PROFESSIONAL SPORTS LEAGUES' BIG BET: 'EVOLVING' ATTITUDES ON GAMBLING.

Author:Brandt, Andrew
 
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INTRODUCTION: THE MANTRA OF INTEGRITY 275 I. PASPA AND FAILED ATTEMPTS TO OVERTURN IT 276 A. Professional and Amateur Sports Protection Act ("PASPA ") 277 B. New Jersey's Quest for Sports Betting 279 C. New Jersey's Resilience 279 D. The Future of the Professional Leagues' Resistance 281 II. CASE STUDY: THE NFL IN 2015; DAILY FANTASY SPORTS AND GAMBLING GREY AREAS 282 A. From Curiosity to Scrutiny 285 B. New York State of Mind 287 C. First Settlement Reached 290 D. Other State Responses 290 III. THE EVOLUTION 292 A. Hypocrisy 292 B. vegas Calling 293 C. NHL Guinea Pig 293 D. Whither the NFL? 294 E. LA's Siren Song 295 F. Just Move to Vegas, Baby 297 G. Silver Linings and the Future 298 INTRODUCTION: THE MANTRA OF INTEGRITY

Integrity has been the watchword of American professional sports leagues. In order to gain public trust and confidence from fans, media, sponsors, networks and other stakeholders in their games, the leagues' mantra of integrity is critical. These stakeholders must be certain they are investing in a product that is beyond reproach.

An area that has traditionally struck at the heart of that integrity is gambling, specifically sports gambling. Throughout the history of sports law and policy, leaders at every level of sports--from league commissioners, to team management, to legislators--have held up roadblocks to sports gambling, all in the name of "integrity of the game." Indeed, the first true commissioner in sports, Judge Kenesaw Mountain Landis, was hired by Major League Baseball with a mandate to restore integrity after the "Black Sox" scandal in 1919, which featured "Shoeless" Joe Jackson and the Chicago White Sox "throwing" the World Series for gambling profit.

Further examples of strong sanctions for gambling included baseball's "Hit King" Pete Rose's banishment from the game for sports betting--an expulsion that continues today, 27 years later--former NFL stars Paul Hornung's and Alex Karras's suspensions by NFL Commissioner Pete Rozelle for the 1963 season for betting amounts ranging from $50 to $500 on league games; and former NBA referee Tim Donaghy's firing in 2007 upon accusations that he made calls that affected point spreads in certain games. When even the appearance of impropriety came up in these situations, league leaders acted to remove the subjects in question from the game. Gambling struck at the heart of the cherished "integrity of the game," and players involved in gambling activities were dealt with harshly.

For this reason and others, although common and even accepted in other countries, gambling in sports exists largely in the shadows in the United States. However, as professional sports leagues move into a new era of fan engagement, high profits, and placement of franchises in Las vegas, there appears to be an increasing re-evaluation and potential reset regarding gambling and its potential threat to the leagues' cherished integrity. Professional sports leagues are increasingly accepting that gambling is part of their future and are actively assessing the best ways to react, respond, and potentially monetize the legal landscape around sports gambling.

This Article examines recent trends in an ever-changing sports gambling landscape, especially through the lens of increasing acceptance forged through fantasy sports, specifically Daily Fantasy Sports ("DFS "). DFS are services that allow consumers to not only wager on their season-long lineup of players but also new and revised weekly (in the case of football) or even daily (in the case of the National Basketball Association ("NBA "), the National Hockey League ("NHL "), and Major League Baseball ("MLB ")) lineups.

The Article will examine the conflicted stance between leagues' ardent defense of New Jersey's efforts to legalize sports betting while openly embracing DFS as perhaps a "softer" form of gambling. This Article will further examine how a symbol of this change in attitude and action can be crystallized in what is happening in the city most associated with gambling in the country: Las vegas. The NHL has relocated an expansion franchise there, which will begin play in the fall of 2017, and the NFL now will join them in a splashy new stadium set to host the Raiders in 2020. The Article will then assess whether, in light of the powerful fan engagement tool DFS has become, professional sports leagues' acceptance of sports gambling is based on a diminishing threat to integrity or an increase in monetization opportunities.

  1. PASPA AND FAILED ATTEMPTS TO OVERTURN IT

    In 1989, Major League Baseball Commissioner Bart Giamatti, a former Yale professor with a romantic view of baseball's purity, launched a comprehensive inquiry into the sports gambling history of Pete Rose, the sport's leader in total base hits, and the then-manager of the Cincinnati Reds. (1) As noted above, the Giamatti-Rose saga resulted in Rose's expulsion from the league with which he is synonymous: Major League Baseball. Rose remains barred from baseball today, three commissioners removed from Giammati, despite his repeated entreaties for acceptance to all three (Fay Vincent, Bud Selig, and now Rob Manfred).

    The Giammati--Rose showdown was emblematic of professional leagues' resistance towards gambling, and the discipline they have levied because of it. While only three states had authorized sports betting in the early 1990s, NFL Commissioner Paul Tagliabue, NBA Commissioner David Stern, and MLB Commissioner Fay vincent, spurred on by the public disgust with the Rosesaga, urged action to prohibit its expansion at the time. (2) Citing the common pillar of integrity, Vincent testified before Congress that "'[t]he legalization of team sports betting by any state or municipality would increase the chances that persons gambling on games will attempt to influence the outcome of those games.'" (3) The NBA mobilized opposition to an Oregon lottery scheme that included NBA teams, eventually forcing the state to no longer base winnings on outcomes of the league's games. (4)

    Public opposition in the name of integrity was one thing; enacting legislation banning sports betting proved more difficult. In 1990, Congress introduced several bills containing amendments banning sports betting, but was unable to pass them into law. (5) The unsuccessful efforts eventually provided momentum towards a successful bill, as Congress enacted the Professional and Amateur Sports Protection Act ("PASPA ") in 1992.

    Pockets of resistance to gambling prohibitions emerged--including cash-strapped state legislatures and revenue-seeking casino operators--with lobbying muscle behind them. (6) In arguments that persist today and create a continuing conundrum in this area, sports betting proponents forcefully argue that a ban on legal sports betting will not eliminate the market, but rather leave it "in the hands of organized crime." They argue that the leagues' mantra of integrity of the game would be better protected by "state officials who [would] carefully regulate [sports betting] ..." (7)

    1. Professional and Amateur Sports Protection Act ("PASPA ")

      PASPA makes it unlawful for a government entity or person in any way to facilitate or conduct a "lottery, sweepstakes, or other betting, gambling, or wagering scheme based, directly or indirectly ... on one or more competitive games in which amateur or professional athletes participate, or are intended to participate, or on one or more performances of such athletes in such games." (8) Under PASPA, state government efforts to regulate--and thereby tax--sports gambling are prohibited, as that would be "authorization." (9)

      Upon its enactment, PASPA made an initial allowance for states then operating sports betting schemes to choose to continue these schemes and be "grandfathered-in" under the new law. (10) Four states chose to maintain their gambling operations: Delaware, Montana, oregon, and, of course, Nevada. The exception was limited, however, to only the schemes currently in place in these states. Delaware and Oregon had a parlay system--a scheme that requires selecting multiple correct outcomes--built into their state lotteries; Montana allowed bars to offer various types of "sports pools; " (11) and Nevada had what would be considered full-scale sports betting, the "forbidden fruit" when it comes to professional sports leagues and their athletes. (12)

      The success these states have had hosting sports betting schemes varies. Oregon, facing pressure from the NCAA and NFL, decided to phase out operation of the state parlay lottery in 2005 as part of an effort to host "March Madness" games. (13) Montana and Nevada continue to operate their betting schemes, but have been reluctant to open the door for daily fantasy sports--though for slightly different reasons. (14) Delaware continues to operate its parlay scheme, but it was the first state to challenge PASPA in court. (15)

      Delaware's sports betting scheme was a "multi-game parlay" system, in which a bettor must select the correct outcome of multiple games in order to win. But in 2009, Delaware attempted to expand this offering by allowing bettors to pick the outcome of only one game--a more traditional type of sports betting. This game, sanctioned by Delaware's "Sports Lottery Act," was met with intense resistance from the four professional leagues and the NCAA. The leagues challenged the law in federal court, but were denied an injunction at the District Court for the District of Delaware. (16)

      On appeal in the Third Circuit, Office of Commissioner of Baseball v. Markell ruled on the scope of PASPA and what would be grandfathered in. Since Delaware was legally allowed to offer multi-game parlays, the state believed it should be allowed to offer single-game bets as well. Judge Hardiman of the Third Circuit, however, decided against the state:

      [The] exception provides that PASPA's general prohibition against sports betting shall not apply to: "lottery, sweepstakes, or other...

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