As a 30-year veteran of the gaming industry and a partner in the Miami Heat basketball team (I am speaking only for myself on this issue), one might assume that I was jumping for joy when the Supreme Court opened the door two weeks ago to legal sports betting in all 50 states.
Instead, my over-riding reaction was one of concern — concern for the negative impact a hasty spread of legalized sports betting could have on the world of sports, as we know it and love it today.
I am reminded of my early days as one of New Jersey’s first gaming regulators. The New Jersey Casino Control Act established a regulatory scheme for the nascent casino industry in Atlantic City that was generally regarded as the strictest in the world. In the preamble of the enabling legislation was the following declaration:
“An integral and essential element of the regulation and control of such casino facilities by the State rests in the public confidence and trust in the credibility and integrity of the regulatory process and of casino operations.”
The New Jersey legislature not only recognized the importance of strict regulations for the casino industry but also recognized the equally important component of public confidence and trust. No one wants to bet in a casino that may not be honest.
Loss of public confidence in the regulation of sports betting is a compound problem. Not only would you be losing bettors when public confidence is low, but you would also be losing fans who are the bedrock of the sport industry. No one wants to be a fan of a team or a player who is suspected of being corrupt.
Sports have long been a unique refuge from the complex world in which we live. The late Earl Warren, former Chief Justice of the U.S. Supreme Court, famously confessed that he always read the sports pages first. This was because, as he explained, they were filled with accomplishments rather than the front page that was filled with human failures. It is important that this special place sports holds in our national psyche be preserved.
This is going to be a challenge as states, hungry for tax revenues, are poised to launch into sports betting without the requisite preparation. It is reckless and naïve for a state to assume that all it has to do is simply allow some licensee to start taking bets and then collect the tax revenue.
How prepared are some of these states to monitor, regulate and investigate potential corruption in a sporting event? One serious betting scandal has the potential to inflict irreparable damage on our world of sports. The mere speed alone of a state’s entry into the highly lucrative world of sports betting is a huge temptation for criminal minds.
Criminal enterprises always seek opportunities where they perceive the pressure is the least. Inadequately regulated sports betting could be just that kind of opportunity.
This rush to implementation of the sports betting business will also fuel cynicism amongst fans about the effectiveness of regulatory efforts that were quickly or thoughtlessly patched together. After all, states would be allowing bets on games that, in most cases, are not even taking place within their borders. The effective investigation and enforcement of integrity in such games by any single state would simply be an illusion. Public trust and confidence could erode to such a degree at the outset that it may never be completely restored. Sadly, the days of die-hard fans could become a bygone era.
For these reasons I think it is absolutely critical that federal standards be put in place immediately by Congress for states who choose to allow sports betting.
These standards should require the following: (1) Minimum standards for each state regulatory system; (2) Adequate funding of dedicated law enforcement resources at the state level and (3) Cooperation amongst all state law enforcement agencies especially with regard to betting information and related corruption investigations.
The professional sports leagues and the NCAA, who are critical stakeholders, must also be active participants in mandatory, regulatory activity. Once federal safeguards and standards are established, states would then be free to create an appropriate regulatory system consistent with the federal requirements.
I know it may seem like blasphemy for an ex-state regulator of casino gaming to suggest that Congress needs to get involved. This certainly puts me at odds with recent statements by the U.S. Gaming Regulators Forum and the American Gaming Association that claim states can handle this new betting industry by themselves.
But unlike casino gaming and pari-mutuel wagering, sports betting involves betting on activities far beyond the reach of any individual state. In addition, there are existing national sports leagues with oversight, expertise and intelligence information that must be utilized. All of these factors present unique regulatory challenges and opportunities far beyond the capabilities of any single state.
My hope is that we will all take a deep breath and avoid the potentially dire consequences of impetuous action. Without a thoughtful and carefully constructed approach to this new industry we are inviting corruption and jeopardizing the special place that sports holds in our society.
Robert B. Sturges is a partner in the Miami Heat franchise and a 30 year veteran of the casino industry.