Taking a Quick Side trip on the Money Angle
In the first detail article we took a trip down memory lane and dug though some major court decisions and fan misperceptions to get a look at the landscape of college athletics as they stand in 2024.
Judging from the reaction, it’s still not gaining a whole lot of traction from the readership as seen in the Facebook numbers. Hopefully, as this series grows a bit, more of the readers will visit the baseline detail article to better understand the current situation.
As the first article was developing, and the money related section was being researched, items kept popping up in the source search that started to refocus some attention regarding an entirely different, but admittedly very old, source of secondary monetary influence on college sports, namely gaming and/or gambling.
Before we get into this, let’s make the parameters of the discussion plain. There is no advocacy intent, one way or the other as to gambling, sports betting, or sports gaming (fantasy football, baseball, etc.). The purpose here is to illuminate an “economy” that has become a major secondary factor in the monetary posture of collegiate athletics. We are here to observe, not facts, and attempt to digest their potential impact on the audience motivations that drive the media revenues. An additional note must be given in full disclosure, several online gaming and gambling sites advertise on SB Nation sites including Gobbler Country and that includes a live link to DraftKings Sports Book. We aren’t scolds, here. However, it is undeniable that the sports gaming and gambling industry has made a major change in the interest, appeal, and viewership of college sports events.
The influence of money and audience on college sports is obvious, but how does the gambling theme fit in with the remainder of the more direct influences involved? Gambling or Gaming on sports has been around for as long has humans have engaged in competitive events. Bored soldiers would bet on boxing matches, cockroach races, and the like in the field probably far before the Mycenean Greeks formed the army to visit Troy. There would be no surprise generated to realize that the ancient Greeks probably bet on the original Olympic game contests. Even when life was at stake, there is a better than even chance (wink here) that someone was betting on the outcome of the contest.
In some cultures, the wagering was completely legitimate and open. For much of modern (late 19th and all of the 20th centuries) American history it’s been limited, heavily regulated, or prohibited altogether. Well, at least legal gaming, anyway. Who hasn’t put a few bucks on some squares for the World Series, or March Madness (which is actually an oblique reference to the immense sums gambled on the tournament, under the table so to speak)?
Everyday gambling habits on sporting contests have their darker sides, however, bookies and broken knees, illicit favors for illegal gambling debts riddle the past, and provide rich fodder for many a detective novel, or police procedural. Those stories ring true because they are a functional part of human and more recently American cultural interchange.
Well, sports gambling was pretty much entirely a no-go zone at every level until the advent of three things: the Internet, Fantasy Sports, and the Federal Court System. Remember the dodges and semi-sort-of-denials about the most popular fantasy sports setups? Well, most people really don’t because basically they weren’t completely true, and the Supreme Court of the United States made all of that moot anyway. It all changed in a May 2018 instant.
The court ruled in favor of the state of New Jersey and struck down the Professional and Amateur Sports Protection Act of 1992. The move effectively legalized betting on all sporting events both amateur and professional. The Act had been a response to the growing trend of Internet gambling, and in particular the wagering on NCAA contests, in particular the NCAA Men’s Basketball Tournament. ESPN has a pretty good summary of the event in its archives.
Living With It and Dealing with the Change
As with many court decisions, and frankly almost all of this massive change in the reality and the perception of collegiate athletics, the end result of the outcome has national impact, and virtually no regulation or legislatively derived law behind it. Suddenly, overnight, what was illicit and under the table became licit, and there was a certain understanding that what was under the table was untaxed as well as unregulated as interstate commerce. Teams are even signing deals with legal sports book entities where it is allowed by state law. Inside the Rise of Sports Betting on College Sports (businessofcollegesports.com)
The brutal truth is, for the government, in this case the state of New Jersey, gambling on sporting events was a “black market” sort of affair. The entire thing was done behind closed doors, or in shady areas in the backs of bars, or off of foreign web sites on the internet. You are supposed to report winnings as other income, even if there were no Form W-2Gs (see: Taxes on Gambling Winnings & Losses: Gambling Taxes Explained | Kiplinger for a good summary of the rules.) But all of us know that no local bookie is going to take your tax information and file a payout report to the IRS. Of course, legal gambling sites, parlors, and the like actually must… and do that for the state as well.
However! The federal government has done little to stabilize and standardize the regulatory environment for gambling and gaming. It has remained in state hands and state control with various rules for various jurisdictions. Washington seems to only care about law enforcement when malfeasance is involved, or the limited rules in place are violated. It also only cares that the line on the 1040 form, and the W-2G is filed along with the 24% federal gambling tax paid. It has little interest in the possible and probable influences on the conduct of the sports being wagered upon.
Are They Really Fans?
The advent of legalized sports gambling has pulled the hidden issue out from under the table, the nature of being a fan, and in particular a fan of college sports. The reality of collegiate athletics is that there are only a few sports that garner any real fan and betting attention: football and basketball (mostly still men’s). These are considered the revenue generating sports and all other collegiate athletics are subsidized by those revenue generating sports.
If you want to get an idea of the scale of the amount of money in the sports gambling industry, take a look at the numbers from CBS on how much How much money is bet on March Madness? The 2024 NCAA tournament is expected to generate billions. – CBS News Now realize that’s combined for both men’s and women’s basketball, but that’s a staggering legally gambled $2.7B (That’s B for billion. Folks).
Those revenues depend upon the nature of collegiate fan participation, whether through direct gate attendance, club contributions, and/or advertising viewership and response. Those revenue flows are largely proportionally tied to the size of the interested alumni base, family, and friends. There is an additional regional appeal. As someone once noted in a discussion, “[T]he Cornhuskers ARE Nebraska’s professional football team.” That is a totally accurate evaluation on many fronts. Though there are quite a few Kansas City Chief or Royals fans in mostly Eastern Nebraska, and maybe a few Denver fans in the west, for the most part the Nebraska Cornhuskers serve as the state’s favored spectator sport team. The same goes for quite a few states including Oklahoma, West Virginia, (even Virginia to a degree), etc. The list gets long, but the point is that the fan bases are niche affairs with local or regional appeal.
Gambling changes that equation. Suddenly a team that might not have much in the way of potential viewer ratings becomes a huge draw because there is some gaming reason altering the viewership and ratings patterns. What happens if the betting action on a Boise State vs. Air Force football game drives the viewership numbers into the stratosphere because of some betting action?
Do the conferences and participating teams get ratings related benefits from the increased viewership? When does that fluidity get accounted for in the re-negotiation of their media rights contracts?
And finally, are fundamentally disinterested gambling observers really fans? And do they or their betting enablers have any influence over the conditions of betting? Do they end up involved in NIL deals with individual players?
The Questions Remain Unanswered
If you look at the sports gaming industry from a more high-altitude angle, you begin to see the holes and pitfalls of the rapidly growing phenomenon. College Sports Gambling Data Market Cools as Negotiations Persist (sportico.com) It’s an erratic market, and often pinned to seemingly unrelated events, activities, and personalities. It is still largely the “wild west” with the NCAA scrambling to keep up, the pressures mounting on NIL contracts and involvement, superstar status for various individual athletes. The Caitlin Clarke/Angel Reese effect on women’s college basketball cannot be discounted. Personalities can drive interest, which drives potential betting action.
How does a legal gambling environment affect the way players participate in it? How do the Athletic Departments and NCAA handle the pressures, govern the activity, and discipline players for participating? From where does the authority come? Who writes and maintains the regulations? What sort of due process is provided for accusations? Who investigates charges? There are some newish attempts to begin to answer these things, but the entire phenomenon is court created and not legislated. The regulations that come out of the process might end up erased by further individually based court decisions.
Summing It Up – or Maybe Not
The NCAA is beginning to track the issue and has published NCAA releases sports wagering survey data – NCAA.org for interested parties to peruse. Please read it and follow the study link. The results, and this was from mid-2023, are something that can rock folks back on their heels. The main part of the conclusion of the report summary is eyepopping:
“Overall, the present survey found that sports wagering is pervasive among 18- to 22-year-olds, with 58% having engaged in at least one sports betting activity.
Sports wagering activity is widespread on college campuses — 67% of students living on campus are bettors and tend to bet at a higher frequency. 41% of college students who bet on sports have placed a bet on their school’s teams and 35% have used a student bookmaker. “
So, the final questions have been begged, loudly.
- Just how good is legalized gambling for college sports?
- And most importantly, can it be effectively regulated so as not to further corrupt an already muddy mess of a college sports situation?
There just are no answers here. That is the hardest part of writing this particular side piece to the money section of the first article. There are only further questions, and more problematic facts begging even more difficult questions.
Next up we get back to the main series with a look at The End: the Svengali Coach, Transfer Portal, and the Effect of Free Agency. There will be another sidebar article that will dive back into the money element as it affects both the Portal and virtual Free Agency and that will be: The End: The Name, Image, and Likeness Fiasco.