After Supreme Court Decision, the Business of Sports Is About to Change Radically. This Expert Explains What You Need to Know.
I’m a baseball fan. When I lived in the Bay Area, I was a season ticket holder to the San Francisco Giants. And every baseball fan knows about Pete Rose, the preternaturally talented player who scandalized his sport when it was revealed he bet on baseball, including games involving his own team. Now, no one is contemplating allowing players or managers to bet on games in their own sport. But the Pete Rose story serves as a grim reminder of what can happen with sports gambling.
The trouble is that sports gambling is fun! The thrill of making some dough on your team just adds to the excitement of the sport. It’s also hugely profitable for business and government. So when the Supreme Court of the United States released their decision on Murphy vs. NCAA last week, the gambling-loving world rejoiced. SCOTUS determined that the 1992 federal law called Professional and Amateur Sports Protection Act (PAPSA) violated the Constitution’s anti-commandeering clause, thus striking down the law.
Mark Conrad is a professor of law and ethics at Fordham University, where he has taught in the School of Law and in the Gabelli School of Business. He’s also the director of Gabelli’s Sports Business Concentration, and is the author of The Business of Sports -; Off the Field, In the Office, On the News. Professor Conrad was kind enough to share with me some of his thoughts on this landmark decision.
1. Nothing’s Actually Changed…Yet.
The Court’s decision caused an avalanche of news and commentary, but, “At the moment, not much has changed,” says Conrad. The decision opened the door to huge change, but nothing is actually different yet. Conrad explains, “The court declared unconstitutional the Federal law that prohibits sports gambling. It did not sanction or permit sports gambling.” So what happens now? Conrad says no one really knows: “It is now up to the states, or the federal government, to decide.” Here’s where it get interesting!
2. The Devil Is in the Details.
“This story is only beginning,” says Conrad, who also has a degree from Columbia’s School of Journalism. “No state has enact a gambling scheme, although New Jersey may soon,” he says. The question is what happens next. For starters, Conrad asks, “Will states legalize it? And if so, which ones, and when?” Next comes the what. Conrad wants to know, “Will it apply to all sports or just pro sports?” And finally, the how. Conrad ponders: “What will be the license fees for companies wishing to do business in the state? Taxes? Anti-corruption measures?” The potential complexities are endless.
3. Congress May Not Be Done.
The Court may have struck down Congress’ PAPSA law, but that doesn’t mean Congress can’t still have the final word. Conrad explains, “The problem with PAPSA was it prevented states from exercising their powers. The law did not mandate a ban on sports gambling – rather, it told the states they were not allowed to enact laws ‘authorizing’ such gambling schemes.” The problem was the way this law was structured, but not the idea behind the law. In fact, Conrad says, “The decision did state that Congress has the power to enact a ban on gambling.” It’s possible Congress could throw some very cold water on all the excitement.
4. Integrity May Be an Issue…Or May Not.
The potential implications for the integrity of sport are fascinating. As with any gambling, there’s risk of corruption. Conrad recalls, “It has occurred in the past, notably in point-shaving in college sports.” But cheating isn’t a given. “In fact, the risk of corruption may decrease with a properly regulated integrity oversight,” Conrad explains. There are examples the US could look to for inspiration. Conrad says, “The UK model has worked well. The betting companies engage in analytics and metric systems to police suspicious gambling patterns and report these anomalies.” The key is not to over-regulate or over-tax it, which may push otherwise legal gambling underground.
5. This Decision Could Have Major Implications for State Versus Federal Authority.
“This is the underlying constitutional issue in this ruling,” Conrad explains. “Ultimately, it is a constitutional law case regarding state powers under the Tenth Amendment.” Here’s his plain-English explanation of the finer constitutional points: “PAPSA was problematic because it ‘commandeered’ states rights. Instead of banning sports gambling, it said could not enact laws authorizing gambling. It’s a subtle difference, but a constitutionally defective one.” This is an important decision in part of a greater shift. According to Conrad, “It continues a trend to give greater deference to state sovereignty.” It will be fascinating to watch as the complexities continue to develop.