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You bet | Coalition comes together to end prohibition of sports wagering in US

  • Bradley Act made betting on sports illegal throughout America in 1992
  • American Sports Betting Coalition calls for legalisation
  • Legalisation could improve declining sports viewing figures

Henry Hill was the mobster whose life story was immortalised in Martin Scorsese’s gangster epic, Goodfellas.

Hill’s extensive list of crime and misdemeanours included drug trafficking, racketeering, arson, armed robbery, extortion, and murder.

However, there was one other offence he committed which was all but ignored in the movie.

From 1978 to 1979, Hill threatened and bribed members of the Boston College basketball team to fix matches. This was one of several betting scandals to rock US sports during the 70s and 80s, the most high profile of which saw Cincinnati Reds baseball player-manager Pete Rose judiciously choosing which games he would bet on his own team to win.

This resulted in Rose being banned from the sport, and he remains in exile to this day.

Those scandals prompted senior sports officials and politicians to question whether betting was causing irreparable damage to the integrity of US sports.

They included former NBA star Bill Bradley, who went on to become Democratic Senator for New Jersey.

He was one of the leading figures behind the Professional and Amateur Sports Protection Act (PASPA) of 1992, also known as the Bradley Act.

This made betting on sports illegal throughout America except for any state that was running licensed sports pools or lotteries, which explains why you can still bet on any sporting event in Nevada.

But there is unquestionably a groundswell of opinion rising within the US which contends that PASPA is out-dated and should be scrapped.

Campaign

Geoff Freeman is the president and chief executive of the American Gaming Association (AGA), an organisation that represents the interests and employees of the casino industry but also has been at the forefront of the campaign to repeal PASPA and make sports betting legal.

In the middle of June, Freeman announced the launch of the American Sports Betting Coalition (ASBC), which has brought together gaming experts, law enforcers and state politicians to support the legalisation of sports betting.

The movement was further emboldened recently when the US Supreme Court agreed to hear New Jersey’s appeal in its long-running quest to offer legalised sports betting, overturning a series of judicial setbacks for one of the few states that already offers legal online gaming.

IMAGE: US sports fans are prohibited from betting on major events such as the NHL’s Stanley Cup final (Bruce Bennett/Getty Images)

Freeman says: “Let’s face it, despite PASPA’s presence, millions of Americans bet at will in a vast unregulated illegal market that offers no oversight by law enforcement, no accountability to regulators, no protection to consumers and no concern about the integrity of games.

“For example, in the two biggest sports events of the year, the Super Bowl and the NCAA Men’s Basketball tournament (otherwise known as a March Madness), Americans wagered nearly $15bn (€13.1bn) and 97 per cent of that wagering was illegal. The ASBC will pursue an aggressive, proactive campaign.”

Crucially, the AGA believes that technology, which has allowed sports betting to grow exponentially outside of the US, also provides one of the most compelling arguments for the repeal of PASPA.

Freeman explains: “There are a couple of UK companies that specialise in data integrity. They are tracking all of the input that goes into every game that takes place – how much is being bet, who’s betting it, where the bets are taking place, what is the betting history of these individuals, who is coaching those games, and who are the officials.

“All of that input goes into these algorithms, so it’s very easy for them to identify if there is an anomaly.

“I’ve been blown away by these data integrity companies and the work that they do. There is nothing like seeing how obvious it is when the fix is in.

“I do believe this is the most significant thing that has changed from 1992 to 2017. The access to data that we have today is fundamentally different and shame on us if we’re not using it.”

Integrity

Those UK companies are Perform Group and Genius Sports. Tom Russell is general counsel for Genius Sports, and he tells SportBusiness International: “Genius Sports has been invited by the AGA as well as a number of other key stakeholders to educate key members of law enforcement (including the FBI, US Immigration and Customs Enforcement, and the Department of Homeland Security) as well as Federal and State lawmakers about how we work with sports leagues and federations to protect the integrity of their events.

“Historically there has been a strong aversion among US sports leagues to any liberalisation of sports betting rooted in the fact that they believed it would dramatically increase the risk of their events being manipulated via betting-related corruption.

“In our conversations with state regulators and lawmakers, we have been able to demonstrate how advances in technology have allowed real time monitoring and control over betting activity across the globe.

“For example SportIM, our bet monitoring system, enables leagues and federations to pinpoint suspicious odds movements across both legal and illegal markets instantaneously and subsequently provide evidence to help sports ascertain if fraudulent activity has occurred.

“For many of the people we’ve spoken to, this is a revelatory technology and one which will play a vital role in raising awareness and reducing the fears of threats to sports integrity regulatory process.”

Opportunity

Russell believes the case to scrap PASPA comes down to a combination of factors.

“Sports betting is already happening in America – the market is estimated to be worth $150bn a year,” he says.

“We believe it is only a matter of time before the federal government seizes the opportunity to achieve three key objectives that regulation brings: grant greater protection to consumers who wish to place bets on sports; attract millions of dollars in tax revenues; and crack down on betting-related corruption.”

But the road towards regulated and legal sports betting is going to be a long one. As PASPA is a federal law it will need to be changed through Congress.

IMAGE: The NCAA’s March Madness event is one of the top draws in illegal betting in the US (Tom Pennington/Getty Images)

That process takes up to a year and it will be reliant on all the key players working together.

Freeman says: “The simple truth is if you have the gaming industry, the leagues and the players unions, broadcasters and other interested parties aligned, including members of this coalition, the legislation will get done.

“And that’s what the AGA has been doing offline, and behind the scenes, to generate alignment on what needs to be done.

“If we go to Congress and expect them to resolve the differences between the various stakeholders then it won’t get done.”

Freeman has been emboldened by the fact that he recently met the players’ unions across the major US sports and there have been frank discussions in preparation for legalisation.

Viewing figures

The broadcasters and rights holders may not openly express an opinion on the subject but a recent study by Neilsen Sports in the US revealed that adults who bet on an NFL game watch 19 more games during the regular season than fans that don’t gamble. With fears circling around the industry about the decline in viewing figures, that statistic probably tells its own story.

However, even though the attitudes of the commissioners running the major sports has shifted in recent years, they are still largely wary of betting (see ‘Extra’ below).

Meanwhile, President Trump has largely kept his counsel on the subject, having previously expressed his support for legalising sports betting in his previous guise as a casino owner.

But when posed the question by a reporter back in February, he also said that the key parties must be aligned. “Well, what I’d do is I’d sit down with the (sports) commissioners,” he said. “I would be talking to them, and we’ll see how they feel about it.

“I would certainly want to get their input and get the input from the various leagues, and we’ll see how they feel about it. I’d also get the input from lots of law enforcement officials, because, obviously, that’s a big step.”

The picture may be also be clouded by the fact that one of the most outspoken opponents of sports betting is billionaire casino owner Sheldon Adelson.

He is one of the Republican Party’s largest donors and made the single biggest financial contribution to Trump’s inauguration party.

Revenues

But even if the ASBC overcomes these hurdles, with PASPA repealed and replaced with a new act to legalise sports betting, how a market will function day to day in the US is a bit like trying to predict how what will happen to the UK economy when it leaves the European Union in 2019.

Leading bookmakers such as Betfair and William Hill already have operations in America. Although with huge revenues potentially at stake, any change in the law might also make them ripe for a takeover.

The logical step would appear to be a state-by-state approach, rather than a one-size-fits-all solution. One option is to filter all the bets through Nevada and each state from where a bet was originally placed would receive a tax credit.

Freeman explains: “As states begin to figure out how they regulate this they need to determine how you sign people up coming into properties or doing it online.

“They will have to understand how an illegal entity does this and how the legal market does this so as not to give too many unnecessary advantages to the illegal market. It’s important from the AGA’s perspective to educate all stakeholders that your tax rates have to be reasonable so as not to create unnecessary costs and give the illegal market a leg up.”

He believes the UK represents perhaps the best model of how a regulated betting market can operate and tells SportBusiness International: “There is heavy regulation in the UK. There are all the rights concerns about money laundering and about underage minors getting online.

“I think the UK is a model in how to do a lot of this right but with an understanding that even leaders in the UK will tell you there is room for improvement. But I think what’s important is that even in a heavy regulated market like the UK you don’t see a thriving illegal market.

“The customer is gravitating towards the safe regulated market and we believe that if the same type of market is on offer in the US, that over time there will be a significant shrinking of the illegal market.”

Freeman has little doubt that he has backed the right horse and concludes: “Everything is trending in the right direction on this. We’ve never been more confident that we will get to a regulated market in the US.”

EXTRA: Sports Betting in US by numbers

$150bn – the estimated figure that is bet illegally on sports every year.

$14.2bn – the estimated annual contribution to the US GDP from legal sports betting.

$5bn – the amount that sports betting could generate in tax revenues.

58% of Republicans and 50% of Democrats support ending the ban.

69% of Americans agree that “allowing sports betting is something for the people of each state to decide, not the federal government”.

There are four states where you could legally bet on sports in the US – Nevada, Oregon, Delaware, and Montana – although in practice it only exists in Nevada and Delaware.

7 – the number of states that have recently proposed sports betting bills. They are Pennsylvania, Michigan, South Carolina, New York, Maryland, West Virginia and Connecticut.

Source: 2017 report by Oxford Economics

EXTRA: How the major sports stand on sports betting

Basketball: In an op-ed piece for the New York Times published in 2014, NBA commissioner Adam Silver wrote, “There is an obvious appetite among sports fans for a safe and legal way to wager on professional sporting events.” Last year, Silver told ESPN: “Just like the stock market with insider trading, if you don’t have an open exchange you can’t know what insider trading is going on.”

American football: In April, NFL commissioner Roger Goodell said: “I think we still strongly oppose [among ownership] legalised sports gambling. The integrity of our game is No.1. We will not compromise on that.” However, the NFL is due to have a franchise in the gambling mecca of Las Vegas by around 2020.

IMAGE: The NFL’s Raiders could relocate to a new stadium in Las Vegas (Raiders.com)

Hockey: NHL commissioner Gary Bettman has largely sidestepped the issue and last year said: “Gambling, for us, is probably an entirely different focus than, say, football or basketball, either at the pro or at the college level. Our game doesn’t lend itself to gambling in the same way that football and basketball do.”

Baseball: Earlier this year, in an interview with Yahoo Finance, MLB commissioner Rob Manfred said: “Sports betting happens. Are we better off in a world where we have a nice, strong, uniform, federal regulation of gambling that protects the integrity of sports, provides sports with the tools to ensure that there is integrity in the competition … or are we better off closing our eyes to that and letting it go on as illegal gambling? And that’s a debatable point.”

College sports: The National Collegiate Athletic Association’s (NCAA) current position is to oppose sports betting.

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