Archive | December, 2014

Battle of the Commissioners: Legalization and Regulation of Sports Betting

December 19, 2014

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By Sangin Safi – Thompson Rivers University 3L JD Student

In an op-ed published in the New York Times on November 13, 2014, NBA Commissioner, Adam Silver, argues for the legalization and regulation of sports betting. According to him, “despite legal restrictions, sports betting is widespread.” He points out that since there are only a few legal options available, those who wish to bet resort to illicit bookmaking operations and shady offshore websites. According to an estimate that he provides the underground industry is worth nearly $400 billion annually.

Mr. Silver argues that times have changed since the passage of the Professional and Amateur Sports Protection Act (PASPA), which generally prohibits states from authorizing sports betting. According to him, gambling has increasingly become a popular and accepted form of entertainment in the United States. He points to trends within the United States (i.e. New Jersey’s referendum demonstrating overwhelming support for legal sports betting) as well as international trends where sports betting is widely legal and subject to regulation. In light of these trends, Mr. Silver argues that Congress should adopt a federal framework for legalizing and regulating sports betting, subject to strict regulatory requirements and technological safeguards.

NHL Commissioner Gary Bettman disagrees. (As a hockey fan from Canada, I am not too surprised by Mr. Bettman’s cynical position!)

According to Mr. Bettman, “… some attention needs to be paid to what sport is going to represent to young people.” He further states, “[s]hould [sport] be viewed in the competitive, team-oriented sense that it is now? Or, does it become a vehicle for betting, which may in effect change the atmosphere in the stadiums and the arenas?” Mr. Bettman seems to be concerned that by legalizing sports betting, fans would be rooting for the spread instead of rooting for their favorite team.

However, Mr. Bettman seems to miss Mr. Silver’s point. By legalizing sports betting, Congress is not introducing sports betting. Sports betting already exists. By legalizing and strictly regulating it, the government would be bringing sports betting out of the underground and into the sunlight where it can be appropriately monitored and regulated, as Mr. Silver argues.

Furthermore, Mr. Bettman’s concern regarding how sports betting would affect young people as well as the atmosphere at sporting events seems to stem out of his moral judgment on the merits of gambling. However gambling is a form of entertainment just like sport is. As Mr. Silver points out, gambling has increasingly become a popular and accepted form of entertainment in the United States. Gambling and sport have co-existed without having a particular affect on young people or the atmosphere at sporting events. Therefore, it could hardly be argued that by legalizing and regulating what already exists, there would be a negative affect on young people and the atmosphere at sporting events.

Moreover, Mr. Bettman seems to suggest that rooting for the spread and rooting for your favorite team are mutually exclusive things. However, most sports fan are able to differentiate between the two and can partake in both activities without affecting their enthusiasm and loyalty to their favorite team. Indeed, it could be argued that sports betting might actually increase the level of interest ordinary citizens might have in sports and in attending sporting events.

In conclusion, while Mr. Silver’s offers a pragmatic opinion on the future of sports betting, Mr. Bettman seems to think that by legalizing and regulating an estimated $400 billion a year underground industry, society would be sending the wrong message to young people. In this battle, Mr. Silver is clearly leading 1-0.

 

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NHL Expansion in Toronto – is sharing caring?

December 19, 2014

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by Michael Truong – Thompson Rivers University 3L JD Student

As long as Canada remains the hockey mecca of the world, rumour and speculation over National Hockey League (“League”) expansion in Toronto will not subside. With the Toronto Maple Leafs being the most valuable franchise valued at over $1 billion, a second team in the Greater Toronto Area (GTA) seems inevitable. While many Canadians, and in particular those living in Hamilton, support League expansion in the GTA, the Toronto Maple Leafs have refused to endorse any such idea.

A second team in the GTA would be a contentious expansion destination, not because the market could not handle a second team, but because the Toronto Maple Leafs would undoubtedly fight to prevent any potential market dilution. A second team means splitting the corporate support and the fan base, which may reduce the value of the existing franchise. Thus, it seems only natural that the Toronto Maple Leafs would vigorously defend their territorial rights before ever conceding their hockey monopoly.

The Toronto Maple Leafs have defended their territorial rights once before. In 2009, Jim Balsillie, the former CEO of Research in Motion, attempted to purchase the former Phoenix Coyotes and move them to Hamilton. The Toronto Maple Leafs took the position that the relocation of a team into their home territory was not subject to a majority vote and that they held de facto veto over whether a new team could move into the region. Though a legal battle never materialized, the NHL Constitution seems to support the Maple Leaf’s case.

Under section 12.2 of the NHL Constitution, each member “accepts and agrees to abide by the … Constitution and each and every alteration, amendment and repeal.” Therefore, the Toronto Maple Leafs are bound by section 3.3, which provides that before any new teams are admitted to the League, the only requirement is a favourable vote of three-fourths of the Board of Governors.

More importantly, however, is the issue of territorial exclusivity. Section 4.3 of Article IV of the NHL Constitution states that each NHL team has exclusive control within its “home territory,” which means “exclusive territorial rights in the city in which it is located and within fifty miles of that city’s corporate limits.” The provision further states that “No franchise shall be granted a home territory within the home territory of a member, without the written consent of such member.” Section 4.3 appears to be the legal weapon with which the Toronto Maple Leafs could mount a defence against the League’s expansion into the GTA. So long as any expansion plans fall within the Leaf’s “home territory,” the League faces an uphill battle.

By virtue of Section 4.3, all NHL member teams seemingly hold a veto over the League if the expansion plan is in the respective team’s backyard. It seems odd that the League would leave a loophole open for teams to potentially handcuff them. Nevertheless, there are a few ways for the League to defend itself against a veto argument.

First, the “city’s corporate limits” in Section 4.3 is ambiguous enough that the NHL can argue for the most restrictive interpretation of territorial exclusivity so as to place them outside the scope of the Toronto Maple Leaf’s territorial rights as set out under Article IV. If successful, this would open up Southern Ontario as a potential destination.

The NHL may even argue that any potential expansion opportunity belongs solely to the League itself, an argument which has been successful in US courts (See, e.g., L.A. Mem’l Coliseum Comm’n v. NFL, 791 F.2d 1356 (9th Cir. 1986); NBA v. SDC Basketball Club, Inc., 815 F.2d 562 (9th Cir. 1987); St. Louis Convention & Visitors Comm’n v. NFL, 154 F.3d 851 (8th Cir. 1998).

If and when the Toronto Maple Leafs are faced with an expansion team in the GTA, any reservations regarding potential depreciation in the value of the franchise may be offset by the projected expansion fee of $1-1.5 billion. If Anaheim serves as an example, the Maple Leafs would stand to receive a sizable share of that expansion fee likely amounting to an influx of $500-750 million, a sum that would cause any owner to think twice.

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