SCOTUS Ruling on Gambling Could Be a Game-Changer

When the Supreme Court in May reversed a long-standing prohibition on sports gambling by overturning the Professional and Amateur Sports Protection Act (PASPA) in Murphy v. National Collegiate Athletic Association, the world of sports may have been forever altered. After all, the anti-gambling stances held by the NCAA and professional leagues make much less sense in a world that sanctions gambling as the law of the land. In that world, sports organizations hoping to avoid the appearance of being "tainted" by gambling would have to vastly shift their strategies.

Instead of merely banning marquee events from Las Vegas, the NCAA in theory would also have to shun Newark and additional host cities, as more states legalize sports betting.

But with PASPA overturned, the NCAA is at least hinting at a stance softer than its long-held belief that allowing bets to be placed on its events threatens the integrity of the games it oversees. In a statement following the Supreme Court's ruling, NCAA president Mark Emmert reiterated these concerns while calling for federal regulation, saying, "While we recognize the critical role of state governments, strong federal standards are necessary to safeguard the integrity of college sports and the athletes who play these games at all levels." However, in the same statement, the NCAA announced that it would lift its ban on hosting championship events in locales where sports wagering is legal (i.e., Las Vegas), at least temporarily.

That said, NCAA policy will still prohibit gambling by collegiate student-athletes and athletics employees, and college athletic directors should be ready for a new enforcement challenge should legislation allowing for sports betting be passed in their state.

Even prior to the Supreme Court's decision in Murphy, professional sports leagues seemed to be warming to Las Vegas and sports betting. The NHL became the first professional league to locate a franchise in Las Vegas with the expansion Golden Knights, and the NFL will soon follow suit by relocating the Raiders. Sports gambling as an enterprise was expressly endorsed by NBA commissioner Adam Silver, who called for bringing sports betting "out of the underground and into the sunlight where it can be appropriately monitored and regulated" in a 2014 New York Times op-ed.

Conventional wisdom holds that the NCAA and professional leagues could parlay sports betting into new revenues. Allowing fans to place bets would simply provide them with a new way of engaging with the team — revving interest and television viewership and possibly leading to even more lucrative television contracts. The NBA and MLB have floated the notion of the leagues taking a cut of any gambling proceeds as an "integrity fee." Sports and culture website The Ringer suggests that leagues could pressure lawmakers to draft legislation that requires any bookmakers to use official league data and charge them for access. Moreover, legal gambling provides teams and leagues an entirely new category of sponsorship opportunities (though the NCAA says it will continue to restrict sports gambling sponsorships and advertising for championships and bowl games).

As of this writing, three states — Delaware, Nevada and New Jersey — had legalized sports betting in some form. According to ESPN, additional states are in the process, with several (Mississippi, Pennsylvania and West Virginia among them) either legalizing but not yet implementing laws to allow sports betting, or working on legislation that would do so. It's worth noting that many states have not moved to legalize sports betting at all, and that one state — Utah — has a firm anti-gambling stance written into its constitution.

Still, the possibility of taxing sports gambling proceeds to shore up state budgets seems likely to lead to action in state houses across the country. Each of the states on the road to legalized gambling has proposed rates higher than the 6.75 percent tax that Nevada places on sportsbook revenues. For example, New Jersey's proposed rates range from 8 percent for bets placed at casinos and tracks to 12.5 percent for online bets. Pennsylvania set an eye-popping 36 percent rate to go along with a one-time, $10 million licensing fee. If any bookmakers bite on those hefty fees for the right to operate and access the market, states could see multimillion dollar boosts to their budgets.

The Supreme Court's ruling therefore represents an opportunity for fans, teams, leagues and states to cash in — but whether they do, and how, remains an open question. It could be that a federal approach to regulation, as proposed by the NCAA's Emmert, will present a new set of challenges, or that too few states will adopt laws of their own to make a nationwide impact. Still, odds appear to be stacked in favor of sports gambling approaching something close to mainstream in the coming years.

This article originally appeared in the September 2018 issue of Athletic Business with the title "Will the Supreme Court’s ruling on sports betting change the game?." Athletic Business is a free magazine for professionals in the athletic, fitness and recreation industry. Click here to subscribe.