August 07, 2012

The Hypocrisy of the New Jersey Sports Gambling Lawsuit

"And when you pray, do not be like the hypocrites, for they love to pray standing in the synagogues and on the street corners to be seen by men. I tell you the truth, they have received their reward in full."

~Matthew 6:5 (New International Version)

Today the NCAA, NFL, NBA, MLB, and NHL joined forces to file a lawsuit in federal court seeking an injunction to block New Jersey from implementing its plans to legalize sports gambling. Although the complaint itself is short and straightforward as a matter of legal pleading, it nonetheless drips with hypocrisy.

The sports leagues assert that legalization of sports gambling in New Jersey will "irreparably harm amateur and professional sports by fostering suspicion that individual plays and final scores of games may have been influenced by factors other than honest athletic competition." OK, point-shaving and game-fixing are bad; fair enough. But then we get to the sanctimonious pièce de résistance:

[T]he proliferation of sports gambling threatens to harm the reputation and goodwill of Plaintiffs [the sports leagues], and to adversely affect the way the public views amateur and professional sports. Plaintiffs cannot be compensated in money damages for the harm that sports gambling poses to the character and integrity of their respective sporting events. Once their reputations and goodwill have been compromised, and the bonds of loyalty and devotion between fans and their teams have been broken, Plaintiffs will have been irreparably injured in a manner that cannot be measured in dollars.

The integrity of the game issues are certainly valid—Major League Baseball, professional and collegiate basketball, and boxing have all had well-publicized point-shaving and game-fixing scandals (not to mention similar scandals overseas for sports like soccer and cricket). But this issue is really a red herring for the current lawsuit. Sports gambling is already a multi-billion dollar industry in the United States, most of it conducted illegally, but still with multiple billions of dollars wagered legally every year in Nevada. [FN1]  Within this system, crooked gamblers have already found ways to influence players and officials to put in the fix on individual games. The mere fact that New Jersey will offer an additional outlet for legal gambling will have no pragmatic effect on the incentives for gamblers to seek an unsavory or illegal edge.

Also, legalized, regulated sports gambling might actually reduce the incidence of point-shaving and game-fixing. A number of collegiate basketball point-shaving scandals were initially detected by legal sports books in Vegas, where smart bookmakers noticed large bets against heavy favorites in otherwise obscure and lightly bet games. In an era where sophisticated computer software can detect anomalous behaviors in large data sets (e.g., the SEC using computers to detect insider trading and other illegal stock market activities), legal wagering actually offers protection against the actions of shady gamblers betting on fixed games. Finally, encouraging more gambling to be done legally at casinos instead of illegally with shady bookmakers deprives those illegal bookmakers of the money and incentive to attempt to fix games. So, if the sports leagues really wanted to guarantee the integrity of their contests, more legal sports gambling, not less, is the proper solution.

As for the sports leagues' more generalized concerns about the public perception of sports being damaged by legalized sports gambling, well the good ship "Sports Integrity" sailed several decades ago, and it was promptly sunk by the sports leagues themselves. The leagues act as if sports in the United States are stuck in a Rudy-esque time-warp fantasy world that probably never existed. The sports leagues bringing this lawsuit are pretty much the entire who's who of multi-billion dollar sports industries. The NCAA makes billions off of the sweat of supposed student-athletes, most of whom in the revenue sports of basketball and football are often students in name only. The NCAA's recruiting and other regulations are widely viewed by the public as toothless, with a running joke occurring every football bowl season and basketball Final Four as to whether the eventual champion will be sanctioned with the empty gesture of a vacatur of its title. The coverup of child rape by Penn St. officials (including venerated coach Joe Paterno who openly traded on a reputation for moral integrity) to protect its football cash cow seems less a freak outlier and more the inevitable consequence of a widespread and morally corrupting dependence on football revenues. For years, the NFL made big money promoting smashmouth football and glamorizing hard hits, while denying any connection between the game and long-term concussion related injuries to its players. MLB turned a blind eye to steroid and other drug use for years, while cashing in on the public's appetite for monster home runs and offensive record chases. The NBA has its own history of rampant drug abuse. All of the sports leagues routinely receive widespread publicity for the off-field misconduct of their players and coaches, ranging from murder to assault to rape to drug use to drunk driving to financial problems to child support issues, and even to, yes, gambling.

But the final bit of chutzpah in the sports leagues' lawsuit is the ultimate hypocrisy—sports gambling is a fundamental cornerstone of the sports leagues' financial success. The NCAA basketball tourney isn't popular merely because of small school upsets; it's popular because it gives even casual sports fans a chance to wager on the outcome of the tournament (via popular brackets contests and more esoteric variants) as well as wagering on the games themselves. Fans in all of the sports leagues watch games because they have money wagered on the outcome; gate receipts and ratings—and the attendant revenues—would plummet if only fans of the teams playing attended or watched games. There's a strong argument to be made that the NFL is currently king of the sports world in large part because of the popularity of gambling on pro football games.

Of course, even though the sports leagues know they have ridden the sports gambling tiger to great profit, they nonetheless also have a public image to sell. So, they sue to protect the "character and integrity" they long-ago sold off for 40 billion pieces of silver. Truly, they have already received their reward in full.


[FN1]  ADDENDUM (12 August 2012):  For perspective, in 2011, Nevada sports books reported winning nearly $141 million off of nearly $2.9 billion in legal sports wagers. Prior to the 2007 recession, Nevada sports books won $192 million in 2006. The American Gaming Association estimates that $380 billion is wagered annually in the United States, almost all of it illegally. Assuming illegal sports books have a similar hold to Nevada sports books (~5%), illegal sports gambling revenues are approximately $19 billion per year.


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