THE MONEY WILL BE HUGE — BET ON IT
For sports leagues, legalized betting offers new risks ... and massive rewards
The U.S. Supreme Court ruling that cleared a path for states to legalize sports gambling did not take North American professional leagues by surprise.
Since New Jersey started its legal push to strike down the federal ban on sports wagering in 2011, the leagues had prepared for this possibility through lobbying efforts, rigorous study and public statements.
As that preparation gave way to the new reality, team owners and league officials reacted with optimism and a touch of caution. Among sports executives, a clear theme emerged: The ruling creates both the need for oversight and the potential for a huge new revenue stream, and they have no choice but to welcome it.
“The result was not unexpected,” Major League Baseball vice-president and deputy general counsel Bryan Seeley said. “We’ve been preparing for this for at least a year, and we’ve been actively lobbying in states since December. We were prepared for this outcome. It definitely opens things up in a way for states that didn’t exist before (May 14). So I think you’re going to see states move pretty quickly to enact sports betting regimes in the wake of this decision. We’re going to have to engage even more than we have and be prepared to ask for the things we need in legislation to protect the integrity of our game.”
In their initial reactions, many organizations appeared eager to leap into an industry they believe promises a new infusion of cash.
Twenty-six years ago, sports leagues had pushed for the federal law, ruled unconstitutional before May 14, which prohibited states outside Nevada from legalizing live betting on sporting events. Now, teams are eager to find a way to profit from them.
“I think everybody who owns a top four professional sports team just basically saw the value of their team double, at least,” Dallas Mavericks owner Mark Cuban told CNBC.
“Legalized sports betting will only bring fans closer to the game, ramping up the action in each minute and creating more intensity,” Washington Wizards and Capitals owner Ted Leonsis said in a statement. “It will bring new revenue into the economy, creating jobs and growing our tax base. The decision is a great one for sports fans and I am eager to embrace it.”
Leagues and teams could try to make money both directly and indirectly from legalized sports betting. Leagues will likely try to take a cut from wagering; NBA commissioner Adam Silver months ago floated the idea, considered dubious in many gaming-industry circles, of the NBA taking a one per cent “integrity fee” from any bet placed. Sports leagues could also charge more for advertisements and rights fees, because widespread legal wagering figures to drive greater fan engagement and interest.
“I mean, look, it could finally become fun to go to a baseball game again,” Cuban quipped. “I think this is something that benefits everybody even tangentially associated with sports.”
While some predicted wholesale changes ahead, others pointed out that gambling already exists: in Nevada, via office pools or on offshore online sportsbooks.
“If it’s been going on as long as it has in Vegas and in every barroom ... it’s been part of our culture,” Chicago Cubs manager Joe Maddon told reporters after learning of the ruling. “I just think it’s out front right now. Regarding all the potential manifestations in a negative way, I don’t really see that.”
The ruling promises to change the in-stadium experience for fans, even if they never place a bet. Scoreboards could post live odds next to runs, hits and errors. Kiosks for bets may become as familiar as concession windows in arena concourses.
MLB said in a statement that the decision “will have profound effects on Major League Baseball,” while Players Association president Tony Clark called it a “monumental” decision “with farreaching implications for baseball players and the game we love.”
The NHL similarly acknowledged the momentous potential for change.
“The Supreme Court’s decision (May 14) paves the way to an entirely different landscape — one in which we have not previously operated,” the NHL said in a statement. “We will review our current practices and policies and decide whether adjustments are needed, and if so, what those adjustments will look like.”
League and union officials emphasized a commitment to the “integrity” of their competitions, and said that they want a voice in the legal process both to ensure outcomes are not questioned and to get their slice of the financial pie.
The NFL called on Congress “to enact a core regulatory framework for legalized sports betting,” essentially asking federal lawmakers to make a uniform code before state legislators create differing laws.
“The NFL’s long-standing and unwavering commitment to protecting the integrity of our game remains absolute,” NFL spokesman Brian McCarthy said in a statement.
Since November 2014, the NBA has publicly supported federal legalization of sports betting. Silver said the league remains “in favour of a federal framework that would provide a uniform approach to sports gambling in states that choose to permit it,” as opposed to having every state make its own law. But he also said the league will continue efforts to discuss legalization with state legislatures.
“The sports leagues are going to make a beeline to Congress,” said Daniel Wallach, a sports gaming law expert and attorney at Becker & Poliakoff. “Certainly they’re going to have to play in the state legislative pool for the next year. But their end game and end goal is to get comprehensive federal legislation that applies from one state to the next.”
While widespread betting raises the potential of outcomes being rigged, leagues and teams say legalization could actually help stymie such schemes.
Seeley, the MLB vice-president, said the league’s lobbying efforts, which have been a joint effort with the NBA and PGA Tour, have been aimed primarily at having a say in how betting lines are monitored. The leagues want laws that ensure casinos share anonymized betting information, so they can analyze it and spot potential corruption. They also want casinos to call them directly when irregularities are spotted.
MLB has also pushed for input on what kind of bets will be offered — it doesn’t want minor league games to be wagered on, and it is leery of bets on individual plays, such as whether the next pitch will be a curveball or fastball.
“Those are things we want a seat at the table to talk about,” Seeley said.
Regulators and sportsbook operators have the best technology and experience in tracking unusual betting patterns and other irregularities that can tip off game-fixing, far better than offshore websites or other underground markets.
“Many ask if this decision will impact the integrity of sports themselves,” Leonsis said. “I think it’s just the opposite. I think that the increased transparency that will accompany more legalized betting around the country will only further protect against potential corruption. They say sunlight is the best disinfectant, and in this case I believe that is certainly true.”
Ryan Rodenberg, a sports law professor at Florida State, said professional athletes would have no financial incentive to throw a game. But he said college athletes, compensated with only small stipends and scholarships, would be at greater risk.
“College sports is the one realm where corrupters can influence athletes, because they’re not paid market rate,” Rodenberg said.
The NCAA has maintained its staunch opposition to legal wagering, even as pro leagues have softened and reversed their stances in recent years.
“While we are still reviewing the decision to understand the overall implications to college sports, we will adjust sports wagering and championship policies to align with the direction from the court,” NCAA chief legal officer Donald Remy said in a statement.
New wagering rules also seem likely to create new labour battlefields, with players’ unions keeping a watchful eye on the leagues’ response. In one scenario, leagues could take in integrity fees as a reimbursement from states and could argue the money is not revenue to be shared with players under collective bargaining agreements. And leagues believe they should be compensated for both their role in ensuring fairness and for casinos using their content to profit.
“This betting is on our games,” Seeley said. “We are the primary input into sports betting on Major League Baseball. So we think we should share in some of the money that’s going to be made by bookmakers.”