by Sara Hoffman
January 17, 2013
In January 2012, New Jersey Governor Chris Christie signed a state bill to legalize sports gambling at the state’s racetracks and Atlantic City casinos. According to recent press, licensing at these venues is expected to begin in January 2013. Under this law, single game wagering on college and professional sporting events will be permissible at licensed locations, and the proceeds will bolster the state’s declining casino industry and increase tax revenue. Proponents assert that this legalization could increase casino and racetrack revenue by approximately $225 million per year.
Sports gambling is prohibited in all but four states-Nevada, Delaware, Montana, and Oregon.
The NCAA and the four major professional sports leagues (MLB, NBA, NFL, and NHL) mobilized to object to New Jersey’s law by filing suit against New Jersey Governor, Chris Christie, and two other New Jersey officials in federal court in Trenton, New Jersey on August 7, 2012. Seeking to prevent state implementation of the law, the NCAA and the leagues assert that the state’s decision violates the Professional and Amateur Sports Protection Act (“PASPA”). The PASPA is a federal law enacted in 1992 which prohibits sports gambling in all but four states (Nevada, Delaware, Montana, and Oregon). The NCAA and the leagues claim that New Jersey’s violation of PASPA causes them irreparable harm by damaging the integrity of amateurism and professional sports. In addition to filing the lawsuit, the NCAA also expressed its opposition by pulling six 2013 championships from the state—a move which the NCAA asserted it was “forced” to make under NCAA policy to protect the integrity of the game as well as student-athletes’ well-being. The decision to relocate the championships was announced on October 15, 2012, the day on which proposed regulations for sports gambling structuring and licensure were published in the New Jersey Register following state Gaming Enforcement Division proposals in July.
The Arguments: State Rights and Lack of Standing v. Federal Law and Irreparable Harm
The arguments on each side have become clear since the lawsuit was filed in August. New Jersey argues that PAPSA violates states’ rights under the Tenth Amendment by depriving them of their rightful policing power. The state argues that the law improperly prohibits sports wagering in forty-six states while allowing it in four others; the state rejects the validity of a federal law that, on its face, applies to certain states and not others. Further, the state’s brief asserts that the leagues have no standing because they fail to show that they will suffer direct harm from New Jersey’s legalization of sports gambling. New Jersey asserts that sports gambling has become widespread with more than $350 billion spent annually on sports betting in spite of the prohibition on such activity. Even if the NCAA and the leagues have standing, the state dismisses their irreparable harm claims by asserting that New Jersey’s gambling operations will not be more harmful than the current abundance of illegal gambling.
The NCAA and the leagues assert that New Jersey’s law is an improper violation of PAPSA and cannot stand because this violation causes irreparable harm to the leagues by damaging essential competitive principles such as integrity. The leagues assert that expanding legalization of sports gambling will erode fundamental principles such as fan loyalty and arouse suspicion of game fixing and foul play. Moreover, the NCAA and the leagues point out that New Jersey had a window of one year to qualify for legalized sports gambling before the passage of PAPSA and did not do so, which is why it is permitted in four states and banned in New Jersey.
While many New Jersey politicians and outside commentators have predicted a state win in the lawsuit, it’s important to consider the contentions of the NCAA and the leagues. Although some may dismiss the NCAA and leagues’ position as another effort to perpetuate their seemingly ever-expanding monopolies and revenue levels, taking a closer look leaves one questioning how the court’s potential upholding of New Jersey’s sports gambling operations could affect the future of NCAA and professional sports. As part of the ongoing litigation effort, NCAA President Mark Emmert and each professional league commissioner submitted declarations supporting the motion for summary judgment and a preliminary injunction in August 2012. The declarations provide clear insight into their opposition to the state’s legalized sports gambling scheme.
The NCAA and League Declarations
The positions expressed by Emmert and each league commissioner in the declarations focus on two main ideas. First, they assert that New Jersey’s gambling scheme threatens irreparable harm to the NCAA and the leagues. Second, the NCAA and the leagues point out that they have vigorously opposed sports gambling in the United States.
NCAA President Mark Emmert’s declaration argues that legalization of sports wagering in New Jersey would damage the integrity of intercollegiate athletics and undermine public confidence, increasing suspicion of “every NCAA event that affects the betting line.” In addition to increasing cynicism and speculation of game fixing, the NCAA claims that gamblers’ gains from betting on college events would improperly signal that the exploitation of student-athletes is acceptable and would consequently place the importance of financial gain above principles such as fan allegiance, student-athletes, and fair competition. Emmert argues that the state recognized the “obvious harms” at stake by choosing to disallow gambling on events taking place in New Jersey or involving New Jersey teams.
The commissioners of the various sports leagues have declared that New Jersey’s effectuation of sports wagering would inflict similar harms on professional sports, including irreparable damage to the leagues’ integrity and public confidence as well as increased suspicion of game events and decisions. NFL Commissioner Roger Goodell’s declaration alleges that fans would begin to distrust “every on-the-field NFL event that affects the betting line” as game-fixing or point-shaving strategies, including “normal incidents of the game such as bad snaps, dropped passes, turnovers, penalties, and play calling.” NHL Commissioner Gary Bettman adds player injuries to the list of normal competition occurrences that would now arouse suspicions amongst fans. Additionally, each commissioner attributes league success and popularity to fan loyalty and team allegiances- principles that they allege would be sacrificed in favor of the financial interest in winning a bet. Rather than focus on team allegiances, the commissioners assert that fans would be primarily concerned with the outcome of their individual bets. As Goodell explains, “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.” All of these declarations state that monetary damages would be insufficient to compensate the harms inflicted and thus the court must prevent New Jersey from legalizing sports gambling.
The NCAA and leagues’ longstanding efforts to oppose sports betting strongly substantiate their belief that gambling would cause harm to their enterprises. Bettman contends that the integrity and ideals of hard work and fair competition are so essential to popularity that the NHL “works tirelessly to earn and protect its reputation for integrity of competition, without which the league will no longer be viewed as quality family entertainment.” The declarations highlight specific rules which have been enacted by the NCAA and the leagues to discourage and prohibit the occurrence of gambling. For example, NCAA bylaw 10.3 prohibits student-athletes and staff members from knowingly participating in sports wagering activities or providing information to individuals associated with wagering activities on intercollegiate, amateur, or professional athletic competition. Violation of this bylaw may result in loss of a minimum of one season of eligibility or permanent loss of eligibility depending on the specific activity. The NCAA also discourages gambling through use of an employee handbook sports wagering provision that prohibits employees from participating in any form of sports wagering and a ban on NCAA championship events in states with legalized sports gambling systems. The MLB also developed a firm stance against legalized sports gambling following the 1919 Black Sox scandal surrounding the World Series, in which eight players conspired to intentionally lose games. As Commissioner Allan Selig’s declaration describes, Rules 21(d)(1) and (2) sanction player, umpire, and club or league official and employee betting by imposing permanent ineligibility for bets on games in which the individual performs. Bets on games in which the individual has no duty to perform are punishable by one year of ineligibility. Goodell’s declaration points to similar rules in NFL governing documents and contracts, including NFL Constitution and Bylaws Article 8.13(C) (prohibiting employee gambling on games) and 9.1(C)(12) (discussing detriments of gambling and game-fixing), the NFL Policy Manual for Administrative/Business Operations (prohibiting owners from owning or managing gambling-related enterprises such as casinos), NFL League Policies for Players (including anti-gambling notices posted in every NFL locker room), and Standard NFL Player Contract (imposing fine, suspension, or contract termination for game-fixing, sports gambling, or associating with gamblers).
In addition to league-specific rules, the NCAA and leagues have also invested a considerable amount of time and money to uphold federal sports gambling regulations such as PASPA. In addition to supporting the enactment of PASPA in 1992 by providing testimony before Congress, from 2000-2002, the NCAA and leagues supported an unsuccessful federal law that would have prohibiting gambling on college sports in all states. The leagues also opposed Delaware’s 2002 proposal for state-sponsored gambling. The leagues supported passage of the federal Unlawful Internet Gambling Enforcement Act in 2006 and successfully opposed 2007 legislation that would have repealed key provisions of the Act. In 2009, the NCAA and leagues were at work in Delaware once again to successfully oppose the state’s attempt to expand sports gambling to single-game wagering in violation of PASPA with summary judgment in Office of the Commissioner of Baseball v. Markell. New Jersey is also familiar territory in the NCAA and league defense against sports gambling—in 1992-93, NCAA and league leaders testified before the New Jersey Senate Judiciary Committee in successful opposition to the proposed state constitution amendment to legalize sports gambling. As MLB Commissioner Selig’s declaration points out, there has also been vocal opposition to proposed legalization of sports gambling in New Hampshire, New York, Massachusetts, and Rhode Island. The leagues have found it necessary to police enforcement of PASPA since they initiated its passing, and this lawsuit is another example of their concern for the effect of sports gambling on their products and the integrity of their brands, especially as they do not stand to gain financially from legalization.
NCAA and league opposition to legalized sports gambling evidences the importance placed on maintaining game integrity and fan loyalty, and their position is strongly backed by PASPA. With a longstanding federal statute on their side, the NCAA and leagues’ arguments against New Jersey’s legalization appear strong; however, the widespread presence of sports gambling as it stands adds momentum to New Jersey’s defense.
Further, there is room to doubt the NCAA and league arguments of irreparable harm. Increased sports gambling may distort the nature of team loyalty and take the focus off of one specific team, but are 100% team allegiances really necessary to league success? In an age of fantasy sports leagues, many fans “own” teams comprised of players across many teams whom they root for each game, and the professional leagues even encourage this activity. Often, fans have money at stake in these fantasy arrangements, and it stands to reason that this financial interest increases viewership and interest, which the leagues enjoy without complaint. Perhaps the shift to legalized gambling is not so prominent. Although the league declarations express concern for taking the focus off of winning, many viewers already worry about spreads while watching games. League concern for exploitation of athletes arising from gambling schemes also seems to be a weak argument in the midst of a highly commercialized, sponsorship-focused sports industry, although there is a stronger argument for preventing exploitation of college athletes to maintain amateurism. Moreover, recent scandals concerning doping, collegiate violations, and lockout issues across the leagues seem to undermine the integrity that the leagues are focused on maintaining.
New Jersey is determined to succeed in this battle against PASPA after its failed attempt to overturn the federal sports gambling ban as unconstitutional in a 2009 federal lawsuit, which was dismissed procedural grounds for lack of standing as New Jersey did not have sports gambling at that time. Obviously the NCAA and leagues’ objection to sports gambling is not restricted to the state of New Jersey—they are worried that allowing New Jersey to legalize sports gambling is just the beginning. New Jersey’s defiance of PAPSA opens the door for all states to do so, and the problem is not contained within the U.S. In fact, the leagues seem to be fighting on many fronts as Canada’s legislature has proposed legalizing single-game wagers on sporting events. It seems it may only be a matter of time before the legalized sports gambling battle is lost—but if the NCAA and leagues can get past the standing hurdle in the New Jersey case, they can put off widespread legalization for a bit longer.