August 23, 2012

United States v. DiCristina—A Win for Poker Players (with an Asterisk)

"Well, let's not start sucking each other's dicks quite yet."

~ The Wolf (Harvey Keitel), in Pulp Fiction (1994)

As most poker players are aware, earlier this week a federal district court judge entered a ruling in United States v. DiCristina finding that poker is a "game of skill" and therefore is not "gambling" for purposes of the federal Illegal Gambling Business Act (IGBA). The lengthy decision by Senior Judge Weinstein is as thorough a discussion of the statistical evidence of the effect of skill in poker as one will likely ever see in a judicial decision. The opinion also contains an exhaustive review of practically every conceivable state or federal statute or appellate decision that addresses the regulation of poker in the context of gambling laws. Every poker player should read the decision to better understand the nature of the legal issues certain to arise as online poker continues down the path to inevitable legalization and regulation in some form.

I skimmed the decision when it was issued and Tweeted some initial thoughts (one of the advantages of being a lawyer is learning how to find the legally significant spots in a 120-page decision) (for the record, those Tweets are here, here, here, here, and here). After a more leisurely perusal of the decision, my initial thoughts remain valid, but I did pick up a few additional points of interest. Now many poker players probably just care about the bottom line—a win is a win, right? In law, however, how one wins is often more important than the case specific outcome. [FN1]

So, in no particular order, here are what I found to be the key points and interesting nuggets from the opinion:

Big win for poker players and the PPA:  There is no question that this decision was a win for poker players. Having a federal judge give careful consideration to the "poker is a skill game" argument and then endorse it in a thoughtful opinion is a win, regardless of the ultimate outcome on any appeal, and regardless of whether the decision is adopted by other courts or remains a one-off outlier. The Poker Players Alliance (PPA) also deserves kudos for not merely rehashing its prior arguments, but for finding an expert economist and statistician, Dr. Randal Heeb, who provided critical analysis and testimony that formed the underpinning of the decision (more on Dr. Heeb later). This decision would not have been possible without the solid work of the PPA's attorneys, and the PPA rightfully should be proud of the decision. [FN2].

First meaningful win for poker: This decision is also important because it is the first court of consequence to issue a ruling that will have any precedential effect. To date, the handful of court "wins" for poker have all been issued by state district courts whose decisions have no binding or persuasive effect on other courts. Every appellate court to date has ruled against the "poker is a skill game" argument. But federal district courts occupy a unique spot in the legal authority realm. Federal district court decisions of consequence are "reported" (officially published) and can be cited as authority in other cases just like appellate court decisions. These district court decisions are not binding on other courts as an appellate decision would be, but they are often looked to as persuasive authority by appellate courts confronted with developing areas of the law. Having a thorough, well-crafted judicial opinion on the merits of the "poker is a skill game" argument on the books, so to speak, lends a certain gravitas to the argument which can bolster that argument if and when it is considered by other courts.

The decision has a shot at being affirmed on appeal:  The obvious question on most poker players' minds is whether the decision can survive if the government appeals. An appeal is not guaranteed, but given that the decision breaks new ground and cuts against precedents from other federal courts, and considering that the government invested a lot of resources fighting this issue rather than plea bargaining what otherwise looks to be a trivially routine gambling case, I would expect there to be an appeal. Now Judge Weinstein is known for a liberal slant, and has written groundbreaking criminal decisions that were later reversed on appeal. But the Second Circuit is less conservative than most federal courts of appeal, and Judge Weinstein is well-respected as a smart judge (and former law professor at Columbia). Also, the case involves a bread-and-butter interpretation of a federal statute rather than a hot button Constitutional issue, so ideological differences among the appellate judges will have very little impact on the outcome of any appeal.

The decision is going to generate a lot of attention among the appellate court judges for several reasons. First, the sheer length of the decision will signal that something significant is occurring. The reason for the length of the decision is that Judge Weinstein spends a great deal of time going over legislative history as well as an exhaustive analysis of poker-related statutes and decisions from around the country. That kind of effort simply is not put into a routine decision, and the appellate judges will certainly note that Judge Weinstein is setting up his argument for a novel interpretation of the IGBA. The weakest part of the decision is that it conflicts with: a) prior federal court decisions related to the IGBA in which state gambling law served as the sole determining factor as to whether a predicate offense had occurred, b) prior federal court decisions in which poker was the predicate gambling activity for an IGBA offense, and c) numerous state appellate decisions and several federal court decisions that have determined poker is "gambling", including some which have considered and rejected the "skill game" argument.

To be blunt, established case law weighs heavily against Judge Weinstein's decision, and it would be fairly easy for the appellate court to reverse the decision. But, many of the prior IGBA cases can be distinguished because they assumed that poker was within the scope of the IGBA rather than analyzing the issue. Also, this case has the best, most detailed factual record as to the "skill game" issue of any court challenge to date. In this regard, Judge Weinstein was a fortunate draw for poker players, as his decision does an excellent job of pointing out the flaws inherent in the legal and factual assumptions underlying the prior adverse decisions. Judge Weinstein has marked a clear legal analysis path for the appellate court, if it chooses to follow his lead.

Nonetheless, I think the deck remains stacked against poker players if there is an appeal. Despite Judge Weinstein's adept "skill game" analysis, poker is still regarded as gambling both under New York law and in the public eye. Poker's reputation in front of the appellate court will certainly not be enhanced by the highly publicized Black Friday prosecutions (and the DOJ's "Ponzi scheme" commentary), particularly given the context of the IGBA's anti-organized crime history and purpose. As I have discussed previously, poker's reputation is a tough hurdle to overcome. Poker's considerable historical and cultural baggage might well overwhelm Judge Weinstein's legal analysis. And if the Second Circuit decides it doesn't want to endorse legalized poker, existing precedents will make it easy for the appellate court to reverse the decision. The easiest and most likely analysis to be used by the appellate court to reverse the decision is to follow those federal courts which defer to state law to define "gambling", and to find that New York state law governs the issue of whether poker is "gambling".

Interestingly, if the decision is reversed on appeal, the portion of the decision analyzing the "skill game" argument would potentially still have precedential value. If the Second Circuit decides that state law controls the "illegal gambling" question and that no further analysis is required under the IGBA, then the Second Circuit would never reach the "skill game" analysis. In that situation, although the case would have been reversed, Judge Weinstein's analysis of the "skill game" argument would remain fair game for citation to other courts (lawyers refer to this by the phrase "reversed on other grounds").

If I were a betting man, I would wager that the decision is ultimately reversed on appeal. But the odds against poker players are not nearly as long as they have been in past cases, and with a favorable panel of judges the decision has at least a puncher's chance of surviving on appeal. [FN3]

The decision is limited in scope:  The decision only addresses the narrow question of whether poker is "gambling" for purposes of the federal Illegal Gambling Business Act (IGBA). As I have discussed in prior posts, when it comes to statutes, definitions are critical. "Gambling" for purposes of one statute may not be "gambling" for purposes of another statute. So the mere fact that poker is regulated as gambling under New York law (or another federal or state statute) is not necessarily dispositive of whether poker was gambling for purposes of the IGBA. Likewise, merely because the court ultimately found that poker was not gambling for purposes of the IGBA does not mean that poker is no longer illegal gambling under most state laws and possibly other federal laws. Still, if the decision holds up, it would remove one weapon from federal prosecutor's anti-poker arsenal.

Poker is illegal under New York state law:  Although the defense team abandoned its argument that poker is not gambling under New York state law, the court nonetheless found that the argument had no merit. The decision explicitly noted that, "New York courts have long considered that poker contains a sufficient element of chance to constitute gambling under that state's laws." Another defendant could always raise a challenge to New York's state law on poker, but it seems doubtful that such a challenge would be successful.

Poker is still illegal under most states' laws: The decision contains an exhaustive listing of state laws and appellate decisions which consider poker to be gambling subject to ban or regulation (see Section II(5), pp. 47-51). The list is pretty bleak from a pro-poker perspective. Most states either explicitly define poker as gambling, or have found poker to be within the definition of gambling, regardless of the amount of skill involved. Again, poker players must keep in mind that, even if skill predominates chance in poker, states can still define "gambling" in such a manner as to encompass poker. The decision doesn't change how any state gambling laws view poker. So if poker was illegal gambling in your state prior to the decision, it is still illegal today.

Poker may still be illegal under federal law:  The decision only interpreted the IGBA. There are other federal statutes that could still be used by federal prosecutors against businesses offering poker, most notably the Travel Act. Unlike the IGBA which contained its own definition of "gambling", the Travel Act simply relies on a violation of a state gambling law to establish the predicate offense. Also, note that the Travel Act prohibits use of "the mail or any facility in interstate commerce" to "distribute the proceeds of any unlawful activity" or "otherwise promote, manage, establish, carry on, or facilitate the promotion, management, establishment, or carrying on, of any unlawful activity". This arguably could mean that merely mailing checks, promotional materials, or awards to players could be a violation of the Travel Act. So far federal prosecutors have not used the Travel Act in any poker-related prosecutions (at least not to my knowledge), but that might change if they lose the IGBA as a tool because of this decision.

House-banked game defense was rejected:  The PPA and many poker players have argued that the fact that poker is not a house-banked game (like blackjack, or three-card poker) is a significant distinction in determining whether poker should be considered "gambling". Even Judge Weinstein rejected that argument, rather summarily (p. 109). This argument is one of those situations where an important factual distinction winds up having no legal significance. So legally, if money gets wagered, it's probably gambling, regardless of how the house makes it profitable.

Revenge of the nerds:  As noted earlier, it is obvious that Judge Weinstein was impressed by Dr. Heeb's statistical and economic research. Although there have been a number of studies that purported to prove that poker was a "skill game", those studies merely demonstrated that skill had an effect on the game, and none of those studies really reached any meaningful conclusions as to the relative effects of skill and luck on the outcome of the game. Dr. Heeb did some really interesting and persuasive analysis directed to that specific issue. One analysis showed that the "long term" required to allow skill to overcome chance is not nearly as long as might be imagined, perhaps as low as 1,000-3,000 hands (rates that can be seen over the course of a long, deep-stacked tournament or a relatively short period of cash game sessions). Another analysis attempted to isolate the skill element of poker by cleverly demonstrating how winning and losing players showed significantly different win rates even when playing the same hand (the examples Dr. Heeb used were K9o and QJs). Any fan of Freakonomics-style analysis would enjoy the court's discussion of Dr. Heeb's testimony. I don't think it is an overstatement to conclude that Judge Weinstein's decision likely would have turned out differently without Dr. Heeb's analysis.

The court's discussion also noted that most online players in the large dataset used by Dr. Heeb were losing players, with 90-95% of players showing net -EV. This statistic was somewhat higher than I would have expected. This statistic could also be used on appeal to argue that, since most players are expected to lose, poker is no different than house-banked games. Judge Weinstein dismissed this argument as irrelevant to the issue of whether poker is a "skill game", and I agree that it is not relevant. But that fact still is one that might be of interest to an appellate court.

The decision is probably not a game-changer:  Even if the decision is affirmed on appeal, its impact on the poker legalization fight is likely to be minimal. In many states, whether poker is a game of skill is utterly irrelevant as poker is explicitly regulated as gambling. In other states where poker's status is not defined by statute, courts have already ruled that poker is gambling, and those courts are unlikely to reverse course after having decided the issue. The decision probably has little application to other federal gambling statutes because the decision is based on the IGBA's particular definition of "gambling". The decision is unlikely to affect federal or state poker legislation efforts as legislation is mostly a political issue which will not be swayed by one court's technical legal analysis of one federal law; poker simply isn't the kind of hot button legal-political issue like abortion or health care where a court ruling matters to legislators. It is possible that anti-gambling groups will use the decision to press for an explicit ban of online poker, but nothing I've read suggests that anti-gambling groups would have any better success passing a poker ban than pro-poker groups have had in passing poker legalization; those issues appear to be in stalemate at least through the upcoming elections. Most likely, the decision will ultimately have only symbolic value.

PokerStars may be the hidden winner:  Because the decision is from a different court, it does not change the pending DOJ Back Friday criminal or civil forfeiture cases other than to make it marginally easier for the remaining defendants to leverage a better plea bargain or settlement because the DOJ's IGBA and associated money laundering charges are now in a somewhat weaker position. The Black Friday cases are ultimately more about the banking and financial shenanigans of those involved than the underlying poker businesses themselves. But the decision certainly strengthens the argument to be made by PokerStars to state gaming regulators that merely running an online poker business did not violate federal law. Even if the decision is reversed on appeal, PokerStars could still argue that if a respected federal judge thought that poker was not regulated by the IGBA, then they certainly had a good faith belief they were not violating the IGBA. Of course, there would still be the matter of PokerStars allegedly violating state gambling laws, the UIGEA, federal money laundering laws, and federal banking laws. But if the applicability of the IGBA and the Wire Act can now be called into question, it becomes easier to raise doubts about some of the other laws in the mix.


[FN1]  Think of the recent U.S. Supreme Court kerfuffle over the Affordable Care Act; although the Act was upheld, the legal reasoning in the decision placing limits on Congress' Commerce Clause authority may ultimately prove critical in decisions far removed in time and subject matter from the health care debate.

[FN2]  The PPA's success in this case, however, does not change my prior critiques of the PPA's "legalization by litigation" strategy. The discussion of whether the damage done by the PPA's earlier legal blundering is redeemed by this decision is better reserved for a separate post.

[FN3]  Thinking way down the road, if the Second Circuit affirms Judge Weinstein's decision, it could potentially set up a U.S. Supreme Court appeal to resolve a conflict among the various circuit courts of appeal as to how the IGBA is interpreted. This would be most likely if the Second Circuit finds that state law does not control the determination of what constitutes "illegal gambling". A lot of stars would need to align for poker to have a day in that Court, but these are the types of issues that are SCOTUS' bread-and-butter cases (i.e., interpretation of a federal statute, and resolving conflicts among the circuits).

August 13, 2012

Did Pappas and the PPA Just Shoot Full Tilt Players in the Foot?

Last Friday, Poker Player Alliance (PPA) executive director John Pappas wrote an editorial for calling for Congress to enact legislation authorizing online poker. The Pappas editorial was headlined, "The DOJ Has Spoken: It's Time For Congress To Legalize Online Poker", which seemed rather strange following the recent $731 million dollar settlement of the DOJ's forfeiture claims. But the headline was not misleading; Pappas in fact asserted:
The hidden gem in this settlement agreement, however, has much larger stakes for American poker players as well as online poker more broadly. In the agreement, the U.S. Attorney’s Office very clearly left the door open for PokerStars, and it’s now-owned Full Tilt Poker, to become licensed online poker operators as soon as the United States decides to license and regulate this great American pastime.

This sends an important message to Congress. The Justice Department could have very easily banned PokerStars and Full Tilt Poker from the United States forever. Yet it chose not to. It chose to clearly recognize that online poker can and should be a viable industry in this country. Now the question is, will Congress listen?
In legal writing, a good rule of thumb is that any statement or contention that uses "clearly" to describe a factual or legal conclusion is likely highly contested. Let's take a quick look at the Full Tilt settlement agreement. In paragraph 7, there is a standard clause stating that the settlement agreement is not an admission of fault. And in paragraph 10, the agreement provides that Full Tilt and its affiliated companies (which would include PokerStars as its new owner):
are precluded from offering online poker for real money in the United States until if and when it becomes permissible to do so under relevant law.
The DOJ press release announcing the settlement contained similar language, as well as a rehashing of the criminal indictments and civil forfeiture claims it had filed, in all their illegal gambling, bank defrauding, money laundering, and Ponzi scheming glory. Certainly nothing in either document contains any indication that the DOJ "chose to clearly recognize that online poker can and should be a viable industry in this country."

In advocacy, it's certainly permissible to argue for a conclusion that rests on an inference drawn from incomplete premises. Here, however, Pappas has crossed the line and falsely insinuated both that the DOJ has taken a position with respect to a thorny and contentious political question, and that the DOJ is in favor of legalization of online gambling despite its recent high profile prosecutions of the major online poker sites.

Blatant misrepresentations like this only serve to undermine the credibility of whatever information or point of view an advocate is attempting to convey. Perhaps Pappas and the PPA felt that their little bit of sophistry would score some easy points with a public unfamiliar with the details of the DOJ-Full Tilt settlement, and was worth risking the PPA's credibility. Even so, Pappas' misrepresentation was a stupid and unnecessary rhetorical gamble.

It's not just the general public tracking the ongoing fight over online poker on Forbes, after all. A much more likely audience for Pappas' article is the DOJ itself. Considering that the PPA is lobbying the DOJ for full repayment of Full Tilt player account balances, it seems foolhardy for Pappas to poke—and probably provoke—the DOJ by publicly asserting the DOJ wants to legalize the very conduct it has just spent years investigating and prosecuting in a high-profile manner. It's certainly not the smartest public relations strategy.

Of course, the PPA probably has little or no credibility with the DOJ in any event. It is no secret that the PPA pre-Black Friday funding came predominately from Full Tilt and PokerStars, the PPA's current funding comes predominately from PokerStars, the PPA's primary founders and directors were owners of Full Tilt (Howard Lederer and Chris Ferguson, who both remain subject to DOJ forfeiture actions), and the PPA's congressional spokesperson was a shill for Ultimate Bet/Absolute Poker (Annie Duke). Given how the DOJ views that poker rogues gallery, the DOJ's granting the PPA permission to submit a letter on repayment of Full Tilt players begins to feel like a classic case of "You'll be given a fair trial and then shot."

Pappas' article in Forbes is simply the latest in a long line of amateur hour moves by the PPA. Poker would be better off if sometimes the PPA just shut up.

* * * * *

ADDENDUM (16 August 2012):  Today, Shamus over at Hard Boiled Poker took a look at the Pappas op-ed in Forbes, and as usual shared some interesting insights. Give his blog a read every day for great poker commentary.

Earlier this week, Chris Grove at Online Poker Report posted a thoughtful contrarian response to my commentary. First off, I find Online Poker Report to be a consistently solid source for poker news and commentary, and encourage poker players to check it out if it's not already in your regular reading. Second, I do have a few responsive comments, but Online Poker Report apparently does not accept comments, so I will post them here.

Starting with one of Grove's last points, Grove and I are in agreement as to the weakness of Pappas' contention that the DOJ has endorsed the legalization of online poker:

It’s not a great argument.   It’s not even really an argument at all – more just two ideas in proximity.  There is a big, big step between the DoJ leaving the door open for PokerStars / Full Tilt Poker in a future, regulated US market and a full-throated DoJ endorsement of that market.

However, Grove doesn't view Pappas' contention that the DOJ "chose to clearly recognize that online poker can and should be a viable industry in this country" as a misrepresentation. "Instead, Pappas is offering one possible interpretation of what one might read in the tea leaves of legal language – a pretty common pastime that rarely gets you called a liar."

As I noted in my initial post, there is simply no evidence to support Pappas' contention. Let's call a misrepresentation a misrepresentation. Although I understand Grove's instinct to be charitable as to Pappas' intentions, Pappas wrote the piece not as part of an everday run-of-the-mill BS session, but as an op-ed in a major business publication in his role as the leader of an advocacy group which is currently engaging and presumably plans to continue to engage in dialogue with the DOJ. As a lawyer, I am in front of administrative agencies regularly. If I or someone from my company started publishing false statements about key agencies, I would fully expect to receive a cool reception next time I had business in front of that agency, and my company would rightfully hold me responsible for creating tension in the relationship between my company and the agency. Pappas similarly owes a heightened duty to the PPA's members not to provoke the DOJ, particularly when the PPA is actively lobbying the DOJ on an issue considered important by many of its members.

Finally, Grove points out what he feels is an inconsistency in my concerns—how can Pappas' comments affect the PPA's credibility with the DOJ if, as I contend, the DOJ already has a pretty low regard for the PPA?

Well, which is it? Is the DoJ parsing Pappas’ every word like a starstruck schoolgirl triple-reading Tiger Beat? Or could they care less?

My guess, for what it’s worth, is that they treat the PPA just like they treat any lobbying organization interacting with the agency during the course of official business (heavily weighted toward general indifference). I’m sure this isn’t the first time the DoJ has dealt with backed by tainted money.

Perhaps the problem here was a lack of clarity in my initial critique of Pappas and the PPA. It is entirely possible for the DOJ to view the PPA with skepticism as a general matter, and for the Pappas article to further damage the PPA's credibility with respect to the pending remission issue. Look, as a lawyer, I have had numerous cases where my client had credibility issues. In such a case, the last thing I want to do is something that adds fuel to the fire. Here, the PPA was given the opportunity to present the views of its members to the DOJ. Even though the PPA's close connection to Full Tilt and PokerStars likely gives the DOJ a certain degree of uneasiness, the DOJ will still give at least some consideration to the points raised by the PPA. Why on earth would Pappas think it was helpful to achieving the PPA's goals to jab the DOJ by misrepresenting its position in such a public manner? What possible good can come of it?

The Pappas article may in fact ultimately have little or no impact on how the DOJ considers the points raised by the PPA on the Full Tilt remission issue. My point is that Pappas was foolhardy to even take a chance on provoking the DOJ with his ill-advised commentary.

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.