BUSINESS

A Fig Leaf across the face

TAGs: Online Gaming, the mouthpiece

In-state prohibitions on sports betting make no sense

“All nonsense questions are  unanswerable.”

C.S. Lewis

In younger, more innocent times, a family friend took me to museums and art galleries, that my mind might be improved. The main difference, as far as I could see, between genuine classic and classically inspired sculptures was the fig leaf.

a-fig-leaf-across-the-face-minVictorian copiers of Greek and Roman works took to covering strategic parts of the anatomy with strategically placed fig leaves. Of course, it backfired. By plainly hiding the thing, the powers-that-be generated undying interest in what those things might be.

Why mention it in an gambling column? Because, in pursuit of an imaginary purity, the various state authorities which control online gaming in the U.S. are working hard to put fig leaves on state licensed online sports betting. This is not merely unjust, it is unbalanced. And of course, it doesn’t work.

A few bad apples ruin the bunch

The multibillion-dollar media empire that is professional sports began, believe it or not, as a social reform movement. The English public school system, copied in America, stressed sports as a release for youthful energy and a transmission line for social values such as competition, teamwork, and sportsmanship.

But of course all that goodness is compromised by exposure to wicked gambling, so sports betting has always been frowned on by the powers that be. In 1919, a crooked gambler bribed the Chicago White Sox to throw the World Series. After that, any involvement with gambling on any level was absolutely taboo for athletes and their teams. Even star players  were not immune.  Anyone remember Pete Rose? He was a shoo-in for the baseball Hall of Fame until connections to sports betting were found. Now he, and others like him, are out in the cold for good.

Likewise one of the prime purposes of the NCAA was and is to prevent collegiate sports being infiltrated by gambling interests. States would love some of that revenue. Notwithstanding, the NCAA continues to oppose “all forms of legal and illegal sports wagering, which has the potential to undermine the integrity of sports contests and jeopardizes the welfare of student-athletes and the intercollegiate athletics community.” This was perfectly fine until last year, when the U.S. Supreme Court struck down the Professional and Amateur Sports Protection Act (PASPA) as unconstitutional, paving the way at last for state and tribal governments to legalize and offer full-on sports betting.

This was and is a knotty problem. On the one hand, sports betting is a global industry, worth about $350 billion annually. The states would love a cut of that revenue. On the other hand, the NCAA runs college sports in America, everything from baseball to water polo. More than 1200 schools and colleges are members, fielding almost half a million student athletes. TV rights and licensing bring the NCAA around $1 billion a year. But now states and the NCAA seem to be on opposing sides. What is to be done?

Compromise or pose?

The compromise, the fig leaf proposed to bridge this gap, is state self-exclusion. A state gambling authority can license bets on pro and collegiate sports, except bets on games featuring colleges from the same state. So if you live in New Jersey, you can bet on all the college teams you like – except for Rutgers and Princeton, and any other college in the Garden State. The same goes for New York, and other states are considering the same betting ban on their own college teams as well.

It’s doubtful that this can even be called a compromise.

The idea of a compromise is that both parties to a dispute resolve the matter by each giving up something, in order to secure the main objective. But in this case what is the objective? To protect college athletics from the scourge of gambling? Well, then, the would be bettor can take his business across the state line and make that same bet. So, betting on a college athlete is harmful and corruptive if made in the same state as that athlete plays, but okay in the state next door? It’s the same bettor and the same bet, just moved a few miles. Are the evil effects of gambling eliminated by distance, as with nuclear warheads? But the same formula is being applied to Rhode Island, which is 40 miles across at its widest, and to Montana, which spans 10 times the distance. Has somebody invented the neutron bet?

The only tangible result is to deprive in-state fans of the opportunity to bet, and thereby deny the state revenue it otherwise would have had. Are virtue and purity upheld by betting only on the other states’ games? Is this to say that neither the gambling public, the athletes themselves nor the regulators of any state can be trusted to play honest when one of the home teams is involved?

What we have here is the phenomenon that has become known as virtue signaling – the old Puritan holier-than-thou routine. On stilts. And not only is this gesture just plain silly today, it will be less and less use as time wears on. For the future of gambling is very clearly digital and online.

Horse racing holds the keys future

Can a multistate participatory model be devised for sports betting? Surprise, surprise, we already have one! Horse racing counts as a sport, and wagers on the ponies have been crossing state and even national boundaries for decades now.

Under the Interstate Horse Racing Act, modified in 1987, state racing commissions and gambling control boards may authorize out-of-state bets on their horse races, provided certain minimal conditions are met. Horse betting services have been, and continue to be provided, online by such companies as TVG, Bet America and Twin Spires, with very few problems.

This business model, including interstate cooperation, can easily be used for betting on other sports, even allowing for the difference between pari-mutuel and fixed odds wagering. A workable, practical solution for sports betting and its finances is there, if the competent authorities will only reach for it.

But this all depends on their recognizing and coming to terms with the emerging realities of sports wagering, particularly mobile and online. In the meantime, alas, the old fig leaf is no longer a guarantor of modesty. Instead, it has slipped, and is now functioning all too well as a blindfold.


Mr. Owens is a California attorney specializing in the law of Internet and interactive gaming since 1998. Co-author of INTERNET GAMING LAW with Professor Nelson Rose, (Mary Ann Liebert Publishers, 2nd ed 2009); Associate Editor, Gaming Law Review & Economics; Contributing Editor, TSN. Comments/inquiries welcome at [email protected].

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