This morning, the US Supreme Court overturned a 1992 federal law banning states from legalizing sports betting. This is huge decision that will have wide ranging impact across the country and around the sports industry.
Experts at the American Gaming Association estimate that more than $150 billion is placed on illegal sports betting each year. The only state where sports betting is currently legal is Nevada. The Nevada Resort Association claims that more than one third of the funding for the state’s public schools comes from the gaming industry. In 2016, more than $161.9 million was generated in Clark County, Nevada for education.
The Nevada resort industry and gaming revenue has also made significant donations to more than 45 different non-profits and community programs. From a philanthropy perspective, more money coming in to the states means that they can do more good with that money. Will they, is the big question.
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States are likely to start rapidly adopting sports betting to get a piece of the action. According to Sports Business Nation, there are three major reasons for states to legalize sports betting. First, it’s a major revenue stream that the state can benefit from. It would cut into a huge black market and give the state a chance to control consumption and gambling addiction. States are counting on millennials to embrace these new laws. States will plan to tax sports betting money, so that they can benefit from the opportunity to have their residents gamble on games.
There are critics of this decision. Many of the major sports leagues are upset about the affect that sports betting can have on the game and the influence it could have on those playing it- one of the reasons that it was banned in the first place.
But leagues have started to get wise and ask instead for a piece of the action. NBA Commissioner Adam Silver has been discussing a 1% integrity fee that would go to the league, and has been asking for a federal law that would make regulations simpler and streamlined across the country.
How can sports betting impact the players?
While each state figures out their laws and regulations for sports betting, the player unions and athletes themselves should be paying attention. While the leagues may ask for integrity fees to cover their involvement and impact in the sports betting industry, the athletes are the ones who will be heavily scrutinized.
Players unions and associations should be preparing discussions with their respective leagues to ensure their players see a piece of those integrity fees being worked out with state legislations. Upcoming CBA agreements will be sure to have sports betting revenues on the docket, as unions will need to ensure their players receive a piece of the action. Daniel Wallach at Forbes does a great job of breaking this down further. Read more here.
Can sports betting impact the community?
Short answer: yes. Long answer: Yes, depending on how each state intends to utilize the profit it receives from taxing the new revenue stream. Nevada has been the model that many states will likely follow, and they fund a third of their public education with taxed gambling revenue and have some of the lowest state taxes in the country.
Wouldn’t it be great to see that tax benefit in states across the country go into schools, sports and arts programs for youth or social programs like state run shelters, welfare programs? Even funds going to infrastructure would be a positive benefit. Where the money will go will depend on the state, but if state congress representatives are smart, they can take advantage of the additional income to add a revenue stream to social programs of their choice.
Leagues, teams and players can do the same thing. Above, I mentioned how leagues were asking for an integrity fee that would be paid out to leagues if agreed upon. Leagues could ensure that this integrity fee goes towards retired player association donations, or a continuing league wide philanthropic partnership. Players can advocate that the money goes towards worthy causes as well.
Gambling is a controversial subject for many people. Putting the revenue made to good use and documenting that revenue stream is a great way to increase buy in to both the league’s desired integrity fee and the legalization of sports betting in general.
Additionally, this would allow teams and charities in states where sports betting is legalized to incorporate gambling into promotional fundraisers. Many promotions involve gambling without a cash payout- but depending on the state’s laws, it may be a valuable new fundraising arena for non-profits. Sports philanthropy executives should keep a close eye on how the legal ramifications of this Supreme Court decision plays out in each state.
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