NFL Should Change Its Opposition to Betting

2/6/09 - Bloomberg - View Source

Commentary by Joe Saumarez-Smith

Feb. 6 (Bloomberg) -- The National Football League is missing out on the Super Bowl.

In Nevada alone, the only state where you could legally bet on the game, $81.5 million was bet this year, according to the state’s Gaming Control Board. Across the U.S. it is estimated a further $4 billion was wagered illegally while if you include office pools and wagering in Europe and Asia, the number could be as high as $7 billion.

Yet the NFL didn’t see a penny of the action that its marquee event generated. The league vigorously opposes betting on sports and would have preferred that none of this wagering had taken place.

In my view the league is doing a disservice to itself and to the sport by sidestepping opportunities for revenue and other benefits of working with legal bookmakers.

The NFL has, since its inception, had a strong anti- gambling stance. It has lobbied against any changes in the laws on sports gambling and blocks Las Vegas from advertising during NFL broadcasts.

“The NFL’s policy on this issue has been consistent for decades,” Brian McCarthy, the league’s director of communications, said in an e-mail. “Sports gambling threatens the integrity of our games and all the values they represent, especially to young people. The NFL has been an active proponent of federal and state efforts to combat sports gambling.”

The vast majority of Super Bowl bets made by Americans are placed illegally with bookies in bars, tobacco shops, the workplace or, increasingly, online.

Online Bets

The 2006 Unlawful Internet Gambling Enforcement Act sought to stop online betting and to some extent slowed the growth of online wagering. Yet even the most basic Internet search shows there are several hundred Web sites based in places such as Antigua, Costa Rica and Malta offering services to U.S. bettors. (Disclaimer: none of my clients takes Super Bowl bets.)

The U.S. government under the Bush administration strongly opposed sports betting. There may be a greater chance that online gambling will be legalized and taxed in the years ahead.

Key members of the American Gaming Association, including Harrah’s Entertainment Inc. and MGM Mirage, have gone from being strongly against legalizing Internet betting to supporting it. In November, AGA president Frank Fahrenkopf said the federal government was losing out on billions of dollars in tax revenue by keeping it illegal. William Hill Plc, the U.K.’s second- biggest bookmaker, offers odds of 1-1 (bet $100 to make $100 profit) that online gambling will be legalized during the Obama presidency. With any law change I would expect most state lotteries to start offering sports betting as an additional product, provided voters approved it at a state level.

Indirect Benefits

I’d make three main points about the NFL’s opposition to sports betting.

First, the NFL benefits from gambling in many indirect ways. On an average Sunday afternoon game the only thing that keeps many viewers watching all the way to the end of an uneven contested game is the bet they have on it.

Second, the NFL says sports betting harms the integrity of football. It is true that it has the potential to, but when the vast majority of wagers placed are illegal and placed in countries over which the NFL has no jurisdiction, the chances for corruption are surely greater. Saying that gambling that shouldn’t take place is a different matter than preventing it.

At the moment the amounts bet on the NFL are huge and it is almost impossible for the NFL to monitor the flow of money. The same is true of the other major American sports leagues, which also oppose sports betting, albeit less vigorously than the NFL.

Monitoring Bets

Most other major sports worldwide have accepted that gambling takes place and have chosen to carefully monitor it to protect the integrity of the contest.

In England the Football Association’s second-largest revenue stream is from licensing games schedules to betting companies. Betfair, the world’s largest betting exchange, has agreements to share information on betting patterns with such bodies as the International Olympic Committee (IOC), the International Cricket Council (ICC) and tennis’s ATP tour. The NFL should follow suit, as currently it is hard to see how it can efficiently monitor unusual betting patterns.

Thirdly, the NFL is missing out on enormous potential revenue. If sports gambling was legalized in the U.S. the NFL alone could generate $150 billion in bets per year, according to Paul Leyland, a gaming analyst at Collins Stewart Plc in London. A 1 percent levy on all bets placed would earn $1.5 billion a year and enable the NFL to support all sorts of projects that currently cannot be funded. For example, it could help support a retirement fund for some of the NFL’s greats who have fallen on hard times.

In short, the NFL and other pro sport leagues need to wake up and look around. Embracing betting, controlling it and earning money from it must be better than sticking your head in the sand.

(Joe Saumarez-Smith is chief executive officer of Sports Gaming, a U.K. management consulting firm to the gaming industry. He also owns European online bingo companies and odds comparison Web sites. The opinions expressed are his own.)