Betting on the NFL Goes on Trial (Part 3)

Cold, Hard Football Facts for Sep 04, 2012



 

By Kevin Braig
Cold Hard Football Facts' Gaming Law Expert

(Click here for Part 2) (And here for Part 1)

Where’s the window?

To understand why the NFL will be irreparably harmed if Governor Chris Christie’s play to establish legal sports betting in New Jersey is successful, it helps to look at the traditional difference between betting on horse racing and betting on other sports such as NFL football.

A window to place bets exists at the track and wagering is an on-site part of the event.  A person attending a horse race that makes a bet is not just a spectator watching the race.  Rather, such a person is a participant who is involved in the race through the placing of the wager.  His or her money runs with the horse carrying the bet.

In economic growth terms, betting in horse racing has grown endogenously, which means betting as grown from the inside—the horse racing event itself—to the outside—the simulcasting of races at one track at off-site tracks, sports books and other venues and the sharing of the commissions generated by wagering at these off-site venues by states, tracks, and horsemen.

Indeed, Congress enacted a law—the Interstate Horse Racing Act—that governs the rights and obligations of all of the public actors (primarily state governments) and private actors (primarily tracks and horsemen) who share the revenue that makes an actual horse race possible.

In contrast, a window does not physically exist at an NFL stadium and wagering is not an on-site part of the event.  The vast majority of people attending an NFL game are pure spectators and not participants because they do not have their money “in the game” in the form of a wager.

Thus, in fact and in economic growth terms, if betting on the NFL is to grow, it will grow exogenously, which means betting will grow from outside NFL game events.  Unlike in horse racing, currently there is no legal structure in place for the NFL and its owners and its players to receive a share of the commissions generated by wagering on NFL games at off-site venues.   

For decades and with very limited exceptions, there has been only one window open to bettors seeking to make legal bets on NFL games.

That window has a name:  Nevada.

Christie wants to open a new, additional window to bettors—New Jersey—and other states are sure to follow if he is successful.  Indeed, state legislators in California are working to legalize sports betting in the Golden State even as we speak.

However, New Jersey has not provided a share of the commissions that will be generated by such wagering—known in the industry as the vigorish or simply “the vig”—for the NFL. 

Moreover, it is 100 percent certain that if Christie succeeds in opening New Jersey’s new betting window in the absence of an NFL share of the commissions, the NFL will never, ever be able to obtain such a share as the casinos and race tracks who will execute Christie’s play will never give back any portion of the commissions that Christie’s play bestows upon them.

Thus, if Christie is successful in establishing legal betting on NFL games in New Jersey, the NFL may be irreparably harmed as it will lose for all time any chance to obtain a share of the commissions generated by “scaled up” betting on NFL games beyond the Nevada state line.  

The second “P” in PASPA functions like a patent.

The PASPA acronym may stand for “Professional and Amateur Sports Protection Act,” but PASPA functions like the “Professional and Amateur Sports Patent Act.”

A patent is a negative property right.  A patent holder has the private property right to stop other people from executing the design described in his or her patent.  Thus, a patent can be used to stop, slow, or control the growth of actions contemplated in the patent by prohibiting the use of the design or licensing use of the design in exchange for a fee.  As a result, a patent creates a monopoly for a limited amount of time for the holder to control the patented idea and design.

A holder’s protection under a patent generally is limited to 20 years, although a small subset of patents may be extended for up to five additional years.  Patent protection is time limited for a simple reason.  The Copyright and Patent Clause of the United States Constitution requires some time limit.  This Clause provides Congress with the power to “promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.”

In the United States Senate, PASPA was debated and passed in the Subcommittee on Patents, Copyrights, and Trademarks prior to its passage by the full Senate and House of Representatives.

Like a patent, PASPA is nothing more than a negative right.  PASPA gives the NFL the statutory right to stop Christie and New Jersey’s casinos and race tracks from executing Christie’s play to establish legal betting on NFL games in New Jersey.

The primary difference between a patent and PASPA is that a patent provides a purely private right to exclude others from using the design described in the patent while PASPA provides both a private right (to the NFL) and a public right (to the federal government) to exclude all others except Nevada and its licensees from establishing broad-based betting on NFL games.

Simply stated, while PASPA is not a patent per se, PASPA functions like a perpetual patent for the NFL with respect to sports betting in light of the fact that in the current case the NFL—not the federal government—is attempting to enforce a private right under PASPA.

Under its broad power to regulate interstate commerce, does Congress have the power to give the NFL the functional equivalent of a perpetual patent that excludes New Jersey and others outside Nevada from establishing legal betting on NFL games?  This is the first time this question has arisen, but the answer is almost assuredly Congress has this power under the Commerce Clause.

While the Copyright and Patent Clause confines a patent holder’s ability to exclude another’s use of a device or business method for “limited Times,” the Commerce Clause contains no such temporal limit.  Moreover, the Supreme Court ruled in 1998 that Congress may extend limited statutory time limits on intellectual property, specifically, copyrights, to create the functional equivalent of a virtually unlimited and perpetual time limit.

In Eldred v. Ashcroft, the Court rejected a challenge to the Sonny Bono Copyright Time Extension Act, which extended existing copyrights for an additional 20 years.  In that case, the challengers argued that “a limited time which is extendable is the functional equivalent of an unlimited time” and therefore unconstitutional under the Copyright and Patent Clause.

In rejecting the challenge, the Court recognized that because the Clause empowering Congress to confer copyrights also authorizes patents, congressional practice with respect to patents was relevant.  “We count it significant that early Congresses extended the duration of numerous individual patents as well as copyrights,” Justice Ruth Bader Ginsburg wrote for the Court.  “The Courts saw no ‘limited Times’ impediment to such extensions; renewed or extended terms were upheld in the early days.”

Justice Ginsburg also cited the 1843 case of McClurg v. Kingsland, in which a patentee “was unprotected under the law in force when the patent issued because he had allowed his employer briefly to practice the invention before he obtained the patent.  Only upon enactment, two years later, of an exemption for such allowances did the patent become valid, retroactive to the time it issued.  The Court explained that the legal regime governing in a particular patent ‘depends on the law as it stood at the emanation of the patent, together with such changes as have been made; for though they may be retrospective in their operation, that is not a sound objection to their validity.’”

By analogy, the NFL was unprotected before Congress enacted PASPA as demonstrated by the federal court’s 1977 decision in National Football League v. Governor of the State of Delaware.  The NFL also has allowed Nevada, which it has called a special case, to practice betting on NFL games within its state borders both before and after the enactment of PASPA. 

Thus, only upon Congress’s enactment of PASPA did the NFL obtain protection of its potential share of the commissions generated by betting on NFL games beyond Nevada—which the NFL claimed in Delaware when it requested the Court to impose a constructive trust upon all revenue generated by the Delaware lottery for the benefit of NFL Charities.

Contrary to what Christie has told the media, Congress did not decide which states can have sports betting and which cannot when it enacted PASPA. 

Rather, Congress merely codified the decisions that the individual states themselves had made in 1992.  At that time, Nevada had decided to permit broad betting on NFL games and other sports.

In contrast, Utah had decided it would not permit any such betting.  New Jersey had decided that it would join Utah and not have betting on NFL games, but because New Jersey had casino-style gaming in Atlantic City, Congress gave New Jersey a year to think about it and change its mind.

Moreover, if Congress had treated all the states uniformly in 1992 when it granted the NFL the functional equivalent of a patent on betting on NFL games, Congress would have had to override Nevada’s long-standing decision to permit betting on NFL games.  Obviously, if Congress had done so, it would have harmed Nevada financially as by 1992 Nevada sports books were handling well over $1 billion in sports wagers.  In contrast, New Jersey was handling $0.

Only by crafting PASPA as it did could Congress avoid harming any state and also provide the NFL with the functional equivalent of a patent.

For all of these reasons—though it may seem hard to believe--Congress acted perfectly reasonably, skillfully, and even surgically when it enacted PASPA as, in the 20th Century, betting on NFL games that was limited to Nevada was a good deal for both the NFL and the states.

But is the PASPA deal that essentially limits legal betting on NFL games to Nevada still a good deal for the NFL in the digital 21st Century?      

Let’s make a deal.

To understand why limiting betting on NFL games to Nevada was a good deal for the NFL in 1992, one first must understand the history of the sports book business in Nevada.

While betting on sports has been legal in Nevada since 1949, the modern Nevada sports book with banks of TVs that resembles NASA mission control is a relatively recent phenomenon.

“In the beginning, sports books were dingy, smoke-filled, single room structures where a crusty crowd of grizzled gambling veterans spent their afternoons cursing their luck and complaining about everything from the uncomfortable hard backed chairs to the poor reception on the television screens,” David Scott wrote in Sports Book Management: A Guide for the Legal Bookmaker, a timeless, hard-to-find classic authored by legendary odds-maker Roxy Roxborough and Mike Rhoden.

“There was one black and white TV set at the old Churchill Downs sports book and if the picture fluttered, as it frequently did, a guy would whack it with a broom,” Roxborough told Scott.

This was the era before October 15, 1974, the date that Congress cut the tax on sports betting from 10 percent to 2 percent.  The change in the tax law dramatically impacted betting on NFL games in Nevada.

In 1972 and 1973, under the 10 percent tax rate, bettors wagered approximately $850,000 per year on football games (both NFL and college football).  When the tax rate dropped to two percent a few weeks after the start of the 1974 season, the 1974 handle (i.e., the total amount bet) jumped to approximately $3.8 million—an increase of roughly 450 percent in less than one year.

Before the start of the 1975 NFL season, the Nevada Gaming Commission lifted its ban on sports books in casinos and the Union Plaza in downtown Las Vegas became the first casino in Nevada with a sports book.

Correspondingly, Nevada’s handle on betting on football soared to approximately $26.1 million in 1975—an increase of 686 percent over the 1974 handle.  According to Scott’s Sports Book Management introduction, by 1979, Nevada had 30 sports books—more than triple the number in 1974—and handle had grown to $289.6 million—an increase of 7,621 percent in five years.

Network television noticed this incredible growth and adapted to it almost immediately.  In 1975, CBS Sports won 13 Emmy Awards for its NFL Today pre-game show hosted by Brent Musburger, who was joined by former Miss America Phyllis George and former NFL player Irv Cross.  In 1976, just one year after the first explosion of Nevada sports book growth, CBS added Las Vegas odds-maker Jimmy “The Greek” Snyder to the show.

A few years later—to compete with CBS and The Greek for viewers—NBC’s NFL ’82 pre-game show hired Pete Axthelm, a former horse racing scribe described by Melvin Dursag in his Los Angeles Times  obituary of “Ax” as “a man eager to get a bet down.”  (Nobody remembers who was on that pre-game show with “Ax” anymore, but many still remember “Ax.”  For the record, it appears that Axthelm’s co-stars on the show were Mike Adamle and Len Berman.)

Just last July, the incomparable Roy Blount, Jr., recounted an even more revealing vignette of the loveable Axthelm’s personality.

“My late friend Pete Axthelm, of SI and later Newsweek, used to refer to himself with relish as ‘a drunk and a degenerate gambler,’” Blount wrote in the July 9, 2012 edition of Sports Illustrated.  “He did die of drink, at 47, but I don't know that the gambling got away from him, though I recall him saying, in a locker room awash in champagne, ‘I hate being around a team that didn't cover the spread and thinks it won.’"

While legal betting on the NFL in Nevada undoubtedly contributed to the growth of the NFL’s popularity on television, it likely paled in comparison to the NFL’s contribution to the growth of Nevada’s sports books.

“Not coincidentally, books have grown with expanded television coverage of sports,” Scott wrote in Sports Book Management in 1998.  “Where once a Sunday yielded just one or two football games over the major networks, now, thanks to cable and satellite TV, every game is available.  That made an enormous difference for Nevada’s licensed bookmakers.”

“We conducted a study and found that games on TV have a handle four times greater than non-televised games,” Mike Knapp, the former director of race and sports at Harvey’s Lake Tahoe, told Scott.

Nevada’s timing in combining casinos and legal betting on the NFL could not have been more perfect.

When it did so in 1975, the NFL already had established a secure grip as the country’s most dominant Nielsen television ratings generator.

In 1970, NFL Commissioner Pete Rozelle and innovative ABC Sports executive Roone Arledge took what was then a major risk to buck conventional thinking that the NFL could not draw an audience in prime time and launched Monday Night Football

To direct MNF Arledge tapped Chet Forte—an avid (too avid) bettor.  Together, Arledge and Forte developed a new and distinctive cinematic “look” for the NFL in prime time.  Commentator Howard Cosell provided a lightning rod, who viewers loved or despised (usually the latter) but could not ignore.

“By the beginning of the show’s second season, 1971, when Frank Gifford came over from CBS … as the play-by-play man, the series was a bona fide hit, its cultural impact unquestioned,” Michael MacCambridge wrote in America’s Game: The Epic Story of How Pro Football Captured A Nation.

In 1982, Rozelle negotiated a new five-year $2.1 billion broadcast rights package for the NFL.  With the new contract, each team’s annual revenue grew from $5 million to $13 million.

The next year, 1983, Congress virtually eliminated the federal tax on sports betting when it lowered the rate from 2 percent to one-quarter of one percent.  Predictably, the number of sports books soared to 61 in 1984 and the handle increased to $930.8 million on all sports betting in Nevada.

In 1989, when Rozelle retired, a new four-year contract was signed with the three major networks, ABC, CBS, NBC, and two cable networks, ESPN and TNT, valued at $3.6 billion, the largest in television history.

In 1998, as the NFL prepared for the century ahead, the market value of its programming showed no signs of weakening in the least. In a record-setting, eight-year deal with ABC, FOX, CBS, and ESPN, the networks paid a staggering $17.6 billion for the broadcast rights to NFL games.

Likewise, by 1998, Nevada was home to 140 sports books, a handle of $2.5 billion, and growth in 25 of the previous 26 fiscal years, including the previous 12 in a row.

“In just two decades, sports book handle had escalated 20 fold,” Scott wrote in Sports Book Management.

So, why did the NFL—an association known for maximizing every one of its revenue streams—steadfastly refrain in 1992 when PASPA was enacted from seeking a share of the Nevada sports book handle that grew so spectacularly during the last quarter of the 20th Century?

The answer is math, pretty simple math, actually.

While $2.5 billion may seem like a lot of money, in reality that handle would not generate that much cash for each individual NFL team.

On a typical wager on an NFL game, a bettor bets $110 to win $100, so the odds are 11-10.  The sports book takes the $110 from the loser, gives $100 of the loser’s money to the winner, and keeps $10 of the loser’s money as its commission.  This commission or vigorish is 4.55 percent.

Over the last 20 years, Nevada sports books have made a profit—known as the “hold percentage” or just “the hold”—of almost exactly 4.55 percent on betting on NFL games.

Assuming that approximately 50 percent of the $2.5 billion bet on sports in Nevada in 1998 was bet on the NFL and the NFL’s then-30 teams split the 4.55 percent commission 50/50 with the sports books, each team would have realized annually about $948,000 in 1998.  That figure would have been about 1.3 percent of the approximately $73.3 million each team realized from the NFL’s 1998 broadcast rights package.

At that cost, the return in the form of additional interest that the NFL received on permitting Nevada to offer betting on NFL games and permitting the Silver State’s sports books to retain the entire 4.55 percent commission was a great deal for the NFL.

But, as demonstrated by its arguments in the Delaware case, the NFL recognized as early as 1977 that permitting the growth of betting on NFL games to other states beyond Nevada would only increase the cost of the interest in the NFL generated by betting—in the form of the foregone share of the hold—with little, if any, corresponding return in additional revenue to the NFL because the NFL had nearly totally pervaded the public consciousness.

While Judge Wier clearly correctly found that permitting Delaware to sponsor betting on NFL games would not cause irreparable harm to the NFL’s integrity and that the NFL had pervasively penetrated the public consciousness, Judge Wier made one critical mistake in his decision.

Judge Wier failed to grasp that, economically, betting on NFL games grows endogenously from NFL games themselves just as betting on horse racing grows endogenously from horse racing even though a betting window does not physically exist at an NFL stadium like it does at a track.

In the case before Judge Wier, Delaware contended that it used no more than the NFL’s schedules and scores in in its NFL-based lottery and that the NFL had no property interest therein.  In contrast, the NFL contended that Delaware was misappropriating the product of the NFL’s efforts—“or in the words of the Supreme Court, the State of Delaware [was] ‘endeavoring to reap what it [had] not sown.’”

The NFL defined its “product” as “being the total ‘end result’ of their labors, including the public interest which has been generated.”

But that was not a position that a 20th Century jurist like Judge Wier was going to buy in 1977.  That simply was not the world in which Judge Wier lived.

“What the Delaware Lottery has done is to offer a service to that portion of [the NFL’s] following who wish to bet on NFL games.  It is true that Delaware is thus making profits it would not make but for the existence of the NFL, but I find this difficult to distinguish from the multitude of charter bus companies who generate profit from servicing those of [the NFL’s] fans who want to go to the stadium or, indeed, the sidewalk popcorn salesman who services the crowd as it surges towards the gate,” Judge Wier wrote.

“While courts have recognized that one has a right to one’s own harvest, this proposition has not been construed to preclude others from profiting from demands on collateral services generated by the success of one’s business venture,” Judge Wier continued.  “General Motors’ cars, for example, enjoy significant popularity and seat cover manufacturers profit from that popularity by making covers to fit General Motors’ seats.  The same relationship exists between hot dog producers and bakers of hot dog rolls.  But in neither instance, I believe, could it be successfully contended that an actionable misappropriation occurs.”

Here is the 21st Century distinction that economists had not yet recognized when Judge Wier ruled in 1977:  Nevada’s sports books do not sell things such as charter bus service, popcorn, cars, seat covers, hot dogs or rolls.

Rather, Nevada’s sports books sell ideas because bets on NFL games are pure ideas about which team will win or lose a game, by how many points they will do so, and how many points they will combine to score in doing so.

As the great economist Paul Romer explained mathematically in 1990 in his seminal paper, Endogenous Technological Change, the economics of ideas is very different from the economics of things.  For his efforts, in 1997, Time Magazine named Romer one of the United States’ 25 most influential people.

“New ideas, more than savings or investment or even education, are the keys to prosperity, both to private fortunes, large [e.g., the NFL] and small, and to the wealth of nations [e.g., here, New Jersey]—to economic growth, in other words, with its incalculable benefit for all.  In the background are the intricate rules of the game that we summarize as the rule of law—and politics,” wrote David Warsh in Knowledge and the Wealth of Nations: A Story of Economic Discovery, which is a timeless portrait of Paul Romer’s “New Growth Theory.”

“New growth theory divides the world along different lines—into ‘instructions’ and ‘materials,’ Romer says,” according to Warsh’s recounting of the talk Paul Romer gave on his theory on January 25, 1996, at an economics conference at the San Francisco Hilton.  “In the short interval between his talk in San Francisco and its appearance in print a few months later, his vocabulary will change slightly:  ‘instructions’ will become ‘ideas’ and ‘materials’ will become ‘things.’  Materials can be thought of as goods with mass or energy (electricity, for instance), Romer explains.  Instructions are goods that can be stored as a bit string of computer code:  software, content, data bases, that sort of thing.”

Bets fit nicely on the ideas/instructions list as bets can be stored as a bit string of computer code.

Consistent with Romer’s theory, in the 21st Century, economic growth and wealth is not driven by physical things such as betting windows at a football stadium or horse racing track or even human spectators at a stadium or track.  Rather, economic growth and wealth is driven by ideas such as bets, which in this case grow endogenously from the NFL games themselves just as bets grow endogenously from a horse race at a track.

As a result, again consistent with Romer’s theory, since the mid-1970s, Nevada has in fact been harvesting a field that the NFL sowed.  But Nevada has been providing a fair return to the NFL in exchange for the permission it received in PASPA to harvest. 

However, to permit New Jersey and other states to also do so or to permit Nevada to reach residents in other states via digital technology would be to permit additional harvesting of the NFL’s field without additional payment to the NFL in exchange for the additional harvest.

As PASPA recognizes that betting on NFL games grows endogenously from NFL games themselves, justice demands that the court must prevent Christie from prevailing no matter how dire the condition of public finance is in New Jersey or how wealthy the NFL is.

It is this economic threat that the growth of sports betting presents to the NFL’s rightful share of the commissions on betting on NFL games that justifies the current federal court ruling in favor of the NFL and either stopping Governor Christie from establishing legal betting on NFL games in New Jersey or imposing a constructive trust upon the revenue generated by such betting for the benefit of the NFL.

While the NFL understandably has little interest in the relatively meager share of the commissions that permitting additional betting on NFL games in New Jersey would generate, the technological changes that late Steve Jobs, Mark Zuckerberg, and others have developed since the enactment of PASPA now make it quite possible for betting on NFL games to be done digitally on mobile devices such as smart phones and tablets. 

In other words, the technology now exists to “scale up” betting on NFL games and the NFL would not have to lay out even $1 in capital costs to do so.

How much additional revenue would such scaled up betting generate for the NFL if the necessary technology were put in place today?

According to the American Gaming Association, those who operate illegal sports betting businesses—the NAPSTER’s of the sports betting world—are part of a more than $300 billion industry nationwide.  Using the 4.55 percent hold percentage, the assumption previously stated that the NFL and the sports books would split the hold 50/50, and an estimate that the current total annual handle related to NFL games—both legal and illegal—is $150 billion, scaled up digital betting on NFL games would generate approximately $106.6 million per team.

By comparison, the NFL’s salary cap in 2012 is $120.6 million.

When the NFL’s new $28 billion, 9-year broadcast rights contracts with Fox, NBC, and CBS and its $1.9 billion contract with ESPN start in 2013, each NFL team will receive approximately $104.2 million per year from the networks.  This figure does not include additional broadcast revenue generated by the NFL’s own NFL Network, which launched in 2003.

“In other words, if scaled-up digital betting on NFL games existed today, each NFL team might realize approximately 102.3 percent of what it realizes in annual network broadcast revenue.  Such a return would be an approximately 7,884.6 percent increase over the 1.3 percent of annual network broadcast revenue that the NFL chose to forego in 1998.

Given the billions of dollars that are at stake in NCAA, et al. v. Christie, the federal court should place a hold on Governor Christie’s play to establish betting on NFL games in New Jersey at least until such time as the Governor agrees to hold a share of the betting hold for the NFL.     

Change is good.

As Sid Gillman and his protégé, Bill Walsh implicitly recognized, no sport encourages the agents of change and the opponents of the status quo—the quarterback and the offense—to take more control of the status quo in a competitive confrontation and change it for the better than NFL football.

In baseball, the pitcher and the defense gets the first move and rules such as a batter must obtain four balls to receive a base but a pitcher must only obtain three strikes to obtain an out are calculated to favor the defense and preserve the status quo

In soccer, the off-sides rule prohibits the offense from getting a player ahead of the ball and behind the defense—the best position on the field to score.  Thus, like baseball, soccer’s design is calculated to favor the defense and preserve the status quo

In basketball, the placement of the goal was originally designed to be above the players’ heads and out of the players’ immediate reach.  Thus, like baseball and soccer, basketball’s original design was calculated to favor the defense and the status quo.  Concededly, players from Wilt Chamberlain to Connie Hawkins to Kareem Abdul-Jabbar to Michael Jordan to Shaquille O’Neal to LeBron James grew and evolved athletically to largely nullify the founder’s design, but the fundamental, defense-oriented status quo preserving design of the game itself has never changed.

Football—particularly NFL football—is different.  

In the NFL—both on the field and off the field—design change is both good and encouraged.

Understandably, the NFL is not ready today to change its view on how betting on NFL games outside Nevada should be designed.  After all, in the past 18 months, the NFL has been completely preoccupied with big-ticket issues like: a) reaching a lasting labor peace with its players; b) negotiating multi-year, multi-billion dollar broadcast rights deals with its partners in the television business; and c) dealing with the growing public health concern about football’s propensity to cause concussions.

But, given time, there is no question that the NFL and the states that wish to sponsor betting on NFL games could reach an agreement and implement an electronic trading mechanism that could fully scale up betting on NFL games and transform the sports betting industry in a manner similar to the way iTunes transformed the music industry.

The NFL knows how to make a mega-deal, even in contentious litigation.  Indeed, just last year, the NFL cut a landmark revenue sharing deal with the NFL Players Association that ensures peace between management and labor for the next decade and massive prosperity for all after the union decertified and sued the NFL for antitrust violations.

However, the NFL also has shown that it will fight and can defeat those who attempt to poach or devalue the NFL’s interests.  For instance, in 1986, the NFL prevailed for all practical purposes in an antitrust case brought by the United States Football League when a jury found the NFL liable for antitrust violations, but awarded the USFL just $1 in damages, which were trebled under the antitrust law to $3.

In the current case, the NFL understandably has taken an adversarial position vis-à-vis Christie (an outsider to the NFL’s business) that more closely reflects its position vis-à-vis the USFL (an outsider) than its position vis-à-vis the NFLPA (an insider). 

But, in reality, there may be no reason the NFL’s position must harden if New Jersey is willing to compromise and provide a share of the hold to the NFL in order to become an insider and partner with the NFL rather than demanding the entire hold for itself and the sports books operating within the state.

Of course, in order to fully scale up betting on NFL games, the NFL, New Jersey, and the other states that desire legal betting on NFL games also would have to talk to Congress about the Wire Act and the Unlawful Internet Gambling Enforcement Act. 

But it seems with New Jersey and California already moving to implement sports betting, Ohio building casinos even as we speak, and New York Governor Andrew Cuomo promoting a plan pursuant to which New York would be the home of seven new casinos, the federal government likely would be willing to listen.

The NFL has permitted and used television technology to scale up demand to watch its games better than any other sport in history.  There is no reason that the NFL cannot also permit technology to scale up demand to be involved in its games through betting just as horse racing fans are involved in a race through betting at off-track sites.

An agreement between the NFL and the states to scale up betting on NFL games would be a “win-win” proposition for both the NFL and the states.  The NFL has achieved dominance by consistently implementing such “win-win” solutions and adapting to technological change.

For example, when television emerged as a new technology in the 1950s, it offered the potential for growth, but also threatened harm to the live gate if the games were broadcast in the home team’s local market.  The NFL adapted by adopting the “blackout rule,” which prohibited the game from being telecast in the local market unless the game was sold out.

But times change.

Just last month, the NFL announced that it would relax its blackout rule and permit local teams to decide if the game would be telecast provided that at least 85 percent of the tickets to the game are sold.  Three lawmakers—Senator Sherrod Brown (D-Ohio), Senator Richard Blumenthal (D-Conn.) and Representative Brian Higgins (D-N.Y.)—“cheered” the NFL’s relaxation of the rule.

“Fans should be able to root for and watch their favorite teams even when they cannot attend in person,” Senator Blumenthal said.

Maybe one day soon the NFL and the states will agree that fans also should be able to bet on their favorite teams even when they cannot make a trip to Las Vegas, Nevada.

Perhaps, on a day some time after that, the NFL itself will launch an NFL-themed casino in Atlantic City, New Jersey.

It may sound crazy to hold such thoughts today.

But anybody who suggested at the turn of the millennium that the NFL soon would operate its own television network probably sounded pretty crazy then too.  So, perhaps the idea of an NFL-themed casino in Atlantic City is not as crazy as it sounds today.

If you are crazy enough to bet that it happens, this much is a stone-cold lock.

New Jersey Governor Chris Christie will cheer for you if you cash your ticket.

 


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