-By Jeff Haney
Talk about a great opening line.
In the majority opinion for the Supreme Court in Murphy v. NCAA, which effectively paved the way for legalized sports betting nationwide, Justice Samuel Alito crafted an initial salvo that was downright elegant in its simplicity, writing: “Americans have never been of one mind about gambling, and attitudes have swung back and forth.”
Certainly, our society’s perspective on games of chance comes across as inconsistent at best. For decades in many jurisdictions, betting on horse racing or blowing your money on the lottery has been deemed perfectly acceptable. But pai gow poker? Caveman Keno? Until relatively recently in large swaths of the nation, not so much.
The May 14 high court decision, however, which struck down a 1992 federal law known as the Professional and Amateur Sports Protection Act, underscores a profound shift in public sentiment toward one particular form of gambling — full-fledged, Las Vegas-style sports betting — in just the past quarter-century.
In the lead-up to PASPA, which essentially banned states from authorizing sports betting, then-NFL commissioner Paul Tagliabue made his distaste clear in testimony before Congress, saying: “Sports gambling threatens the character of team sports. … The spread of legalized sports gambling would change forever, and for the worse, what our games stand for and the way they are perceived.”
And Bill Bradley, the former basketball star and Democratic U.S. Senator from New Jersey who championed PASPA, memorably said in 1991: “I know that when I was a player, I certainly didn’t like the idea of being a roulette chip.”
Fast forward to 2018 and the Supreme Court’s 6-3 decision in Murphy, and the contrast could not be starker. If anything, the major sports leagues are now looking for a piece of the action, using terms like “integrity fee,” “royalty,” and other euphemistic words for “shakedown” as at least 20 states scrambled to implement sports betting legislation in the wake of the ruling.
For example, an Indiana state bill on sports betting included a proposed fee to the NBA and Major League Baseball amounting to 1 percent of handle, or total wagers. Betting industry executives cried foul, pointing out that because sports books typically keep, or “hold,” only about 5 percent of handle after paying out winning bets, a 1 percent fee would equate to a whopping 20 percent of gross revenue. In New Jersey, state Senate president Steve Sweeney characterized such fees as “extortion.” A bill in the New York legislature floated a potential 0.25 percent fee for the leagues capped at 2 percent of revenue, which could prove more palatable.
With a massive, heretofore untapped and largely underground U.S. sports betting market that could exceed $150 billion annually, according to American Gaming Association estimates, the stakes are high. Even without collecting any fees directly tied to sports betting revenue, though, the leagues stand to benefit. A 2016 Nielsen Sports poll, for instance, found that NFL bettors watch 19 more games each year — more than an entire regular season’s worth — than non-gambling fans. The survey revealed that 77 percent of respondents said placing a bet enhanced their enjoyment of a game (if anything, seems a little low!), and 84 percent were more likely to watch a game if they made a bet on it. Cognizant of how gambling galvanizes fan interest, Dallas Mavericks owner Mark Cuban said he expects the value of pro sports franchises to “double at least” after the Supreme Court ruling.
The effect on Nevada, the one state where full-scale sports betting has been legal all along, figures to be neutral to positive rather than detrimental. For one thing, sports betting revenue in the state (about $250 million last year) represents a paltry 2.2 percent of total gaming revenue ($11.1 billion). Sure, there’s a relatively tiny universe of tourists who visit Las Vegas specifically to place sports bets who may opt to stay home from now on. They’ll likely be replaced, with room to spare, by new customers who will have learned the rudiments of sports betting in the friendly confines of their own state, who will be able to easily decipher the once-inscrutable hieroglyphs of the big betting board, who will feel comfortable in the sports book as Americans’ capricious attitudes toward sports gambling crystallize into something like a warm embrace.
Jeff Haney is the vice president of Fierro Communications, Inc.