era of cord-cutting and
streaming, the changing views of commissioners reflect an increased appreciation
for new technologies that could heighten engagement with fans—and possibly
generate new revenue streams as well.
Many sports executives are especially intrigued by the potential of expanded in-
game betting, a mobile-friendly type of wagering that accounts for the majority of
sports gambling in Europe, according to gambling-industry executives. That type
of wagering represents a fraction of U.S. betting, in large part because the legal
sports-betting markets are so small that they don’t justify the required investments,
these executives said.
The leagues “are reversing themselves, but in a very shrewd and strategic way,”
said one lawyer who has been involved in the issue for many years. “They are
trying to find ways to make money.”
The American Gaming Association, a trade group for the casino industry, shifted its
stance in late 2015, supporting efforts for a wider legalization of sports betting in
hopes of taking business away from big offshore operators that field tens of billions
of dollars in bets from U.S. future licensing and sponsorship deals; all eyes on
the NFL
This weekend’s Final Four will determine the outcome of billions of dollars in
bracket pools and other wagers related to college basketball’s marquee event. The
vast majority of those bets, as they have been for decades, are illegal.
That could change soon. In recent months, the prospect of legalizing sports betting
has picked up momentum. The most notable shift has come from some of the
sports commissioners who once staunchly opposed gambling in all forms but now
covet new revenue streams in the face of dwindling television ratings. That desire
is overriding the sports industry’s gambling taboo stemming from several
damaging game-fixing scandals.
“There is definitely forward motion,” said Dan Spillane, a National Basketball
Association senior vice president who has led the league’s efforts to study the
issue. “Five years ago, no one saw this as something that could realistically
happen.”
The matter could come before the U.S. Supreme Court this year, after it asked in
January for a written argument by the U.S. solicitor general in a case involving
New Jersey’s attempts to legalize sports betting. President Donald Trump has
previously expressed support for legalized sports betting.
“I’m OK with it because it’s happening anyway,” Mr. Trump said in a 2015
interview with Fox Sports radio-and-television host Colin Cowherd after being
asked about daily fantasy sports and sports gambling. “It’s all over the place.” In a
separate radio interview after his election, Mr. Trump said he would talk to the
sports commissioners to “see how they feel about it.”
The commissioners’ opinions are increasingly favorable. Major League Soccer’s
Don Garber said in March he was adding his voice to “the chorus” of those in
sports who are open to legalization, joining Major League Baseball’s Rob
Manfred, the NBA’s Adam Silver and the PGA Tour’s Jay Monahan.
U.S. professional sports have long considered gambling verboten because of
incidents that threatened the integrity of competition, including the “Black Sox”
scandal involving a fix of the 1919 baseball World Series, the 2007 revelation that
NBA referee Tim Donaghy bet on games he officiated, and several point-shaving
scandals involving college players.
The lifeblood of the sports industry is the billions of dollars leagues collect from
broadcast networks. With ratings softening in the era of cord-cutting and
streaming, the changing views of commissioners reflect an increased appreciation
for new technologies that could heighten engagement with fans—and possibly
generate new revenue streams as well.
Many sports executives are especially intrigued by the potential of expanded in-
game betting, a mobile-friendly type of wagering that accounts for the majority of
sports gambling in Europe, according to gambling-industry executives. That type
of wagering represents a fraction of U.S. betting, in large part because the legal
sports-betting markets are so small that they don’t justify the required investments,
these executives said.
The leagues “are reversing themselves, but in a very shrewd and strategic way,”
said one lawyer who has been involved in the issue for many years. “They are
trying to find ways to make money.”
The American Gaming Association, a trade group for the casino industry, shifted
its stance in late 2015, supporting efforts for a wider legalization of sports betting
in hopes of taking business away from big offshore operators that field tens of
billions of dollars in bets from U.S. customers.
NBA Commissioner Adam Silver, , is one of the professional-sports commissioners who have said they are open to legalization of sports gambling.
A major holdout is the National Football League, by far the most powerful pro
sports league. “They are the big gorilla, and until they go along with it, it is not
going to happen,” said Keith Miller, a professor of gambling law at Drake
University in Des Moines, Iowa.
Although NFL Commissioner Roger Goodell has continued to publicly oppose
legalized sports gambling, the league approved the Oakland Raiders’ move to Las
Vegas, a cultural shift that places one of its 32 teams in the nation’s gambling
capital. In announcing the move, Mr. Goodell said the league hasn’t changed its
position on sports betting, but noted that “society in general has had a little bit of a
change with respect to gambling in general. We’ve seen that.”
In a 2012 deposition for a second New Jersey sports-betting case, the NFL’s senior
labor litigation counsel, Larry Ferazani, said the league would support legalized
betting if it made economic sense. “The NFL is a revenue-generating business,” he
said. “If the NFL thought sports gambling allowed it to increase its revenue, it
would engage in that activity.” However, he said the league’s studies at that time
indicated legalized sports betting would “negatively impact our long-term
relationship with our fans.”
The NCAA, which oversees collegiate athletics including the Final Four, remains
firmly opposed to legalization.
Gamblers are more engaged with sports than casual fans. A September Nielsen
study conducted for the American Gaming Association found that bettors watch
NFL games on average for 91 minutes, versus 79 minutes for nongamblers, and
they watch about 35 games per season, compared with 16 for nonbettors.
Many argue that the skyrocketing salaries paid to professional athletes make them
less susceptible to ill-intentioned gamblers.
“Who the hell is going to corrupt an NFL quarterback when they make $25 million
a year?” said Steve Wynn, chairman and chief executive of casino operator Wynn
Resorts Ltd. “What are you going to offer them? A new car?”
League officials and industry experts say there is persuasive evidence that
legalized gambling, as practiced in most of Europe, makes it easier to track the
flow of money and spotlight potential corruption.
A 1992 federal law supported in part by professional leagues restricts sports
betting to Nevada, Montana, Oregon and Delaware. Nevada is the only state to
allow betting on individual games.
The New Jersey case that could go to the Supreme Court began after Gov. Chris
Christie in 2014 signed a law rolling back prohibitions on sports betting at casinos
and racetracks in the state. Professional sports leagues and the NCAA filed suit to
block the law and won in federal district and appellate levels. The Supreme Court
has asked for the federal government’s written opinion on the issue but hasn’t
decided whether to hear the case.
Legalization could boost revenue potential for leagues through licensing deals and
contracts for real-time sports data, which the leagues could sell to sports-book
operators and other gambling sites.
In December, the NBA dipped a toe into the area with the launch of a mobile app
called NBA InPlay, which allows fantasy-sports players to choose stars in real time
during national broadcasts of league games. Users can even activate 48-second
“turbo boosts” for a player expected to score imminently. While technically a
fantasy-sports contest rather than pure wagering, it requires real-time decisions as
users watch a live game—similar to how in-game betting works. The league has
found that it almost doubles the amount of time users spend watching games.
“We are just scratching the surface” on how to use player-performance data in real-
time, said the NBA’s Mr. Spillane.
In your discussion, you answer at least 2 of the below questions for 5
points you may answer all 4 questions for 10 points
1. Why are some professional sports leagues warming up to legalized
betting while the NCAA stands firmly against it?
2. How would a professional sports league benefit from legalized gambling
on its games?
3. Why would in-game betting financially benefit team owners?
4. Why are professional athletes today less susceptible to ill-intentioned
gamblers?
