Sports Leagues Bet on Gambling. Now They’re Facing Its Risks.
A string of gambling situations involving athletes leaves leagues in a tough spot.
Major League Baseball held its season openers this week under the shadow of a gambling scandal. Reports surfaced that the National Basketball Association is investigating a player over irregular bets. And college basketball fans await results from a review into unusual betting on a men’s basketball game.
The incidents have highlighted a trade-off that professional sports leagues made when they embraced gambling.
Leagues have signed lucrative marketing deals with betting apps like FanDuel and DraftKings and use gambling to amp up fan engagement. But this new source of revenue has also opened the doors to a fundamental danger: that an explosion of sports betting could threaten the assumption of fairness at the core of athletic competitions.
“The risk is that the game becomes like professional wrestling — which is rigged. And nobody bets on professional wrestling,” said Fay Vincent, the M.L.B. commissioner from 1989 to 1992. “And if baseball becomes professional entertainment the way wrestling is, it’s dead.”
Leagues are unlikely to abandon gambling completely. But is there a way for them to protect their image as they profit from betting?
Clubs can no longer blame gambling itself for scandals. When Pete Rose was barred from baseball in 1989 for betting on games, in one of the most famous gambling scandals in sports history, Commissioner A. Bartlett Giamatti, Vincent’s predecessor, denounced gambling as corrosive. But after a 2018 Supreme Court decision paved the way for states to legalize betting, leagues are now working directly with sports books. The N.B.A. signed an estimated $25 million contract with MGM Resorts in 2018, and M.L.B. has an exclusive multiyear deal with FanDuel.
“There is no putting the toothpaste back in the tube,” said Patrick Rishe, a professor in the business of sports at Washington University in St. Louis. “The money flows too thick.”
Leagues may support limits on prop bets, which allow gamblers to bet beyond the results of games on components like the first player to score. Since the outcome of these bets can often be decided by only one player, they leave individual athletes vulnerable to more pressure from bookies and others. The president of the N.C.A.A., Charlie Baker, encouraged states this week to ban prop bets, sending shares of DraftKings and FanDuel’s parent company, Flutter, tumbling. (Some analysts said a ban would only minimally affect the sports books’ bottom lines.)
Better self-monitoring could help. The largest U.S. sports books announced this week that they were forming the Responsible Online Gaming Association, an organization that will allow them to share information about customers who have been excluded because of problematic gambling.
“This is real money, real participation,” said Chris Grove, an analyst at Eilers & Krejcik Gaming. “But, with that said, it shouldn’t also just be a free pat on the back. There are a lot of questions, especially around what kind of information are you going to be sharing about individual players and then what kinds of actions are you going to be taking based on that information sharing.”
Leagues could also extend bans against in-sport betting to individuals with ties to players, like personal assistants. Anyone who works at the teams “should probably be subjected to the same rules as they’re subjecting the athletes to,” said Jeffrey Kessler, a sports law lawyer at Winston & Strawn.
More taxes may be on the table. “State governments are also major beneficiaries of regulated gambling,” Grove said. “They have an obligation to step up and to help to mitigate whatever problems are emerging.”
States could raise taxes on sports betting, which range from 6.75 percent in Iowa to 51 percent in New York, Rhode Island and New Hampshire, and use the proceeds to fund oversight initiatives such as real-time data monitoring or state-supported teletherapy for gambling addicts.
A flat tax increase might be welcomed by FanDuel and DraftKings, the largest betting sites, which are better equipped than smaller rivals to afford the impact — “though they would never say that out loud,” Grove said.
But many are doubtful this will happen any time soon, given the pushback that higher taxes would most likely elicit from others. Professional sports teams and casinos both “have a very strong track record in terms of lobbying state legislatures,” said Marc Edelman, a professor of law at Baruch College who studies gambling history.
Will the latest incidents damage leagues? Given the lengthy nature of TV contracts and relative steadfastness of fans, any immediate impact may be subtle. Attendance at Cincinnati Reds games dipped only slightly after Rose, who managed the team, was ousted for betting, said Keith O’Brien, author of “Charlie Hustle: The Rise and Fall of Pete Rose.” A year later, it jumped about 25 percent.
“Does that mean that fans wanted to come because they were washing away the scandal? I don’t know,” O’Brien said. “I can tell you, having lived in Cincinnati in 1989, that it ruined baseball. It ruined it. And it was a lost season.”