Opinion: How NCAA Concession On NIL Rules Could Affect US Sports Betting Industry

Posted on July 29, 2021
NIL
Posted By on July 29, 2021

The college sports world has undergone as much change in the last month as just about any period in recent memory, including new rules affecting name, image, and likeness (NIL.)

It began with the Supreme Court‘s Alston decision that found NCAA restrictions on academic-related aid to violate federal antitrust laws and continued through July 1 when state laws granting college athletes the rights to monetize their own NIL rights came into effect. These changes raise many questions, but there are some important questions regarding how these changes may have an impact on the US sports betting industry.

Quick overview of major changes

On June 21, the Supreme Court released a groundbreaking decision in the NCAA v. Alston case. The case declared that NCAA imposed limits on the amount of academic-related aid that college athletes could receive, violating federal antitrust law.

While the unanimous decision in favor of the Alston plaintiffs was major, it was the concurrence of Justice Brett Kavanaugh that attracted perhaps even more attention. Kavanaugh seemingly invited future challenges to NCAA regulations that limit athletes’ economic rights.

Kavanaugh concluded with one of the more memorable lines in a Supreme Court decision stating that “the NCAA is not above the law.”

NIL bombshell beats the deadline

The Supreme Court ruling was coupled with state NIL laws taking effect nine days later on July 1. These allowed collegiate athletes to monetize their NIL rights in various states.

About eight hours before various state laws were to take effect, the NCAA released an interim policy acquiescing to defeat on a century-long effort to stop athletes from being compensated with little more than their scholarships.

The NCAA’s decision not to use the judicial system to challenge these new state laws – thereby granting rights to athletes across the country – created a new marketplace where businesses can hire college-athlete endorsers without those athletes risking their NCAA eligibility.

Impact on US sports betting industry

The new state laws that have taken effect do not exactly create a true open market for athletes to market their images. Many state laws come with various restrictions and while many include standard provisions that bar athletes from engaging in relationships that would compete with university sponsorships, a variety of states have taken to banning athletes from endorsing products in a variety of industries.

Both New Jersey and Pennsylvania implemented comprehensive bans on athletes receiving any compensation from many vice industries, including the gambling industry. Pennsylvania also bans compensation for endorsing prescription drugs.

The restrictions on gambling endorsements in these states are limited to college athletes and do not appear to reflect similar bans on universities entering into future agreements with vice industry sponsors. The most notable example of this is the University of Colorado signing a deal with PointsBet.

NCAA rules on betting

The NCAA has long protested sports betting. They remain the last major U.S. organization to oppose legal sports wagering.

The organization has punished college athletes who have bet on sports, and the organization has also been the victim of many of the most prominent match-fixing scandals in the history of this country.

NCAA rules ban not just college athletes, but also athletics department staff, those who have responsibilities in or over the athletic department, and conference staff from:

knowingly participat[ing] in sports wagering activities or provid[ing] information to individuals involved in or associated with any type of sports wagering activities concerning intercollegiate, amateur or professional athletics competition.

College athletes who violate the wagering provisions risk their NCAA eligibility.

New interim rules involving NIL

The NCAA adopted interim rules on June 30. The rules provide four points of guidance:

  • Athletes can engage in NIL deals that are consistent with state law and colleges and universities can provide information on “state law questions;”
  • College athletes in a state without an NIL law can still monetize their NIL rights without violating NCAA rules;
  • Athletes can hire a professional services provider to advise on NIL activities; and
  • Athletes should report NIL activities in accordance with state law or school and conference rules.

The NCAA’s interim rules make no mention of gambling businesses or other vice industries as being prohibited.

An early controversy involving Barstool

In the first hours of college athletes having similar NIL rights as virtually any other person who sets foot on a college campus, Barstool Sports (not the branded-subsidiary Barstool Sportsbook) launched what was dubbed Barstool’s NCAA Marketing Firm, later renamed Barstool Athletes Inc.

The company was quickly inundated with applications from college athletes around the country, which it welcomed. From the sound of it, most of the Barstool College Athletes will receive some Barstool merchandise and perhaps a tweet from notable members of the Barstool staff in exchange for their association.

Some compliance departments urged athletes to proceed with caution because Barstool has a sportsbook. Barstool Athletics has since filed for a trademark, which some argue further distinguishes the sportsbook from the college-athlete endorsements.

The reaction to Barstool’s endorsement of college athletes is a good reflection of just how little is known about the enforcement and interpretation of these NIL laws moving forward. Could college athletes be prohibited from endorsing shows on Fox channels because their parent company owns FoxBet?

We just do not know at this point and there seems to be a great deal of uncertainty.

Proceed with caution

NCAA President Mark Emmert recently indicated a possibility that the NCAA will step back and give greater autonomy to schools and conferences to regulate permissible conduct. There remains a great deal of uncertainty around the new rules, in part, because no one was sure what the NCAA would do about state NIL laws until they basically told schools and conferences to make the rules hours before state laws came into effect.

However, the confusion surrounding what is and is not allowed is an ongoing trend between college sports and the gambling world.

The NCAA, schools, and conferences need to talk to and educate their athletes about gambling and the associated risks. Sports betting is legal in more than half of states and can no longer be treated like the illegal bogeyman.

It is time that schools and college sports organizations start acknowledging this fact because while athletes might be restricted from partnering with gambling providers, as we have seen already schools are not. This is an opportunity for schools to improve the conversation about betting with their college athletes.

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John Holden

John Holden J.D. / Ph.D. is an academic. His research focuses on policy issues surrounding sports corruption.

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