First, it was legalized weed, now it’s sports gambling. What’s next, prostitution?
The U.S. Supreme Court’s decision to strike down a federal ban on legalized pro and college sports betting raises lots of questions.
First off: When can people start legally losing dough over garbage time buckets and controversial penalty flags?
The answer: Probably not for at least two more years here in California.
The Supremes ruled 6-3 that the 1992 Professional and Amateur Sports Protection Act was unconstitutional because it overstepped states’ rights to regulate themselves.
So regulate away, you quasi-united states.
After talking to Bay Area legal scholars, we’re setting 100-1 odds that this process goes smoothly. In the meantime, here are some issues for Californians to ponder:
Where does this state stand on sports gambling?
No polls have been taken yet to see where the voting populace stands. But, not surprisingly, the state’s gaming industry, which includes tribal casinos, card rooms and racetracks, has welcomed the decision.
State Assemblyman Adam Gray, D-Merced, immediately got on the case after the high court ruling Monday and announced a proposed state constitutional amendment that would make sports gambling legal.
It’s difficult to gauge the state’s political will over sports wagering but former Stanford law professor William B. Gould IV doesn’t expect a backlash. “I don’t see entrenched resistance to this from churches or religious groups,” he said.
Delaware, Mississippi, New Jersey, Pennsylvania and West Virginia already began the process to legalize sports betting or develop regulations. Rhode Island’s governor counted on revenue from sports betting when proposing the fiscal 2019 budget and Connecticut’s governor was considering calling for a special session to consider legalizing sports betting.
In short: Many states can’t wait to get in the game. There’s no reason to think Californians won’t do the same.
How quickly can this happen?
Gray told the Southern California News Group he expects an amendment on the statewide ballot in two years. But while the gaming industry welcomes the opportunity, the strong lobbying groups have competing interests that could slow the process.
The state that brought the case to the Supreme Court, New Jersey, expects to have a sports book running by Memorial Day weekend. Experts say the landscape will look different within five years as many as 32 states could be open for business by then.
“The general consensus is that states that have a gaming infrastructure — parimutuel, racehorse betting, casino — those states will be ahead in the race a little bit,” said Donald J. Polden, a Santa Clara University law professor with an expertise in gaming. “The anticipation is there is going to be so much interest from those sources there will be legislative action pretty quickly.”
Who is likely to benefit from sportsbooks?
The American Gaming Association estimates $150 billion is illegally spent on sports betting annually. So, it’s understandable why state treasurers have their eyes on a potentially lucrative revenue stream. California stands to make as much as $393 million annually in gaming taxes, according to a report on the economic impact of legalized gambling that was commissioned last year by the American Gaming Association.
California has a gazillion professional teams and Division I schools so it’s easy to imagine that gaming revenues could help get that bullet train from Los Angeles to San Francisco on track sometime before the 22nd century.
What might the on-site gambling possibilities look like?
Racetrack and parimutuel (shared winnings) betting already have the systems to easily move into sportsbooks. Santa Clara’s Polden expects “mom and pop” betting shops also to surface. Then he added this whopper: “I would imagine charitable organizations, the proverbial church bingo game suddenly changes. Now you can wager on a card of 15 football games from pros to colleges.”
Another area to consider is the world of fantasy sports, which has faced legal questions about whether it is a game of skill or one of chance. Legalized betting would end the discussion. It also has the potential to make fantasy sports even more inviting to fans.
Is it inevitable that all pro teams support this?
The four major leagues — the NFL, NHL, NBA and MLB — supported those trying to uphold the federal ban. Part of the legal support was protecting their games’ public perception. But leagues already have shown a willingness to go along with gambling, underscored by the NFL and NHL awarding teams to Las Vegas.
Listen, professional teams and leagues see dollar signs in sports wagering. Pro teams average a 5 percent to 6 percent return on investment so any new revenue stream is worth pursuing.
“They’re always trying to get people into a closed area and charge them for things that don’t involve the game,” Stanford’s Gould said. “Well, this is one more. It’s purely cynical self-interest. They will be at the front of the line with their hands open.”
How big of an extra cash cow could that be for them — and the leagues?
It’s difficult to estimate figures until we see what happens. But it must be a ton of dough because NBA commissioner Adam Silver has been all over this for the past four years. He has talked about the leagues getting an “integrity fee” cut off the sportsbook profits.
It leads to many questions, primarily, would the profits go only to teams playing in states with legalized betting? It’s going to take time to figure it out but rest assured the suits in the league offices will get their share.
What about college sports and the NCAA?
Colleges have attempted to create an image of purity if you will. But three days after the high court ruling the NCAA announced it had temporarily suspended its prohibition on championship events being held in states that allow sports betting. The ban, we don’t mind saying, was hypocritical considering the Pac-12 and Mountain West conferences hold annual basketball tournaments in Las Vegas.
Still, morality vs. money remains one of college sports’ biggest tug-of-wars. For example, Cal and Stanford don’t sell alcohol at sporting events, but San Jose State does. While alcohol sales have been revenue winners at places like Ohio State and Texas, the gambling potential is a different beast.
The feeling toward gaming will be ‘If we don’t have some portion of the stake somebody else will take it from us,’” Gould said. “Stanford is thinking very carefully about how it can do this. It runs counter to the public image they hope to cultivate but they wouldn’t let that stand in their way.”
Gould, however, says college sports might be vulnerable to game fixing because the players are not paid. The scholarship system has led to discontent among the athletes who see the NCAA and schools reap millions off their performances. A money trough such as gambling could lead to the unionization of college athletes.
Gould raised another interesting concern: “I wonder whether people will begin to bet on individual players,” he said. “If that happens will there be (Ed) O’Bannon-type disputes about that appropriation of their likeness.” (O’Bannon, a former UCLA star, sued the NCAA in 2009 in an antitrust class action case.)
Where do the existing offshore operations stand with the upcoming changes?
On the surface, it seems offshore bookmaking, which is located mostly in the Caribbean and Central America, could lose its client base to legalized gaming.
Not so fast.
The presence of offshore sites might force states, leagues and teams to lower revenue expectations. If commissions and taxes are too high, bettors might stick with the easy click of their mobile phones to make wagers abroad. Sure, such bets are illegal. But offshore sites have proven difficult for U.S. authorities to police.
State officials will need to create an easy-to-use system that can compete with the offshore sites. But the foreign books already have one big advantage: Some offshore sites take bets on credit, a proposition that won’t exist in legalized gaming.
What have we learned about sports gambling from places like Europe where it’s been legal for decades?
Betting shops have become universally accepted throughout the United Kingdom since it became legal to gamble on sporting events in 1960. The British establishments are as pervasive as pubs in malls and other centers of commerce instead of hidden away on backstreets like California marijuana dispensaries. Researchers have not found indications of increased addictions to gambling, according to studies.
Is there any increased risk for gambling-related scandal within the sports leagues themselves?
In 2006, Italy’s soccer leagues were embroiled in a major game-rigging scandal that led to punishment against some of the biggest clubs, including Juventus of Turin. Irish investigative journalist Declan Hill has written extensively about gambling and corruption, exposing problems in Asia and lower-division European soccer leagues.
However, the prevailing thought is professional athletes in major U.S. leagues are so well compensated that the temptation to help rig a contest has been reduced.
How would this change sports media?
In a column in the Los Angeles Times, Randy Harvey posits reporting on sporting events will undergo a dramatic shift. For starters, the games’ outcomes might have different significance to bettors, who also are big-time fans, and thus, the sports pages’ target audience.
Consider this freakish scenario: A blow-out that once garnered little drama or interest suddenly could be the most exciting moment this side of a World Cup final because the spread or over-under wasn’t decided until the final second or out.
“Your expertise will have to include understanding the implications for sudden shift changes,” Polden said. “This will be a regular part of your work on teams, trends and sports. That’s just scratching the surface in terms of stuff that will be important for reporters to know about.”
