Legalized Sports Betting: A Threat To Profits Or The Integrity Of The Game?

October 5, 2015

Uncategorized

By Alexander Paterson – Thompson Rivers University 2L JD Student

On August 25th, 2015, the 3rd Circuit Court of Appeal upheld the lower court verdict in NCAA v Christie, voiding New Jersey state legislation on sports betting. In the 2-1 decision by the Appeals Court, it was determined that allowing casinos and racetracks to take bets on sport events violated the Professional and Amateur Sports Protection Act (PASPA). The decision was the latest event in a three-year legal battle between the state of New Jersey and national sports organizations including the National Basketball League (NBA), the National Football League (NFL), the National Hockey League (NHL), Major League Baseball (MLB), and the National Collegiate Athletic Association (NCAA).

All of the national sports organizations opposed the legalization of sports betting on the grounds that “the sponsorship, operation, advertising, promotion, licensure and authorization of 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.” While those fears may have merit, New Jersey legislators pointed out the hypocrisy of the national sports organizations in opposing the legalization of sports betting while they simultaneously advertised and profited from fantasy sports.

Fantasy sports have often been referred to as sports betting, although they were specifically exempted from the PASPA in 2006 through the Unlawful Internet Gambling Enforcement Act (UIGEA). However, the recent rise of daily fantasy sports (DFS) competitions has led to questions of whether DFS fall within the exemption granted by the UIGEA. While traditional fantasy sports competitions involved season or playoff long undertakings, DFS competitions are focused on single day or weekend competitions. Furthermore, fantasy sport companies are now acting as facilitators by accepting entry money for fantasy competitions, then distributing it to the winners. The acceptance of money and its subsequent distribution is a large departure from traditional fantasy sport companies who merely facilitated the choosing of fantasy sports teams and players. The intake and distribution of money strongly resembles the actions of a casino, which is likely one of the reasons that both the Massachusetts Attorney General and Nevada Gaming Control Board have taken preliminary steps to assess the legal standing of DFS.

The first weekend of the NFL season featured a reported $31 million in expenditures on 9000 advertising slots by FanDuel and Draftkings, two fantasy sports companies who have each surpassed $1 billion in estimated value. Perhaps it is not surprising then that FanDuel and Draftkings investors currently include the NHL, MLB, NBA, and the National Football League Players Association (NFLPA). As mentioned, those leagues were all party to the lawsuit against the legalization of sports gambling, yet they are all currently involved, either directly through ownership stakes or indirectly through advertisement payments, with a practice that bears a strong resemblance to the sports betting they opposed.

In November 2014, Adam Silver, the Commissioner of the NBA, wrote an op-ed article in which he endorsed the legalization of sports betting in the United States through federal, as opposed to state, legislation. In 2007, the NFL played its first regular season game (of many) in London, England, where sports betting is a legal, commonly accepted form of entertainment. Similarly, the NHL is also strongly considering the possibility of granting an expansion team to Las Vegas, Nevada, where sports betting is currently legal as well. If national sports leagues are so concerned with the impact of legalized sports betting on the integrity of the game, actively looking to expand to locations where sports betting is already legal appears nonsensical.

Looking at the surrounding factors and events, the opposition of national sport organizations to the legalization of sports betting appears to be one based not on the integrity of the game, but on the ability to profit from the current system. Fantasy sports are surging in popularity, and the exposure provided by fantasy sports competitions, along with the money to be made through ownership stakes and advertising revenue, seem to be the primary drivers of their stance on sports betting. State regulation of sports betting in casinos and racetracks does not offer the same opportunity for investment and profits, so it appears to be in the national sports leagues’ best interests to oppose its legalization for the time being, and until federal regulation materializes, ride the wave of profits produced by fantasy sports.

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