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Why Major League Sports Are Freaking Out About a New Attempt to Legalize Betting on Their Games

Would league sports support gambling if they could profit from it?
 
 
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“On January 17, 2012, New Jersey Governor Chris Christie signed into law an Act passed by the New Jersey State Legislature purporting to permit wagering at casinos and racetracks on the results of certain collegiate and professional sports or athletic events. On July 2, 2012, pursuant to the Sports Gambling Law, the New Jersey Division of Gaming Enforcement published proposed regulations concerning the licensure and operation of sports gambling in Atlantic City casinos and at New Jersey's racetracks….The public comment period for the Sports Gambling Regulations ends on August 31, 2012. Once these regulations become effective, which is expected to occur within the next two months, Atlantic City casinos and racetracks across New Jersey will be able to apply for licenses and commence gambling operations on amateur and professional sports.”

Thus begins the lawsuit brought forth by the NCAA and the four major sports leagues—the National Football League (NFL), Major League Baseball (MLB), National Basketball Association (NBA), and National Hockey League (NHL)—in an attempt to stop New Jersey from legalizing sports gambling.

The state’s new law violates the Professional and Amateur Sports Protection Act (PASPA), a federal statute passed in 1992 which halted the spread of state-sponsored sports gambling beyond the four states (Nevada, Delaware, Oregon and Wyoming) which already possessed legal variations of it. Governor Christie, in an effort to both bring in needed revenue while making a stand for States’ rights, shunned PASPA, a law which benefits only the leagues who initiated its passing. Oddly, the federal government hasn’t chosen to enforce PASPA—the sports leagues do the dirty work.

This is not the first time this issue has come up. In fact in 1993, New Jersey previously attempted to circumvent PASPA. That initial measure failed. Delaware also tested the limits of PASPA in 2002 and again in 2009. Each time, the leagues were there to stop the state from expanding its sports gambling beyond what was already allowed (single game wagering is not available in Delaware, only parlay cards are).

Despite the sweetheart relationship the leagues enjoy with the federal government which has given them each a level of anti-trust status, making them monopolies in all but name, not every attempt made to limit sports gambling has been successful. Between 2000 and 2002, the leagues, in concert with the NCAA, sought to pass a federal bill which would have made it illegal to wager on any college sports whatsoever (including in Las Vegas where it was legal). In this instance, Congress did not heed the leagues’ wishes.

However in 2006, the leagues were instrumental in getting a different federal law passed—the Unlawful Internet Gambling Enforcement Act (UIGEA). This “prohibits the acceptance of credit, electronic funds, checks, or the proceeds of other financial transactions by persons involved in the business of betting or wagering in connection with unlawful internet gambling.” When a key measure in this legislation was threatened a year later, the leagues again were there to ensure the UIGEA remained intact.

But why do the NCAA, NFL, et al. have such a vengeance against people gambling upon their sports? The notion appears counterintuitive, given the obvious interest a betting fan would possess.

Setting aside the NCAA’s claims which exist on an entirely separate plain than the major leagues’ (its main argument revolves around the “amateur” nature of college athletics…which are about as “amateur”—and clean—as the Olympics are today), there are three main points of contention which are repeated in the anti-sports gambling argument.

#1 – Legalizing sports wagering in New Jersey would not eliminate illegal gambling.

On this first point, the leagues are absolutely correct. If New Jersey wins its right to offer sports wagering, illegal bookies would continue to exist. Nevada, the only state which offers full-line sports wagering, only accounts for 1 percent of all the money bet on sports in the United States. The other 99 percent is conducted illegally.

Just how much is bet through illegal or off-shore sports books? A congressional investigation in 1999 (the last time a formal survey was taken) concluded that anywhere from $80 to $380 billion was wagered illegally on sports each year. The bulk of that money ends up in the hands of organized crime, making it one of the mafia’s most profitable endeavors. This money is unmonitored and untaxed. Like Prohibition in the 1920s and illegal drugs today, until sports gambling is offered legally everywhere as it is in the United Kingdom none of this will change.

Yet what the sports leagues won’t mention is that legalizing this practice will do three important things. First, it would make a dent in organized crime, stripping it of a vast amount of income. Second, it would boost each state’s revenue given that perhaps as much as $380 billion would now be taxable. And third, it would actually aid gamblers by eliminating the credit system most bookies use (getting many compulsive gamblers in trouble) while monitoring all betting action. This would help stop corruption within the system before it begins.

#2 – Sports “fans” would become “bettors.”

NFL Commissioner Roger Goodell wrote in his official “Declaration” in this case, “The new sports gambling scheme that New Jersey proposes would…greatly increase the likelihood that the allegiance of certain fans will be turned from teams, players and high-level athletic competition, toward an interest first and foremost in winning a bet. The core entertainment value of fair and honest competition between teams and athletes that is reflected in NFL games will be replaced by the bettor’s interest, based not on team or player performance, but on the potential financial impact of each on-the-field event.”

Parroting that was NBA Commissioner David Stern. “The sports gambling scheme contemplated by the State of New Jersey threatens to alter [the] fundamental characteristics of NBA basketball,” he wrote. “Players’ missed baskets, coaches’ strategic decisions, and referees’ calls all will come to be viewed through the prism of the impact on the betting line, rather than whether the team won the game or its players performed well. Fans’ interest—once unified toward the common goal of winning the game—will become fragmented, with spectators rooting for varied outcomes such as merely ‘covering the spread’ or scoring enough points to beat an ‘over/under’ bet.”

“Instead of enjoying the NHL for the skill of our athletes and to root for their team to win the game,” wrote NHL Commissioner Gary Bettman, “many fans will feel cheated and disappointed when they do not win their bets, regardless of whether their team wins or loses. By making sports gambling a widespread institution tied to the outcomes of NHL games, the very nature of the sport is likely to change for the worse.”

This, too, would harm Major League Baseball as Commissioner Allan “Bud” Selig wrote, “Another likely result of sports gambling is that fan loyalty would diminish, as many fans would focus less on their allegiance to certain teams, players, or cities and instead focus more on the outcomes of individual bets. The inevitable shifting ‘loyalties’ that would result from sports gambling could forever alter the relationship between teams and their fans. Players would not be viewed by fans as exceptionally skilled and talented competitors, but as mere assets to be exploited for ‘fast money.’”

The problem with this potential shift in the mindset of fandom is, as NBA Commissioner Stern wrote and his fellow commissioners repeated in similar fashion, “The NBA cannot be compensated in damages for the harm that sports gambling poses to the fundamental bonds of loyalty and devotion between fans and teams. Once that special relationship has been compromised, the NBA will have been irreparably injured in a manner that cannot adequately be calculated in dollars.”

Can the leagues prove this certain harm?

No. And in reality, they already actively support an institution which does exactly what they “fear” legalized gambling would do: fantasy sports. In these leagues, “owners” root for “their” players often over and above their supposed real-life team allegiances. Yet the professional leagues all actively push fans to join these fantasy leagues where money often exchanges hands between participants.

The other truth the leagues bypass is that $380 billion wagered illegally every year. If the leagues are to be believed, none of the people gambling those untold billions are currently watching their games. These are not “fans,” merely degenerate gamblers who cannot be counted by the leagues’ rationale.

Of course, fans have been betting on sports since sport began. Baseball became the “National Pastime” in essence because of gamblers. The NFL enjoys its success as the county’s foremost sporting league because of the estimated $1 billion wagered upon its games every week. For the leagues to make an argument claiming fans will become gamblers misses a bigger fact: the fans already are gamblers.

In 1985, NFL Commissioner Pete Rozelle was asked on NBC’s NFL pregame show if a button existed that could stop NFL fans from gambling upon football, would he press it? Rozelle evaded answering. Why? Because Rozelle knew if the league willfully eliminated its gambling fans, attendance and television ratings would plummet. Gambling drives fandom, or at the very least, viewership. Of this, there is no question.

So what’s really worrying the leagues?

#3 – The threat of a “fix.”

“The spread of sports betting, including the introduction of sports betting in New Jersey,” Selig wrote, “would threaten to damage irreparably the integrity of, and public confidence in, MLB. The more pervasive the sports gambling culture, and the more that culture is actively promoted by governments, the more likely it is that games will be perceived by the public with increased cynicism. Specific plays, coaching decisions, and umpiring calls would be questioned by fans who suspect that the ‘fix is in.’ If fans suspect that plays, decisions, and umpiring are in any way influenced by sports gambling, they will more likely disengage from what they perceive to be a tainted sport rather than continue to invest their energy in it.

“Beyond fostering increased suspicion of underhanded dealing, increased sports gambling also makes it more likely that people will actually attempt to ‘fix’ games or obtain inside information from people directly involved in the sport.”

What is at stake is each league’s integrity. Or, more importantly, the appearance thereof.

“The great popularity of NFL football and the goodwill it has achieved with its fans and the public as a whole,” wrote Goodell, “is rooted in the integrity of the game itself. NFL football stands for clean, healthy competition, and rewards hard work, dedication, and honest effort. Maintaining these values and the highest integrity of the game of professional football is a critical aspect of preserving the NFL’s goodwill. For these reasons, NFL owners and players have worked diligently since the league’s inception nearly ninety years ago to protect the NFL’s integrity and maintain the public’s confidence in the league.”

In a world where drugs (performance enhancing and recreational) run rampant, where an athlete is seemingly arrested every week, where owners collude against players and lock them and referees out to secure larger fortunes, and where corporate and media ties seem to be overwhelming the games themselves, isn’t their collective integrity already deeply in question?

Couldn’t the leagues maintain this illusion of integrity if sports gambling was legalized?

There are deep seeded rules already in place to prevent gambling, game fixing, and point shaving in each league. As Selig pointed out, “Baseball has highly restrictive policies related to gambling. As discussed above, the position of Commissioner of Baseball was created in response to the 1919 ‘Black Sox’ scandal. As a result, eight players who were found to have participated in an effort to lose games [this was more than an “effort,” they were quite successful] were banned from baseball for life. Further, Major League Baseball Rule 21 (d) provides that: (1) Any player, umpire, or Club or League official or employee, who shall bet any sum whatsoever upon any baseball game in connection with which the bettor has no duty to perform, shall be declared ineligible for one year. (2) Any player, umpire, or Club or League official or employee, who shall bet any sum whatsoever upon any baseball game in connection with which the bettor has a duty to perform, shall be declared permanently ineligible.”

Goodell cited a few of the NFL’s anti-gambling rules in his Declaration as well. For example, Article 8.13(C) of the Constitution and Bylaws of the NFL states, “Whenever the Commissioner…determines that a person employed by or connected with the League or any member club thereof has bet money or any thing of value on the outcome or score of any game or games played in the League or has had knowledge of or has received an offer, directly or indirectly, to control, fix, or bet money or other consideration on the outcome or score of a professional football game and has failed to report the same in the manner hereinafter prescribed, then the Commissioner shall have complete and unrestricted authority to enforce any or all of the following penalties: [suspension, lifetime ban, fine, cancellation of employment contracts, forced sale of ownership interest, or]…such other or additional punishment or discipline as the Commissioner may decide.”

Another NFL example is found within Paragraph 15 or the standard form NFL Player Contract which has been dictated via the Players’ Union collective bargaining agreement with the league. This reads, “Player recognizes the detriment to the League and professional football that would result from impairment of public confidence in the honest and orderly conduct of NFL games or the integrity and good character of NFL players. Player therefore acknowledges his awareness that if he accepts a bribe or agrees to throw or fix an NFL game; fails to promptly report a bribe offer or an attempt to throw or fix an NFL game; bets on an NFL game; [or] knowingly associates with gamblers or gambling activity…[he is subject to fine, suspension, or termination of his contract].”

There is also the Sports Bribery Act. Passed in 1964, this federal law makes it illegal to bribe someone to alter the outcome of a sporting event. As recently as this year, 10 people were arrested in part for violating the Sports Bribery Act in relation to University of San Diego basketball games.

What the leagues maintain is that should sports wagering be legalized, the incidence of game fixing, or at least attempted game fixing, would dramatically increase.

This flies in the face of each league’s own purported history. Major League Baseball hasn’t admitted a game of theirs has been fixed since the aforementioned 1919 World Series. The NHL’s last fixed game was supposedly in the 1940’s. The last time anyone has allegedly shaved points in an NBA game was 1954. And the NFL, well, it proclaims that no one has ever rigged one of its contests.

So how is legalized sports gambling supposed to alter that legacy? Haven’t each league’s respective anti-gambling rules worked perfectly? Well over 50 years have elapsed since professional sports (admittedly) witnessed a fixed game, despite the fact that throughout this time, organized crime has overseen the illegal sports gambling empire in the United States. If the mafia hasn’t fixed a game, how would a state-run operation suddenly lead to widespread point shaving? Will players and referees no longer follow league rules? Will gamblers suddenly decided to bet vast amounts on fixed games within a tightly controlled and monitored legal sports gambling institution?

Here’s the truth of the matter: The leagues have to maintain this anti-gambling stance for simple public relations reasons. In this manner, should anything on par with the NBA’s Tim Donaghy scandal again arise, the league(s) can claim with a straight face, “We did all we could to prevent this from happening. We have stood against legalized gambling. We have rules in place. We have investigative divisions. Yet this scandal still occurred. But we have rooted out the problem and will move forward.”

Despite the leagues anti-gambling argument, they really aren’t 100 percent against state-sponsored gambling. NFL, NHL, and MLB teams have allowed their team logos to be incorporated in state lottery scratch-off tickets. The Green Bay Packers, New Orleans Saints, Washington Redskins, Baltimore Ravens and Cleveland Browns are all featured on lottery tickets. The Boston Bruins and Pittsburgh Penguins were lottery partners as well. So, too, are the Chicago Cubs, Chicago White Sox, St. Louis Cardinals, and Los Angeles Dodgers among other MLB teams.

Why? Because the leagues can profit from this situation (and even though team season tickets are one of the prizes offered in these lotteries, none of this gambling is related to actual game results). If they could somehow profit off of legalized sports gambling, it’s likely the leagues’ stance would instantly change to a pro-gambling position.

But until that time, the leagues will continue to trot out these well-worn excuses for why sports gambling should remain illegal despite a public want for its legalization.

However, should New Jersey win its legal battle against the sports leagues, be ready for the sports gambling floodgates to open. California has already passed legislation to legalize it, and other states with casino gambling and horse tracks will also follow suit.

And then we can see if any of the leagues’ arguments really hold water.

Brian Tuohy is the author of The Fix Is In: The Showbiz Manipulations of the NFL, MLB, NBA, NHL and NASCAR. He is the nation's leading authority on game fixing and maintains the popular website thefixisin.net. His second book tentatively titled Larceny Games: Sports Gambling, Game Fixing, and the FBI is due out in 2013.