Experts Debate Implications of Legalized Sports Betting for College Athletics

With approximately 20 states having already passed legislation since the Supreme Court (SCOTUS) cleared the way for states to legalize sports betting in 2018, legalized sports betting in America is alive and well. The SCOTUS decision, which struck down the Professional and Amateur Sports Protection Act (PASPA), has also opened the door for sports wagering on college campuses.  In that vein, LEAD1 Association (a community of athletic directors at the nation’s largest colleges and universities) hosted a virtual forum in November. Panelists debated whether legalized sports betting in America could become detrimental to colleges and universities.

The panel, moderated by Jeff Ifrah – the Founder and General Counsel at iDEA Growth Association and one of the nation’s leading legal experts on sports betting, featured Heather Lyke, the Director of Athletics at the University of Pittsburgh; Dan Walsh, Partner at Farragut Partners; Stacie Stern, Government Affairs Director at FanDuel; and Jake Williams, Vice President of Legal and Regulatory Affairs at Sportradar.

Before debating some of the nuances of legalized sports betting, the panel outlined some of the general legislative history. Then, the panel noted that every major sports league in the U.S. has at least one sports betting partnership (the NCAA prohibits gambling on college sports from any of its campus stakeholders; and obviously, for years, professional sports leagues were opposed to legalized sports betting due to perceived integrity issues). The patchwork of state laws has also led to varied regulations, in particular, with respect to betting on college sports (where, for example, college sports has been less regulated in some states). Of course, prior to the 2018 SCOTUS decision, the sports betting market in America was pretty much all illegal except for a few grandfathered exceptions. 

In late July of this year, athletic director, Lyke testified before the U.S. Senate Judiciary Committee on the practical implications of legalized sports betting.  The heart of the webinar, therefore, concentrated on Lyke’s three main points included in her testimony with the rest of the panel responding to her arguments.  

Lyke’s first main point was that the introduction of legal wagering on college sports will have a detrimental impact on student-athletes and general student bodies. Lyke described the temptations that student-athletes face due to intense community pressures, which would be exacerbated if wagering takes place. 

Stern explained that many of these temptations already exist on college campuses (even prior to legal betting) and therefore the responsibility to educate student-athletes should be on the institutions and betting industry to better inform student-athletes about some of the possible unintended effects. Williams agreed with Lyke, noting that because the ease of using mobile devices to bet, student-athlete well-being is critical. Williams stated, however, that the industry can monitor regulated environments to mitigate possible bad actors (for example, Sportradar can determine whether there are irregular betting activities based on its technology).

Second, Lyke argued that student-athletes may be susceptible to corruption and other abuses by gambling interests, which could impact the integrity of college athletics. Other important considerations are the advent of “prop betting” (a bet on an individual occurrence within a game) as well as social media’s impact on student-athlete mental health and well-being (such as messages to and about student-athletes that create further pressures). Walsh recommended that colleges and universities consider utilizing “exclusion lists” that most states have, which allow people to request to be excluded from legalized gambling activities in the state. Specifically, for example, colleges and universities could add their own people to the list, whether student-athletes or staff.

Third, Lyke highlighted some of the compliance ramifications, stating that the widespread effects of legalized gambling cannot be contained even with the requisite education and rules in place. Lyke also noted some of the extra costs on athletic departments to monitor all betting activities. Stern described that one key mitigation strategy is moving illegal offshore betting to more regulated spaces (noting that the illegal market cannot be regulated). According to Stern, companies like with more players betting with FanDuel and DraftKings, fewer sports betters are using illegal, unregulated operators.  

The panel also discussed the University of Colorado’s recent partnership with “PointsBet,” an online bookmaker. According to Walsh, these partnerships are “inevitable,” so more and more colleges may look to monetize such opportunities.