Are Partnerships Between Sports Betting Companies and Universities a Bridge Too Far?

The commercialization of collegiate sports is an outgrowth of the legitimization of gambling in America. It started with off-track-betting, spread to state lotteries, then casino gambling, and now we have fantasy sports betting. Collegiate sports have been affected as well through agreements to license student “names, images, and likeness” (NIL) and betting on sporting events through online sports books. The fallout is that betting on collegiate sports by students below 21-years old is a real threat that results from partnership arrangements in the sports betting space.

Cashing in on Name, Image, and Likeness

The movement to allow sports betting on campuses follows on the recent rules developed by the NCAA on how and when college athletes can be compensated when others use their NIL for commercial purposes. Basically, the NIL is a term that describes the means through which college athletes are allowed to receive financial compensation through autograph signings, product endorsements, social media posts, and more.

NCAA rules still prevent schools from paying players directly. This means that college coaches cannot offer money as an incentive for high school athletes to play at their school, nor can athletes receive compensation directly from their university based upon their athletic achievements. Because the NCAA still intends to maintain its amateur sports status, paying athletes for their play on the field isn’t possible. However, NIL is the workaround for athletes to get paid without technically being considered professional athletes who make a living playing their sport.”

Legal Issues

The sports betting industry got a boost in 2018 when the U.S. Supreme Court overturned the Professional and Amateur Sports Protection Act and permitted states to decide for themselves whether they wanted to legalize sports betting. According to the American Gaming Association, 31 states and DC currently have sports betting legislation that's considered “Live, Legal,” meaning single-game sports betting may be offered to consumers through legal retail and/or online and mobile sportsbooks. Five additional states have legalized sports betting but are not operational.

The sports-betting market, fueled mostly by online wagering, has grown to a roughly $4 billion industry and is forecast to reach as high as $22 billion in annual revenue by 2026, according to VIXIO GamblingCompliance, an industry research firm. Let’s face it, the genie has been let out of the bottle and there is no way to recapture it.

Sports Betting Partnerships

To secure these sports betting partnerships, athletic departments depend on the companies that manage the promotional and advertising rights for their teams. These companies, which arrange all kinds of deals with sponsors, function as intermediaries. They negotiate the agreements with betting companies and take a cut, sometimes in the millions of dollars, of whatever money changes hands.

The University of Colorado in 2020 agreed to a $1.6 million, five-year deal with the online sportsbook PointsBet which is the first time that a sports betting operator has partnered with an NCAA program. The deal covers free-to-play sports games, daily fantasy sports, casino, online casino, and retail and online sports betting. PointsBet sweetened the deal by offering the school an extra $30 every time someone downloaded the company’s app and used a promotional code to place a bet.

In September 2021, an official in Michigan State University’s athletic department sent an email to his boss with exciting news: “An online betting company was willing to pay handsomely for the right to promote gambling at the university. If we are willing to take an aggressive position, we have a $1 M/year deal on the table with Caesar’s.”

The offer from Caesars Sportsbook turned out to be even bigger. In the end, the company proposed a deal worth $8.4 million over five years. It was, a member of the negotiating team said in another email, “the largest sportsbook deal in college athletics.”

Other schools, too, have struck deals to bring betting to campus. After Louisiana State University signed a similar deal in 2021 with Caesars, the university sent an email encouraging recipients — including some students who were under 21 and couldn’t legally gamble — to “place your first bet (and earn your first bonus).”

This followed a communication between L.S.U and Caesar’s about these arrangements that said the university “share[s] a commitment to responsible, age-appropriate marketing [that is] integral to a sustainable and responsible partnership benefiting our entire department, university, and fan base.” This sounds nice but the devil is in the details.

All three deals were part of a far-reaching but secretive campaign by the developing online sports-gambling industry. Ever since the Supreme Court’s decision in 2018, gambling companies have hastened to convert traditional casino customers, fantasy sports aficionados and players of online games into a new generation of digital gamblers. Major universities, with their tens of thousands of alumni and a captive audience of easy-to-reach students, have emerged as an especially appealing target.

Cost-Benefit Analysis

The widespread movement of the sports betting industry into collegiate sports raises questions whether these deals are in the best interests of the universities and the public at large. Do they fit the mission of the university?

One way to evaluate these arrangements is through a cost-benefit analysis. This kind of utilitarian analysis is quite common in business and finance to decide on the advisability of going forward with specific projects.

The primary benefit is the revenue brought into colleges and universities from these deals. These partnerships bring in extra funds that can be used to hire top-notch coaches, enhance athletic facilities, and otherwise support sports programs on campus. These monies should also be used to benefit students in other ways including providing scholarships to needy students. Moreover, funds need to be set aside to educate students about the real dangers of gambling and provide mental health assistance if needed.

In addition to the costs of developing campus programs to support students’ gambling issues, there should be educational programs about the possible costs when students use their monies targeted for other reasons – i.e., to buy books –for gambling purposes. Many students lack impulse control and can be taken in by the allure of betting online much to their detriment.

University Responsibilities

Studies have shown that young adults are at a higher risk for sports-gambling-related problems, and studies have also suggested that 75% to 80% of college students report having gambled in general within the previous year, according to a report in the Journal of Gambling Issues. 

A key issue is whether the partnerships with online sports-betting companies will usher in a new generation of digital gamblers. The sports betting companies claim that they are careful not to target students below 21-years of age, which is the minimum age for legal gambling in most states. They claim to target alumni and other adults who can legally bet. The problem is, the mechanisms set up to ensure those below 21 don’t receive the messages to gamble is difficult, if not impossible, to verify. Perhaps this is a matter to “trust but verify” what the companies do in promoting gambling at collegiate athletic events and elsewhere.

Universities should provide for full transparency about these arrangements, how they affect the university, how the funds received are used, and ample education to create a bridge between wanting to bet and doing so. Universities should establish committees to oversee these sports-betting arrangements with faculty and members of the community who are independent of the athletic department.

Summing it Up

Here is the problem briefly. How will universities prevent students from using bookmakers they can easily access on their smartphones? Do universities want to pollute the ethical environment on their campuses and risk gambling addictions among students and all that entails including costs to their financial wellbeing and mental health problems simply because these institutions can earn millions of dollars from sports betting arrangements? Where does the commercialization of collegiate sports programs stop? Are these partnerships a bridge too far? It has been said that just because you may have a right to do something that doesn’t mean it is the right thing to do.

Blog posted by Dr. Steven Mintz, The Ethics Sage, on December 13, 2022. You can sign up for Steve’s newsletter and learn more about his activities on his website  (https://www.stevenmintzethics.com/) and by following him on Facebook at: https://www.facebook.com/StevenMintzEthics and on Twitter at: https://twitter.com/ethicssage.