A sure bet? Universities wrestle with potential impact of betting

8/4/2018

People make bets in the sports book at the South Point hotel and casino in Las Vegas. The Supreme Court's recent decision to strike down a federal law prohibiting sports gambling in most states will have an impact in college football going forward, but schools and leagues are still figuring that out.

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Someday in the near future, you might find yourself bored on a weekday afternoon and decide to turn on the television. Maybe you’ll scroll to ESPN or FS1 — the channel is irrelevant because the programming will be the same: a sports betting show.

On an otherwise typical May afternoon, the college sports establishment anxiously turned its gaze to Washington, D.C., where the Supreme Court struck down the Professional and Amateur Sports Protection Act, a 26-year-old law that effectively outlawing sports betting outside Nevada.

In a 6-3 decision, the court ruled PASPA was unconstitutional, setting off a wave of enthusiasm from gamblers while athletic administrators and coaches cast a wary eye.

The word “gambling,” long a college sports bogeyman, carries negative connotations, striking fear of potential scandal into the NCAA’s powerbrokers.

“First thing I would say is I think we’ve got great students playing football,” Big Ten commissioner Jim Delany said in Chicago at the conference’s media days. “Trust them. They’re young. We need to continue to educate them about the challenges associated with gambling and the importance of the integrity of the game.”

If Delany had it his way — and he usually does — he would eliminate college sports from the gambling model. And if that’s not successful, he prefers a framework that gives additional protection to college, high school, and Olympic sports.

New Jersey and Delaware began cashing in immediately followed by Mississippi, while Pennsylvania, Rhode Island, and West Virginia anticipate sports betting prior to the start of the NFL season. Fourteen states are awaiting passage of a bill to legalize betting on sports.

Ohio is not one of them, though it’s likely to join the growing list at some point. So far, the state legislature has only introduced placeholder bills that lack specifics about where sports betting might be allowed, how it will be regulated, and how much it will be taxed.

The Michigan House of Representatives voted 68-40 in favor of legislation that would legalize online gambling and begin the process of allowing sports betting. The state Senate will not consider the bill until it reconvenes in September.

The American Gaming Association, which estimates Americans wager $150 billion on sports illegally each year, projects Michigan would reap a $23 million tax windfall — at minimum — from legal sports betting.

Tens of millions are expected to be generated inside Ohio’s borders too — once the state approves sports betting. Experts caution that taking too much time to refine the plan could backfire.

“Ohio is sort of lagging,” said Jay Masurekar, head of gaming and travel investment banking at KeyBanc Capital Markets in Cleveland. “If you’re looking at this as a possibility to increase tax revenue, then you're losing out on a year or two of that. It’s going to be very difficult for Ohio to capture the clientele, especially on the border areas.”

Local reaction

Administrators at Bowling Green, Michigan, Ohio State, and Toledo are cautious but realistic about the inevitable legalization of sports betting in their states. They share many of the same concerns while recognizing that a slate of betting scandals probably isn’t going to occur.

“We’re educating our student-athletes on gambling,” Bowling Green athletic director Bob Moosbrugger said. “Obviously, on a college campus, they’re talking to their classmates. Hypothetically, if someone could run up to Hollywood Casino and place a legal wager, bettors could have inside information that came from one of our student-athletes or even a staff member, and we certainly don’t want that to happen. Those are concerns of ours.

“Anytime you introduce something new like this, there is cause for concern. There will be more regulations once it’s made into law. There’s comfort in that. Will people go out and run and abuse it? I don’t think so. But it certainly gives people the opportunity.”

The most obvious move to stave off corruption is the implementation of a weekly injury report, similar to what the NFL does to ensure transparency. Injuries are a topic that’s typically out of bounds for college coaches, but at Big Ten media days a potential injury report garnered universal support. You would have thought the discussion was about puppies, ice cream, and San Diego weather.

Yes, yes, and yes.

“Yeah, I would be fine with that. Want to do an injury report? We can do an injury report,” said Michigan coach Jim Harbaugh, who has been among the most elusive coaches in the sport when it comes to player information.

Mid-American Conference administrators and coaches had the same talking points in Detroit. UT’s Mike O’Brien said an injury report is only “a matter of time,” and Moosbrugger believes it’s essential to curb gamblers attempting to seek out players and staff members for information.

What’s most likely because of HIPPA and FERPA, federal health and privacy laws, is an availability report instead of a handout detailing each player’s injury. 

Potential scandal

The biggest fear in college sports is point shaving, an issue that Toledo is acutely aware of. Seven former Rockets — four basketball players and three football players — were paid money and items of value in order to influence the final score of basketball and football games from November of 2005 through December of 2006.

The scheme was orchestrated by two Detroit-area businessmen, who received prison time. The players were all sentenced to probation.

“That's in our past and individuals learned from it,” O’Brien said. “The key to what we do at UT relative to gambling and any other issues down the road is simply educating our student-athletes. More than anything, it was embarrassing to our department and our university. But we've moved on from it and are proud of what is occurring in our athletic department.”

The NCAA, before the Supreme Court’s decision, issued a warning against legalized sports betting, citing fears of increased point-shaving scandals. The organization said it “opposes all forms of legal and illegal sports wagering, which has the potential to undermine the integrity of sports contests and jeopardizes the welfare of student-athletes and the intercollegiate athletics community.”

UT, Arizona State, Northwestern, Auburn, and the University of San Diego have all dealt with high-profile point-shaving scandals since the 1990s. When you have impressionable young people who come from poor financial situations, a few thousand dollars to shave points sounds like a good idea.

“[Legalized sports betting] will have a dramatic effect on schools,” said Tom McMillen, a former congressman who is now president and CEO of the LEAD1 Association, which represents Football Bowl Subdivision athletic directors. “A lot of the gambling interests like to say, ‘Don’t worry about it. Regulating it, taxing it, and bringing it above board will mean there’s less scandal.’

“I wish that were true. But if you look at tennis around the world, there’s an enormous amount of match-fixing, especially lower-level matches. You’re not immune to scandal just because you legalize it. What I will say with certainty is there will be point-shaving scandals.”

McMillen, a former Rhodes Scholar who played basketball at the University of Maryland, was a Democratic congressman from Pennsylvania when PASPA was overwhelmingly favored and non-controversially signed into law in 1992. He was part of the majority and soon authored a book titled Out of Bounds: How the American Sport Establishment Is Being Driven by Greed and Hypocrisy — And What Needs to Be Done About It in which he predicted the money would be so attractive that sports betting would be legalized across the country.

“This is uniquely American,” McMillen said. “There isn’t another nation in the world where you have big-time college sports on campuses. That's why I think the risk is greater in the United States [for point-shaving].”

Said Harbaugh: “Don't associate with gamblers, avoid it like the plague. Don't walk away, run.”

An NCAA survey conducted in 2016 found that 24 percent of male athletes and 5 percent of female athletes — 22,388 were surveyed — had violated NCAA rules in the previous year by placing a bet on sports.

Unknown impact

For every doomsdayer, you’ll find an ardent supporter who decries fear tactics by schools and their representatives.

“It’s not quite an apples-to-apples comparison, but look at marijuana and what legalization has done,” Todd Fuhrman, a former oddsmaker who hosts the Bet the Board podcast, told the Pittsburgh Post-Gazette. “It hasn’t created more drug dealers. It’s probably put more of them out of business. You can follow the flow of money, and it’s a safer and cleaner environment.”

Increased spending on compliance departments is concerning to ADs, 80 percent of whom said one year ago they were opposed to legalized sports betting, even if it meant more money flowing to their school. That’s how big of a potential headache gambling could cause.

“I’m not an alarmist, but I would be concerned,” Ohio State athletic director Gene Smith said. “Anytime you enter into something like that, you have to strengthen your firewalls and protect your young kids. Juniors and seniors understand things, but freshmen, in particular, are susceptible to someone trying to influence them. Until they get embedded into their culture, they’re vulnerable. I’d be concerned, but not panicked.”

Smith, however, disagreed with the notion that monetary issues could arise in compliance departments tasked with monitoring athletes. He sees it as a time commitment instead of an additional expenditure. Smith is also more concerned about prop bets, which allow bets to be placed on individual players within games, than line bets.

“We’re going to ratchet up our education,” he said. “We haven’t had someone on a consistent basis speak like we’ve had for other topics such as sexual assault, relationship management, and drugs. Now we’re going to ratchet that up and have speakers come in. We’ll send articles and information to student-athletes. We’ll double down on our education, and we’ll start that this fall.”

An added revenue stream professional sports leagues are hoping to tap into is integrity fees, essentially a tax placed on all bets. The NBA, MLB, and PGA Tour have all requested 1 percent of wagering revenue. The NCAA, however, announced it would not seek a similar fee. But it doesn’t limit individual schools from collecting a percentage of gambling proceeds in their state.

The state of West Virginia could be a model for the rest of the country. West Virginia University and Marshall University reportedly reached an agreement to receive 0.25 percent of each bet wagered on their schools. The additional money will be directed to compliance and athlete education related to sports betting, according to the school’s ADs.

If a similar proposal comes to Ohio, Smith said the money would be directed to the John Glenn School of Public Policy.

“We wouldn't want it tethered to athletics,” he said.

Michigan athletic director Warde Manuel, through a spokesman, declined to comment for this story.

Blade sports writers Brian Buckey and John Wagner contributed to this report.

Contact Kyle Rowland at krowland@theblade.com, 419-724-6110 or on Twitter @KyleRowland.