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We’ll take a look back at the recent Congressional sports betting hearing in this series.
In part five we take a look at the filings by various interest groups which were filed with the House Committee.
In addition to their oral testimony and written testimony, the NFL also filed a one-page document titled Protecting Sports Integrity After PASPA.
The NFL begins with a bang, citing the unconstitutional statute as a reason for needing federal legislation, stating: “Sports gambling conducted pursuant to State law threatens the integrity and character of, and public confidence in, professional and amateur sports, instills inappropriate values in the Nation’s youth, misappropriates the goodwill and popularity of professional and amateur sports organizations, and dilutes and tarnishes the service marks of such organizations.”
Again, these guys appear not to get it. Let’s break down the statement to be clear. The reference to ‘pursuant to state law’ was the very issue with PASPA that Congress was found to have unconstitutionally commandeered state legislatures.
I would not trust either Congress or the NFL with instilling “appropriate” values in children. The statement then talks about misappropriation of goodwill and discusses how gambling dilutes and tarnishes the service marks of such organizations. After sharing the problematic statement, the NFL then moves on to the “Key Components of Post-PASPA Legislation.”
Part one is titled: “Integrity of the Game” which includes:
This first pillar appears fairly reasonable, depending on what the NFL classifies as a risky betting fixture. These are fair concerns shared by most operators as well.
The second pillar is protecting content and intellectual property, which to the NFL means mandating official data, having the leagues consent to betting on league events and technological safeguards.
The great irony of requiring the use of official data is that mandating a single data feed actually invites corruption. The leagues can already file a petition in Nevada to have certain offerings taken down, which seems to be far more reasonable and fair to the market than giving a league veto power over particular events, something which would seem ripe for abuse.
In the third pillar, the NFL seeks core regulatory standards including an accrediting body, licensing, responsible gaming resources and information sharing. The NFL also seeks clarification on interstate betting. Indeed, this is something that is becoming more of a pressing need, especially as some seem to be pushing forward with prominent questions as to how or if the Wire Act and its safe harbor may be applicable.
The final pillar of the NFL’s second written filing is their desire to eliminate the illegal market, which includes active monitoring and enforcement and civil and criminal penalties for violations.
Again, not to beat a dead horse but there are substantial penalties. Until illegal gambling enforcement becomes a federal priority, expecting major sweeps and reductions in the illegal market because of enforcement is unlikely.
In addition to the NFL and any behind the scene lobbying that other leagues may have done, the unions of the NFL, NHL, NBA, MLB and MLS filed written testimony under the name “One Team.”
The unions expressed a desire to have players included in this conversation and their voices be heard. The unions note that their concerns are shared by umpires, referees and other on-field personnel. They have four areas of concern:
Player safety is a very real concern, as it is for referees, coaches, training staff and anyone who has the ability to impact a game. It is not entirely clear why the risk is more pronounced now than in the era of illegal betting and when the Dr. Boudreaux’s of the world were putting player safety at risk.
Despite this being a legitimate concern, though one that is not new, it is unclear what additional protections the unions would like put in place. There could perhaps be new penalties for attempting to induce a player to manipulate the outcome of a game, but again, new laws are only as effective as the enforcement mechanisms behind them.
The unions’ second point calls on leagues to establish a mechanism for players to report approaches by match-fixers. The unions note the importance of protecting the reporting party.
This is, in fact, an incredibly important point. Match-fixing policies need whistleblower protections in order for them to work effectively. The reporting of prohibited contacts to league officials is a reasonable start, but these should also be required to be reported to law enforcement. The allowing for organizations to keep these threats internalized threatens to allow match-fixers to proliferate without consequence.
The players would also like to work with the leagues in order to mandate that only certain types of bets be allowed. This is likely an unnecessary interference with the bookmaking market, but a mechanism for unions or leagues to appeal the offering of certain types of wagers or specific props is likely a reasonable compromise.
The players conclude by expressing concerns over the potential sale or marketing of health information, including anonymized data of players. This is indeed a growing concern, not only for its use in the gambling market, but for the players in future contract negotiations.
My discussions with an individual who handles this data on a daily basis for a team in the NFL expressed that great precautions are taken to limit who has access to the information and players participate in biometric data tracking on an opt-in basis, at least on his team.
With that being said, this will likely be an important subject in the next few collective bargaining sessions and is an area that players have reason to be concerned about. In addition to the HIPAA protections in place for those handling the data, it is unclear what additional protections the players would like to see. It is also unclear how much demand there is for player biometric data at this point.
Overall, the unions’ demands seemed quite reasonable. There was no call for a special tax, unlike the league executives who continue their quest for an integrity/royalty fee.
A group called the Sports Fans Coalition filed a copy of the Sports Bettors’ Bill of Rights with the House subcommittee.
Based on their website, the group appears to be concerned with four main issues: public financing of stadiums, the concussion “cover-up”, fixing U.S. Soccer, and the Sports Bettors Bill of Rights.
The filing begins by detailing the death of PASPA at the Supreme Court and observing that much of the early sports betting legislation lacks consumer protections from: “fraud, invasion of privacy, or the exploitation of vulnerable populations.”
While I am in agreement that consumer protections in some jurisdictions have been secondary to state profit motives, certainly fraud is prohibited at both the state and federal level. And financial regulations mean that most if not all operators are required to comply with federal financial security regulations. While the consumer protections could receive more attention, states are hardly creating a wild west with Social Security numbers lying around all over the place at sportsbooks.
The Sports Bettors’ Bill of Rights (BoR) is built around five “fundamental rights”:
All of these sound like very reasonable components of a consumer protection program. The overview of PASPA in the BoR is a little shaky as it details that three states were grandfathered under PASPA, as opposed to the four commonly cited or ten-plus which PASPA actually exempted in some form or another.
The paper cites “some economists” as projecting states to earn hundreds of millions of dollars in tax revenues on an annual basis. This is unlikely to be the case for most states (at least on an annual basis). The filing also confusingly refers to the “enactment of PASPA sixteen years ago,” PASPA was passed in 1992.
The paper argues that lawmakers should focus on shifting the black market into a legal market and provides some anecdotes about bettors wagering offline and not getting paid. The BoR was formulated based on feedback from a symposium at George Washington University Law School in June of 2018. The panel seemingly endorsed the idea that sports wagering requires regulation beyond that of the industry itself, though the symposium was split on whether federal or state regulation was preferable.
The organization’s fundamental rights seem largely reasonable. In regards to transparency, the organization wants the following information mandated or accessible:
In regards to the right to data privacy, the Sports Fans Coalition seeks to have mandated protections for online transactions, effectively mandating a higher level of protection than the black market. This is likely already mandated by federal laws applicable to casinos and money-transmitting businesses who have obligations to both the Internal Revenue Service and the Department of the Treasury.
Self-exclusion is codified in the BoR and is, again, an important protection within the gaming industry, though arguably one area that needs to be continuously analyzed to see what can be done better as a number of studies have found that some who self-exclude have still managed to access gaming activities.
The Sports Fans Coalition concludes with a right to recourse request, which would enable a complaint system that would enable consumers an opportunity to be heard should “a transaction go awry.”
It is unclear how this differs from what is already in place in many states, for example, the Nevada Gaming Control Board enables an individual to file an iGaming complaint in less than five minutes by completing an online form. This is certainly a valid concern, the extent to which it is novel is unclear; however, providing consumers with meaningful access to recourse is an absolute benefit over the black market.
It remains unclear what, if anything, will happen on the federal level. Barring the introduction of some legislation, it would seem unnecessary to hold another hearing.
There were few surprising moments during the hearing and the biggest take away is that many in Congress appear to still be adjusting to the idea of a post-PASPA world. Perhaps the biggest surprise was the absence of the NCAA, an organization who has historically suffered more than the other American organizations at the hands of match-fixers.