With the May 2018 Supreme Court decision declaring the Professional and Amateur Sports Protection Act unconstitutional, effectively lifting a bar on sports gambling nationwide, professional sports leagues have begun partnering with casinos and sports books.
Given the financial stakes, this was perhaps inevitable, but the implication are yet unknown. One question that has been raised is the cognitive dissonance between the leagues’ prior stances on gambling, including restrictions on players, versus these new partnerships taking advantage of the market. The new laws are going to require leagues to revisit their internal policies and consider the impact on their players.
After the Supreme Court’s decision in Murphy v. National Collegiate Athletic Association, 138 S.Ct. 1461 (2018), many states acted quickly to pass and implement their own sports betting laws. Since the decision, eight states now have legalized sports betting, including states with grandfathered legalized betting prior to act outlawing such practices. Twenty other states have legislation pending in various phases.
This rapid expansion of the sports gambling market makes clear that the United States is set to become one of the world’s largest betting markets. Estimates indicate that prior to legalization, offshore betting websites took in approximately $150 billion annually, suggesting a close facsimile and perhaps even a conservative estimate for the future market for legitimate sports betting.
It was, thus, inevitable, that the four major sports leagues would want a piece of this pie, despite the leagues previously contending that they would suffer “irreparable harm” if Professional and Amateur Sports Protection Act was overturned. Now, each league has struck individual gambling sponsorship deals to cash in, and to have a say on how this new market develops.
The National Basketball Association was the first pro league to take advantage of the situation. In July, the NBA agreed to partner with MGM Resorts to allow MGM to utilize NBA and WNBA branding and data. MGM now has access to certain statistical data as well as advertising rights.
The deal is a three-year agreement that will pay the NBA $25 million annually and could put the league on the road to a more lucrative partnership in the near future.
The National Hockey League and Major League Baseball followed with their own partnerships with both leagues inking deals with MGM. Similar to the NBA arrangement, MGM gained access to NHL and MLB content and the right to activate advertisements across several platforms.
The National Football League was the last to enter into an agreement, recently reaching an deal with Caesars Entertainment to be its official gambling sponsor. However, in contrast to the other leagues’ arrangements, the NFL’s $30 million per year agreement does not allow Caesars to include any league branding on sports betting products or daily fantasy sports.
While the professional leagues have been able to financially profit from the new laws, the players in these leagues are still subject to significant restrictions when it comes to gambling. Yet, these new partnerships will undoubtedly lead to increased exposure to gambling, which will need to be addressed.
Section D of MLB Rule 21 states that “any player, umpire, or [c]lub or [l]eague 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”.
NFL rules prohibit personnel from engaging in several gambling-related activities, including but not limited to “betting on any NFL game or practice, or any other professional (e.g., NBA, MLB, NHL, PGA, USTA), college (e.g., NCAA basketball) or Olympic sport, including but not limited to wagers related to game outcome, statistics, score or performance of any individual participant.”
The NBA incorporates similar language, stating that any “person who, directly or indirectly, wagers money or anything of value on the outcome of any game played by a [t]eam in the league operated by the [a]ssociation shall, on being charged with such wagering, be given an opportunity to answer such charges after due notice, and the decision of the [c]ommissioner shall be final, binding, conclusive and unappealable”.
It is not unreasonable to restrict players from betting on their own sport, and such restrictions will undoubtedly remain. However, it is unclear how far these restrictions should extend in this new environment. For example, is it reasonable for the NFL to continue to bar persons from betting on other sports, if such gambling is legal?
Another open question is whether individual players should be able to individually endorse casinos or sports books, even if they are technically prohibited from gambling themselves. Such individualized promotion has been frowned upon in the past.
In 2015, then Dallas Cowboys quarterback Tony Romo promoted a fantasy football convention that was scheduled to be held at a Las Vegas convention center adjacent to a casino, and the league successfully shut down the event, leading to a civil dispute that escalated to the Texas Supreme Court.
Perhaps most importantly, as the leagues tap into this new revenue source, and the stream presumably grows in coming years, players will expect a concordant increase in revenue. This will likely need to be addressed in future labor negotiations.
The NBA and the NBA Players Association had the foresight to address this issue already and negotiated into the most recent collective bargaining agreement a cut of the new revenues in the form of basketball-related income. Such income includes “all proceeds, net of taxes, less reasonable and customary expenses … from gambling on NBA games or any aspect of NBA games … ” NBA Collective Bargaining Agreement, Article VII, Section 1(a)(1)(xiii).
NFL players are not convinced that they will receive the same treatment, which could lead to unrest. National Football League Players Association Executive Director DeMaurice Smith has previously stated several concerns about the integrity of the game, citing the NFL’s unwillingness to partner with the players on gambling issues.
Eventually, though, as revenues from sports gambling increase, leagues will inevitably be forced to split those revenues with their players and liberalize restrictions on gambling activity so that players can capitalize on the legalization of sports betting.