[toc]Editor’s note: This is the second in a series or articles about the NFL and other pro leagues’ case against legalized sports betting.
Part one: The NFL’s Argument That Sports Betting Causes Harm Is Wearing Thin
Part three: Legal Sports Betting Could Happen Quickly In The US, If The NFL And Other Leagues Fall Flat On Proving ‘Harm’
The issue of “irreparable harm” (and, to a lesser extent, the related doctrine of “standing,” as highlighted in an article by the staff of Legal Sports Report) could emerge as a key battleground in future cases involving US sports betting.
Recent developments — consisting mainly of the leagues’ own words and actions — have, in my view, undermined any potential claim by the leagues that they would suffer irreparable harm from state-sponsored sports betting. (Remember, “no irreparable harm” means “no preliminary injunction.”
What the leagues are doing on sports betting
That could leave the leagues powerless to stop sports betting while a potential lawsuit plays out over several years, including appeals). It could also potentially negate the leagues’ “standing” to enforce PASPA (the federal prohibition on sports betting) in court.
Through their words, the major US sports leagues have slowly begun to embrace the possibility of expanded legal sports betting. This would certainly be the first line of attack against any claim by the leagues that they would be “irreparably harmed” by activity that they now appear poised to endorse.
Along those lines, the recent statements by league commissioners would be fair game. Exhibit “A” in this approach, of course, would be NBA Commissioner Adam Silver’s New York Times op-ed in 2014 calling for the legalization and regulation of sports betting. Silver’s piece recedes from the NBA’s longstanding opposition to sports betting.
He acknowledges the obvious — that PASPA does done little to stop the spread of sports gambling in this country. It has only achieved the shifting of such activity to illegal markets, where it is untaxed, unregulated and bereft of any consumer protections.
Significantly, Silver’s pp-ed also appears to contradict any notion that there is a “stigmatizing effect” resulting from the fusion of sporting events and gambling. That argument was the cornerstone of the leagues’ “irreparable harm” argument in both the Christie I and Christie II cases in New Jersey.
Signaling that “[t]imes have changed” since the enactment of PASPA in 1992, Silver’s op-ed points to the increased public acceptance of gambling. Silver characterizes it as “a popular and accepted form of entertainment in the United States,” noting that most states now offer lotteries, over half have casinos, and three states (e.g., New Jersey, Delaware and Nevada) “have approved some form of Internet gambling, with others poised to follow.”
Dissonance from the NBA
These refreshingly candid comments — which conclude with a call for Congress “to adopt a federal framework that allows states to authorize betting on professional sports” — break sharply with the leagues’ courtroom narrative advanced just one month earlier. (The leagues filed their last brief, citing the “stigmatizing effect” of mixing sporting contests and gambling in October 2014. Silver’s piece ran in the New York Times on November 13, 2014, coincidentally— or not —one day after the NBA announced that it would become an investor in daily fantasy sports site FanDuel.)
Silver’s comments alone aren’t enough to crack the dike. After all, he is just one of five sports league commissioners represented in the Christie case. But his bold stance (albeit with no follow-up action) has lured other league commissioners into this debate, leading to even more contradictory statements.
Major League Baseball
In the nearly two-and-a-half years since Silver’s op-ed was published, the other pro sports league commissioners (and several team owners) have weighed in at various junctures with revealing comments that further lay waste to the leagues’ “irreparable harm” argument. They have either indicating support for repealing or modifying PASPA, or by insinuating that gambling on sporting events is an exaggerated problem or not a serious problem at all.
Among the other league commissioners, Major League Baseball’s Rob Manfred appears to be the most outwardly supportive of Silver’s proposal. In response to a question at the 2015 MIT Sports Analytics Conference, Manfred said that the federal regulation of sports betting “seems like a pretty good idea” to him.
Manfred’s more recent comments go even further:
- During a February 2017 interview with Yahoo Finance, Manfred said that MLB was “reexamining [its] stance on gambling. It’s a conversation that’s ongoing with the owners.” Manfred acknowledged during that sit-down with Yahoo’s Daniel Roberts that betting on the games “can be a form of fan engagement, it can fuel the popularity of the sport. We all understand that.”
- Less than month later, Manfred took another quantum leap forward on the issue, declaring that MLB “is ready to join in what I think is going to be a dialogue about how sports gambling regulation in the United States should be changed.”
MLB takes it even further
But it’s Manfred’s other statements that may have done untold harm to the leagues’ “irreparable harm” argument.
In an interview with Fox Business last month, Manfred rejected the notion that there was any “stigma” associated with placing a team in the Las Vegas market. He said that “[w]e’re past the stigma, as you put it, associated with Las Vegas.” He reasoned that “[t]he fact of the matter is, people can gamble even on sports wherever they want to, we know that. It’s a fact that we all live with.”
This comment, in particular, would seem to completely contradict MLB’s prior assertion in Christie II that there is a “proven ‘stigmatizing effect’ of having sporting contests associated with gambling.” Consider the stigma officially removed, and with it MLB’s ability to credibly maintain “irreparable harm” on that basis.
Manfred’s hockey counterpart, NHL Commissioner Gary Bettman, has been somewhat more circumspect about the league’s position, insisting that hockey “doesn’t lend itself to gambling in the same way that football and basketball do.”
But even that statement would seemingly belie any future claim by the NHL — in legal filings— that it would be “irreparably harmed” by state-regulated sports betting. The NHL, of course, is putting a team in Las Vegas.
However, the National Football League — the sport garnering the largest amount of illegal wagering activity in the US — remains vehemently opposed to changing the federal law.
At an NFL owners meeting in October 2016, Commissioner Roger Goodell declared that the league “remains very much opposed to legalized gambling on sports.” In a more recent interview, Goodell reiterated that the NFL “still strongly oppose[s] legalized sports gambling,” adding that “[t]he integrity of our game is number one. We will not compromise on that.”
But cracks in the league’s publicly stated position are starting to emerge. The owners of two NFL teams — who are essentially Goodell’s employers — have seemingly contradicted the league’s public stance against sports betting
The owner of one AFC team recently told SI’s Albert Breer that it’s “a joke to even say” that wagering on the league’s games would be a problem, characterizing it as an “issue decades ago.” The unnamed AFC team owner insisted that “sports gambling is going to be legal. We might as well embrace it and become part of the solution, rather than fight it. It’s in everybody’s best interests for it to be above-board.”
Just as revealingly, another team owner (from the NFC) confided to Breer that the league’s concern about sports betting “is not 100 percent put to bed, but it’s relatively put to bed just because of technology today.”
Hurting the NFL’s case
With statements like these, the ability of the NFL to assert “irreparable harm” an essential element of a preliminary injunction — in future cases becomes severely compromised.
Courts often rely on a plaintiff’s out-of-court statements — even those that would otherwise constitute inadmissible “hearsay” evidence — to negate the element of “irreparable harm” and deny a party’s motion for a preliminary injunction. See Johnson v. Couturier, 572 F.3d 1067, 1083 (9th Cir. 2009) (“A district court may . . . consider hearsay in deciding whether to issue a preliminary injunction.”).
No doubt the lawyers in the New Jersey sports betting case are working overtime trying to keep tabs on the league’s contradictory positions. So too, likely, are lawyers representing other potential state challengers — and there may be several of those soon enough (West Virginia is one intriguing possibility. See here, here and here).
The NFL’s move to Vegas is important to any sports betting case
But it’s the NFL’s actions that truly expose the fallacy of its publicly stated opposition to sports betting, They severely weaken (if not doom) any potential future claim of “irreparable harm.”
What the NFL did before Vegas
While the NFL’s public statements may be carefully couched to protect the league’s flank, their recent actions paint a more revealing portrait of the league’s growing involvement in — and direct financial benefit from — wagering on the leagues’ contests.
The NFL has a data licensing deal with Sportradar US, a subsidiary of Swiss-based Sportradar, which reportedly provides real-time data and statistics to online gambling operators serving the US. The league also embraces daily fantasy sports — 23 NFL teams have marketing partnerships with either DraftKings or FanDuel (albeit, down from 29 nearly one year ago).
These are two oft-cited examples of the league’s hypocritical anti-gambling stance. This could be used to counter the league’s assertion that sports gambling harms its interests.
That brings us to the NFL’s latest action: approving the relocation of the Oakland Raiders to Las Vegas.
Now, there’s an NFL team moving to Nevada
For years, the NFL has shunned Las Vegas because of its legalized sports betting and casino environment, a historical aversion that has sometimes bordered on the farcical. As recently as 2015, the NFL was so spooked by any association with Las Vegas that it shut down a fantasy football convention featuring NFL players simply because it was being held in a convention center that was adjacent to a casino property.
But money talks — all $750 million of it. That’s the amount of public money financing the construction of a new football stadium to house the Las Vegas Raiders.
This is a dramatic turnabout for a league that not too long ago insisted in court papers that “there is a proven ‘stigmatizing effect’ of having sporting contests associated with gambling.” The placing of a team in Nevada — a state with an astounding 273 casinos and 196 licensed sports books — has the effect of unraveling so many of the league’s prior statements about the supposed “irreparable harm” that it would suffer from having any association with a gambling environment.
Consider, for example, the affidavit that Goodell gave in Christie I in support of the leagues’ request for a preliminary injunction. (The district court never ruled on the preliminary injunction motion, which was paired with a motion for final summary judgment, the latter of which the court granted).
What Goodell used to say on sports betting
In his affidavit, Goodell identified a number of “harms” that the NFL would suffer from New Jersey’s proposed sports betting scheme (In many ways, these concerns mirror the protections enshrined in Nevada sports betting regulations. Goodell spoke unfavorably of the link between the leagues’ contests and gambling. In particular, he decried the presence of “casinos and other gambling institutions”:
[C]asinos and other gambling institutions that permit betting on sports are often viewed unfavorably by a significant portion of the public. The NFL, on the other hand, strives to preserve and promote an image of fairness, and has invested mightily in maintaining this image. State-sponsorship of sports gambling threatens to confuse fans into believing that the NFL supports sports gambling, thereby allowing casino operators and other sports-betting operations to trade unfairly on the NFL’s goodwill and image of fairness.
In his affidavit, Goodell also warned that state-regulated sports gambling would harm the leagues by shifting fan loyalties from rooting for their favorite teams to “winning a bet.” Goodell asserted that state-sponsored sports betting
would . . . greatly increase the likelihood that the allegiance of certain fans will be turned from teams, players and high-level athletic competition, toward an interest first and foremost in winning a bet. . . . The core entertainment value of fair and honest competition between teams and athletes that is reflected in NFL games will be replaced by the bettor’s interest, based not on team or player performance, but on the potential financial impact of each on-the-field event.
NFL on harm
In articulating the NFL’s “irreparable harm,” Goodell’s affidavit also spoke of the threat to “the goodwill, character and integrity of NFL football” and the “bond” between fans and teams that would be “broken” if sports gambling were allowed:
The NFL cannot be compensated in damages for the harm that sports gambling poses to the goodwill, character and integrity of NFL football, and to the fundamental bonds of loyalty and devotion between fans and teams that the league seeks to maintain. Once the character and integrity of NFL football have been compromised, and the bonds of loyalty and devotion between fans and teams have been broken, NFL football will have been irreparably injured in a manner that cannot adequately be calculated in dollar.
What Goodell says now on sports betting
Now compare those dire warnings to Goodell’s more recent statements following the league’s formal approval of the Raiders’ relocation to Las Vegas.
At a press conference during the recent NFL owners’ meeting in Phoenix, Goodell sharply changed his tune regarding the NFL’s impending association with a sports gambling environment. In response to a question about whether the NFL would seek to have Nevada regulators take Raiders’ games off the board after their move to Las Vegas (expected in either 2019 or 2020), Goodell actually extolled the virtues of Nevada’s gaming regulatory environment, admitting that it “could be beneficial.”
With these three words, Goodell finally acknowledged what proponents of legal sports betting (including the American Gaming Association) have been saying for years. Robust regulation of sports betting — backed by consumer protections and close monitoring of the wagering that takes place on the leagues’ games — protects the integrity of sporting events. Or at least it does so better than simply allowing the activity to continue unabated (to the tune of $150 billion annually) in an unregulated and illegal environment. In the status quo, it is not as effectively monitored for suspicious wagering activity, is completely untaxed, lacks consumer safeguards, and allows criminal enterprises to flourish, thereby straining the limited resources of law enforcement.
We’ve heard this all before, but for Goodell and the NFL, it’s the league’s first public concession of the plainly obvious benefits of regulated — and legal — sports betting.
What this means for PASPA
From a purely legal perspective, the NFL’s “come-to-Jesus” moment may have serious — and deleterious — repercussions in a court of law (federal court) should the NFL and the other sports leagues find themselves in another battle over PASPA.
The leagues’ shopworn argument that the mix of sports and gambling poses an existential — and irreparable — threat to their product may have finally met its Waterloo. The leagues likely desire to reap the obvious financial benefits of sports betting, from:
- New sponsorship opportunities
- The increased value of its real-time data and video rights
- Higher television ratings leading to more lucrative rights’ deals
- Increased “fan engagement” (the latest sports industry buzzword)
- And, yes, even a percentage of the wagering “handle” (the unspoken quid pro quo that looms as the eventual trade-off for the leagues’ acquiescence on sports betting; see David Stern’s recent comments at G2E)
All of that will also inure to their obvious detriment in one very critical area: the loss of the moral (or, rather, legal) high ground in resisting efforts by states to legalize it over the leagues’ objections.
The ability of the leagues to march into federal court and claim “irreparable harm” (or even a sufficiently “aggrieved” interest for purposes of establishing their legal “standing” to sue a renegade state that enacts a sports betting law) may have been forfeited (or at least severely compromised) by virtue of the leagues’ evolving stance on sports betting.
Next: What’s next for states, PASPA and sports betting