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Volume 21 No. 13

World Congress of Sports

Photo: getty images

Walking a guest through the U.S. headquarters of sportsbook William Hill, nestled in a well-manicured office park a half dozen miles from the Las Vegas strip, CEO Joe Asher is amused by the contrast between its cubicle culture — with sections devoted to customer service, finance, marketing and HR — and the Runyonesque image often attached to a bookmaking operation.

 

William Hill’s neighbors aren’t named Knuckles or Lucky or Big Sam. They’re Wells Fargo and New York Life.

 

“This is about the most boring corporate environment you could find,” said Asher, a former Skadden Arps attorney who helped Wall Street firm Cantor Fitzgerald enter the gaming business, and then started his own licensed bookmaking operation that he sold to William Hill in 2012.

The London-based bookmaker now accounts for about 30 percent of Nevada’s $4.8 billion in sports betting revenue and operates about 60 percent of its sportsbooks, ranging from 10,000-square-foot spreads in Las Vegas strip hotels to small storefronts in rural towns and airline-ticket style kiosks spread throughout the state.

 

“To the extent that there’s any uncertainty about who these bookmakers are, it’s time for people to let go of that old-school image of the greased-back hair and the cigar,” Asher said. “I used to practice law for a big New York firm. What we have here is about the most professional environment that anyone could imagine.”

 

When the professional leagues and the NCAA pressed for federal legislation that would restrict sports betting to the states that already had it 25 years ago, they were driven by the fear of corruption. College basketball teams were exposed shaving points. Pete Rose bet on baseball. The sports industry saw gambling as a threat to the integrity of its games, and the core of its businesses.

 

Twenty-five years later, the environment, and the tone of the discussion, have shifted dramatically. Increasingly, the prevailing argument is that legalizing and regulating sports betting is the better way to ensure integrity.

 

“There’s a massive black market where there’s no transparency and no insight into what’s happening,” Asher said, pointing to oft-repeated but impossible to verify casino industry estimates that Americans wager $150 billion each year through illegal bookmakers and offshore websites. “And if there is something fishy going on in the black market, what’s the bookmaker going to do? He’s not going to pick up the phone and call the FBI because he is a criminal.

 

“The idea that somehow a black market is more protective of integrity than a highly regulated market as exists in Nevada today has no basis in common sense.”

 

To the leagues and teams, the economic potential of an expanded U.S. betting market is evident. From the creation of a new and lucrative sponsor category to the promise of increased engagement at a time when ratings are in decline, the consensus across sports is that the introduction of gambling would provide a windfall to leagues, teams, networks, data providers and other sectors spawned as the market evolves.

 

The question is, at what cost?

 

The revelation that eight Chicago White Sox players conspired to help mobsters fix the 1919 World Series still stands as the greatest scandal ever in baseball. Seventy years later, gambling brought down Rose, shattering his legacy.

 

The NBA endured its worst scandal ever in 2007, when the FBI caught referee Tim Donaghy selling inside information to bookmakers and betting on games. One of the NFL’s worst moments came in 1963, when future Hall of Famer Paul Hornung was suspended for the season for betting on NFL games while playing for the Green Bay Packers.

 

In college basketball, the greatest blows have come from point-shaving schemes, most notably the CCNY scandal of the early 1950s, which led the defending national champion to de-emphasize its entire athletic program. It also shut down the basketball program at blueblood Kentucky for a year. While it was the largest scandal, it wasn’t the last. Tulane, Boston College, Northwestern, Toledo and San Diego State all have been implicated in point-shaving schemes that led to criminal convictions.

 

The first indication that a league might be willing to relax its flat-out opposition to sports betting came in 2014, when NBA Commissioner Adam Silver penned an op-ed suggesting that shifting societal norms and improved tactics to detect corruption had led him to support the acceptance of sports betting, so long as the integrity of the games was protected.

 

Not only was the NBA the first of the leagues to publicly relax its opposition, it also was the first to dive deeply into how sportsbooks work. In the last two years, the league has spoken with gaming operators in Nevada and abroad, gaming regulators in several states and sports properties in countries with robust, legal sports betting operations, collecting information and establishing points of contact.

 

“One thing that I took away from those discussions is that there are many areas of common interest and alignment of incentives between sports leagues and sportsbook operators,” said Dan Spillane, senior vice president and assistant general counsel at the NBA, who has been the league’s point person on gambling. “It’s in everyone’s interest to avoid manipulation, to avoid betting using inside information, to avoid integrity incidents from occurring.”

 

“The gaming industry and the leagues are in lockstep when it comes to protecting the integrity of sport,” said Geoff Freeman, CEO of the American Gaming Association, the leading casino industry trade group. “Neither of us can have a viable product that appeals to the American consumer if there are any questions about integrity.”

 

Where they have differed is on the way in which to accomplish that.

 

••••

 

During hearings in front of state legislators, representatives of the NBA and Major League Baseball have identified a core of five proposals that they say are crucial to their interests as states develop laws and regulations around sports betting.

 

Two of those deal directly with protection of game integrity: The real-time sharing of betting data between bookmakers and leagues, and the final say over what sort of bets bookmakers can offer. Not surprisingly considering the stakes, the leagues and casinos have crossed swords over both.

 

The sharing of consumer data has been a prickly point from the moment that the leagues introduced it during state lobbying efforts that began in January.

 

Their proposal calls for a data stream of all bets placed through any licensed sportsbook, with names and other identifying information masked to guarantee consumer privacy. By aggregating and then monitoring the time, amount and location of every bet, the leagues hope to identify suspicious patterns that might indicate game-fixing or, more likely, the use of insider information that might indicate a security breach.

 

American Gaming Association CEO Geoff Freeman says leagues and the gaming industry agree on protecting the integrity of sports. But the parties differ on how that can be done.
Photo: getty images

“I think it is a no-brainer that casinos should share anonymized betting data with us or with our designee so that we can aggregate that data and spot abnormal betting patterns,” said Bryan Seeley, senior vice president of investigations and deputy general counsel at MLB, who since last year has overseen the matter for MLB. “There is no question the best way to protect the integrity of the game is to get data from all the casinos in all the states and look at it for patterns of abnormal betting activity.”

 

At the outset, the casinos called it a nonstarter, suggesting it was a poorly veiled attempt to market to their customer base. The leagues insisted that the data could be anonymized to address those concerns. Of late, the two sides appear to have moved toward a compromise.

 

“We’re working through the details right now as to how we build a system that protects the private information of bettors while also ensuring the integrity of sport,” Freeman said. “We’re working to better understand all the concerns that leagues have. And I think they’re working to better understand all the complexities that gaming companies confront … With both of us learning from one another, I’m confident that this is an issue that can be addressed.”

 

Like many in the gaming industry, Asher sees most of the league proposals as unnecessary, arguing that the state regulatory model in place in Nevada could sufficiently serve the same purpose in all states.

 

Rather than supplying account-level betting information directly to the leagues, Nevada casinos provide it to state regulators, either on their own or by request. If a league has suspicions, it can ask for an investigation through the state’s gaming control board, which is guaranteed access to all information about every bet and who placed it.

 

“Sharing of information directly with a sports league is a complete nonstarter for me,” Asher said. “But I’m certainly going to share anything we have with the gaming control board.”

 

Another of the league’s integrity-related asks is an opt-out — the ability to have final say on what games sportsbooks offer and, more importantly, on the specific bets that they can take.

Each presents a different issue.

 

The NBA and MLB say the opt-out of specific games is meant to keep states from offering bets on minor league or G League games, where players are paid less and might be more susceptible to bribes to throw games or shave points. But the casino industry worries that an opt-out could be extended to college sports, where the NCAA might use it to block wagering entirely.

 

The other integrity question may well be more difficult to address to the satisfaction of both sides.

 

Both the leagues and the casino industry agree that certain bets present a greater integrity risk than others, particularly since the advent of in-game wagering, which allows customers to wager on individual events within a game at odds that change with the situation.

 

The most popular of in-game wagers are simple and present no greater risk than a standard wager. In football, it’s a bet on whether a trailing favorite will come back to win. In baseball, the top sport for in-play wagering in Nevada, the most popular bet is on whether a run will be scored in the current inning.

 

“Takes a three-hour game and distills it into a 20-minute game,” Asher said. “That’s what people bet.”

 

That’s precisely the sort of action that the leagues envisioned when they considered the potential for building engagement among fans and keeping them watching through a game. But there are other in-game bets that scare them — most notably, those that pay off on a single event, or choice, that is largely within a player, referee or umpire’s control.

 

“We’re not looking to exempt bets on the outcome of games,” Seeley said. “We’re not even looking to exempt bets on the next batter. We may be looking to exempt bets on what the next pitch is going to be — a fast ball or curve ball, a ball or strike. But these are things we want flexibility on. Maybe once those bets start being offered, we find it’s not a concern.”

 

The casinos argue that they can deal with those concerns by keeping limits on those bets so low that it would make the risk-reward ratio unpalatable for those willing to manipulate the outcome. Most books do that now because they perceive the bets as unpredictable and high-risk. They exist as a fun marketing ploy, not a revenue center.

 

The leagues are receptive to that argument but want legislation that goes beyond simply trusting the casinos to set low limits themselves.

 

“Our concern is that that standard and that practice may not be uniform across all operators,” Spillane said. “Operators are competing with each other for business. So in that environment, it’s easy to envision exotic bets that have greater integrity risks being offered at higher limits.

 

“Asking for a say in this doesn’t mean we’re going to give [casinos] a short list of the most plain vanilla bets that you can think of, because that’s not in our interest either. An important goal of this whole exercise is to shift people from betting in illegal markets to legal markets so it can be monitored and regulated. We understand that in order to do that, legal operators need to offer bets that are competitive with those offered on illegal markets.”

 

Again, Asher suggested that states handle the matter as Nevada does, offering sports properties the opportunity to appeal to state gaming commissions to prohibit certain bets.

 

“I have a lot of respect for regulators,” Seeley responded. “But the regulators in these states, outside of Nevada, have no experience regulating sports betting … I think we as Major League Baseball are in a better position to examine these issues and decide what bets pose integrity risks to us than a state regulator with no experience in baseball.

 

“To ask us to concede that to a state regulator is a big ask.”

 

••••

 

It was in-game betting that enabled one of the higher-profile match-fixing schemes in the world two years ago, a manipulation so obvious, and so egregious, that FIFA followed with an unprecedented response, requiring the replay of a World Cup qualifier between South Africa and Senegal. It also was in-game betting that alerted monitors that the fix was in. 

 

In a conference room in the New York offices of sports data provider Sportradar, the head of the company’s integrity services unit, Andy Cunningham, tapped at his laptop, calling up video from the game in question.

 

Footage showed referee Joseph Lamptey of Ghana incorrectly calling a hand-ball in the penalty area in the 41st minute of a 0-0 tie, leading to a penalty kick that put South Africa ahead 1-0. A few minutes later, Lamptey hastened a quick restart that led to a second South Africa goal. Senegal scored in the second half, making the final score 2-1 and — from a betting perspective — rewarding anyone who bet that the teams would combine for at least two or three goals.

 

“Referees make mistakes,” Cunningham said. “But in this case our system had predicted that something suspicious might happen.”

 

On a PowerPoint slide, Cunningham pointed out a graphic that showed what the in-game odds should have been as time progressed, based on a reliable algorithm that predicts in-game odds movement. Obviously, after 40 minutes of scoreless play the likelihood of the teams combining for two or three goals had decreased. The odds should have been going up as time passed. But, at one sports book, they weren’t. In fact, they were decreasing.

 

“The bookmaker was cutting their odds as they were taking this suspicious money, and yet the money kept coming in and the odds kept going down,” Cunningham said. “This is a classic example of how we detect suspicious betting.”

 

A Senegal-South Africa World Cup qualifier in 2016 had to be replayed because monitors detected suspicious betting activity and questionable calls from referee Joseph Lamptey (below).
Photo: getty images
Photo: getty images

Pairing the odds pattern with the bad call that its analysts saw on video, Sportradar reported its suspicions to FIFA.

 

The fact that five integrity services alerted FIFA to the suspicious activity is an indicator not only of how closely the markets are watched, but how many people see the business potential of a global betting market that is expanding exponentially, and a world of regulatory agencies trying to keep up.

 

Sportradar is one of two such companies that have planted flags in the U.S., well ahead of any predicted market expansion. It has deals to provide information, including alerts regarding suspicious activity, to the NBA, NHL and MLS. London-based Genius Sports provides similar services to MLB and the PGA Tour.

 

That’s because whether bets are placed legally in the U.S. or not, the properties know that there’s big money wagered on their games — not only with illegal bookies, but through betting sites around the globe that the services monitor.

 

With a staff of about 50 analysts monitoring 280,000 matches a year in 17 sports, Sportradar regularly identifies matches that it says bear further investigation. Since 2016, it has made clients aware of more than 1,000 matches that it described as “suspicious and likely to have been manipulated,” Cunningham said. Information provided by Sportradar has led to 24 criminal convictions and 213 sanctions by sports organizations, he said.

 

The alerts the company provides to clients are based upon the monitoring of odds from about 550 betting operators across the world, which together account for about 5 billion odds movements a day. Using proprietary algorithms, Sportradar’s software predicts how and when a line or set of odds should move, based upon a series of factors. When it finds an outlier, it flags it.

 

But that’s only the start of the process. From there, the information is reviewed by an analyst who follows the sport closely. Typically, when the numbers move in an unpredictable manner, it’s driven by an easily explained factor, such as an injury. When analysts can’t discern a reason, they make the sports property aware of suspicious activity.

 

In many cases stemming from Sportradar’s detection methods, inexplicable odds patterns coupled with suspicious play have led to sanctions against players and clubs, even when there was no supporting evidence, such as financial transactions, phone records, or even a record of specific bets.

 

“They’ve compared our monitoring detection system to the blood passport in the doping world,” Cunningham said, “because of the forensic nature of our work.”

 

It is impossible to sift through the stories of betting-related corruption from across the globe, compare them to the relative quiet of U.S. sports in that regard, and not wonder whether the promise of expanded, regulated sports betting that beams like a beacon over the horizon is, in fact, a glowing nuclear reactor.

 

The U.K. is thought of highly when it comes to its regulation of sports betting. Since 2005, many of its leading bookmakers have worked together as members of the European Sports Security Association, a nonprofit watchdog that gives bookmakers a vehicle to share information about suspicious betting activity which, if confirmed, can be passed along to sports organizations and regulators.

 

Premier League player Joey Barton was suspended for betting on soccer over 10 years.
Photo: getty images

The strength of the system is that it can track betting patterns using actual bets, rather than simply relying on an external examination of odds and point-spread movement. The weaknesses are that it trusts the bookmakers to self-report and that it doesn’t provide the opportunity to look for similar activity across multiple bookmakers until one has notified ESSA.

 

The model is one that the U.S. gaming industry points to as a possible solution to some of the concerns of the leagues. Last year, ESSA notified sports organizations of 266 incidents of suspicious activity, with 111 of them coming in the final three months.

 

And yet, a year ago, 34-year-old EPL veteran Joey Barton was suspended for 14 months after it was revealed that he placed 1,260 bets on soccer matches during a 10-year span of his pro career. Thirty of those bets were on games involving his own club. In half of them, he bet against it.

 

Barton placed those bets through an account bearing his name, paid for through his credit card, using his passport to verify his identity. His most recent bet was placed less than a year before his suspension, well after most of the U.K.’s current controls were put in place.

 

“That shows that the system has not been completely effective,” said Emanuel Macedo de Medeiros, an attorney and former Portuguese soccer executive who now heads the London-based Sport Integrity Global Alliance. “There is no doubt that the U.K. is well-advanced in this field. And also there is no doubt that English soccer leagues are well-resourced and have been playing a very active role in protecting integrity for the sport. But this shows it’s not enough to have pretty regulatory frameworks if there is not scrutiny; to have advanced legislation if there is not vigilance. And a zero tolerance.

 

“In a market where there is fragmentation and a lack of collaboration between all organizations, failure is inevitable.”

Watching as state after state cobbles legislation in anticipation of a Supreme Court ruling that would pave the way for sports betting, one of the nation’s premier gaming attorneys harbors grave reservations about the piecemeal manner in which the landscape is unfolding.

In 35 years of practice, Tony Cabot has represented casino owners, gambling sites and sweepstakes operators, frequently advising them on the intricacies of gaming regulation. He co-authored a casebook on the law of gambling and regulated gaming, and its upcoming edition will include an updated chapter on sports betting.

As of last week, six states had passed laws, with 10 more considering active bills and as many as a half dozen showing indications of interest.

 

Cabot doesn’t think gaming regulators in most states are equipped to handle the oversight of sportsbooks.

 

“What is really being missed in this whole thing is that sports wagering is fundamentally different from what most casinos do,” Cabot said over breakfast at a suburban Las Vegas omelette house. “If you have a casino, everything that determines the integrity of the game is within the casino. It’s easier to regulate a confined environment.”

 

Cabot described the way regulators monitor slot machines and table games like blackjack, roulette and craps, walking casino floors and inspecting equipment to make sure the house is playing fairly, then contrasted that with the far-flung nature of sports.

 

Nevada’s Gaming Control Board, which regulates both casino games and sports betting, employs 404 people, including 121 in its enforcement division.

 

“When you start doing sports wagering, now you’re relying on the integrity of a game that is occurring in another jurisdiction that could be halfway around the world,” Cabot said. “That’s a big departure for regulators, because now you have to start relying on the integrity of something you don’t control.

 

“And that’s where they fall down.”

 

Four months removed from a Supreme Court hearing in the case Christie v. NCAA, since renamed Murphy v. NCAA to reflect the election of Phil Murphy as New Jersey’s governor, the U.S. sports industry awaits a ruling that could come as early as this week and no later than June.

 

William Hill is ready to open Monmouth Park horse track to sports betting if the Supreme Court rules in favor of New Jersey.
Photo: getty images

At stake: The fate of a sector that promises to infuse sponsor dollars and increase fan engagement at a time when the latter is of particular concern.

 

That it all could play out state by state only magnifies the complexity, and the concerns.

 

Murphy v. NCAA stems from New Jersey’s attempt to circumvent the Professional and Amateur Sports Protection Act, a federal law that since 1992 has prevented states that didn’t offer sports wagering at that time from doing so. Surprised when the court agreed to hear the case, many took it as an indication that a majority of justices were prepared to overturn PASPA, a prediction bolstered by the tenor of the December hearing.

 

But, because the constitutional questions raised in the case can affect broader policy matters such as the enforcement of federal immigration and marijuana laws, some remain skeptical that the court will deliver anything more than a narrow ruling that would clear the way for sports betting in New Jersey, but only in an unregulated and untaxed fashion. It’s unlikely that more than a handful of states would find that model appealing enough to join in.

 

That would send the casino industry back to Congress to push for a federal solution, which seems unlikely in the near term.

 

Should the court issue a full repeal of PASPA, that would open the gates on a race between states to be among the first to open.

 

“To me, it’s simply politics trumping good policy,” Cabot said. “But that’s the road we’re headed down.”

 

Cabot is not alone in that recognition. The NBA and MLB both say they would prefer a federal solution. Even the gaming industry, which is used to state regulation, sees the potential benefits.

 

“When we met the NBA initially, they said, ‘We just want a kind of one size fits all,’” said Sara Slane, senior vice president of public affairs for the American Gaming Association, the leading casino industry trade group. “In a perfect world that would be ideal. The problem is, you have 40 states that have some sort of gaming and they’ve had regulations on the books for decades.”

 

While it’s the road the leagues have anticipated since late June, when the court agreed to hear the case, it has played out more quickly than they expected. The NBA, which was the first to embrace sports wagering, and MLB, which came to accept its inevitability late last year, didn’t think many states would pass legislation ahead of a court ruling, the details of which could render all their work moot.

 

Turns out that the same appetite for tax dollars that has driven the expansion of commercial casino gaming from two states to 24 in the last 30 years also applies to sportsbooks.

 

An Oxford Economics study commissioned by the AGA estimated the potential for the U.S. sports betting market (defined as how much consumers bet) at $65 billion to $332 billion annually if wagering were allowed in all 50 states, with the number fluctuating based upon state tax rates and consumer availability — for example, whether bets could be placed on mobile devices. Gaming analyst Eilers & Krejcik set the range at $113 billion to $247 billion. Projections at the low end are for states that allow betting only at existing casinos and racetracks.

 

Examples of the impact on states: New Jersey stands to add $28 million to $50 million annually in tax revenue; West Virginia $6 million to $12 million.

 

Of course, there’s no chance that all 50 states would permit sportsbooks. But Eilers & Krejcik estimates a 14-state market in the first two years after a PASPA repeal, growing to 32 states within five years.  

 

“I think we may well find that the states are premature,” said Geoff Freeman, CEO of the AGA. “We’re excited to see the states moving forward and considering what good regulation and good policy might look like. But … all of this state action presupposes the law being declared unconstitutional, when it’s quite likely a narrow ruling is the outcome — in which case we still have work to do to repeal PASPA.

 

“And that is going to put a lot of these state efforts on hold.”

 

“I’m not here to tell you not to legalize and I’m not here to tell you to legalize. I’m here to tell you that if you want to legalize sports betting, here are the things that are important to us.” — Bryan Seeley SVP, investigations, and deputy general counsel, MLB
Photo: AP images

Though that may be the case, two of the leagues aren’t taking any chances. Realizing that states were moving on legislation, in December the NBA and MLB agreed to work together to present state legislators with their vision of what a regulated sports betting market should look like. While the most wagered upon league in the country, the NFL, has remained conspicuously absent from the public process at the state level, the NBA and MLB have lobbied actively, appearing at hearings whenever invited.

 

“I don’t know how much there’s a change in our position vis-à-vis whether sports betting should be legalized or not,” said Bryan Seeley, senior vice president of investigations and deputy general counsel at MLB, who since late last year has overseen the matter for the league. “What I think has changed in terms of our approach is the reality of where the law is headed. 

 

“The calculation we were making was, do we want to just sit back and let this play out, or do we want to come to the table … What I’ve been saying in the states is: I’m not here to tell you not to legalize and I’m not here to tell you to legalize. I’m here to tell you that if you want to legalize sports betting, here are the things that are important to us.”


In conversations with state legislators, the leagues have focused on five key pillars:

 League access to transactional betting data, along with other protections that they argue are needed to detect corruption.

 

Ability for leagues to opt out of betting on certain games and to block sportsbooks from offering certain types of bets that they say increase the risk of corruption.

 

Integrity fee

While many states are undecided about including an integrity fee in their bills, some have already addressed the issue. So far, New York is the only state in which legislation featuring an integrity fee has begun to advance.

Proposed integrity fee/State(s)

1% Indiana, Illinois, Kansas, Missouri

0.25% New York


0%Delaware, Iowa, Maryland, Michigan, Mississippi, New Jersey, Pennsylvania, Rhode Island, West Virginia*

* In March, West Virginia passed legislation that allows casinos to offer land-based and online sports wagering in the event that PASPA is overturned. The law excluded an integrity fee.

Collection of royalties and fees, including a now controversial  1 percent “integrity fee” nominally tied to the increased cost of policing an expanded sports betting landscape.

 

A requirement that sportsbooks only use game stats provided by the leagues, especially for in-game bets.

 

The inclusion of mobile wagering, allowing fans to bet without visiting a casino or racetrack.  

 

The mobile wagering provision is the only one on which the leagues and casino operators agree entirely. Though both say it’s crucial that they preserve the integrity of the games, they have disagreed on the manner in which transactional betting data would be shared and on the need for opt-outs (see story, Page 1).

 

The way sportsbooks use in-game stats to resolve bets is another active fight. 

 

“To say we have to pay the leagues for data, and this is a legislated mandate — it’s just a money grab,” said Joe Asher, CEO of the U.S. operation of leading sportsbook William Hill, which operates in Nevada and stands ready to open at Monmouth Park horse track if New Jersey wins its case. “There’s plenty of money to be had for the leagues. If the bookmakers want to offer in-play [betting], they’re better off getting the feeds from a league-approved source because it’s faster. The ability to stream video into our app — we’d pay big money for that. … But we have to have the ability to say no.”

 

Throughout the hearings, there has been no greater kerfuffle than the debate over what has come to be known as the “integrity fee,” a 1 percent tax levied on bets, the proceeds of which would go to the leagues based upon how much wagering they brought in.

 

Now widely seen as a royalty, the fee has been complicated by the leagues’ desire to base it upon the amount bet rather than on revenue, which is what the casinos come away with after paying the winners. 

 

The point, the casinos say, is that the vast majority of what sportsbooks do amounts to transferring money from losers to winners. When you consider that over the last 10 years Nevada sportsbooks have handed 94.7 percent of all money bet back to the bettors, the league’s ask of 1 percent of handle turns out to be about 20 percent of revenue.

 

“They say 1 percent and it doesn’t sound like much,” said Jay Kornegay, manager of the Westgate Superbook in Las Vegas. “If they said 20 percent, everyone would realize it’s a lot.”

 

That margin becomes particularly relevant when tacked atop the licensing fees and tax rates that states will require, all for a sportsbook segment that last year accounted for only 3.5 percent of the money wagered at Nevada casinos and only 2.1 percent of gaming revenue. Thus far, only three states — Indiana, Illinois and Missouri — have included payment to the leagues in their bills. 

 

“The question is, how much is too much?” said Dan Spillane, senior vice president and assistant general counsel at the NBA, who has been the league’s point person on gambling. “Clearly, any form of taxation or regulation of a business puts businesses at a disadvantage to illegal operators who are operating in another country. They have lower costs and minimal to no regulations to comply with. Whatever happens, you’re going to have that kind of dynamic. The key is to make sure that whatever limits and taxes and fees are required of gaming operators are not excessive and still allow those operators to compete. We think that what we’re proposing is in harmony with that goal.”

 

While they continue to differ on specifics — several of which could present significant hurdles — both the leagues and the casino industry appear to be coming to similar conclusions about a path to successful regulation.

 

“My goal is that leagues and the gaming industry can find common ground,” Freeman said. “And I don’t think finding that common ground is going to happen in some public forum in Indianapolis or some other state capital. I think that common ground is going to come behind closed doors, where we can work through some of these issues. And I am optimistic that we are working our way down that path.”

 

The man who hopes to be among the first to take a bet on a game in Atlantic City hopes so.

 

“I’d love to get past all this,” Asher said, “so that we can get to the point of trying to make money together.”

A bet is placed on men’s college basketball inside the Westgate Superbook in Las Vegas.
Photo: getty images

On a typically busy Saturday morning in late February, the three oddsmakers on duty at the Westgate Superbook sat side by side, eyes alternating between their computer screens and the video monitors that filled one wall of the control room at Las Vegas’ largest sportsbook.

 

One focused on NASCAR practice sessions, preparing to tweak odds for the next day’s race. Another had an eye on golf, while also handling responsibility for monitoring early bets coming in on the night’s NBA and NHL games. A third oversaw a full college basketball schedule.

 

With the tap of a key or toggle of a mouse, each could bring up an eye-stinging array of data streams.

  

One screen tracked point spreads and odds from a customized menu of casinos and websites across the world, allowing them to tweak odds and point spreads to keep in stride with their competitors, the digits turning colors to help them notice any recent change. Another showed bets in each sport as they came in, sorted to distinguish between those placed at the casino and ones that came in online. One oddsmaker kept open an expertly curated Twitter feed, the better to monitor news, as well as tips from popular touts who might influence bettors.

 

When a customer asked to place a bet larger than the pre-set maximum on a college basketball game — typically $1,000 for a standard wager on whether a team would cover the point spread — a pop-up window opened on the oddsmaker’s screen, displaying the amount, along with the name of the person trying to place it. Another click revealed the player’s betting history, which could be sliced and diced to reveal proclivities, including how well he’d fared on each sport.

 

Based on that information, and other factors, the sportsbook could determine whether to take the over-the-limit bet, decline it, or negotiate it down to a smaller amount.

 

“If there’s a guy out there who wants to bet [a large sum on] Dayton, my first question is going to be, ‘Who is it?’” said Jay Kornegay, who has built a 27-year career managing sportsbooks, the last 14 of them at Westgate. “Sometimes I know exactly who it is and sometimes I may have to look it up. But our guys in the back will know who is betting what, always. They monitor it. You have to.”

 

It’s a lot easier to get an advantage through information than it is to set up a game. That’s why we’re concerned about who this guy is when he walks in to place that bet.
Jay Kornegay
Westgate Superbook

It is that sort of attention to both movement in the global market and the betting patterns of individual customers that casino operators point to when they argue that legal, regulated sports betting, as conducted in Nevada, is the best way to combat point shaving and the sale of inside information.

 

When games are manipulated or inside information is traded, casinos typically are the losers. They also stand to lose business from bettors if their trust in a sport erodes.

 

That was the message that Kornegay tried to deliver about a dozen years ago when he and a colleague were invited to Indianapolis for a sit-down that included representatives from the NCAA, the major pro leagues and the FBI, all of whom wanted to know how the casinos monitored betting to sniff out corruption, as they had in several cases.

 

“We told them everything,” Kornegay said. “I think that may have been the first time that they heard that we were on the same side; that integrity is our product as well. And that we want to protect the integrity of the game just like they do, because we don’t want to be accepting bets on something that may be pre-determined. We’re the ones that get hurt on that. So we do our best to protect it, just like [the sports properties].”

 

On that particular Saturday morning in late February, there was big news regarding the FBI’s investigation of college basketball. On ESPN’s “GameDay” pregame show, analysts discussed whether the stories might lead several schools to sit their star players.

 

When the conversation in Westgate’s control room turned to the matter, the oddsmakers discussed the impact that uncertainty had on the betting line of one game in particular — Arizona vs. Oregon. Arizona had announced that Sean Miller would not coach the game, but there was debate over whether the school would allow Pac-12 Player of the Year Deandre Ayton to play.

 

Like most books, Westgate took Arizona-Oregon down from its board when the news hit, unwilling to take bets on that game and several others until it had a better idea of how they might be affected. When it allowed wagering to resume, bettors generally stayed away from Arizona, even as the books offered an increasingly generous line.

 

If, during that period of uncertainty, an insider was sure that Ayton was going to play, he could have used that information to place a bet that would pay off if underdog Arizona lost by fewer than eight points. When it became clear later in the day that Ayton would play, that number dropped to four.

 

This is one aspect of betting that long has concerned those in both pro and college sports — that privileged information held by those inside the game could be used to give bettors an edge.

 

A trainer. An equipment manager. A league employee who has seen an umpire assignment before it has been made public. A player’s family member or friend. All of them possess information that could be used to the advantage of bettors.

 

Leagues and players associations say they increasingly have made educating players and employees on that dynamic a priority as sports gambling has become more prevalent.

 

“That’s more of a concern for us than fixing the game,” Kornegay said. “It’s a lot easier to get an advantage through information than it is to set up a game. That’s why we’re concerned about who this guy is when he walks in to place that bet.

 

“He just might be a really good handicapper or he might have the latest algorithm that’s come up and it’s doing very well. But maybe he knows something about that Toledo team tonight and we don’t.”

 

The leagues argue that that’s why it’s critical they have access to anonymized data, which can be reviewed bet by bet.

 

“Identifying a problem with insider information is usually going to come down to the monitoring of betting lines,” said Bryan Seeley, senior vice president of investigations and deputy general counsel at MLB. “You’re going to see a spike at a certain time period and then the first thing you do is look for a plausible explanation. Was that the moment the umpires were announced for this game or we determined who the umpires were going to be? Or was there another explanation? And if not, then you’ve got to look at whether there was information that wasn’t public that would have affected betting lines in this kind of way, and who knew that information.

 

“If you can’t identify it on the player side or on the umpire side, that’s when it’s important to be able to find out who placed those bets.”

So similar to the stock market is modern sports betting that some in the business refer to their oddsmakers as traders.

 

To a bookmaker, any game, or event within that game, is a market. Any odds or point spread that they set is a price. As odds move, the market follows. If the Westgate has Oklahoma City favored by only 4 points against Golden State while most other casinos have the spread at 5, it is almost certain to attract a flood of money on the favorite.

 

Photo: getty images

While it can win or lose large sums on any given game, a sportsbook’s only sure source of revenue is from the commission it takes — typically 10 percent — on a winning bet. So the traditional practice of a casino is to keep its offerings on par with those of its competitors, lest it be left exposed to money flooding in on one side.

 

If, by deftly moving the line to and fro in half-point increments, the Westgate manages to attract $100,000 in bets on the Warriors and a matching $100,000 on the Thunder, it can collect its $100,000 from the losers, pay $90,000 to the winners and hold on to a $10,000 profit. It rarely works out quite that evenly, since money can land in a heap on one side or the other in the minutes before a game. And there are instances where an individual sportsbook might willingly take additional risk on one side of a game because its experts think the broader market has it wrong. But, largely, most books make a balanced ledger their goal.

 

“By the time we open, the offshores have been taking bets for three hours, so those are already seasoned lines,” Westgate Superbook manager Jay Kornegay said, noting that its market-setting early NFL lines are an exception to that rule. “We might throw in our two cents here or there. But, mostly, you’re going to have money come in on both sides based on that number.

 

“Might we react [and move the line] if we’ve all of a sudden taken a lot on one side? We might. But that’s probably going to come back mostly to one question: Who is betting? When you’re trying to figure out how much you’re taking, who is betting is the most important thing to know.”

 

— Bill King

Editor’s note: This story is revised from the print edition.

 

For those selling and marketing sports media and sponsorships, the imminent legalization of widespread bookmaking is like a map to buried treasure.

 

“This will be a tsunami of money for teams and TV rights holders,” said MKTG Canada President and CEO Brian Cooper.

 

“Gambling will be a top-five sponsorship category almost immediately,” said a chief revenue officer for an NFL team. “I’m bullish enough that I would even take a percentage of the gross.” Like many other team and media sales types, the team CRO requested anonymity, since bookmaking is illegal outside of Nevada.

 

“When it becomes legal, it will be much better to be a seller of sports media and sponsorships than an actual sportsbook operator,” said David Goldberg, former president and CEO of Youbet.com, now an independent consultant. “There’s not going to be enough media and sponsorship supply to meet demand.”

 

After years of pretending illegal sports betting didn’t exist, the very mature sports industry is starting to come to terms with its last big domestic revenue opportunity — legal sports gambling. It’s a market every estimate places at hundreds of billions of dollars, enough to buy every NFL team.

 

Monumental’s Ted Leonsis sees possible expansion of his group’s partnership with MGM.
Photo: getty images

In Nevada, legal sports wagering hit a record $4.9 billion in 2017. How much illegal wagering is there across America?

 

“Believe whatever numbers you want: 10 times, 20 times, 100 times the legally wagered amount,” said Monumental Sports Chairman and CEO Ted Leonsis, owner of the Washington Wizards and Capitals. “It’s unregulated, untaxed, untended, and whenever you have that associated with a huge revenue stream, you’ll have bad behavior.”

 

The industry awaits a Supreme Court decision that could end the federal prohibition on gambling and leave regulation up to states. However, across the business, the feeling is that if sports betting isn’t deemed legal after this case, it will be soon after. As the CRO of a top Premier League team put it, “When it comes to the U.S. and [legal] sports betting, by now, surely it seems like when, not if.”

 

So, sales types are already penciling out profits.

 

“You’re going to see a mad dash,’’ said Sean Barror, the chief commercial officer at AS Roma from 2013-15, who now heads property sales at Excel Sports Management, “so you’ll have people overpaying.”

 

That scenario is reminiscent of the 2015 marketing battle between fantasy brands DraftKings and FanDuel, which prompted consumer fatigue and calls for regulation.

 

“The biggest thing that hurt daily fantasy was that it didn’t have any guard rails,” said Optimum Sports President Tom McGovern. “All that marketing noise created an annoyance factor and raised the discomfort levels with those who didn’t like it in the first place.” McGovern expects a limited number of TV ads for gambling, along the lines of the limitation that the NCAA has for beer marketers. A prescribed amount of “responsibility” messaging is also expected.

 

Nonetheless, “gambling will be a top sponsorship category immediately,” Barror said. “The wild card will be what sort of balance the leagues will strike between consumer sensibilities and teams’ ability to monetize.”

 

League or team opportunity?

 

Since it appears that it will be states regulating sports wagering, the question of whether national advertising or league sponsorships will be important is intriguing.

 

As demonstrated by the NBA’s lobbying efforts for a 1 percent “integrity fee” from regulators, leagues want a piece of the action. They will also incur new overhead in policing gambling. It’s hard to fathom that teams will profit without a league tithe.

 

“The winners will be the ones making the new rules across sports,” said Premier Partnerships President and CEO Randy Bernstein, “and that will be the leagues.”

 

The tidal wave of demand in advertising and sponsorship will be the most immediate opportunity. Leonsis sees legalized bookmaking having an impact across many of his businesses.

 

“The more gaming and gambling, the higher the engagement level of fans, and the more valuable our media rights will be,” said Leonsis, an investor in DraftKings and sports data supplier Sportradar.

“There are two ways to increase ratings,” said Howard Levinson, senior vice president of ad sales at YES Network. “You can have more people watch or you can have the ones already watching to watch more. Anything that will add to engagement will help ad sales.”

 

Leonsis also expects an ESPNews-like channel centered on gaming and gambling, and for betting parlors to someday set up shop in NBA arenas.

 

“You could envision one day that our building is open 18 hours a day,” he said. “MGM built a billion-dollar casino near us [in Maryland] and they advertise in our building for people to go there. I could see a day where there’s partnership and we bring part of MGM across the river into our building.”

 

Finally, there’s the data backbone upon which the new gambling infrastructure will be built. Data companies and financial verification firms will profit. Assuming in-game “real-time” data is deemed as league owned, so will sports properties.

 

“Bloomberg has a huge business in licensing financial data,” Leonsis said. “You are going to see a booming business where we not only license our content, we license our data.”

 

The real-time data imperative will underwrite applications such as ongoing MLB prop bets on a batter-by-batter basis, a scenario envisioned by Bill Squadron, special counsel to sports data provider Genius Sports, who said more than half of all U.K. sports bets are prop bets made after the game has started.

 

“You’re going to get people betting who never bet before,” said Jim Schwebel, a former NFL senior vice president of corporate sponsorship marketing and now a principal at sports and entertainment agency Apel. “And once they start doing it, I could see a dedicated NFL channel for bettors.”

 

Without knowing precisely what the laws will be regarding legalized sports bookmaking or what league rules will permit, many selling team sponsorship assets were reluctant to make predictions.

 

“It will depend on how liberal the leagues are,” said the president of a large-market NBA team. “[Uniform] patch or no patch? Courtside signage or no courtside signage? Betting in arena or not? There are so many variables.”

 

Far East

 

Asia is the biggest gambling market in the world. The popularity of the NBA in China is one rationale behind NBA Commissioner Adam Silver championing legalized sports betting.

 

Could gambling be what opens up the world’s biggest consumer market for other U.S. sports properties?

 

“Betting has driven the rapid increase in popularity of European soccer in Asia, so you have to wonder if it won’t have the same effect for the NFL there and unlock that market,” said Matt Hill, senior vice president of global sports and entertainment consulting at GMR, and a former NFL marketer.

 

While the U.S. market will be lucrative, Asia is a coveted target. For example, the Brooklyn Nets’ new minority owner is Joseph Tsai, co-founder of Chinese e-commerce giant Alibaba. On his way back from recent meetings with Tsai and potential sponsors in China, Brooklyn Sports & Entertainment CEO Brett Yormark stopped in London to familiarize himself with the legal bookmaking industry there.

 

“Look at the size of the market in China and our new ownership there,” Yormark said. “We see a real upside on sports betting, and we’re going to take advantage of it.”

 

Even those overseas are starting to notice something that could grow into competition. “Betting companies will be rushing in,” said the Premier League team CRO, “but I’m interested to see how global that opportunity gets or if it will remain U.S.-centric.”

 

Yet another factor that will stimulate demand: “This will probably go down as the most quantifiable form of marketing ever, because they [bookmakers] control every end of the transaction,” said Dan Donnelly, executive vice president and managing director of Publicis Media Sports. “It’s much harder to determine ROI for autos or beer, and they are the biggest spenders, so … ”

 

Camera visible

 

Some see unprecedented demand resulting in more advertising in and around the field of play. If any opportunity could convince the NFL to put signage between its goalposts, this is it.

 

“There will be a huge need right away, for these guys [bookmakers] to spend and pick up market share,” said Ron Skotarczak, executive vice president of marketing partnerships for Madison Square Garden. “That will push all the leagues to find as many camera-visible branding opportunities as they can.”

 

Another untested variable: How will incumbent sports sponsors, especially those targeting youthful consumers, feel about associating with bookmakers, even legal ones? Will NFL corporate sponsors like Gatorade or Campbell Soup want to be the sign next to or in the same commercial pod as Betnfl.com?

 

“The one thing holding back this rush of gambling money would be if a big sponsor said they don’t like being in that neighborhood,” said Chris Weil, CEO at Momentum Worldwide, whose clients include heavy sports spenders Coca-Cola and Verizon. “I’ve already had one client express concern there.”

 

San Jose Earthquakes President Tom Fox spent around seven years in the EPL as CEO at Aston Villa and chief commercial officer at Arsenal FC. Having sold marketing rights in a legal betting environment, Fox says the American branding race will be analogous to the competition between Netflix, Hulu and Amazon for video subscriptions — with considerably more marketing noise.

 

“Digital [bookmakers] are the vast majority of the [U.K.] business now,” he said. “Like Netflix, they want to get you onto their platforms as quickly as possible, and keep you loyal.”

 

Aside from the branding imperative, data collection and CRM is a big part of every U.K. deal. “These are very sophisticated data miners and marketers so I would also look for an explosion in digital media sales,” Fox said. “The aim is to follow you from bet to bet and game to game.”

 

Divide and conquer

 

Never underestimate the sponsorship industry’s ability to segment a lucrative category. Across the 92 teams in English soccer, there are around 50 gambling brands buying top-shelf marketing assets, like jersey sponsorships and perimeter signage, “infinitely more than any other category,” according to Phil Carling, former commercial director of Arsenal FC and head of the Football Association’s Commercial Department, now Octagon’s managing director of football.

 

While the lines have blurred in recent years across English soccer as digital betting took precedence, team gambling sponsorships have been split between betting companies with in-stadium locations (normally ATM-like kiosks), digital brands located in the U.K. and offshore digital bookies. “Some [offshore bookmakers] advertise in Malaysian or Chinese,” Carling said. “They don’t care about the locals. Americans are far more creative in slicing the pizza. Once the floodgates open for bookmakers in American sport, God knows, it will be awesome to behold.”

 

Pending the Supreme Court decision, “We’re all sitting around waiting, but we can see what’s going on in Europe, in Asia,” Leonsis said. “We’re really far behind and no one can really articulate why. Twenty years from now, we’ll look back at this moment like we did 20 years ago when someone told us they had email; gaming and gambling will become an integral part of the sports experience.”

Those seeking a comparison to assess the economic impact of legalized sports wagering in the U.S. usually reference the English Premier League, since its lock on the European sporting consciousness and unparalleled global reach have attracted sponsorship money and franchise valuations for top clubs that even the NFL envies.

 

But if the EPL will be the model upon which the junction of American sports marketing and bookmaking is built, stateside sports fans had better prepare for a marketing assault.

 

Across the 20-team Premier League, the biggest buyers of marketing inventory are dot-com betting houses. Jersey sponsorships for the elite top six teams — Arsenal, Chelsea, Liverpool, Manchester City, Manchester United and Tottenham Hotspur — are priced high enough (an average deal of $48.9 million a year) that they are out of reach. However, nine of the remaining 14 EPL clubs have sold shirt sponsorships to bookmakers. More than 40 percent of the perimeter ad boards are bought by betting houses.

 

“Bookmaking is a very easy startup and potential profits are enormous,” said Phil Carling, Octagon’s managing director of football.

 

Added Ron Skotarczak, Madison Square Garden’s executive vice president of marketing, “It may get as big here as it is in the EPL, but that’s not going to be right away. The leagues are going to be very careful.”

 

The betting explosion has even become a political football. Britain’s Labour Party has pledged to outlaw betting companies’ use of shirt sponsorships. Accordingly, even in a land where gambling sponsorships are common as rainy weather, there’s a reluctance to talk about the issue. 

 

“I see the category getting quickly crowded and fractured,” said an EPL chief revenue officer, when asked to predict how the U.S. legal bookmaking market will develop. “But caution is necessary, too … You’ll want to make sure your partner in this developing market will be around in three or four years.’’

 

— Terry Lefton

Photo: getty images

In the United Kingdom, placing a wager at a professional sporting event is as commonplace and interwoven with the fan experience as going to a concession stand and buying a hot dog and a beer.

 

Whether that happens in the United States, even if the Supreme Court clears a path to legalize sports wagering, remains to be seen. But even before a decision is rendered, entities across the sports industry are actively plotting how in-venue betting can similarly become a fundamental part of the American fan experience.

 

BD Sport Group, which has struck a dominant position as a back-end service provider aiding major British bookmakers such as William Hill and Ladbrokes with in-venue wagering, last year became part of New York-based Orange Capital Ventures. And part of the strategy behind Orange Capital’s acquisition of BD Sport Group’s parent company included a potential expansion into the U.S.

 

“Clearly, we’d like to be part of it, if it happens,” said Tony Warwick, BD Sport Group co-founder and joint managing director. “We want to replicate what we do here [in England] in the U.S. We are ready and have the infrastructure and [intellectual property] in place.”

 

Leading daily fantasy sports operator DraftKings already has taken some similar steps in this direction, opening several branded lounges at arenas and stadiums around the country over the past several years where fans could gather and play daily fantasy during the course of a real-life game.

 

And more recently, DraftKings has hired a head of sportsbook with experience in the U.K. gaming space, based him in a newly opened company office in Hoboken, N.J., and is preparing for a legal landscape where U.S. gambling laws likely vary significantly by state.

 

“Our big thing is being very nimble and flexible, and prepared for every potential outcome. Whatever makes business sense and regulatory sense, we’ll want to do,” said Jason Robins, DraftKings co-founder and chief executive. “We all agree that this could be a very big market, and in-venue is a great way to reach fans. But what this could look like and what it will look like will probably be two different things.”

 

Among the key questions to be resolved in a legalized U.S. gaming landscape is precisely how interactive and technology-driven an in-venue wagering scenario will be for fans. In the U.K., fans can bet through a wide variety of means, including kiosks, online and on mobile-based platforms. And in the U.S., mobile platforms now represent the vast majority of content consumption for most major sports programmers, suggesting similar interest in sports betting through smartphones.

 

But Warwick said traditional cash-based betting windows in the concourses and luxury suites of U.K. soccer stadiums remain popular as many fans still prefer a human interaction as part of their match-day experience.

 

“The back-end behind these services and managing the cash flows and activity is certainly very high-tech, but that low-tech style of betting from the fan perspective is still very much there,” Warwick said. “Going to the match and placing a small bet, that’s simply part of the day for many fans.”

 

Warwick said BD Sport Group’s average in-venue wager is about 20 British pounds, and predicts a typical American fan would similarly wager about $25 and $30 at a game, should it become legal. The total amount bet at a normal U.K. football match amounts to 50 or 60 pence per person in stadium, translating to more than 30,000 pounds wagered per match at the larger Premier League stadiums. Warwick said even higher amounts could occur in the U.S. given the longer duration of games in the NFL, NBA and MLB. 

 

Following a Supreme Court ruling, the pathway toward any in-venue wagering would require, in the words of Robins, “a lot of hands in the cookie jar.” Approvals likely would be needed from not only state and local jurisdictions, but also the leagues, teams, venue owners, and labor groups such as players associations. And battle lines are already forming in many states regarding the splits around potential gaming revenue.

 

Lee Zeidman, Staples Center president, said the building is “always open to new ways to enhance the guest and fan experience” that a legalized betting landscape could bring. But he similarly pointed to the long series of legal and tenant approvals needed to make in-arena betting happen even at just that one arena.

 

Warwick similarly has a long view and points to the decades of U.K. regulation and established betting culture around sports wagering that has led to the current situation there.

 

“This is going to take a while to build up all the protective infrastructure needed to really make this happen” in the U.S., he said. “In-venue is probably not the first thing on the list to happen following a ruling. It’s maybe third or fourth on the list. But I could see something happening in this area perhaps by 2020 or 2021, and then becoming a key part of what we’re talking about.”

The NCAA’s long-standing position against gambling on college games is about to receive a stiff challenge.

 

The governing body of college sports wants an exception if the Supreme Court lifts the ban on sports gambling, a move that would keep wagers on college games illegal. 

 

But separating out college games from pro games would come with its own set of complications, said Geoff Freeman, CEO of the American Gaming Association. The reason: An exclusion for college sports would fuel illegal betting on the black market and ultimately be counterproductive for the gaming industry. Close to a third of the handle in Nevada comes from betting on college games.

 

Besides, many athletic administrators believe that if gambling becomes legal, they’d rather operate in a regulated environment versus an unregulated one.

 

“Gambling is happening on NCAA games, gambling right now is happening illegally,” said Jennifer Roberts, associate director of the International Center for Gaming Regulation at the University of Nevada-Las Vegas. “It’s better to have a system where it is regulated, and you have protections that monitor wagering activity.”

 

NCAA President Mark Emmert said the organization will not make wholesale changes to its approach on gambling, at least until the Supreme Court rules and maybe not even then, but new wagering laws could still have an impact across the country. 

 

The most obvious change could come in the way the NCAA selects championship sites. Nevada, the lone state where single-game wagering is legal, is not permitted to host NCAA championships, even though the Pac-12 and Mountain West conferences stage events there. But if 20 to 30 states institute legal gambling, as expected, the NCAA will likely have to loosen those restrictions. It would have a hard time prohibiting half of the country from hosting NCAA championships. 

 

“If it’s going to happen, the NCAA will have to reshape their own protocols around it,” said Tom McMillen, the former congressman and now CEO of LEAD1, a professional organization for Division I FBS athletic directors. “They’re not going to say that 30 states can’t host championships. That would be ludicrous. But you’re not going to see the NCAA deal with it until something is decided.”

 

The combination of college sports and gambling often evoke memories of high-profile point-shaving scandals.

 

But in Las Vegas, where gambling on individual games is legal, former athletic administrators at UNLV say they felt more secure knowing the betting patterns were being regulated as part of a legal wagering system versus one that’s illegal and unregulated. If a UNLV athlete wandered into a sportsbook on the Strip, just three blocks from campus, it didn’t go unnoticed.

 

“We received a notification if somebody even sat down at a table,” said Jim Livengood, who was the athletic director at UNLV from 2009-13.

 

That’s what leads many campus administrators to counter the NCAA’s notion that gambling should remain illegal.

 

“When I was there, we’d go into the sportsbooks just to make sure we didn’t have athletes in there,” said Marshall AD Mike Hamrick, who was UNLV’s AD from 2003-09. “It’s just something that we had to deal with [at UNLV], and now for everybody else, it’s coming.”

 

Neither legal nor illegal gambling is foolproof when it comes to the potential for fixing games.

 

“The players come from a more vulnerable universe,” said McMillen, who has been proactive about educating his membership about legal gambling as it comes across the horizon. “When you can just walk into a casino and place a bet instead of betting on a phone, you might have more potential for abuse.”

 

But Roberts said: “When you have wagering, and it’s regulated, you have rules, you have consumer due diligence, integrity monitoring, line monitoring to see patterns on wagering. When you have a state-regulated activity, they can have closer communication with the NCAA and its schools.”

 

In Nevada, the state used to prohibit any bets on UNLV or Nevada games in the 1990s, but that law was repealed “because of the confidence in the system,” Roberts said.

 

Unlike the NCAA, pro leagues such as the NBA and MLB have advocated for legalized gambling that would pay the leagues a cut of the handle — what’s commonly called a 1 percent “integrity fee” or royalty. Emmert said the governing body is not interested in seeking revenue from gambling.

 

The revenue piece “is not something that anybody that’s in college sports thinks is appropriate for colleges and universities,” Emmert said at the Final Four.

 

But for schools in the states where it might soon be legal, like West Virginia, there could be both revenue and expense implications. Hamrick said he anticipates additional expenses to better equip Marshall’s compliance staff, possibly with more staff to work with the state on monitoring.

 

So, he’d like to see more opportunities for revenue coming from legal wagering. Some athletic departments already accept lucrative advertising and sponsorships from casinos and resorts in their states — sportsbook William Hill has advertising at UNLV. In states where gambling would be new, sponsorships from sportsbooks and casinos could represent new revenue.

 

“Just my opinion, but yes, if gambling becomes legal, we’re going to need more resources,” Hamrick said. “If somebody is going to benefit, why shouldn’t college athletics benefit just like the NBA and MLB? I can tell you we’re going to have extra expenses.”

When Fox Sports 1 launched in 2013, it decided to embrace gambling programming as a way to separate itself from its competitors. Its hosts were free to discuss betting lines. It gave airtime to a sports wagering expert. And during the day, it had a scrolling CNBC-style ticker at the bottom of the screen, complete with standings, statistics and, yes, point spreads.

 

The idea was that FS1 would cover U.S. sports the same way Fox Business Network covers the financial markets. The problem was that while Fox Business Network's stock ticker fluctuated throughout the day, FS1’s remained relatively stagnant. Sports statistics and odds do not change much during daytime hours, especially since most games are scheduled at night.

 

After a few months, network executives still liked having their hosts talk about point spreads. But they decided to pare down the ticker.

 

“You can only run through standings and points leaders so many times,” said a Fox Sports source who did not want to be identified discussing potential ramifications of a Supreme Court gambling case that has yet to be decided. “There’s not a whole lot of data that is being created in the daytime in sports. It’s not like business.”

 

Fox’s experience from five years ago is instructive as media companies try to figure out what changes they need to make to their programming in an environment that could become much more permissive about gambling.

 

Most media executives contacted for this story believe that if gambling laws become more relaxed, gambling segments will appear more frequently. But they do not see big changes in the way TV channels program their schedule. Linear television audiences are too big to allow niche programming, such as gambling and fantasy, to take over their schedules.

 

Platforms like Vegas Stats and Information Network could see growth if sports betting is legalized.

Rather, they predict that the biggest changes will be seen on digital platforms. Every source contacted for this story pointed to Brent Musburger’s recently launched Vegas Stats and Information Network as an example of what the future could look like if gambling becomes more permissive — a niche digital platform focused on betting lines.

 

“It’s all about the interactivity piece,” said Daniel Cohen, senior vice president of Octagon and head of its global media rights consultancy arm. “The second screen is going to offer a new way to watch TV programming that runs in real time with the linear broadcast from that broadcaster. In-game betting is going to be huge.”

 

Cohen referenced Facebook’s $35 million deal to stream 25 weekday afternoon baseball games as particularly interesting. Typically, midweek games draw the smallest TV audiences by far. But a midweek game that can be streamed in a gambling-friendly environment? That has a ton of potential, he said.

 

“When I used to work at Bloomberg, I’d go over to London and see these traders all have their trade screens on one monitor and have some sporting event on the other,” Cohen said. “They’d just be making real-time bets as the games were going on. It’s such a core fabric of the culture there. I think it will explode here.”

 

Zach Leonsis, senior vice president of strategic initiatives for Monumental Sports Network, said he expects 75 percent of gambling to occur on digital and mobile devices.

 

“Real time is one of the most exciting opportunities here,” he said. “That’s where I see interactivity in digital channels … I see us taking advantage of the inherent touchability that iPhones and Android devices give us. You can’t do that on linear.”

 

For decades, TV sports shied away from any kind of gambling references. Some play-by-play voices, like Al Michaels or Musburger, gained cult status in some gambling communities because they referred to betting lines during their broadcasts, almost always with a wink-and-a-nod, using coded language that bettors would know. Musburger, for example, would refer to “our friends in the desert,” whenever he talked about a Las Vegas betting line during a game.

 

For the past several years, that gambling taboo on television largely has gone away, as gambling talk has become much more pervasive. Today, some of the biggest sports TV stars openly discuss bets. On ESPN, one of the most recognizable segments on Scott Van Pelt’s “SportsCenter” is “Bad Beats,” when he shows a seemingly meaningless touchdown, basket or goal that affected a point spread. On FS1, Colin Cowherd spends much of his Fridays during NFL season talking about betting lines.

 

When it comes to figuring out how much emphasis networks should place on gambling should it become legalized, one network executive said TV networks will take the lead from their league partners. If a league, like the NBA, embraces wagering, networks will have more leeway to roll out gambling-related programming. If a league does not embrace wagering, networks most likely would respect those wishes, the executive said.

As leagues, bookmakers and bettors await the Supreme Court’s ruling on PASPA, companies are positioning themselves for the broadened legalization of sports betting. While preparation for some of these companies began years ago — William Hill U.S., for example, in 2013 struck a partnership with Monmouth Park in New Jersey to operate a sportsbook at the horse track — the landscape has become more complex as sports leagues and daily fantasy companies angle for a slice of the revenue.

 

Here’s a look at a few companies — bookmakers, data providers, lobbying groups — that figure to help shape the sports betting industry upon legalization.

 

SPORTSBOOKS

 

WILLIAM HILL

In 2012, William Hill became the first U.K.-based bookmaker to be granted a license to operate in the United States. Branded William Hill U.S., the company’s American division offers sports wagering at 108 locations throughout Nevada, including full-service sports books at Las Vegas casinos such as Binion’s and the Plaza, as well as at kiosks throughout the state. William Hill U.S. also has a mobile app for betting.

Key executives: CEO Philip Bowcock; William Hill U.S. CEO Joe Asher

Headquarters: Global, London; U.S., Las Vegas

Revenue: $2.4 billion, according to the 2017 annual report, up 7 percent from the prior year, with adjusted operating profit of $411 million.

Operations: In addition to its 108 Nevada locations, William Hill U.S. serves as the risk management consultant for Delaware’s Sports Lottery (parlay cards). Its deal at Monmouth Park in New Jersey includes an agreement to operate the horse track’s sportsbook, as well as title sponsorship of the sports bar at the facility.

 

CG TECHNOLOGY

In 2016, CG, the sports betting arm of financial services firm Cantor Fitzgerald, agreed to a $22.5 million settlement for its role in an illegal gambling and money laundering scheme. The company, from 2009 through 2012 when it was branded Cantor Gaming, was found to have knowingly accepted bets from an illegal bookmaking network, nicknamed the “Jersey Boys.” The case resulted in the 2012 arrest of vice president of risk Mike Colbert, as well as the forced resignation of CEO Lee Amaitis.

Key executive: Parikshat Khanna, who joined the company in 2010 as operations manager, was promoted to CEO in February 2017.

Headquarters: Las Vegas

Revenue: CG is privately owned. No revenue information was available.

Operations: Nevada sportsbooks operated by CG include Penn National Gaming’s Las Vegas casinos — M Resort and the Tropicana. Penn operates casinos and racetracks in California, Florida, Illinois, Indiana, Kansas, Maine, Massachusetts, Mississippi, Missouri, New Jersey, New Mexico, Ohio, Pennsylvania, Texas and West Virginia. CG also operates the sportsbooks at Vegas’ Venetian, Hard Rock, Cosmopolitan and Palms.

 

CAESARS ENTERTAINMENT

Founded nearly eight decades ago in Reno, Nev., Caesars Entertainment counts Bally’s, Harrah’s and Horseshoe among its hotel/casino brands, in addition to its flagship Caesars brand. In Las Vegas, the company has the Cromwell, Flamingo, The Linq, Paris and Planet Hollywood.

Key executives: President and CEO Mark Frissora; Director, Specialty Games, Frank Kunovic

Headquarters: Las Vegas

Revenue: Operating income in 2017 was $532 million on revenue of $4.85 billion.

Operations: Caesars Entertainment’s national reach stretches to casinos and gaming operations in Arizona, California, Illinois, Indiana, Iowa, Louisiana, Maryland, Mississippi, Missouri, New Jersey, North Carolina and Pennsylvania. It also owns the World Series of Poker tournament and brands and has properties in Canada, Egypt, England and South Africa.

 

MGM RESORTS INTERNATIONAL

The largest employer in Nevada, MGM Resorts International owns properties along the Las Vegas Strip that include MGM Grand, The Mirage, Mandalay Bay, Bellagio, Luxor, New York-New York, Excalibur and Circus Circus. The company’s Park MGM property — formerly Monte Carlo — is the casino closest to the city’s new 20,000-seat T-Mobile Arena. As the operator of all these Strip properties, MGM Resorts is the sportsbook that caters to the average Las Vegas tourist, whereas the Wynn attracts more high-rollers, and the South Point brings in locals.

Key executives: Chairman and CEO Jim Murren; VP Race and Sports, Jay Rood

Headquarters: Las Vegas

Revenue: $10.8 billion, and domestic resorts net revenue of $8.3 billion, an 18 percent increase over 2017.

Operations: Beyond Nevada, MGM has resorts in Mississippi, Maryland, New Jersey and Michigan.

 

INTEGRITY

 

SPORTRADAR

Sportradar collects and distributes data to leagues, bookmakers and media companies. Its foray into the U.S. was boosted by a $44 million round of funding from Mark Cuban, Michael Jordan and Ted Leonsis in 2015.

Key executives: Founder and CEO Carsten Koerl; Deputy President, Sportradar U.S., Laila Mintas.

Headquarters: St. Gallen, Switzerland. It was founded in 2000 in Trondheim, Norway. Its U.S. subsidiary, Sportradar US, is based in Minneapolis.

Revenue: $250 million in 2016.

Operations: Working with properties that include FIFA and NBA, Sportradar’s Integrity Services division monitors odds movement and betting patterns.

 

GENIUS SPORTS

Genius Sports, which launched as a brand in 2015, supplies betting technology to sportsbooks and collects and distributes data in partnership with properties such as MLB, the PGA Tour, ATP and WTA, as well as FIBA and the English Premier League and La Liga.

Key executive: CEO Mark Locke

Headquarters: London

Revenue: According to a report released in June 2016, revenue of $45.3 million with EBITDA of $6.7 million.

Operations: Beyond its London base, Genius Sports has 16 other locations around the world. The company refuses to do business with bookmakers in the Caribbean, which say they are regulated but accept bets illegally from the U.S.

 

OTHERS

 

AMERICAN GAMING ASSOCIATION

Positioning itself as the premier national advocacy group for the $240 billion U.S. casino industry, the American Gaming Association is at the forefront of the push for the legalization of sports betting. Subscribing to the “rising tide lifts all ships” mantra, the AGA says the national expansion of gaming will be to Las Vegas’ benefit.

Key executive: President and CEO Geoff Freeman

Headquarters: Washington, D.C.

Operations: Founded in 1994, the AGA pegs its messaging to major national sports events that generate into the billions of dollars of wagers, some legally but mostly illegally. On Super Bowl Sunday this past February, the group launched a marketing campaign emphasizing “the need to end the federal ban on sports betting.” As March Madness was getting underway, the AGA trumpeted its research that only 3 percent of the $10 billion bet on the NCAA Tournament would be done so legally.

 

BD STADIA

Formed about six years ago as part of BD Sport Group, BD Stadia provides the operational and logistical pieces for in-stadium betting at multiple venues throughout the U.K. BD Stadia acts as a liaison between teams and bookmakers. In March 2017, BD Sport Group was acquired by Gaming Nation for $12.4 million in cash with provisions for another $3.1 million.

Key executive: BD Sport co-founder and joint managing director Tony Warwick

Headquarters: Lancashire, U.K.

Revenue: BD Sport Group, $6.1 million in revenue in the year prior to the acquisition with EBITDA of $1.83 million.

Operations: BD Stadia counts Betfair, Bodog, sportingbet, Mansion and 12Bet.com among its bookmaking clients, and services the facilities of Chelsea, Liverpool, Manchester United and Arsenal. The company has about 600 employees working at stadiums. Last September, BD Stadia announced an expansion of its partnership with William Hill, under which the bookmaker was given access to open new betting shops inside stadiums of Stoke City, Huddersfield, Queens Park Rangers, Preston North End, Bradford and Bolton.

OCTOBER 1992

The Professional and Amateur Sports Protection Act is enacted and prohibits sports betting nationwide but grandfathered in those states already providing that wagering.

MARCH 2009

New Jersey State Sen. Raymond Lesniak among others files suit over PASPA.

JULY 2009

Ohio Lottery Commission approves Bengals and Browns instant lottery games to be sold statewide. The Seahawks also sign a similar deal on a Washington Lottery scratch-off game.

 

NOVEMBER 2011

New Jersey voters pass a referendum supporting legal sports betting at casinos and racetracks.

 

APRIL 2011

NFL lifts ban on advertisements and sponsorships for casinos, but with restrictions still in place.

 

AUGUST 2012

The NCAA, MLB, NFL, NBA and NHL file suit against New Jersey in an attempt to block the state from implementing sports betting on pro and college games.

 

SEPTEMBER 2013

The 3rd U.S. Circuit Court of Appeals sides with the leagues in a 2-1 decision.

 

MARCH 2014

NFL lifts restrictions on casino sponsorships and advertisements, including increasing available inventory for teams to sell to casinos, and lifting of ban on stadium signage in lower levels.

 

OCTOBER 2014

New Jersey passes legislation that decriminalizes sports betting at licensed racetracks and casinos. The leagues would file suit again.

 

Photo: getty images

OCTOBER 2015

The Phoenix Suns and Salt River Pima-Maricopa Indian Community agree to a naming-rights agreement to change the name US Airways Center to Talking Stick Resort Arena, the first major sports arena naming-rights deal for a casino.

 

APRIL 2015

NFL Commissioner Roger Goodell states, “We oppose sports gambling. We haven’t changed our position on that, and I don’t see us changing our position on that.”

 

AUGUST 2016

The full 3rd U.S. Circuit Court of Appeals rules 9-3 in favor of the sports leagues. New Jersey takes its appeal to the U.S. Supreme Court.

 

JULY 2017

NBA Commissioner Adam Silver states that he senses the law will change in the next few years in the United States.

 

JULY 2017

MLB Commissioner Rob Manfred says the league wants a say in the future of sports betting.

— Compiled by Brandon McClung


In this week’s First Look podcast, SBJ’s Abe Madkour, Bill King and Terry Lefton discuss this week’s edition, including an in-depth discussion on sports gambling and the ramifications of pending Supreme Court action.