Sports Betting Goes to College

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In this episode

March Madness season will soon be upon us, bringing with it another grand American tradition: an annual college-sports-betting bonanza. A 2018 U.S. Supreme Court ruling struck down what had been a near-national ban on sports betting, ushering in a wave of legalized gambling legislation across the country. For colleges and universities, the changing sports-betting landscape brings new risks and potentially lucrative financial returns.

Related Reading:

• What Colleges Need to Know About Sports Betting
• How Colleges and Sports-Betting ‘Ceasarized’ Camps Life
• North Carolina is About to Rake in Millions in Sports Betting Revenue. 13 Colleges Will Get a Slice.

Guest: John Holden, an associate professor of business law and ethics at Indiana University’s Kelley School of Business

Transcript

This transcript was produced using a speech-recognition software. It was reviewed by production staff, but it may contain errors. Please email us at collegematters@chronicle.com if you have any questions.

Jack Stripling This is College Matters from the Chronicle.

John Holden College students are gambling. And so the sooner that we start building in safety mechanisms and providing assistance for college students, I think the better and more likely we are to mitigate some of the major harms that can come when we start recognizing that this is something that is happening and simply saying don’t do this doesn’t work.

Jack Stripling It’s March Madness season, and you know what that means: A deluge of college basketball action, Cinderella stories, buzzer beaters, and — you guessed it — lots of and lots of gambling. From office betting pools, to online sportsbooks, to friendly wagers among rival alumni, it’s a safe bet that tens of millions of Americans will put money on the outcome of the annual NCAA men’s and women’s basketball tournaments this year. It all gets underway starting March 16, known as Selection Sunday, when the Division I tournament brackets will be unveiled. Sports betting is big business, and it’s a big reason that millions of people tune into college games. But the enormous growth of legalized sports wagering in the United States has brought with it some big headaches for colleges and universities. Administrators are worried about student athletes being harassed by bettors, either on campus or online. They’re worried about gambling addiction among their students. And they’re debating the ethics of cutting business deals with the gaming industry.

To better understand the rapidly changing sports betting landscape and how it may affect colleges and universities, we’re turning to John Holden, an associate professor of business law and ethics at Indiana University’s Kelley School of Business. Professor Holden researches sports gambling, regulation and policy, and we’re excited to have him on College Matters. Dr. Holden, welcome to the show.

John Holden Thank you so much for having me, Jack.

Jack Stripling So it feels like sports gambling is everywhere now. How did this happen?

John Holden Yeah, it certainly does. And we see a lot of advertisements all over the place, billboards. It’s one of these things that we’ve come to live with very quickly. This really started back in 2011. New Jersey held a referendum and the voters of New Jersey in a non-binding referendum said they wanted sports gambling. New Jersey then passed a law legalizing sports gambling and were sued under a federal law called the Professional Amateur Sports Protection Act. That case dragged on for six years, eventually making its way to the Supreme Court. What the Supreme Court said was that the way that PASPA — Professional and Amateur Sports Protection Act — prohibited sports gambling or froze it in place, effectively only allowing it to happen in Nevada, at least as we know it today, was unconstitutional because it required states to maintain their laws and enforce this federal law against state’s wishes.

Jack Stripling This was a federal law that effectively made gambling illegal everywhere, but essentially Nevada — or sports gambling specifically.

John Holden Yes. So the Professional Amateur Sports Protection Act actually froze gambling laws affecting sports gambling as they existed in 1992. So everything was frozen in time from 1992 forward. And that was why you couldn’t just go anywhere, even though you might see on TV people placing sports bets. Those were happening in illegal or unregulated markets.

Jack Stripling I see. And sports betting is its own beast, right? I mean, you could, you can do slots and play blackjack and a lot of other things. Sports betting had its own particular carve out.

John Holden Yes. So this law affected only sports betting and it’s one of actually a handful of federal laws that treat sports gambling differently than other gambling activities. And this is largely related to the historical connection that Congress drew between sports gambling and organized crime and organized crime using sports gambling as a primary revenue generator.

Jack Stripling And people have been betting on all sorts of sports, including college sports, forever. But there has been a real move toward state legalization of sports betting since this 2018 Supreme Court ruling. How has state legalization changed things in terms of the overall landscape?

John Holden Yeah, so sports and betting go hand in hand. I mean, we know that dating back to the first games that existed in human history, people were betting on them. So it’s really something that’s always been happening. And what we’ve seen since 2018 is that there’s been a rush of states — 39 plus D.C. and Puerto Rico at this point — that have legalized sports betting. And a lot of these states are effectively saying this was something that was happening anyways. We were concerned. Our citizens were betting on this. There were no consumer protections in place. And that money that they were wagering was going untaxed. And one of the things that we knew was that we were talking about tens of billions, maybe hundreds of billions of dollars being wagered in these unregulated, untaxed markets prior to 2018. Now, there’s still some of that happening. But we also have states that are regulating sports gambling now and taxing it, as well as instilling some forms of consumer protections.

Jack Stripling And you mentioned unregulated markets. So is that everything from your frat brother collects 100 bucks from everybody to there’s some offshore entity that’s unregulated that I’m sending money to?

John Holden It is. And so unregulated market is any market that exists outside the state regulatory system. And this includes both sort of illegal markets, which actually violate a law, as well as those markets that might not explicitly violate a law but exist outside the state licensing system. So there are some states that allow certain types of social wagering. Those are still unregulated wagers.

Jack Stripling Right, and there’s lots of money in those unregulated markets. I think some people would be surprised to learn just how much money Americans are legally betting on college sports. Just some data here: Last year, sports bettors were projected to legally gamble $2.72 billion during March Madness alone, that’s according to data from the American Gaming Association. We don’t have estimates for this year yet, but this is a massive business now. With that broad overview in mind, I want to zero in on how this is affecting higher education. So the National Collegiate Athletic Association, which is the governing body for college sports, has long said they were opposed to sports gambling. But they’ve had to accept this new reality. What worries them most about this, both historically and now?

John Holden You know, the NCAA — unlike the four major professional leagues in the United States — is really the only one who has stayed firm in their opposition to legalization of sports betting. And a lot of this concern stems from historical issues. The NCAA has been the organization or league, if you will, that’s been most victimized by gambling related match fixing. And this is where players throw games for either themselves as a gambler or for the benefit of gamblers. So this is an image that has stayed really in the minds of the NCAA for a long time. There has long been a concern that at least until this coming season, the schools do not pay the athletes a salary. And therefore there was a fear that they would be vulnerable to corrupt influencers who would bribe them in order to shave points or throw a game.

Jack Stripling Oh so if I’m not making money off of this in a legitimate way, maybe I can do that by shaving points or throwing a game or something like that? They were uniquely vulnerable to that in the view of the NCAA.

John Holden Correct. And so what we saw with professional athletes was there was long an argument that if you’re making millions of dollars, you are going to be induced to throw a game for a couple hundred thousand. At the college level, for the most part, until 2021, when college athletes were able to earn NIL money, there was really no salary beyond sort of the daily expenses and tuition and room and board. So they were potentially at risk to one of these sort of long held fears.

Jack Stripling And so, NIL, this is name, image and likeness.

John Holden: Yes.

Jack Stripling: The athletes can make money if they’re put on a video game or a T-shirt or anything like that, right?

John Holden That’s right.

Jack Stripling We now see athletes getting more above board payment, which maybe lessens to some degree the concerns that they will take money to throw games and do things like that that are quite nefarious.

John Holden Yes, I think it certainly lessens some of the more obvious fixes. One of the concerns that always is out there for the people that actually study this is that while bribery was always a concern, there were often other things that went with it, such as athletes racking up gambling debts and then shaving points in exchange for canceling out those debts. So there’s still a lot of concerns and a lot of work that really needs to be done to protect both college athletes and professional athletes. But one of the arguments for legalizing and regulating sports gambling has been, you’re more likely to get people to report problems in a legal market where these activities are happening legally than you are in an unregulated market where there’s concerns that they may have committed a crime.

Jack Stripling I see. There’s another worry out there, I think, that the NCAA specifically has raised. And Charlie Baker, in his recent testimony before a U.S. Senate committee talked about this. This is, he’s president of the NCAA. He’s also a former Republican governor of Massachusetts. And he expressed a lot of concern about the harassment of athletes, college athletes in particular. I wonder if you can talk a little bit about that as a concern for the NCAA.

John Holden Yes, the harassment of athletes online in particular, although there is some that takes place in person as well, is a huge concern at both the professional and collegiate level. The one thing that makes the concern perhaps more pressing at the college level is that college athletes are in an environment with a lot of other individuals, whereas professional athletes are much more isolated from the rest of society compared to college athletes.

Jack Stripling I mean, Baker talked about death threats.

John Holden Yes. And so these threats are scary. And one of the perhaps big failures of the legalized market has not been doing enough to prepare for the negative consequences, this being one of them, of what comes with legalized sports gambling. And gambling has always existed, as we’ve talked about, but oftentimes when it was happening in an unregulated market, that was something that was an illegal activity. Now that you have this legal activity, which seems at least anecdotally, to have seemingly given emboldening of people to increase the harassment online, and this has been heavily talked about over the last year. We’ve seen a number of college basketball coaches speak out about it. There’s been a number of newspaper articles talking about it. And really it’s something that I think the NCAA is starting to try and get some numbers behind. But everyone is really trying to figure out how is the best way to stop this.

Jack Stripling One of the issues that has been raised about the harassment of college athletes is this notion of proposition bets. Talk to me about what they are and why they might present a particular risk to a college student who plays basketball, for example.

John Holden Sure. So prop bets are a very popular type of bet. So the most popular types of bets are on the team. Who’s going to win either by directly winning, called the money line; or against the spread, where they effectively give a number that the team needs to win by more than; or total bets, which is the total number of points scored by each team. After that, the next most popular type of bet are player prop bets. And these are bets on a player’s performance in a game. And in a basketball game, you might have prop bets on the number of points the player would score, the number of rebounds they might score, the number of steals they have — the sort of major statistics that you might think of. One of the effects of having these types of bets is it makes gambling a very individualized activity where bettors are betting on individual performances instead of team performances. One of the things that Charlie Baker and the NCAA and I think a lot of colleges are concerned about is that that uniquely exposes individual athletes as opposed to teams as a whole to more targeted harassment because their individual performance is tied to a bettor’s bets themselves as opposed to the team’s performance.

Jack Stripling So you missed that three pointer. I might have lost money on that.

John Holden Exactly.

Jack Stripling And that’s your fault. It’s not the team’s fault.

John Holden Exactly. No longer is the responsibility diffused across 12 players. It’s a single individual.

Jack Stripling And one thing we haven’t discussed are rules around athletes betting. Can a college basketball player bet on college basketball? Can a college basketball player bet on college football?

John Holden No. So NCAA rules say that an NCAA athlete, as well as a number of individuals associated with NCAA athletics, are not allowed to wager on any sport in which the NCAA offers a championship. And so this effectively prohibits a track runner from betting on college basketball. If you are an NCAA athlete, you are effectively, broadly prohibited from betting on college sports.

Jack Stripling What really concerns the NCAA about athletes betting, particularly if they’re not betting on their own sport?

John Holden So I think the primary concern is always that athletes would have influence over their own games. If they’re not betting on their own sport, the concern is both from a market perspective and a game integrity perspective, where athletes are typically around other athletes, they work out in the same facilities, they often eat meals together. They may have information that is not public. And so having that information may give them an advantage and may give them at least the appearance of an advantage. And overall, because of the NCAA’s opinion that sports gambling should remain illegal, and they don’t support legalization, allowing athletes to wager on sports that they don’t participate in would sort of go against that idea.

Jack Stripling And I’m assuming this applies to even if I asked my roommate to bet on my behalf. Like they know that trick, right?

John Holden Correct. It’s still your bet whether you are placing it or your roommate, your mom, your dad.

Jack Stripling Okay. I thought I’d figured out a way for this to work for the athletes. Sadly, no. But we do know violations occur. And I’ll give a little context here. So back in 2023, the NCAA’s president wrote a letter to a member of Congress saying that they’d found 175 infractions of their sports betting policy since 2018. We also saw a case at the University of Alabama not long ago. A former head baseball coach was found to have provided inside information to a gambler who bet against the team. I think we’ve got more than a dozen athletes or staff at Iowa and Iowa State who were suspected of violating betting rules. Are we going to see more cases like this? What does that mean for college sports?

John Holden Yeah, I think we will see more cases over time. There has always sort of been this temptation, both when gambling existed largely in illegal markets and in the regulated market, where athletes either think they won’t get caught or don’t care, whatever reason, we’re likely to continue to see this. And we’ve seen it with NFL players making millions of dollars. It doesn’t seem to be about the amount of money that they’re making. It’s an attraction to the betting. And I think what the NCAA can do moving forward really sort of involves continuing to educate athletes about the rules, about the consequences, as well as working with the gambling industry to better help understand the consequences of violating the NCAA rules.

Jack Stripling Stick around. We’ll be back in a minute.

BREAK

Jack Stripling I think that, you know, one of the themes that we’ve seen emerge over the last few years is the sense that the colleges and the NCAA are really having to play catch up here. You have the NCAA out there lobbying as much as they can against prop bets, for example. They’re trying to get states to pass laws to say we can’t have prop bets on college sports. We have individual institutions that have introduced some rules, but there’s a sense that this is kind of a ball rolling quickly down a hill that colleges can’t catch up with. I wonder how effective you think colleges have been specifically about educating athletes about the risk, because it’s not just that you could lose your scholarship for violating NCAA rules. In some states, if you’re an athlete and you bet on a sport, it’s a crime.

John Holden It’s not just the colleges, the NCAA, the athletes that are playing catch up. It’s the state legislators, too. People around the country don’t have the knowledge of what comes with sports gambling. And unfortunately, a lot of people didn’t really look around the world to see some of the negative externalities that come with sports gambling becoming so widely available. So colleges, universities, the athletes, they’re all running behind playing catch up, but so are the state legislators, the regulators. And to some degree, I think the gaming companies are as well. There’s a sort of learning on the fly, which is when you’re dealing with something that can have tremendous consequences is not a great situation to be in. And I think what we’re going to see moving forward is a lot more attention paid to first understanding some of these consequences that are coming with this, involving betting on college campuses. And then we will begin to see more steps taken towards mitigating some of the harm.

Jack Stripling And the harm, of course, that we all know about, whether it’s legalized or not legalized sports betting, has to do with gambling addiction or problem gambling. What is the scope of this problem, particularly as it relates to young people or 18 to 22 year olds who are in that college population?

John Holden You know, I’m not a psychologist, so I generally don’t try to prescribe any sort of medical diagnoses here. But the concerns that we have with legalized sports betting is it really seems to appeal towards young people of college age, particularly males. And another thing that we know about sports betting is it happens to appeal to risk takers. We know that athletes tend to be risk takers. So we have these connections around this product that we know for a certain proportion of the population, they are more likely than other people to become addicted to it. Because of these factors, it’s one of these things where colleges, universities, the NCAA, administrators, need to be taking steps towards creating systems where athletes are able to get help, as well as other college students on campuses. We can no longer treat this as something that’s happening only in illegal markets. It’s in 39 states, D.C., Puerto Rico. It’s literally everywhere.

Jack Stripling And they’re betting on college sports, right?

John Holden They’re betting on college sports.

Jack Stripling It’s a complex situation for the colleges, I think, because the sports that the students are betting on are their own sports. And we have seen through March Madness or the College Football Playoff that this is just becoming an ever bigger and bigger business for higher education, or a particular sliver of higher education, and has created a landscape in which gambling is going to probably blossom.

John Holden Yes. And I think this is one of these things, you know, for a long time, alcohol on college campuses was very much treated as a taboo. And now we are learning that simply saying don’t do that isn’t very effective. And I think that the sooner that colleges and college administrators recognize that even if you say don’t gamble, college students are gambling. And so the sooner that we start building in safety mechanisms and providing assistance for college students, I think the better and more likely we are to mitigate some of the major harms that can come when we start recognizing that this is something that is happening and simply saying don’t do this doesn’t work. It’s something that’s now legal almost everywhere.

Jack Stripling And we do have some data on this. I think that in your gut, people sort of envision a college guy betting on sports. But the NCAA has done some of its own surveys around this, and I’ve jotted down some of their findings just for our listeners to understand the scope. They found that nearly 60% of 18 to 22 year olds have engaged in some kind of sports betting activity. 67% of students living on campus are bettors — they have bet on college sports or some kind of sports. 41% of college students who have bet on sports have placed a bet on their school’s teams, which is kind of interesting. We have seen at least one example, I think, at Purdue, right? Where there’s a prohibition on betting on your own team. Is that right?

John Holden Yes. So Purdue is the only school that I’m aware of that doesn’t allow effectively anyone on campus who’s an employee or student to wager on Purdue sports. We haven’t seen a lot of schools follow suit, and I’m not aware if Purdue’s ever attempted to enforce this policy.

Jack Stripling Well, we’re hearing a lot of concerns from both the institutions and the NCAA about sports betting. But let’s talk about the potential upside for colleges. What do colleges stand to gain from legalized sports betting?

John Holden You know, this is one of the areas that I think colleges are hesitant to discuss. But at the end of the day, they’re undoubtedly benefiting from. So the day after the Supreme Court decision, Mark Cuban, the former owner of the Dallas Mavericks, came out and said every sports team owner just saw their franchise values double. And we’ve continued to see professional sports leagues and teams increase in valuation. And the reason for that is because those television contracts became much more lucrative with the legalization of sports betting. So one of the statistics that we’ve known for a while is that sports bettors perhaps naturally consume more sports than non-sports bettors. And because of that, that translates to TV broadcasts being worth more. We’ve already seen new record television broadcasts for college football. Women’s basketball has viewership numbers that are at all time highs. There is a continued growing interest in sports content. Now, those television contracts pay money to the college conferences that then distribute that to the school. So increased interest results in increased viewership. It’s not a direct payment to the school from gambling companies or anything like that, but they’re undoubtedly indirectly benefiting from this increased interest in the sports that they’re producing.

Jack Stripling And we know from some New York Times reporting a couple of years ago that some colleges entered into very lucrative deals with online sports betting companies, known as sports books. There were agreements between athletics departments and booster clubs with brick and mortar casinos. Can you talk about these agreements? What were the colleges offering up for this money?

John Holden Colleges were effectively offering up access to people who like sports. They were people who were potential betters, and in exchange, they received payment from these companies to effectively distribute marketing materials, either through traditional billboards or email lists, perhaps mailing lists as well.

Jack Stripling And by people who like sports, you mean their students? Their alumni?

John Holden In some cases, it appears that students were on these distribution lists.

Jack Stripling I see. So this allowed these entities to market to people that might have been on lists or to put regular advertisements up, maybe in stadiums, that sort of thing?

John Holden Yes. This was met with significant blowback, at least when The New York Times did a story on it. Now, the deal that began to catch a lot of attention was when the University of Colorado signed a deal with a company called Pointsbet. And they signed this deal and it made headlines. And there was some discussion about the ethics behind it and the optics of it. But sometime after that, The New York Times did this investigation and effectively found that these deals were much more common than we thought of. And LSU had a deal. Michigan State had a deal. And they were really sort of questioning, based on the numbers that we’ve talked about and the concerns about college students and gambling, whether these deals were really appropriate. And after that piece came out, as far as I’m aware, almost all of these deals are now gone.

Jack Stripling Yeah, I mean, we went through kind of a shame cycle, right?

John Holden: We did.

Jack Stripling: Where we did a lot of these institutions backed off. It may seem self-evident, but make the argument for me, John, why were people so worked up about these deals? What are the optics?

John Holden Well, you know, when you think of what a college or university is, it’s an educational institution first and foremost. And I think the view to people that they were effectively partnering with gambling companies — this vice activity that has a largely negative connotation — was not a good look. I think there were a lot of blowback at the time surrounding sort of the ubiquity of sports gambling. And because of that, it all sort of culminated in this backlash. And a lot of universities and administrators at the time were effectively saying, okay, yeah, maybe this was not such a good idea that we thought it was when we initially began this.

Jack Stripling This is a really interesting ethical minefield to me that there is a lot of money to be made for colleges and universities to get in league, if you will, with casinos and sportsbooks. But at the same time, there is a huge PR cost, it seems to me. What does it reveal to you about kind of the country’s conflicted relationship about gambling?

John Holden This is one of these things that we’re seeing sort of develop before our very eyes is that for many years before sports betting was able to be legalized at the state level, this was happening. But it was always sort of happening in the dark. People would bet on the Super Bowl. People would have March Madness pools. Now, it’s everywhere. It’s on TV. There are shows dedicated to it.

Jack Stripling We really know there’s gambling in Casablanca at this point.

John Holden Yes. Yes. There’s no hiding from how ubiquitous this is.

Jack Stripling And it’s hard for a college to say, on one hand, we condemn this. But on the other hand, we’re very much in this soup, right? I mean, we’re we’re again, we’re we’re putting forward games and activities and entertainments that we profit from in almost every other way. Why not this?

John Holden And I think a lot of people who watch college sports are seeing college sports look less and less like this amateur activity that we’ve been told it was for the last 70 years. And look more and more like a professional model of sports where athletes will now share in revenue sharing. They can do endorsements. So you’ve got this product that looks very much like a professional product. But is acting very differently than the professional leagues who have fully endorsed sports gambling at this point. And it creates this issue for people to understand. Why are these two things different?

Jack Stripling It’s a profound sort of cultural shift, it seems like.

John Holden: Very much.

Jack Stripling Yeah. And the fight is essentially over, over whether it’s going to be legal or not, at least in the states and D.C. that you’ve talked about. But there’s going to be a big regulatory debate that I think will continue across the country. Where do you see that all headed? Is it affected at all by the political changes we’ve seen in Washington?

John Holden I might be a pessimist, but I’m not overly optimistic that Congress is going to take much in the way of a step to address much in the realm of college sports. I think one of the things that we will see, and perhaps Ohio is the leader at this, is state legislatures taking more steps to protect athletes from harassment. And Ohio has talked about banning bettors who harass athletes. And I would expect a number of states to sort of follow that lead, taking legislative actions to provide at least some protection that can be enforced against harassers.

Jack Stripling You know, before we go, you mentioned something a few minutes ago, John, that I wanted to ask about. You talked about how this legalization of sports betting is yet one more example of kind of the professionalization of college sports. And my sense is that there are people in pockets of the country here who are kind of mourning that. And I wonder what you think of that.

John Holden My views on college sports are that college athletes generate millions of dollars for institutions and that they should share in that revenue just like their professional counterparts do.

Jack Stripling So get over it.

John Holden That might be the more succinct way of putting it.

Jack Stripling All right. Fair enough. Well, John Holden, thank you so much for coming on College Matters. I really appreciate it.

John Holden Thank you so much for having me, Jack.

Jack Stripling College Matters from The Chronicle is a production of The Chronicle of Higher Education, the nation’s leading independent newsroom covering colleges. If you like the show, please leave us a review or invite a friend to listen. And remember to subscribe on Apple Podcasts, Spotify or wherever you get your podcasts so that you never miss an episode. You can find an archive of every episode, all of our show notes, and much more at chronicle.com/collegematters. If you like, drop us a note at collegematters@chronicle.com. We are produced by Rococo Punch. Our podcast artwork is by Catrell Thomas. Special thanks to our colleagues Brock Read, Sarah Brown, Fernanda Zamudio-Suarez, Laura Krantz, Carmen Mendoza, Ron Coddington, Joshua Hatch, and all of the people at The Chronicle who make this show possible. I’m Jack Stripling. Thanks for listening.