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A Challenge to Leagues for a Serious Discussion on Sports Betting...By Hartley Henderson
The sports leagues, particularly the NFL, must feel as though they've been hit with a 2 X 4 in recent months. In the past when the leagues said "jump," politicians and courts would ask, "how high?" Without question the NFL lobby is very powerful and was instrumental in the passing of PASPA in 1992, the UIGEA and other anti-gambling laws. Now, however, the leagues are meeting unprecedented resistance. Threatened with a lawsuit by the NFL, Delaware has essentially told them to "bring it on". The state knows it was given an exemption with PASPA and won't be intimidated. Similarly New Jersey, and most recently Massachusetts, have stated they will fight for the right to offer sports betting and believe that PASPA is unconstitutional. And like with Delaware those states won't be intimidated by league attorneys. The reason for the change in attitude is fairly simple: the states need money. In this recession states are looking for an easy revenue source, and gambling has and always will be a way to gain revenue without raising taxes. Lotteries and casinos have been a gold mine to most state governments and sports betting can help bring additional revenue, and more importantly boost interest in current gambling offers.
The leagues can also blame themselves for the new attitude by states since, to date, no league was willing to honestly discuss the whole issue of sports betting---so the states see league concerns as baseless. Instead of providing concrete reasons and proof why sports betting is harmful to their games, leagues instead have chosen to spew rhetoric and innuendo. They suggest that gambling hurts the integrity of the game because people will believe games are rigged, that organized crime will call the shots and that teens will bet on games, hurting their grades and forcing them into a life of crime. But when asked to provide examples of where this has happened and answer relevant questions, the leagues refuse to address them and simply wave off those who challenge them. It has happened to me personally, and I know politicians, offshore sportsbook owners and lawyers who have received similar responses. In fact when Barney Frank introduced his most recent legislation he called the rhetoric by the leagues "one of the least persuasive emotional outbursts I have encountered." So in better words the states and politicians aren't willing to buy the league's arguments. If the leagues want to present real arguments without the rhetoric, hyperbole and fear mongering, now is the time for them to come forth with it. In the end, all the arguments will be heard in a courtroom anyway, and if the leagues are going to rely on the malarkey they've spewed to date the courts will probably rule that their arguments are baseless.
With that in mind, here are some questions the leagues and courts need to address. The questions have been sent to them before, but the leagues have responded with the virtual middle finger. At some point the leagues will have to address them. And conversely, lawyers and sports betting proponents will have to provide valid arguments on the other side of each question.
1- To what degree do the leagues own the sports and all conduct from that sport? This may sound like a strange question, but it is pivotal. One of the league's arguments in the past is that they control all aspects of their games, and if they don't want betting on the games, then no one has the right to challenge their ownership. There isn't much argument that the leagues control merchandising of their products, but can they control other offshoots of the sport? The question is also timely since a somewhat similar question is being asked in Phoenix. Jim Ballsillie, the owner of Research in Motion, wants to buy the Phoenix Coyotes and move them to Hamilton, Ontario, and the Phoenix owner who declared bankruptcy wants to sell the franchise to him. The NHL, however, has blocked the sale of the team to Balsillie, claiming he went through the wrong channels (also that they have a right to control where teams in the league play and they don't want a team in Hamilton). The issue is still before the courts, but the bankruptcy courts have said that Balsillie has the right to submit a bid and have it considered regardless of the NHL's contentions. Similarly, in the past when lotteries in Canada and Oregon offered sports lotteries the leagues challenged the legality of it because they said they owned the rights to the nicknames. The question was never really challenged in court and instead the lotteries decided to just list city names without the nicknames. So a game between the New York Jets and the New York Giants on the Ontario sports lottery lists New York vs. New Jersey. Bettors know New Jersey represents the Giants from years of playing the lottery. As well, one of the original online sportsbooks (WSEX) was challenged by the leagues for putting up team logos on their website, so at the request of the NFL they were taken down. It's thus safe to say that leagues have control over merchandising and copyrights on their logos and nicknames, but do they have the right to actually stop people or states from gambling on the product? If the leagues truly believe they do then what are their arguments---and they can't just be, "because we said so".
2- Related to the first question, what rights do the leagues truly have if a state starts offering sports betting? The leagues have often claimed that Nevada doesn't have a professional sports league because of sports betting in Las Vegas. And in Ontario the Toronto Raptors have been paying the Ontario government for years, because in order to obtain a team the government had to remove NBA betting from its sports lottery and the government wanted revenue to offset what they would have made. The leagues have also threatened to take away teams from states that decide to offer sports betting. Naturally Delaware isn't an issue since they don't have any teams in the 4 main sports, but do the leagues really have that right? Again this is something the courts must decide. And more importantly would league officials honestly take away the license to operate from the Boston Red Sox, New England Patriots or New Jersey Nets if a state started offering sports betting? How would that be in anyone's interest, and what would be the net gain to the leagues, and what rights do team owners have in all of it?
3- What proof does the league have that betting harms game integrity? Forget the rhetoric and hyperbole and provide concrete examples of how betting has harmed the integrity and hurt the leagues? How did Pete Rose betting on baseball hurt the integrity of the game? How did Ted Donaghy cheating to shave points hurt the game? Did league revenues drop as a result? Did attendance decline? And more importantly has there been a jump in concerned letters to the leagues by fans and viewers as a result of those incidents? Furthermore, sportsbooks in Nevada, offshore and in the UK have claimed that legal sports betting helps identify cheating and thus protects the integrity of games. In fact the NHL signed a memorandum of understanding with Betfair to identify suspicious betting on the exchange, and there is ample evidence that almost all cheating in the past involved illegal books mostly run by the mob. Underground betting isn't going anywhere regardless of what the leagues do, and the Donaghy cheating scheme, along with that by Rick Tocchet, were done with shady underground figures. So how is it better to keep the betting underground than to bring it in the open where all bets can be analyzed and open to scrutiny? It also should be noted that in 2004 FC Porto was charged with trying to bribe an official in an attempt to rig a match in Portugal. The punishment handed out by their league was severe and the team was deducted 6 points and may be forced out of the Champion's League next year, which would cost the team millions. More than anything, it hurt the reputation of the team. Yet the interest in soccer in both Portugal and the rest of Europe is as high as ever. The Europeans seem to believe that if a team is caught cheating, then you go after the cheaters. Severe discipline will ensure it is less likely to happen. But never in all the scandal was it suggested that betting on soccer games was the main concern or that gambling on soccer was something that should be stopped. Are the U.S. leagues going after the right parties with their concerns, or are they placing the blame on gambling rather than on the cheaters to avoid the real issues?
4- Related to question 3, the UK has had legal sports betting since 1961 and Australia has had legal sports betting for almost as long. The countries have stated that sports betting helps the integrity of the sport and that the number of incidents have been small. Overseas there are clear rules that players, coaches, etc. can't bet on games in which they are involved. And in horse racing, trainers, owners and jockeys cannot bet against their own horses. These simple rules seemed to satisfy all parties. Why exactly are U.S. leagues different than those overseas and why do the U.S. leagues believe they are superior to other leagues and above any reproach? Furthermore, does the fact that overseas leagues allow players to wager on sports, while U.S. leagues don't allow players to gamble at all, mean that the U.S. leagues simply don't trust their own athletes? Does the fact that American athletes are constantly testing positive for steroids, while overseas it's almost unheard of, cause some of that mistrust? Maybe the leagues are right that their players can't be trusted, but that is an issue that must be addressed separately from the gambling concern.
5- The leagues have been charged with hypocrisy on gambling because they allow some lotteries to use their trademarks as part of the game, and very often casinos advertise at sporting events. The leagues were instrumental in passing the UIGEA because they claimed all online gambling was bad for them. And they have challenged Barney Frank, Robert Wexler and others who want to legalize online gambling and provide an opt out for sports betting. The leagues seem to be talking out of both sides of their mouths. On one side they say that all gambling is wrong and must be stopped, yet on the other side they are promoting gambling via lotteries, casino advertising and rotisserie leagues. So what is their stance? Is all gambling wrong, or not? If not how do they differentiate between "good non-sports gambling" and "bad non-sports gambling?" Furthermore, why do they believe it is their concern whether someone plays poker online?
6- As mentioned earlier, the Toronto Raptors had to pay the Ontario government not to offer NBA betting in order to secure a team. If the courts determine that Delaware, New Jersey, Massachusetts, etc. are permitted to offer sports wagering, would the leagues be prepared to do as the Raptors did and pay the states an amount equal to what could be gained through sports betting in exchange for not offering gambling on the product? If not, then how much would the leagues be willing to pay to the states not to provide something the states believe is absolutely within their right to offer? Along with this issue the courts must decide if gambling is a state's right issue, and if it is, how can they dictate that some gambling is ok and others aren't? At some point the tenth amendment to the constitution must be addressed.
7- And finally, the NFL is very rich and the other leagues are doing well. But revenues are declining, corporate seats aren't selling as well, and in sports like NASCAR, teams are finding it difficult to secure sponsorships and advertising. Start and park teams in NASCAR are just accepted these days, and any non-tobacco advertising is welcome. In fact for a while BetonSports Poker sponsored a NASCAR team. Other leagues such as the CFL and MLS allow gambling advertising because they don't have the revenue stream as the NFL and need the advertising to survive. Can the leagues assure that if revenues continue to decline and gambling is the only form of viable revenue that they will never allow gambling advertising or help promote betting companies as a revenue generating tool? Also, are all teams on the same side with this stance or are the league commissioners today simply expressing their own opinions and team owners are forced to accept the league's position even if they don't agree with it? Furthermore, if the leagues could guarantee an extra billion over a few years by sanctioning sports betting would their stance change? If so can the leagues assure the courts, fans and bettors that their stance is solely based on morality and concern for integrity and it's not sour grapes that they aren't getting a percentage of the take? If not then maybe sportsbooks and politicians need to discuss a revenue sharing plan instead.
If the leagues can honestly address all the issues above and do so without rhetoric and hyperbole, then the states, politicians and courts may take them more seriously.
I still have the nagging feeling the leagues are wrangling to get a piece of the action. Maybe earlier they were just in the "no gambling" mode (yes Nevada, but ~$2B yearly handle is nothing compared to the illegal handle).
Now...maybe they know legalized sports betting is going to happen...and Delaware is a lot closer to more major population centers than Nevada. With NJ suing and MA making similar pro-betting noise, the leagues need to exert any influence they have to get some. This is the only leverage they have.
They've been smacked down in a couple of cases where they tried to corner the fantasy sports market. They lose this and they will have to live off their paltry TV revenue, LOL.
I think the leagues miscalculated. They should have worked with Congress and the states in private years ago to set up the structure and revenue breakouts and then make the plan public. Ticking off big companies (like CBS and Yahoo) over names and statistics for fantasy sports and states like Delaware over sports betting, they haven't made any friends.
As you stated in your article, the states are looking for money, and gambling is more than a viable source of revenue. Politicians see lots of $$$, couple that with immediate need and the ability of gaming operators to provide equal or greater campaign contributions than the leagues and NCAA...easy call. Place your bets, baby.
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