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Inevitable: Sports Gambling, State Regulation, and the Pursuit of Revenue

Harvard Business Law Review Online, 2015, 5, 27-38

12 Pages Posted: 12 Jan 2015 Last revised: 13 Jan 2015

Anastasios Kaburakis

Saint Louis University - John Cook School of Business

Ryan M. Rodenberg

Florida State University - College of Education; Florida State University - College of Law

John T. Holden

Florida State University

Date Written: January 10, 2015

Abstract

Balancing the protection of private business interests against governmental regulation is one of the most significant legal frictions of the modern era. Over the course of the past twenty-eight months, this conflict has manifested itself through a federal sports gambling lawsuit involving New Jersey. However, the ongoing lawsuit between a plaintiff quintet of the most powerful sports entities in the United States — the National Collegiate Athletic Association (“NCAA”), the National Basketball Association (“NBA”), the National Football League (“NFL”), the National Hockey League (“NHL”), and the Office of the Commissioner of Major League Baseball (“MLB”) (collectively “sports leagues”) — and the Governor of New Jersey over the possibility of regulated sports wagering in the state is not about gambling. It is about control: control of events, control of data, control of marketing opportunities, and control of current and future revenue streams. This is a clash between sports leagues looking to reserve opportunities to monetize sporting events as commodities and cash-strapped states intent to raise tax revenue via regulation of an industry with a massive volume of underground activity.

The sports gambling industry, legal and illegal, is vast. The National Gambling Impact Study Commission estimated that up to $380 billion was wagered illegally in the United States in 1999. The International Centre for Sport Security reports a range of $250-650 billion gambled globally on both U.S. and international sports. The state of New Jersey and in effect forty-eight other states receive no taxable share of such revenue.

Sports betting economic activity in the U.S. is largely constrained by the Professional and Amateur Sports Protection Act (“PASPA”). Nevada is the main exception, and its licensed sports books generated a handle of $3.45 billion in 2012. New Jersey has assumed a key role in challenging PASPA’s effective federal ban on sports betting by attempting to implement Las Vegas-style sports betting at casinos and racetracks. Should New Jersey ultimately prevail in its PASPA challenge, other states may follow in efforts to capture taxable portions of the presently elusive sports betting marketplace.

Keywords: Private business, government regulation, federalism, sports betting, gambling, gaming law, fantasy sports, professional leagues, NCAA, PASPA, standing, rights to games, intellectual property

JEL Classification: K00, K10, K11, K19, K20, K23, K29, K30, K39, K40, K49, L50, L59, L80, L83, L89, O34

Suggested Citation

Kaburakis, Anastasios and Rodenberg, Ryan M. and Holden, John T., Inevitable: Sports Gambling, State Regulation, and the Pursuit of Revenue (January 10, 2015). Harvard Business Law Review Online, 2015, 5, 27-38. Available at SSRN: https://ssrn.com/abstract=2548111

Anastasios Kaburakis (Contact Author)

Saint Louis University - John Cook School of Business ( email )

3674 Lindell Blvd 407
St. Louis, MO 63108-3397
United States

Ryan M. Rodenberg

Florida State University - College of Education ( email )

Tully Gym 1002
1114 W. Call Street
Tallahassee, FL 32306-4450
United States
850-645-9535 (Phone)
850-644-0974 (Fax)

HOME PAGE: http://education.fsu.edu/faculty-and-staff/dr-ryan-rodenberg

Florida State University - College of Law ( email )

425 W. Jefferson Street
Tallahassee, FL 32306
United States
850-645-9535 (Phone)
850-644-0974 (Fax)

HOME PAGE: http://education.fsu.edu/faculty-and-staff/dr-ryan-rodenberg

John T. Holden

Florida State University ( email )

Tallahasse, FL 32306
United States

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