After a Major Domino Falls in College Sports Betting Landscape, Two Experts Opine on What’s Next

Nov 6, 2020

By Peter Dawson, Senior Editor
 
Last month, the University of Colorado struck a five-year deal with PointsBet, an Australian-based sports betting operator. This will make these two organizations official sports betting partners.
 
The deal (terms of which have not been released) covers sports betting, fantasy sports, casino games, and free-to-play contests, according to news reports. PointsBet will have signage put in at the school’s football stadium and basketball arena, and will also have exposure on radio broadcasts and other media channels.
 
Colorado state legislators legalized sports betting in the state during May 2020, opening the door for the partnership.
 
Recently, PointsBet has been making other major moves in the U.S. and plans to move its U.S. headquarters to Denver. In August, the company signed a long-term deal with NBC Sports and Kroenke Sports & Entertainment. The latter deal will make PointsBet the exclusive betting partner of the Denver Nuggets, the Colorado Avalanche and their home arena.
 
Media reports on the Colorado deal include a pivotal quote from Johnny Aitken, the CEO of PointsBet’s U.S. business, about the company’s long-term plan for sports-betting partnerships with universities: “The scale of our growth as a business is going to be huge, going from operating in three states to operating in 20 or 30 over time,” Aitken said.
 
Given that deal, we spoke to two experts about their thoughts on the Colorado/PointsBet partnership, how the NCAA and its leagues/universities plan to adopt or counteract them, how the issue might play a role in the recently-proposed legislation dubbed the “Athletes Bill of Rights,” and more.
 
The Interview
 
Attorney Jeff Ifrah is the founding partner at the law firm Ifrah Law and has been nationally recognized in Gaming & Licensing Law and as one of America’s leading lawyers for litigation in the areas of White Collar Crime and Government Investigations, according to Chambers USA. He currently serves as an Adjunct Professor for the UNH Franklin Pierce School of Law’s “Advanced Regulation of Sports Betting” course.
 
Dan Walsh is a partner at the Washington, D.C.-based lobbying firm Farragut Partners. For over two decades, he’s had experience dealing with public policy regarding copyright, gaming, communications and consumer protection.
 
Question: How do you view the uniqueness of the deal between the University of Colorado and PointsBet?
 
Walsh: As far as I know, it is completely unique. Unless you count University of Las Vegas Nevada and its deals, but UNLV is a bit of a different creature. But a non-Las Vegas athletic department doing a deal with a sports betting operator is completely unique. And It’s going to complicate the NCAA’s world, because right at the moment, its members are facing a lot of lost revenue from ticket sales. They now have the option to do these deals with sports betting operators for revenue share. A lot of these programs are going to find that tempting.
 
Question: How would you evaluate the success or failure of a deal like the one made between PointsBet and the University of Colorado?
 
Ifrah: A lot of these sports betting partnerships are lopsided and tend to favor the non-sports betting partner in the arrangement. Generally, you have a sports betting partner who ends up giving money or revenue for signage, sponsorship, or marketing rights. There isn’t really a way to determine whether they are commercially reasonable deals, because companies like PointsBet, FanDuel, and DraftKings are the leaders in doing this, so they are the first companies out there doing these types of deals. Ideally, what PointsBet and its peers are trying to do is socialize their brand name and acquire customers through affiliations with companies who have large databases of customers. On a commercial basis, you’d look at: how much are they paying for this deal? How many referrals were led back to their sports book in Colorado as a result of this deal? And was that an efficient way to acquire customers?
 
Question: Do you think small to large universities will look at Colorado/PointsBet as a litmus test for how this could work?
 
Walsh: There is still a lot of skittishness around the idea of sports betting at NCAA schools. They can be persuaded eventually that a licensed/regulated market will be safer for their athletes than an unlicensed, unregulated, illegal offshore market that exists today. That exists, and, according to the American Gaming Association, does $150 billion does a year. But I don’t think there are that many (schools) that are there yet. They’re going to have competing pressures, such as integrity concerns. If you look at the Athletes Bill of Rights that’s been proposed, that is kind of saying ‘in return for your NIL solution, you have to do all of these other things.’ It is going to be more of a negotiation than that. I haven’t seen a lot from the NCAA on the Athletes Bill of Rights, the NCAA will say conceptually support most everything in it. But I’m pretty sure they don’t support enactment of it. And the Athletes Bill of Rights, as far as I know, doesn’t have a single Republican co-sponsor, in what is currently a Republican-controlled senate. That is a bargaining position and the discussion will go from there. But I will admit that I am not immersed on those issues. I’ve kind of watched them from the sidelines and I don’t have a client on those issues.
 
Question: Do you think it’s the smallest schools to the biggest schools, in terms of making money, that will try to study the CU/PointsBet deal and see how if it could work?
 
Ifrah: I have to say, with respect to the concept that colleges and universities may jump on the sports betting bandwagon, I’ve never seen that platform resonate with any college or university at any level. And I’ve been involved in those types of discussions at the legislative level, the NCAA level, and the athletic departments have organizations they belong to that I’ve spoken to, along with athletic directors across the country. I haven’t heard anyone express support for the type of deal that PointsBet entered into with Colorado. I have no reason to think that this is going to grow in popularity. But these are crazy times with COVID and with a lot of these universities being down (revenue), and smaller colleges might react to the lack of revenue usually generated by sports in different ways, like this. It also might be short-lived.
 
Question: Hypothetically, if the PointsBet-Colorado deal is “successful,” does PointsBet try to pitch the concept to a whole league, or does it maintain a university-to-university approach?
 
Ifrah: There’s no way they (PointsBet) are going to get reception at the conference level. It’s just a waste of time. The college leagues are way too dug-in on this issue, as I mentioned earlier. Even if the NCAA was willing to listen, it would have to be for a serious chunk of change. In addition to compliance measures, and all sorts of integrity issues, which a PointsBet or companies like it, could never deliver. What you want to find are the abilities to do deals with universities that are not prohibited from entering these agreements, based on their participation in NCAA Sports.
 
Question: Is the language within the sports athletes’ bill is a bit vague, regarding how universities deal with potentially partnering and accepting legalization of sports betting. Is that true?
 
Ifrah: When the NCAA goes to Congress, or a conference, or a webinar, or speaks publicly on the issue of sports betting, they consistently say they are concerned about their young players, integrity and underage gambling. And you hear the same things from the representatives of the universities. I’m in-touch with a lot of them, athletic directors on up. And they are consistently concerned about legalization of college sports betting. The fact that PointsBet was able to negotiate this agreement, despite that, kind of tells me that maybe there is dissention and maybe it isn’t because vocalized. Now, people are looking at this announcement, and saying ‘well, what is this a reflection of? Is this a reflection of dissention in that the NCAA may not represent the majority interest of its member colleges and universities? Or is this just a reflection of COVID and having no fans and the fact that there is revenue shortfall?’ Which is it? I don’t know.
 
Walsh: The NCAA needs a solution on this NIL stuff, or it’s going to tear the NCAA apart. If I’m running government affairs for the NCAA, I might look for restrictions, regulations, prohibition on wagering on amateur sports as desirable. But I don’t want to bring in something that might sink the whole NIL bill. You may have noticed when the Senate Judiciary Committee did a hearing on the NIL issue, they had a second panel on sports betting and what it means. By then, there were only a few senators left in the room. But the chairman gave the impression that he had some big concerns about (sports betting), especially prop bets, in the context of amateur athletics. But if the NCAA tries to put a prohibition on betting on amateur sports into a NIL bill, they’re going to endanger a NIL bill that is going to be hard enough to pass anyway.
 
Question: There is all this money out there from college betting. So, do you think the players will look at that money and say betting should be included in the NIL bill?
 
Ifrah: I don’t think the players will really ever have a seat at the table to discuss a sports betting partnership. But given the way the NCAA is structured and given the players’ ages; I think it’s really a different issue. I don’t think universities are compelled to include players, even players of legal gambling age, in conversations about sports betting partnerships. There’s been a lot of progress on the endorsement side to potentially generate revenue and that it will be very successful. But because of the minimum age requirements, betting is really a different issue, and universities are going to be careful about that.
 
Question: If you were a lawyer, where is the most beneficial to be and also navigate an ever-changing set of issues?
 
Walsh: For lawyers, you want to be a regulatory lawyer in state capitols that have past NIL and, or sports betting legislation and developing regulations. Because they are going to have to walk everyone through the licensing process (every state is a little different). And the lobbying work is going to be in the states that haven’t passed this type of legislation but are looking to. Keep in mind, in gaming, transaction is regulatory. Every major transaction is scrutinized by a regulator.
 
(This article appeared in My Legal Bookie, a periodical covering the legal sports betting industry, published by Hackney Publications.)