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States Seeking More Sports Gambling


It's a sign of a lagging economy: American pro and college sports teams seeking new revenue through increasingly bold marketing relationships with gambling interests. It's why team logos have begun appearing on state lottery tickets and why some basketball games have been played at casino hotels.

Now officials in Delaware and New Jersey, facing their own budget problems, say it's time for a bolder move: full-scale, legalized sports betting in states other than Nevada, currently the only place such activity is allowed. They are pushing hard to add legalized, in-casino sports betting to their states' gambling offerings, which include horse racing, lotteries, slot machines and - in Atlantic City - table games.

The plans are being resisted by the nation's four major pro sports leagues - the NFL, the NBA, the NHL and Major League Baseball - as well as the NCAA. Despite marketing arrangements schools and pro teams have with gambling, sports officials are asking a federal court to stop the Delaware effort, saying widespread legalized betting would threaten the integrity of their sports by creating incentives for cheating and game-fixing.

That view is not unanimous among sports owners, however.

Joe Maloof, whose family owns the NBA's Sacramento Kings and the WNBA's Sacramento Monarchs as well as the Palms casino resort in Las Vegas, says well-regulated sports gambling would help prevent such problems.

"With all the different casinos in different states that have legalized gaming, why not legalize sports betting?" Maloof asks. "When it's regulated, it's safer. There's no hanky-panky."

As one of four states that once had a form of sports betting, Delaware was exempted from the federal ban on sports wagering that was passed by Congress in 1992 and took effect Jan. 1, 1993. Led by Gov. Jack Markell, the state plans to capitalize on its exemption by allowing bets on NFL games beginning with the start of the 2009 season. The NFL, the NBA, the NHL, Major League Baseball and the NCAA last week sued in U.S. District Court in Delaware to block the plan, citing state and federal laws.

Meanwhile, in New Jersey - which is not exempt from the ban - state Sen. Ray Lesniak and Gov. Jon Corzine are involved with a lawsuit filed in March that seeks to have the federal sports-betting ban declared unconstitutional.

Last week two U.S. senators and three congressmen - including Rep. Heath Shuler, D-N.C., a former NFL quarterback - joined the fray. They wrote to Attorney General Eric Holder, urging him to fight the lawsuit and Delaware's plan.

Compared with previous challenges to the USA's sports-betting system, "I'm not aware of anything close to this," says Paul Haagen, a Duke University Law School professor and sports law expert. "I am sure the current economy is playing a significant role in terms of the shape of state budgets. The other part is that there's either an acceptance of gambling or the acceptance that this is inevitable. There's a sense of the traditional cultural resistance (to sports betting) is weakening."

He adds that if Delaware and New Jersey officials succeed in their quests to open sports betting, "I would expect to see that kind of activity spread, just as you saw the spread of state lotteries."

Drawing a line on gambling

Sports betting in the USA is restricted by the 1992 Professional and Amateur Sports Protection Act. The law contains one grandfather provision for states that had forms of sports betting between Jan. 1, 1976, and Aug. 31, 1990; that covered Nevada, Delaware, Montana and Oregon.

The law also gave other states with existing casinos a one-year window after its effective date in which to establish sports betting that then would be allowed. New Jersey never had legalized sports betting and didn't use the one-year window to start it. That was probably a mistake, Corzine says.

Gambling generates tax revenue and economic impact not only from the betting but also from ancillary spending by visitors to casinos.

Delaware's plan could give it a competitive edge as a gambling attraction not only over Maryland and Pennsylvania - which have joined Delaware in adding slot machines to horse racing and lotteries - but also over New Jersey and its Atlantic City casinos. Delaware projects an addition of $55 million in annual revenue if its sports betting plan goes ahead.

Sports betting would make Atlantic City a more attractive venue for boxing and other big-time sporting events, Corzine says. "We're trying to make Atlantic City a destination resort. . . . We certainly don't want to be at a disadvantage with other venues" that can offer sports betting.

Even as the pro sports leagues and the NCAA oppose Delaware and New Jersey, teams, schools and conferences are earning millions from varied business deals with gambling concerns - just one part of corporate sponsorship initiatives that have reached further as the economy has soured.

In May, NFL owners voted to allow clubs to sign deals with state-sponsored lotteries for the first time. Since then the Washington Redskins, New England Patriots, Baltimore Ravens, Houston Texans, Cincinnati Bengals, Cleveland Browns, New Orleans Saints and Seattle Seahawks have gone into business with state lotteries for 2009.

They're following the path blazed by MLB and NBA clubs such as the New York Yankees, New York Mets, Boston Red Sox and Boston Celtics, who have slapped their trademarks on lottery tickets in recent years. For years, the NHL has allowed teams to partner with state and provincial lotteries, and teams such as the Vancouver Canucks have done so.

The WNBA's Connecticut Sun are named after a casino resort, the Mohegan Sun, and play home games at Mohegan Sun Arena in Uncasville. (The WNBA All-Star Game was held there last weekend.)

Major-college athletics programs accept sponsorships from state lotteries and Indian tribes with casino hotels; San Diego State, for example, has an arena naming-rights deal with the Viejas Band of Kumeyaay Indians. The West Coast Conference holds its postseason basketball tournaments at the Orleans Hotel's arena in Las Vegas, and the Western Athletic Conference will do so in 2011 and '12.

Then there's pro sports' flirtation with Las Vegas, with the NBA and MLB staging events there.

"I understand what they're trying to do with the logos," New Jersey's Corzine says. "But it isn't perfectly consistent with this other view (of opposing legalized sports betting). And it's not consistent, frankly, with tolerating it in other places."

MLB President Bob DuPuy says there's a clear distinction between inviting fans to buy a Yankees or Red Sox lottery ticket and encouraging them to bet on what happens between the lines.

"It's part of promoting the game. Logos allow people to associate themselves with the team they have an affinity for. Those games have no bearing on competition on the field," he says.

Baseball knows the corrupting influence of gambling all too well, from the "Black Sox" scandal, in which eight players conspired to throw the 1919 World Series, to the lifetime ban of career hits leader Pete Rose, who bet on the Cincinnati Reds when he was their manager. The NBA endured a betting scandal involving then-referee Tim Donaghy, who pleaded guilty in 2007 to wire fraud and transmitting betting tips to gamblers.

League executives worry about the potential for point-shaving and other gambling scams if legalized sports betting spreads. "Remember, the office of the commissioner was formed in response to gambling," says DuPuy, citing the 1919 scandal. "Obviously, we have a certain level of sensitivity. . . . We are opposed and concerned about the proliferation of sports books betting on the outcome of baseball games. We sell the integrity of the game - and more betting on the outcome is troublesome."

NBA deputy commissioner Adam Silver takes a wider view. "We have a global business where many countries like the U.K. and China have legalized sports betting," he says. "We can't live with our heads in the sand and pound our fists that we don't want betting on our games. We realize there is enormous interest in betting on our games. . . .

"Over time, there is no question that it will be more accepted (in the USA). What we need are safeguards that can be put in place so that it won't affect the outcome of games. . . . There's a long tradition of sports gambling in the state of Nevada. They have enormous infrastructure to monitor it. It's unclear if other states that went into the business would be able to establish similar safeguards."

Even so, the prospect of betting in Delaware on individual games - as opposed to parlay wagers that can be won only if bettors correctly choose the outcomes of multiple games - was the tipping point for the pro leagues' and NCAA's lawsuit against the state, says their lead attorney, Kenneth J. Nachbar. Single-game wagering is far more attractive to bettors than parlay wagering, which is what Delaware offered in the 1970s.

"We are not challenging what Delaware conducted in 1976, which was parlay betting limited to NFL games," Nachbar says.

"The only aspects that are being challenged are single-game betting and betting on sports other than the NFL. Delaware has never had sports betting on anything but NFL games."

Markell, the Delaware governor, says, "We figured there would be a challenge."

'The hypocrisy of it is just mind-boggling'

If they're so concerned about gambling, why are pro sports leagues venturing into that realm at all, asks Lesniak, the New Jersey state senator.

"The hypocrisy of it is just mind-boggling," he says. "The only reason they're objecting is they're not getting a piece of the action. Sports betting's legal throughout the world. Billions of dollars are bet here illegally in the U.S. It hasn't destroyed soccer and the other sports overseas, and it won't destroy sports here."

Legal or not, FBI Special Agent Mike Plichta says, there always will be an unseemly element to sports betting where individuals will try to fix games.

"There's more money on it now than ever before," says Plichta, a unit chief who monitors organized crime activity. "Because it's bigger, it's also more attractive to criminal organizations to be involved. I strongly believe they are out there right now trying to fix games."

In May, seven former University of Toledo football and men's basketball players were indicted along with two Detroit-area businessmen accused of contriving a game-fixing scheme. In a separate indictment unsealed the same day, authorities alleged a former horse racing jockey attempted to fix races in Florida, Delaware and other states.

There also are those who don't see that great of a leap between the sports betting occurring legally outside the USA and the betting occurring in the USA. Office pools based on NFL games and the NCAA men's basketball tournament are common, and fantasy sports leagues involving entry fees and end-of-season payouts have exploded in popularity.

"We are in a halfway position now," Duke's Haagen says. "Given the number of friendly pools and the acceptance of betting lines in the newspaper, there's been a substantial movement toward acceptance (of sports betting). Would more people place bets if a state is promoting the act? Yes. More people drank after Prohibition ended."

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