At Odds: The Ramifications of Legalized Sports Gambling

During their 2023 Stanley Cup ceremony, the Vegas Golden Knights raised their championship banner out of a slot machine. 
(Credit: The Athletic)

Written by Michael Merolla, Edited by Amanda Pohly

​On September 30th, Pete Rose, baseball’s all-time hitting leader, passed away. Over the course of 24 seasons, the man renowned as Charlie Hustle amassed 4256 hits, 17 All-Star recognitions, and 3 World Series titles. [1] For all his undeniable excellence on the field, Rose’s career will forever be marred by controversy. In 1989, reports surfaced that Rose had gambled on major league games, including those involving his own team, the Cincinnati Reds. [2] Following an extensive investigation, the league corroborated the allegations against Rose and permanently banned him from baseball. As a result, he never received the highest honor bestowed by the national pastime: enshrinement in the National Baseball Hall of Fame. 

Rose was not the first ballplayer to cross this boundary. In 1919, eight Chicago White Sox players were accused of conspiring with professional gamblers to rig the World Series. Now known as the Black Sox Scandal, the ensuing fallout established gambling as the sport’s cardinal sin. [3] For instance, Rule 21, which explicitly bans all Major League Baseball employees from betting on games, hangs in each team’s locker room. [4] A similar regulation exists in just about every professional sports league; employees with direct impact or insider access to the competitions are prevented from wagering on the outcomes.

While it might be outlawed in the locker rooms, a recent landmark Supreme Court case has introduced legalized gambling into the larger sporting world. In Murphy v. National Collegiate Athletic Association (2018), the Court struck down the Professional Amateur Sports Protection Act (PASPA), a federal law prohibiting states and individuals from the sponsorship of betting schemes based on competitive sporting events. [5] In the majority opinion, Justice Alito cited that the PASPA violated the anti-commandeering provision of the Constitution. This rule, an enumerated and inferred restriction drawn from the Tenth Amendment, restricts the federal government from commanding states to undertake a specific act. Murphy expanded the scope of the anti-commandeering rule by including “negative” federal commands. Alito asserted that there is no difference in potential overreach between requirements and prohibitions placed on states. The ruling opened the floodgates for legalizing wagers across America, as 34 states have now approved some form of sports betting since 2018, in addition to four states already grandfathered into the practice.  

Once the Supreme Court legitimized sports betting, corporations quickly took over the enterprise. Industry titans such as Draftkings, FanDuel, and BetMGM set probability-based odds on potential sporting outcomes and accept bets on these odds from their customers. Replacing individual bookies, these online sportsbooks operate in states where sports gambling is legal, generating over ten billion dollars yearly. [6] Professional sports leagues have sought to capitalize on this massive market. In the past five years, all of the Big Four leagues – the National Basketball Association (NBA), the National Hockey League (NHL), the National Football League (NFL), and Major League Baseball (MLB)  – have signed lucrative sponsorship deals with sportsbook companies. [7] Other prominent organizations such as the Ultimate Fighting Championship, the PGA Tour, and Major League Soccer have also entered into similar agreements, weaving the once-taboo activity into mainstream sports culture.

The mutual benefits of these partnerships are substantial. The sportsbooks offer huge commissions from their gambling revenues, compensation the leagues with huge profits from their competitions. In exchange, the league provides the betting companies with significant brand promotion (stadium/arena naming rights, ballpark advertisements, TV commercials), the use of official team licensings, and in-depth data to support oddsmaking. In 2024, CBC’s Marketplace and researchers at the University of Bristol closely analyzed five NHL games and two NBA games to count how often gambling-related media (logos, commercials, live odds) appeared on the broadcast. The collaboration found that some form of gambling messaging appeared on the screen for an average of 21% of the approximate three hour run time, a rate of 2.8 promotions every minute. [8] "It's shocking the amount of gambling-related messages that bombard the audience when they're just trying to watch a game," said Jamie Wheaton, the University of Bristol researcher who led the study. [9]

The legalization of sports betting and the rise of “smartphone sportsbooks” has coincided with an increase in wagering amongst Americans, with a recent Seton Hall poll reporting that 37% of the general population has placed a bet on a sporting event at some point in their lives (up from 28% in 2022). [10] These trends are undeniably concerning, as gambling has long been linked to negative outcomes such as addiction, relationship deterioration, financial hardship (debt/lowered credit rating), and lowered mental and physical health. [11] As sports betting continues to be firmly integrated in the sports world, these risk factors are only multiplied. Although these developments raise significant moral concerns, the gambling industry mostly escapes legal liability for their customers’ well-being through certain precautions. In the Draftkings Terms & Conditions, customers agree “to hold harmless” DraftKings and all related parties (shareholders, sponsor, etc) “from any and all liability, claims or actions of any kind whatsoever.” [12] Furthermore, sportsbooks have adopted a common practice in the alcohol industry by plastering disclaimers and addiction hotlines all over their advertising and apps. 

Seeking to overhaul the gaming industry through customer protections, In September 2024, Senator Richard Blumenthal (D-CT) and Representative Paul Tonko (D-NY) introduced the Supporting Affordability and Fairness with Every (SAFE) Bet Act into Congress. [13] One stipulation of the Act would require sportsbooks to implement “affordability checks” for each user, limiting how much and how often users can wager. Another portion of the SAFE Bet Act targets the advertising sector, restricting gambling companies from running advertisements during live sporting events. The legislation also seeks to ban incentives such as “bonus bets” and “no sweat bets” that can lure users into betting habits by offering lower stakes. The bill would serve as the first substantial federal regulations on sports gambling since the Murphy ruling, a process that is currently delegated to the states. The SAFE Bet Act faces fervent resistance from gaming lobbyists, who argue that devoluted gaming laws create tailored frameworks specific to each state. [14]

In addition to the debate swirling around consumer protections, there has also been a renewed focus on the power held by athletes and referees participating in the sporting events. When Pete Rose first received his ban from baseball 35 years ago, sports gambling was viewed under a much different light. The practice was largely associated with organized crime networks, particularly the American Mafia. As a result, most of the sports betting scandals that predate the Murphy decision were linked to the criminal underworld. The most famous example is the 1978-79 Boston College basketball point shaving scandal, in which three BC athletes colluded with Henry Hill, an American mobster now immortalized in the film Goodfellas. [15] The scheme relied on the Golden Eagle athletes to fix games by winning or losing by a certain point difference, allowing the mobsters to profit off of wagering on these results. Although these past sports gambling scandals are infamous amongst sports fans, at least part of this notoriety can be attributed to their rarity. After the fallout of the Rose scandal, gambling-related suspensions were few and far between across professional sports for the next three decades. Because of the negative sentiment towards organized crime and the precedent of harsh punishments, league employees were strongly disincentivized against risking their careers.

The Murphy decision has completely altered this landscape. The advent of online sportsbooks has coincided with a sharp increase in suspensions, as athletes and their personal circles now have unprecedented access to gambling markets. In 2023, 10 NFLers and 10 NHL players received suspensions for betting-related misconduct. [16] None of these players were indicted in any organized crime conspiracies, but simply violated their league betting rules in some form. Commenting on these developments, Shane Kraus, a psychology professor at the University of Nevada, Las Vegas, predicted, “I think we’re going to see more of this coming…wasn’t as popular before because it wasn’t as accessible. You needed bookies. Now you have unlimited access and there are so many apps. Whenever you have something that is an addictive behavior, when you increase access, you increase problems.” [17]

Kraus’ prediction turned out to be true. In April 2024, Toronto Raptors forward Jontay Porter was banned from the NBA for both gambling on games in which he did not play and providing insider information to outside bettors for games in which he did play. Porter, who apparently participated in the scheme to pay off massive debts that accumulated from a gambling addiction, is now facing federal felony charges. [18] Two months later, a similar controversy occurred with Tucupita Marcano, a Pittsburgh Pirates infielder. Marcano was banned for life from baseball, after MLB found that he bet on hundreds of games, including those involving his own team. [19] There are many striking similarities among these recent controversies. Porter, Marcano, and other recently suspended athletes have fit a certain mold: younger, fringe players on relatively meager salaries. This exposes a threatening vulnerability for the future, as inexperienced and financially insecure players are tempted by expanding avenues to exploit their positions. 

As professional sports leagues scramble to maintain the integrity of their competitions, two potential sources have arisen as safeguards against employee gambling infractions: increased education and improved revenue sharing. Last August, the NFL announced the institution of in-person mandatory gambling education and training. The new policy requires that all 17,000 NFL employees, from players to coaches to referees, must attend these training sessions each season during the preseason training camp window. [20] MLB and the NBA have also instituted similar mandatory yearly training programs to ensure that employees are kept up to date on league policies. 

The revenue sharing discussion revolves around the collective bargaining agreements (CBAs) between the leagues and the player unions. In the NFL’s most recent CBA ratified in 2020, the player negotiated for the inclusion of the gambling revenues into the shared revenue stream, ensuring that the players receive a substantial portion of the league’s billion-dollar sponsorships with sportsbooks. [21] The new NBA CBA passed in 2023 also addressed the evolving sports betting scene by allowing players to invest in and promote gambling or fantasy sports companies. [22] The hope was that by expanding the athletes’ legal earning power, they will be dissuaded from turning to illegal wagering. However, results have been mostly mixed.

Even with new policy proposals to protect both fans and athletes from the newfound dangers of the post-Murphy gambling scene, the sports world is in an unprecedented and precarious position. When risky business is legalized, livelihoods and competitive integrity are put at stake. It is up to a vast and complex network of lawmakers, gaming officials, league personnel, and players’ unions to protect both athletes and fans. 

The opinions and views expressed in this publication are the opinions of the designated authors and do not reflect the opinions or views of the Penn Undergraduate Law Journal, our staff, or our clients.

Bibliography
[1] Baseball-Reference.com, Pete Rose Player Page. https://www.baseball-reference.com/players/r/rosepe01.shtml
[2] Josh Peter, “Why was Pete Rose banned for life from MLB?” USA Today. (2024) https://www.usatoday.com/story/sports/mlb/2024/09/30/pete-rose-gambling-mlb-banned-for-life/75461152007/
[3] Britannica.com, “Black Sox Scandal”. https://www.britannica.com/event/Black-Sox-Scandal
[4] Major League Baseball, “Rule 21”.  https://content.mlb.com/documents/8/2/2/296982822/Major_League_Rule_21.pdf
[5] Harvard Law Review, “Murphy v. National Collegiate Athletic Association”. (2018)
[6] Doug Greenberg, “Sports betting industry posts record $11b revenue.” ESPN. (2024) https://www.espn.com/espn/betting/story/_/id/39563784/sports-betting-industry-posts-record-11b-2023-revenue
[7] Sportshandle.com.  https://sportshandle.com/partnership-tracker/
[8] CBC News, “Hey, sports fans: You spend up to 20% of every game watching gambling advertising.” (2024)
https://www.cbc.ca/news/marketplace/sports-betting-gambling-advertisements-1.7086400
[9] Ibid. 
[10] Seton Hall University, “Sports Poll Finds Slowed Growth for Sports Betting.” https://www.shu.edu/business/news/sports-poll-finds-slowed-growth-for-sports-betting.html
[11] Ibid.
[12] Draftkings, “Terms of Use.”  https://sportsbook.draftkings.com/legal/nj-terms-of-use
[13] Representative Paul Tonko, “SAFE Bet Act Fact Sheet.” https://tonko.house.gov/uploadedfiles/fact_sheet_safe_bet_act_3.24.pdf
[14] John Barr, “Lawmakers propose new federal regulations on sports betting.” ESPN. (2024) https://www.espn.com/sports-betting/story/_/id/41234480/congressmen-propose-new-federal-regulations-sports-betting
[15] David Purdum, “The worst fix,” ESPN. https://www.espn.com/espn/chalk/story/_/id/11633538/betting-chronicling-worst-fix-ever-1978-79-bc-point-shaving-scandal
[16] David Mendes. The Athletic.  https://www.nytimes.com/athletic/5201567/2024/01/18/gambling-suspensions-sports-nhl-shane-pinto/ (2023)
[17] Ibid. 
[18] Associated Press, “Banned NBA player Jontay Porter charged Jontay Porter charged felony” (2024) https://www.espn.com/nba/story/_/id/40490035/banned-nba-player-jontay-porter-charged-felony 
[19] Jamie Strashin. “Lifetime bans and careers in tatters — recent sports betting scandals show fringe players are vulnerable” CBC News. (2024) https://www.cbc.ca/news/canada/sports-gambling-scandal-fringe-players-1.7227653
[20] Mike Jones. The Athletic.(2024). https://www.nytimes.com/athletic/5717096/2024/08/22/nfl-gambling-policy-education/
[21] David Purdum. “New CBA allows owners,players to cash in on stadium sportsbooks.” ESPN (2020). https://www.espn.com/chalk/story/_/id/28930507/new-cba-allows-owners-players-cash-stadium-sportsbooks
[22] Paul Kasbian. “NBA Rumors: New CBA Allows Players to Invest in Teams, Sports Betting, Cannabis.” 
Bleacher Report (2023) https://bleacherreport.com/articles/10070902-nba-rumors-new-cba-allows-players-to-invest-in-teams-sports-betting-cannabis