By: Richard Bomberger
The ban on sports gambling was recently overturned. In Murphy v. National Collegiate Athletic Association, the Supreme Court declared the Professional and Amateur Sports Protection Act of 1992 unconstitutional under commandeering principles. This ruling caused an earthquake through the sports community and leagues as a possible source of new revenue. While this market has recently been mostly speculation, Penn National Gaming’s acquisition of 40% of Barstool Sports has officially started the race on businesses trying to cash in on sports betting. The market saw this move with fervency by shooting Penn National Gaming’s stock by 33% in the two weeks after the acquisition announcement. Institutional investors have also seen this move as a big deal. It has not only been Barstool Sports that has been alone in a sports reporting conglomerate being venturing into the sports betting market, but SB Nation and Bleacher Report have moved into the market to various degrees. For example, Bleacher Report has regular reporting on betting lines and advice. Additionally, the XFL tried to capitalize on this growing market by putting betting lines and advice on their website about their games.
This explosion in sports betting also raises legal issues in the business legal community. First and foremost, the decision has created collegiate athletes as an easy target in the new industry. This could be done in multiple avenues: first, by an overt bribe to shave points or throw a game; second, through peer pressure; or third, the athlete being indebted themselves and having to shave points to cover their own debts. Secondly, it can cause a relatively young demographic to become the new age sports media developing personal issues with sports gambling. For example, the target demographic of Barstool Sports is in the 18-35 age demographic. Additionally, with 27% of Generation Z engaging in their platform, it creates a strong likelihood that Barstool sports is also capturing a portion of high school students as well. Bleacher Report and SB Nation also have similar demographics. With the young demographic that the companies target, it is very important that the business law community in this area create strong internal governance and self-regulation. For instance, Barstool Bets is part of the Barstool family and focuses particularly on sports gambling. As of today, Barstool Bets blog posts do not have a disclaimer about Penn National Gaming owning a stake in the Barstool company. This could create legal issues down the line if it is found that large sport media companies are trying to funnel a particularly young demographic into sports gambling. Another issue with sports media companies that have a large audience is that it could create an issue of employees influencing the line to better their profits or to try to short the market.
There are some simple steps that a sports media company can take to alleviate some of these future concerns. One example would be to list disclaimers. For example, one way to do this would be to disclaim any personal conflicts that the writer of the article related to gambling has. Another way the use of a disclaimer could be used is for the company publishing the gambling advice would be to post the company’s financial conflicts when giving gambling advice. Another way a business lawyer can help their company is by posting information about gambling addiction help. For example, SB Nation Bleeding Green Nation’s pick against the spread series, part of the SB Nation family, gives what its season record is for picks and the community voters’ record as well. This allows a perspective gambler to assess the quality of information they are receiving. Additionally, SB Nation as a whole has taken steps to talk about their responsibility to provide adequate gambling information and protection for their viewers. For the leagues that promote betting as a company policy like the XFL, there should be restrictions on who inside an organization can place bets and have severe penalties for violators. While an inside single bet for one of the larger leagues may not disrupt the overall credibility and cash flow, it is a different calculus for smaller leagues or new leagues. Thus, their credibility needs to be perfect. Finally, to protect collegiate athletes, a school should take steps to hire a lawyer and/or counselor.As this area develops over the course of the next couple of years, it will be interesting to see what measures companies start to take to ensure that they are promoting sports betting in an ethical manner. The sooner that attorneys for these companies come up with procedures that make the combination of sports betting with the actual sports leagues or sports media outlets done in an ethical manner, the less backlash they will eventually have from a sports betting scandal.
See generally Murphy v. NCAA, 138 US S. Ct. 1461 (2018).
See Marc Edelman, Explaining The Supreme Court’s Recent Sports Betting Decision,Forbes(May 16, 2018), https://www.forbes.com/sites/marcedelman/2018/05/16/explaining-the-supreme-courts-recent-sports-betting-decision/#2a3fe9d8537c (discussing the future of sports betting).
See Katherine Sayre & Benjamin Mullin, Race Is On To Case In On Sports Betting, The Wall Street Journal(Jan. 29, 2020), https://www.wsj.com/articles/penn-national-gaming-to-buy-minority-stake-in-barstool-sports-11580274060.
Yahoo Finance, https://finance.yahoo.com/quote/PENN/ (last visited Mar. 1, 2020) (using the price chart to show the price growth).
See Jesse Pound, Penn National’s investment in Barstool Sports is “going to be worth a ton,” Ron Baron says, CNBC(Feb. 4, 2020), https://www.cnbc.com/2020/02/04/ron-baron-touts-penn-national-investment-in-barstool-sports.html (stating “[n]ot only are they going to make a lot of money on this investment for this $150 million and buy the rest of it out from the founder, but also it’s going to increase traffic in their casinos” .
See Bleacher Report, https://bleacherreport.com/sports-odds (last visited Mar. 1, 2020).
See XFL, https://www.xfl.com/en-US/xfl-betting (last visited Mar. 1, 2020).
See Steve Berkowitz & Erik Brady, Legalized sports betting will wreak havoc on college athletics. Or not., USA Today(May 31, 2018), https://www.usatoday.com/story/sports/college/2018/05/31/sports-betting-college-athletics-world-concerned-supreme-court-ruling/645367002/ (discussing the vulnerabilities of college atheletes).
See id(discussing the inevitability of a collegiate scandal due to gambling).
John Dick, Barstool Sports is Legit, Civic Science(Aug. 14, 2019), https://civicscience.com/barstool-sports-is-legit/ (stating “[w]here Barstool really earns its advertiser attention, however, is its age cohort. A whopping 67% of daily Barstool users are under the age of 30”.
BARSTOOLBETS, https://www.barstoolbets.com/shows/104/picks-central (last visited Mar. 1, 2020) (seeing a lack of disclaimers).
See Brandon Lee Gowton, NFL Picks Against the Spread: Week 15 Games, Bleeding Green Nation (Dec. 15, 2019, 3:18 AM), https://www.bleedinggreennation.com/2019/12/15/21022627/nfl-picks-against-spread-week-15-games-2019-gambling-betting-spreads-line-odds-football-eagles-teams (last visited Mar. 1, 2020).
NCPG, https://www.ncpgambling.org/national-conference/sports-summit-2019/ (last visited Mar. 1, 2020) (speaking at a conference about the companies duty to protect readers from bad gambling habits).