For sports leagues, legalized sports betting offers new risks, and massive rewards

The Supreme Court ruling Monday 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.

Monday, as speculation gave way to a new reality, team owners and league officials reacted primarily with optimism and a touch of caution. Among sports executives, a clear theme emerged: The ruling creates the potential for a huge new revenue stream, and they have no choice but to welcome it.

“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. Today’s decision is a great one for sports fans and I am eager to embrace it.”

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 Monday, which outlawed states outside Nevada from legalizing live betting on sports 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 on Monday.

Leagues and teams could try to make money both directly and indirectly when states legalize 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 1 percent “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 said. “You know, all that down time. At a basketball game, first of all, it’s easy to see how you’ll have fun at the arena, at the stadium. . . . 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, in the back of many barrooms, whether it’s been in Chicago or in Hazelton, Pa., it’s been part of our culture,” Chicago Cubs Manager Joe Maddon told reporters Monday. “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 in arena concourses as concession windows.

“Today’s decision by the United States Supreme Court will have profound effects on Major League Baseball,” MLB said in a statement. “As each state considers whether to allow sports betting, we will continue to seek the proper protections for our sport, in partnership with other professional sports. Our most important priority is protecting the integrity of our games. We will continue to support legislation that creates air-tight coordination and partnerships between the state, the casino operators and the governing bodies in sports toward that goal.”

Leagues 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 favor 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 bee-line to Congress,” said Daniel Wallach, a sports gaming law expert and attorney at Becker & Poliakof. “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.”

The NHL said the court’s decision had no immediate impact on its current rules regarding gambling, but it acknowledged the momentous potential for change.

“The Supreme Court’s decision today 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.”

While widespread betting raises the potential of outcomes being rigged, leagues and teams say legalization could actually help stymie such schemes. 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 labor 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.

“The court’s decision is monumental, with far-reaching implications for baseball players and the game we love,” MLB Players Association President Tony Clark said in a statement. “From complex intellectual property questions to the most basic issues of player safety, the realities of widespread sports betting must be addressed urgently and thoughtfully to avoid putting our sport’s integrity at risk as states proceed with legalization.”

While pitfalls lie ahead, leagues and teams met Monday’s ruling with a welcoming tone. Many had long seen legal betting as inevitable and had shifted their thinking into how best to take advantage of it.

The court’s decision is “a logical outgrowth of fans’ obsession with data,” Leonsis said. “It brings a multibillion dollar industry out of the shadows and into the sunlight, where its integrity can be guaranteed and consumers can be better protected.”

Enter your NameEnter your Email Address

Leave a Reply

Your email address will not be published. Required fields are marked *