[toc]New Jersey’s argument for overturning the Professional and Amateur Sports Protection Act (PASPA) and legalizing sports betting within its jurisdiction is on the verge of hitting the U.S. Supreme Court. As that time nears, there is no shortage of debate regarding what the potential ramifications of the case are.
A trio of experts well-versed on the subject of sports law and sports-based wagering converged in a digital discussion presented by Sports Betting USA on Aug. 15. They were:
- Attorney Daniel Wallach
- Andrew Brandt, ESPN business analyst and director of the Moorad Center for Sports Law
- ESPN Chalk writer David Purdum
The talk delved into the multi-faceted topic from their respective areas of expertise. The trio tackled multiple angles of the case, including:
- Whether the tide has officially turned on sports betting legalization in the U.S.
- The conflicting stances held by some of the leagues with respect to gambling.
- The pros and cons of a nationwide legal sports betting landscape for the pro sports leagues.
- The possibility of a settlement between the leagues and New Jersey on the issue, as well as other potential outcomes of the case.
- How the leagues can best prepare for the eventuality of legalized sports betting.
Sports betting approaching the mainstream?
All parties agreed that the mere fact that New Jersey’s case made it to the highest court in the land is the most tangible evidence yet that the legalized sports betting push is in uncharted waters. Wallach even referred to it as the “pivot point” in the debate.
“The sports gambling landscape has never been closer to legality, to acceptance, to understanding,” opined Brand. He added that you can count the amount of sports-related Supreme Court cases “on one hand.” Brand also pointed out that the one word he’s consistently heard regarding the leagues’ positions on sports gambling for some time now — “evolving” — confirms their changing views.
Meanwhile, Purdum reflected on the significant increase in public discussions and information about sports betting over the last decade. Specifically, he discussed the platform that features his betting-centered Chalk column, ESPN.com. However, he cautioned that an official change in some of the leagues’ public-facing stances on the issue may stem from some major internal developments.
“It’s going to come down in my opinion to money. When they think the revenue they can get from sports betting outweighs the consequences of legal sports betting, I think you will see that pivot. You’ll also notice that leagues that have pivoted, [NBA, MLB], they’ve had new commissioners come in.”
Conflicting stances from the leagues
Indeed, one of the overarching themes of the conversation – and one on which all parties appeared to concur – was the increasingly difficult balancing act that the pro sports leagues acting as plaintiffs in the NJ PASPA case continue to engage in.
The most recent and perhaps vivid example is that of NFL. The league historically takes the most rigid anti-legalization stance of the leagues. The irony of the Oakland Raiders’ pending relocation to Las Vegas for the 2020 season wasn’t lost on the panel.
On that subject, Brandt brought up a rather surprising revelation. When talking to multiple league and team insiders about their most prevalent concerns regarding the move, they never brought up gambling unless Brandt specifically asked about it.
And the common response he received was just as unexpected. The league sees it as “no problem” and a non-issue. In Brandt’s view, this was yet another indicator that, despite their proclamations to the contrary, the leagues are ready to embrace legalized sports betting.
Growing engagement with gaming industry
Despite this off-the-record approach to the topic, the NFL’s official stance is “adamantly opposed” to the legalization of sports betting, according to Purdum. However, the fact that multiple business dealings of both the league and its teams fail to square up with those words was also a topic of discussion.
Brandt brought up MGM Grand’s naming rights deal for a luxury-seating area at Ford Field. There is also Oneida Nation’s multi-year partnership with the Green Bay Packers. That deal includes the sponsorship of a gate at Lambeau Field.
The NFL’s full-on embrace of season-long fantasy sports in tandem with some teams’ financial stakes in daily fantasy sports (DFS) operators is something that Brandt also labeled as a “softener” in terms of the league’s resistance to sports gambling. He went on to observe that the leagues have always opposed gambling for “practical purposes.” However, they tacitly accept it for “fan engagement purposes.”
And the aforementioned collaboration of NFL teams with various gambling entities are the latest examples of why the official company line is increasingly harder to reconcile with reality. League owners voting to allow a team to set up shop in the country’s legalized gambling mecca does not help either.
“If you’re placing team in Vegas and allowing sponsorships with casinos, you’re softening the stance,” remarked Brandt.
Pros and cons of a NJ victory
Leagues’ financial stake in wagering
Despite its cautious dalliances with the gambling realm, there is some potential downside for the leagues if New Jersey ultimately succeeds, the panel argued.
Purdum summed up what he feels what the best– and worst-case scenarios for the leagues are if the Supreme Court rules in favor of New Jersey.
“If they were to lose, they would relinquish a lot of control of the sports betting industry to the states. I would say the best-case scenario for the leagues would be some sort of framework where they do end up getting some kind of significant and direct financial revenue stream.”
However, he added that the key to the latter would be there not being “the appearance” of the leagues having a direct revenue stake in wagering. For example, if they allowed licensing out of betting data regarding their games. Purdum emphasized that leagues remain concerned with the perception of the integrity of their respective sports.
Ensuring nobody throws games for a bet
Another long-held concern of the leagues is the potential for high-stakes gamblers to cast influence on athletes with respect to their performances in games.
“The real concern leagues have is influence with players,” Brandt said. However, he questioned the likelihood of seducing players into “throwing” games in an era of astronomical salaries. “We can all have our opinions on whether players are even susceptible to influence with the money they make, “ he added.
The panel went on to point out that the forays of various leagues into Europe for regular-season games often takes them directly into markets with legalized sports betting. In that time, these games played without incident.
Purdum emphasized that the 108 active offshore, unregulated sports books take millions in bets each year from U.S customers. These sites offer no transparency to the leagues regarding unusual betting activity. Therefore, the idea that a legalized and regulated market poses a threat is not something he agrees with.
“For the leagues to come out and say that they oppose this because it will impact the integrity of the game, that is a flawed argument that they need to move past,” said Purdum.
Meeting halfway a possibility?
Despite the widespread assumption that the plaintiffs in the case intend on seeing the process through, the panel broached the topic of a potential settlement between the parties. Specifically, the possibility of an agreement on a partial repeal of PASPA which would enable New Jersey to enact sports betting within its borders.
Wallach opined that there could be mutual benefits if the two sides opted to take this route. He added the Supreme Court allows for such a settlement. As a result, the leagues could “kick the can down the road” for a few years on the issue. Moreover, it would give Garden State a monopoly on East Coast sports betting.
For his part, Purdum added that he’d heard no whispers of a settlement from his sources. He did allow that anything was possible down the road once the legal process began playing out.
Brandt cast some doubts about there being any upside for the leagues in terms of a compromise. Especially considering they can still craft their own internal policies irrespective of what activities are currently legal on the federal level.
Myriad of potential outcomes
The alternative of pushing for a federal law to replace PASPA before a decision in the case also came up. One example is New Jersey Rep. Frank Pallone’s Gaming Accountability and Modernization Enhancement Act (GAME) bill. While all parties agreed that the ultimate goal for stakeholders is to devise a PASPA replacement, they also think Congress currently has a number of higher priorities.
The trio also concurred that there is a wide range of outcomes if the case ultimately proceeds to the ruling stage, including:
- The Supreme Court declaring PASPA invalid due to a violation of the Anti-Commandeering principle, which prevents Congress from allowing states to govern the activities of its citizens.
- New Jersey prevailing through PASPA being declared invalid due to a violation of the Equal Sovereignty principle. That principle prevents Congress from favoring one state unreasonably – in this case, Nevada — at the expense of others.
- New Jersey prevailing and SCOTUS voids PASPA exceptions.
- New Jersey prevailing, but PASPA remaining in force (example of a narrow ruling)
- The leagues prevailing and the status quo remains.
Preparation is key
There are multiple avenues through which New Jersey can prevail, and the general momentum seems in their favor. So, the group discussed how the sports leagues should prepare for such a reality.
Brandt hypothesized that the leagues won’t be caught flat-footed on the issue. “Somehow, some way there’s a plan for all these leagues when it happens, we just don’t know it yet,” he explained.
However, he also expounded on a specific component that he isn’t sure they’ve contemplated yet, but one he feels would be essential to a smooth transition—employing a gambling “czar” with either a legal or sports background.
“I think we’re at a point in time where the leagues have to get a handle on this and the people employed by the leagues right now may not be the best to get a handle on everything that’s going on in this world. Someone has to develop regulations for officials, for coaches, for executives, for players, people associated with the teams, for medical people.”
Plenty of common conclusions
Reaching consensus on a fairly complex topic that still lacks certainty is by no means easy. Nonetheless, the panel certainly found common ground on a few subjects:
- Irrespective of the outcome of the current case, a legalized sports betting landscape seems inevitable.
- The professional sports leagues have been preparing for such a scenario behind the scenes for some time.
- Despite statements to the contrary, the leagues’ increasing willingness to attach their names and enter into a variety of agreements with gaming-related entities. These deals speak to a changing approach.
- Sports fans already engage heavily in wagering on sports through a variety of unregulated means.
- Many of the pro sports leagues’ long-held objections to legalized sports betting no longer apply in today’s environment.
- Potential revenue opportunities in a legalized sports betting environment would be plentiful for both the states and the leagues. This leading Purdum to conclude that this case “won’t be the endgame, regardless of decision.”
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