Collegiate Athletics and Sports Betting: An Entanglement

Despite continued efforts to avoid crossovers between sports gambling and collegiate sports, the NCAA is between a rock and a hard place. As schools all over the country desperately search for ways to generate revenue, some athletic departments decided to take matters into their own hands and push the envelope. The most recent example is the University of Colorado’s new advertising agreement with the sports betting company, PointsBet.

Colorado’s Revenue Generating Agreement

Colorado’s advertising agreement will pay the school a base amount of $1.625 million over 5 years. On top of the base amount, Sports Illustrated found out that Colorado will directly receive an additional $30 for each person who uses PointsBet with Colorado’s promotional code. Even better for Colorado, it had the leverage to negotiate a clause that states “the school is not liable if an athlete files a ‘claim of any kind’ against PointsBet related to using their NIL.” This wasn’t example of Colorado going rogue and doing its own thing, though. Sports Illustrated went on to say that Colorado consulted with the Pac-12 and the NCAA when pursuing the deal.

Colorado was very up front with the reasoning behind engaging in such an advertising deal. As their own website said , “The five-year deal provides a financial boost for CU Athletics during a time when athletic department budgets nationwide are stressed by the COVID-19 pandemic.” While Colorado also is excited about its opportunity to create a pipeline for jobs post-graduation and “emphasize and create awareness around responsible gaming and sports betting education”, there should be no mistake as to why it entered into this agreement. Colorado, like most schools around the country, is reeling from the effects of COVID-19 on its athletic budget and needs to find ways to bring in cash.

Prior Gambling Contracts

This isn’t the first partnership between schools and gambling companies, though. William Hill partnered with The University of Nevada, Las Vegas in 2017 and the University of Nevada, Reno in 2018. These partnerships not only help the schools bring in money, but also create a market advantage in college markets. As PointsBet Chief Commercial Officer Eric Foote said, “We’re optimistic and happy to be, kind of, Colorado’s true hometown sportsbook.” Being the hometown sportsbook can provide a huge market advantage as the American Gaming Association study found that 45% of core sports bettors are in the 23-34 year old age demographic.

Gambling and Collegiate Athletics Pushback

Not everyone is on board with the school and gambling partnerships, though. Some schools are also opposed to gambling tie-ins entirely, like the University of Pittsburgh and fellow Atlantic Coast Conference (ACC) schools. Pittsburgh’s athletic director Heather Lyke said that the entire ACC opposed gambling on college sports and stating that, “while sports wagering might create revenue opportunities for states, it will ultimately undermine the integrity of intercollegiate sports and the academic, personal and social experiences of students and student-athletes at our institutions.”

Additionally, the NCAA and Congress are discussing different Name, Image, and Likeness (NIL) bills that expressly prohibit student-athletes from making money from gambling companies. The NCAA and Congressional legislation would prohibit student-athletes from engaging in activities involving a commercial product or service that conflicts “with NCAA legislation,” including sports wagering.

The NCAA puts on a basketball tournament tailored perfectly for sports gambling every year during “March Madness” where it makes substantial revenue. Photo Source: John Locher/Associated Press

Balancing School and Student-Athlete Interests

Although the NCAA prohibiting student-athletes from partnering with sports gambling institutions, it consulted with Colorado to allow them partner with one of those very institutions. There are clear concerns with allowing gambling companies to pay student-athletes directly. But those concerns don’t magically vanish when a school is the one making a deal instead. By allowing schools to negotiate such deals but not student-athletes, it further shows the opportunities for revenue afforded to schools but not reciprocated to student-athletes. Whereas the NFL’s player union collectively bargained to share revenues with owners for in-stadium gambling, the student-athletes are left without being able to make the same money schools can.

The NCAA’s desire to completely separate student-athletes and gambling could be pushed in New York State if a proposed NIL bill passes. New York’s bill calls for 15% of the revenue earned from athletic department tickets to be dispersed to student-athletes evenly through a wage fund at the end of each year. The concern comes from provisions like those in Colorado’s PointsBet agreement that states that “Colorado University will also provide PointsBet a ‘hospitality bank’ of $25,000 per year to redeem for tickets to Colorado University football, basketball and volleyball games, autographed items and “VIP experiences.” The school is providing ticket credits to the gambling company. In a similar situation under New York’s proposed bill, any such ticket credits would then be split between student-athletes through the wage fund after each year.

Another potential conflict may arise in New York if schools here begin to sign similar agreements to the one signed in Colorado. As it stands right now, New York bettors cannot bet on college teams from New York State or on any college game occurring in the state.

How will New York handle schools potentially partnering with gambling companies for revenue? How will the NCAA handle such conflicts? Will the NCAA be able to pass its own regulation before state or federal proposals go into action? All of these questions will soon be answered as the need for revenue will only increase and schools feel the need to push the boundaries into the emerging sports gambling industry.

*PSA* If you’re interested in learning and asking more about the path for mobile sports betting in New York State, please sign up for our Round Table discussion this Tuesday October 20th at noon with Senator Joseph Addabbo Jr., the sponsor of the New York mobile sports betting bill. You can register for the event here

We hope to see you there!

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