gambling headerAt the end of February, I wrote about sports gambling. I wrote a lot of words about sports gambling. It’s an appealing topic to me, not because I particularly enjoy wagering on sporting events, but because the divide between the perception and the reality of the subject seems so vast.

Furthering my interest is the role that Major League Baseball, National Basketball Association, National Football League and National Hockey League (as well as the National Collegiate Athletic Association) have played in manipulating the public perception of sports betting away from the reality. North American professional sports leagues have collectively fought the legalization of sports gambling in the name of the integrity of their respective sports, willfully ignorant to the benefits that a regulated system would provide the sanctity they strategically want to be seen protecting. The reality is that the leagues are far more interested in protecting control over the data that their product creates.

It’s hypocrisy at its most blatant: Powerful organizations privately protecting their own interests by publicly decrying progress that would limit the very things over for they feign concern. Unfortunately, it’s taken the self-serving initiatives of another powerful authority to highlight the discrepancy between what’s said and done.

Enter, from stage right, the State of New Jersey. Despite initially being a boon to the local economy, casinos in New Jersey have begun to struggle. In the wake of competition from new casinos in Pennsylvania and New York combined with a stagnant economy in general, annual gross revenues from gambling have declined by 40% over the last seven years. Prior to this decline, the state had gotten used to the budgetary room that gambling dollars had afforded in the past. In order to bring back the heydays of casinos on the boardwalk, New Jersey had a plan.

On November 8th, 2011, the people of New Jersey approved a referendum to amend the state’s constitution to allow for the legalization of sports betting. Two months later, Governor Chris Christie signed the subsequent bill into law, causing much consternation among the four major North American professional sports leagues and the NCAA.

In August of 2012, these five governing bodies of sport teamed up to file a federal lawsuit to stop New Jersey from allowing sports wagering, claiming that it was in violation of the Professional and Amateur Sports Protection Act of 1992 (PASPA), which prohibits sports betting in all but four states. After months of declarations, depositions and hearings, U.S. District Judge Michael Shipp ruled in favor of the leagues on February 14th, 2013, effectively upholding PASPA. It seems that in the United States, there may exist a slight unwillingness among district court judges to overturn federal law.

In response, the state not only appealed the decision with the Third Circuit court of Appeals, but also adopted a new tactic in their struggle to find legitimate revenue from gambling: the legalization of fantasy sports betting. On Monday, New Jersey’s Division of Gaming Enforcement established standards for casinos to offer fantasy sports tournaments for cash prizes, allowing operations at Casinos to begin as soon as next month.

This is the equivalent of attempting to bowl over the catcher at home plate to score a run, after a previous runner was called out when he attempted to slide into home plate. It’s completely allowable within the rules of the game, but in addition to being slightly confrontational, it’s a desperate move that’s far from certain to end up counting.

New Jersey believes that this time they have the law on their side thanks to the the Unlawful Internet Gambling Enforcement Act of 2006 which exempts fantasy sports from online gambling legislation based on the popular source of entertainment being a game that isn’t merely based in luck. The key to this is a U.S. District Court ruling from 2006 that found “the success of a fantasy sports team depends upon the participants’ skill in selecting players for his or her team.” Surprisingly, my victory in a 2005 Yahoo! Sports NBA pool was not brought up as evidence to support the losing side of the complaint.

The ruling in 2006 seems specific to the brand of fantasy sports games that last an entire year, as opposed to the single-day games that casinos are most likely to utilize. These are the types of options with which Sport Select users in Canada may be familiar. A list of comparable players are presented within separate pools, and gamblers are invited to guess which player under each classification is most likely to score the most points in a single game.

However, to challenge this latest bit of posturing from New Jersey, sports leagues would appear even more hypocritical than is typically the case. MLB, the NBA and the NHL all feature pages on their official websites linking to fantasy games, offering fantasy advice and highlighting news with fantasy implications. In the NFL, the importance of fantasy games is emphasized even more with the very first clickable item in its main page menu being one that links to a fantasy game with cash prizes.

NFL Website

Despite it being a friendly form of wagering for a great many participants, Lawrence Ferazani Jr., a senior lawyer for the NFL, made the at-best-naive, at-worst-dishonest claim that he was unaware of any such betting on fantasy football during a deposition for the court case that New Jersey lost.

The fantasy football games that I’m aware of, there’s a prize, but not a financial prize. I don’t play fantasy football. I know what we offer so I’m not – I can’t tell you that there are others, other places that you can go to and somehow win cash prizes playing fantasy football. The ones I’m familiar with are run by us and you’re either playing for a prize but mostly you’re playing for bragging rights against the people against who you play.

Perhaps I’m in the minority, but I’d wager that 95% of the fantasy sports games that I’ve played with friends have included a nominal fee contributing to a larger payout for the winner. If my experiences with fantasy sports are a representative of the majority of experiences, we receive yet another example of a professional sports league being willfully ignorant.

Of far more concern to the leagues than people wagering on their product is that it represents an income channel being created based on their product, but outside of their control. The introduction of a more prominent means of making fantasy sports wagers on a larger scale further calls into question the control that professional sports leagues exert over the data that their product produces. This is far more worrisome to sports leagues than the imaginary threat of match-fixing.

During a hearing before the Senate Judiciary Committee’s Subcommittee on Patents, Copyrights and Trademarks, in June of 1991, NBA commissioner David Stern was more forthcoming with what motivated his disdain for sports gambling. He claimed it was a matter of defending the intellectual property rights of the league from third-party infringement:

Conducting a sports lottery or permitting sports gambling involves the use of professional sports leagues’ games, scores, statistics and team logos, in order to take advantage of a particular league’s popularity; such use violates, misappropriates and infringes upon numerous league property rights. …the NBA – like other sports leagues – owns the rights to its games and the manner of their exploitation.

This makes a lot more sense than what the leagues have claimed in public for the twenty years following the passing and signing into law of PAPSA. However, reality isn’t nearly as likely to sway public opinion as leaning on buzz terms like “integrity of the game” and “match-fixing” to associate sports gambling to its basest and most negative stereotypes – the very ones that a lack of regulation helps to proliferate. When we examine the role that legalized and regulated sports betting has played in encouraging transparency and prompting the actual discovery of what professional sports leagues claim it causes the ulterior motivation behind the stance against gambling becomes even more distasteful to reason and maddening to anyone who despises hypocrisy.

This, of course, isn’t to make a hero out of New Jersey for their taking on the leagues by any means necessary. There is no altruistic motivation here. It just so happens that in this specific scenario, the self-interest of the state is a lesser evil that stands to improve things, not just for the people of New Jersey, but a great many of us.