Collegiate Sports Betting
Brief History and Current State of Collegiate Sports Betting
In 1992, the U.S. Congress enacted the Professional and Amateur Sports Protection Act (“PASPA”), which outlawed sports betting in most U.S. states.[1] Sports leagues supported the bill and stated that it was necessary to protect the integrity of sports.[2]
While New Jersey was one of the states that should have been exempt from PASPA, the state failed to apply for the exemption within the designated time frame.[3] A few companies and two state senators then sought to challenge PASPA by bringing a lawsuit.[4] However, the U.S. District Court for the District of New Jersey rejected the lawsuit and stated that only Governor Chris Christie (via his attorney general’s office) could bring such a suit.[5] Then, the New Jersey legislature enacted the Sports Wagering Act in 2012, which allowed sports wagering in New Jersey casinos and racetracks.[6] The leagues challenged this law by suing under PASPA.[7] The U.S. District Court for the District of New Jersey held that PASPA was constitutional.[8] The Third Circuit Court of Appeals upheld this holding, and the U.S. Supreme Court declined to hear the case.[9] The legislature amended the bill, which the leagues again challenged.[10] Both the District Court and the Court of Appeals found for the leagues a second time.[11] However, this time, the U.S. Supreme Court granted certiorari.[12]
In 2018, the U.S. Supreme Court ruled that PASPA violated the Tenth Amendment and held that individual states had the freedom to create their own laws regarding sports betting.[13] Since that holding, twenty states have legalized sports betting.[14] While some states, such as New Jersey, allow gambling both in-person and online, other states, such as New York, limit gambling to in-person.[15] Many of these states exempt college sports from their legalized gambling laws.[16]
Potential Benefit to Student-Athletes
Though collegiate sports gambling is not yet legal in most states, there is little doubt that a large illegal market already exists.[17] Those involved in the illegal market may be benefiting. However, there are fewer opportunities for states, colleges, the National Collegiate Athletics Association (“NCAA”), and student-athletes to benefit from illegal markets. Legalizing collegiate sports gambling could benefit all of these parties.[18]
A first benefit of legalizing collegiate sports gambling is the ability to enact regulation.[19] Regulating these markets increases the integrity of betting.[20] For example, if a person places a large or otherwise suspicious bet, the sportsbooks will track who that person is and be able to monitor the gambling activity.[21]
Further, legalization can draw an entirely new crowd—those who were interested in betting, but who did not want to participate in illegal practices.[22] Among these new gamblers could be a new crowd for college sports. This can be advantageous to the NCAA, the schools, and athletes. Increased spectators increase profits for the school.[23] An influx of spectators also increases recognition of the players, which could benefit them, for example, should they pursue a career in professional sports.[24] Similarly, it could increase the value of their name, image, and likeness (“NIL”). Ultimately, it seems as though legalizing collegiate sports gambling will monetarily benefit the NCAA, its member schools and the states they are located in but also, importantly, the student-athletes.
Two common criticisms of legalizing collegiate sports gambling are related to the core belief that the NCAA protects the coveted “amateurism” of student-athletes. However, neither of these criticisms seems to carry much weight.
One criticism is that allowing sports betting will encourage college athletes to break the NCAA rule against betting.[25] This rule prohibits student-athletes from wagering on any sports, whether intercollegiate, otherwise amateur, or professional.[26] First, this rule is already broken in the illegal market. A 2016 NCAA study of almost twenty-three thousand student-athletes found fifty-five percent of men reported they gamble for money, and twenty-four percent reported they violated NCAA bylaws.[27] Second, the NCAA regulation and permitting spectators to wager on intercollegiate competitions are not mutually exclusive. Student-athletes can be prohibited from gambling themselves and still derive benefits from legalizing collegiate sports wagering.
A second criticism is that student-athletes will be enticed to rig games for compensation.[28] First, even without legal gambling, this is a risk. As mentioned above, just because sports gambling is not legal in certain states does not mean there is no illegal gambling market. With no alternative means to obtain compensation in connection with their positions as athletes, it is not surprising that some students resort to accepting these deals. Second, increased gambling regulations can make it easier to track down participants in these manipulated bets.[29] Further, if student-athletes can derive a benefit through other means, such as monetizing their NIL, obtaining compensation through an illegal means that harm the integrity of their sport will likely be less attractive.
[1] 28 U.S. Code § 3702. A few states’ gambling practices were exempt from this Act, such as Nevada. See 28 U.S. Code § 3704.
[2] See Jill R. Dorson, What Is PASPA, The Federal Ban on Sports Betting?,SportsHandle (July 1, 2020), https://sportshandle.com/what-is-paspa-sports-betting-ban-professional-amateur-sports/. However, leagues have grown skeptical of the act’s success in accomplishing this goal. See Adam Silver, N.Y. Times (Nov. 13, 2014), https://www.nytimes.com/2014/11/14/opinion/nba-commissioner-adam-silver-legalize-sports-betting.html. For example, in 2014, Adam Silver wrote an op-ed in the New York Times where he noted that despite PASPA, the illegal sports betting market was thriving. See id. He opined that sports betting should be legalized so that it can be regulated. See id.
[3] See Nat’l Collegiate Athletic Ass’n v. Christie, 926 F. Supp. 2d 551, 556 (D.N.J. 2013) [hereinafter Christie I].
[4] See Interactive Media Entm’t & Gaming Ass’n, Inc. v. Holder, No. CIV.A. 09-1301 GEB, 2011 WL 802106, at *1 (D.N.J. Mar. 7, 2011).
[5] See id. at *10.
[6] S.B. 3113, 216th Leg. (N.J. 2011).
[7] See generally Christie I.
[8] See id. at 579.
[9] See Nat’l Collegiate Athletic Ass’n v. Governor of New Jersey, 730 F.3d 208, 241 (3d Cir. 2013).
[10] S.B. 2460, 216th Leg. (N.J. 2014).
[11] See Nat’l Collegiate Athletic Ass’n v. Christie, 61 F. Supp. 3d 488, 508 (D.N.J. 2014), aff’d sub nom. Nat’l Collegiate Athletic Ass’n v. Governor of New Jersey, 799 F.3d 259 (3d Cir. 2015), reh’g en banc granted, opinion vacated (Oct. 14, 2015), on reh’g en banc, 832 F.3d 389 (3d Cir. 2016) (known as “Christie II”).
[12] See Murphy v. Nat’l College Athletic Ass’n, 138 S. Ct. 1461 (2018).
[13] See id.
[14] See Ryan Rodenberg, United States of Sports Betting: An Updated Map of Where Every State Stands,ESPN (last updated Nov. 3, 2020), https://www.espn.com/chalk/story/_/id/19740480/the-united-states-sports-betting-where-all-50-states-stand-legalization. Note that this statistic is as of November 3, 2020.
[15] See id.
[16] See id.
[17] See John Brennan, NCAA Makes Case To Senators To Ban Betting on College Sports, SportsHandle (July 22, 2020),https://sportshandle.com/ncaa-makes-case-to-senators-to-ban-betting-on-college-sports/.
[18] While the illegal market will not be eradicated if sports gambling is legalized, it will likely be diminished, especially with strategic structuring of the legal market. See Andrew J. Silver, Legal Sports Betting Still Faces Competition From Illegal Market; Low State Taxes Could Turn the Tide, Forbes (Apr. 7, 2020, 9:22 AM), https://www.forbes.com/sites/andrewjsilver/2020/04/07/legal-sports-betting-still-faces-competition-from-illegal-market-low-state-taxes-could-turn-the-tide/#38cacadf23e3. At a minimum, those who gamble illegally are expected to gamble more, legally. See id.
[19] Taxation also piggybacks on legalization of illegal practices. While this post will not address taxation, this is another benefit that the state can enjoy.
[20] For example, the Premier Lacrosse League recently announced that Genius Sports will be its Official Data and Integrity Partner for sports betting (emphasis added). Premier Lacrosse League Partners with Genius Sports Group for Launch of Sports Betting, Premier Lacrosse League (May 12, 2020), https://premierlacrosseleague.com/articles/premier-lacrosse-league-partners-with-genius-sports-group-for-launch-of-sports-betting/.
[21] See Dustin Gouker, NCAA Head: Sports Betting is ‘Going to Threaten the Integrity of College Sports in Many Ways,’ Legal Sports Rep. (Jan. 25, 2019), https://www.legalsportsreport.com/28038/ncaa-says-sports-betting-will-threaten-integrity/; David Forrest & Rick Parry, The Key to Sports Integrity in the U.S.: Legalized, regulated Sports Betting 3 (2016), available at https://www.americangaming.org/sites/default/files/FINAL%20SPORTS%20INTEGRITY%20REPORT.pdf.
[22] See Silver, supra note 18.
[23] Legal gambling monetarily benefitted the NFL. See Matthew Kredell, NFL Pushes the Envelope on Official Data as it Benefits from Sports Betting Expansion, Legal Sports Rep. (Sept. 10, 2019), https://www.legalsportsreport.com/35347/aga-nfl-official-data-sports-betting/.
[24] Legal gambling increased fan engagement for the NFL. See id. For example, an August 2019 Morning Consult survey of eleven thousand American adults found that sixty-three percent were more likely to watch a game with family and friends. See id.
[25] See Sean Isabella, Sports betting: Gambling could put athletes at risk, Trib.-Star (July 5, 2018), https://www.tribstar.com/news/local_news/sports-betting-gambling-could-put-athletes-at-risk/article_4a4f1a0b-c3a5-581c-a196-eba84945bc59.html.
[26] NCAA Const. art. 10.3.
[27] See Trends in NCAA Student-Athlete Gambling Behaviors andAttitudes, Nat’l Collegiate Athletic Ass’n (Nov. 17), http://www.ncaa.org/about/resources/research/trends-ncaa-student-athlete-gambling-behaviors-and-attitudes.
[28] See Isabella, supra note 25.
[29] In fact, the United Nations Office on Drug and Crime stated in its August 2016 manual “it is more difficult to investigate allegations of match fixing where betting is illegal.” United Nations Office on Drugs and Crime, Resource Guide on Good Practices in the Investigation of Match-Fixing (2016) 3, available at https://www.unodc.org/documents/corruption/Publications/2016/V1602591-RESOURCE_GUIDE_ON_GOOD_PRACTICES_IN_THE_INVESTIGATION_OF_MATCH-FIXING.pdf.