HEDGING THEIR BETS

Gambling fills the coffers of all major sports, but at what price? A New Jersey court case has put league executives on the spot, and their public and private statements tell two different stories

THERE ARE graceless touchdown dances and ungainly home run trots, clumsy chest bumps and ill-timed fist knocks, but the most awkward choreography in sports is the gambling two-step: first, professional leagues and the NCAA want nothing more than to tap into the easy revenue generated by sports gambling; then they contend that the ills associated with gambling undermine honest competition and threaten the entire sports enterprise.

This dance—fraught with contradictions and what some would call hypocrisy—has taken center stage as the leagues challenge New Jersey's bid to legalize sports gambling. While the Supreme Court will consider reviewing the case next month, a series of documents obtained by SI reveals the commissioners dancing as fast as they can.

Over a drink and without recording devices whirring away, sports executives will concede that, yes, gambling is good for business and has enhanced fan interest—which leads to fat television deals that enrich all parties. Anticipation of the outcome of over/under and exotic prop bets keeps innumerable fans watching long after winners and losers have been determined. In 2009, NBA commissioner David Stern, in a moment of candor, told SI that nationwide, regulated betting was a "possibility" that "may be a huge opportunity." As Joe Asher, the CEO of British bookmaker William Hill, recently told SI, "Nobody being intellectually honest can debate that the popularity of the NFL is greater with gambling."

In a once unthinkable move, teams have begun to make deals with betting entities. Earlier this year the New Jersey Devils and the Philadelphia 76ers signed sponsorship agreements with PartyPoker, an online portal owned by bwin, operator of a large Internet sports book. Around the same time Major League Baseball—having last year dismissed fantasy leagues as "a flip of the coin" akin to gambling—quietly partnered with DraftKings, which bills itself as "Daily Fantasy Sports for Cash." In 2012 the NFL lifted its ban on teams accepting some advertisements from casinos. The WNBA's Phoenix Mercury have a jersey sponsorship deal with an Arizona casino, while the Connecticut Sun play home games at Mohegan Sun.

Like diners who gobble dessert then decry snacking, the leagues fiercely denounce gambling, going so far as to scold broadcasters (not named Al Michaels) for merely mentioning point spreads. Here's NFL commissioner Roger Goodell from his declaration in the New Jersey case in August 2012: "Because of the threat to the goodwill and integrity of NFL football, and to the fundamental bond of loyalty and devotion between fans and teams, the NFL has repeatedly and consistently been a leading opponent of legalized sports gambling."

In some corners—admittedly populated with conspiracy theorists—there's another line of thinking: Until the leagues figure out how to directly make money from gambling, they don't want other entities (like New Jersey) sharing in this potentially enormous windfall. Regardless, the leagues' position in the New Jersey case shows the lengths to which they'll go to block the spread of sports gambling. Quick background: In 2011 two-thirds of New Jersey voters approved a referendum permitting the state's casinos and racetracks to offer sports wagering. On Aug. 7, 2012, MLB, the NFL, NBA, NHL and NCAA collectively sued Governor Chris Christie, who signed the bill. In a 12-page complaint the plaintiffs claim that the law violates the federal Professional and Amateur Sports Protection Act (PASPA), which limits sports betting to Nevada and several other states.

Three days later Goodell, Stern, MLB commissioner Bud Selig, NHL commissioner Gary Bettman and NCAA president Mark Emmert each filed a formal declaration in the case. Their statements were similar, each definitive and forceful. Emmert mirrored the position enunciated by others, warning:

5. The spread of betting on intercollegiate athletics, including the introduction of sports betting as proposed by the state of New Jersey, threatens to damage irreparably the integrity of, and public confidence in, NCAA athletic competition. An increase in state-promoted sports betting would wrongly and unfairly engender suspicion and cynicism toward every NCAA event that affects the betting line. When gambling is freely permitted on sporting events, normal incidents of any athletic competition inevitably will fuel speculation, distrust, and accusations of point-shaving or game-fixing.

However, when the executives were deposed, between Oct. 31, 2012, and Nov. 19, 2012, they were vague about their relationship with betting operators. What's more, both sides were insistent on keeping testimony from the public, resulting in the court-approved redaction of large segments of the case documents. Bettman's deposition, which included the notation HIGHLY CONFIDENTIAL on the cover page, was completely sealed; same for Stern's and Selig's. Portions of the Emmert and Goodell depositions were included in the court file obtained by SI. Emmert's deposition totaled at least 97 pages, only 37 of which were made available. Goodell's deposition was at least 68 pages; just 32 were included in the file. Yet the remaining slivers are revealing.

In the following exchange among New Jersey's attorney, William Wegner; Emmert's attorney, Anthony Dreyer; and Emmert, the NCAA's top executive seems much less confident than he was in his declaration on the ills of gambling:

Q. Would you agree that if you were a, the sort of person who would do the despicable and try to fix a match, especially an amateur match, wouldn't you prefer to do that in a market that was unregulated and undisclosed and undiscoverable, to some extent, than in a legal market?

MR. DREYER: Objection, calls for speculation.

A. You didn't like my assumptions earlier, now you want my assumptions?

Q. No. It actually wasn't your assumption, it was your conclusions that I didn't like, not your assumptions.

A. I, I have no idea. I really don't.

During Goodell's deposition, Wegner pressed the NFL commissioner on whether he was aware of any games having been fixed. Goodell, represented by Jeffrey Mishkin, repeatedly stated that he was unsure if there had been any specific incidents of gambling-related game-fixing, yet, curiously, he referenced "three incidents." Most details are redacted from those portions of the transcript, but this exchange remains in the record:

Q. So the three [incidents] that we've identified, Commissioner, they either didn't or you don't know if they involved game-fixing. Have there been any incidences that you're aware of where the NFL's games were violated by game-fixing resulting from gambling?

A. Those three incidents were involving violations of our policy in association with gambling. And the reason we have those is to make sure that game-fixing doesn't occur. They're preventative, they're to avoid this. That's a serious threat to our game and to the integrity of our game.

Q. What I'm trying to establish, Commissioner, is I think—and I'll ask you if this is true—that the NFL has not had a recorded incident of game-fixing as a result of gambling. Is that true?

A. I don't know.

Q. Can you think of any incidents, as the Commissioner of the NFL, where there has been game-fixing involved in an NFL game?

MR. MISHKIN: It's been asked and answered. You can answer it again.

A. I can't think of a specific incident off the top of my head.

Q. Is it fair to say that would be sufficiently significant that you would remember it if one had occurred?

MR. MISHKIN: I object to the form of the question.

A. Again, I've been involved with the NFL for 30 years, 30-plus years. There's a history that the NFL goes over 90 years now, so there's a long history of the NFL prior to my involvement. I don't—I can't speak to all those issues.

Q. But as you sit here today, you can't recall any incident where there was game-fixing in an NFL game?

MR. MISHKIN: Asked and answered.

A. I've given you my best answer. I'm sorry if that's not good enough.

Q. No, it's not that it's not good enough, Commissioner. But the answer, I take it then, is you can't recall any?

A. That's correct.

Why would the leagues be so adamant about having so much testimony shielded from public view? They claim that they didn't want to share information with one another—yet they all voluntarily came together to sue New Jersey. NBA lawyer Daniel Spillane expressed this sentiment in connection with a half-dozen studies the league commissioned after the 2007 gambling scandal involving referee Tim Donaghy:

The public disclosure of the Harris Interactive NBA Studies would cause serious injury to the NBA because if other basketball leagues, other professional sports leagues, or other companies and entities that provide entertainment products and services were to gain access to the information contained within these studies, those leagues, companies or entities could gain a competitive advantage over the NBA and adversely affect the business operations of the NBA and its member teams.

The leagues offered another rationale for keeping information from the public domain too. In her certification, NCAA attorney Naima Stevenson wrote:

The NCAA has a legitimate interest that warrants an Order permitting Plaintiffs to file the NCAA National Study under seal. That study contains highly confidential proprietary business research and information with respect to a study of gambling activity by certain individuals involved in NCAA Men's Basketball.

The public disclosure of the NCAA National Study would cause the NCAA serious injury because the information contained therein could damage the NCAA's reputation. Disclosure of this information could also cause competitive and financial harm to the NCAA.

No less restrictive alternative to sealing the entirety of the NCAA National Study is available due to the entirety of the document containing highly sensitive information of which redaction is not practical.

Filings generated at the behest of New Jersey's lawyers were also censored in the court documents obtained by SI. Lawyers for Christie hired an expert witness, Princeton economist Robert Willig, to assist in the case. The resulting 116-page Willig Report is wide-ranging but also scrubbed—even the last sentence of a reference to the Black Sox scandal of 95 years ago (and an accompanying footnote) was redacted.

So far the sports leagues' arguments have been a rousing success. They were granted an injunction in March 2013. After losing twice at the lower-court level, Christie's legal team recently filed a 45-page petition with the U.S. Supreme Court, essentially arguing that PASPA unconstitutionally infringes on New Jersey's right to decide for itself whether it should offer regulated sports gambling within its borders. Footnote 3 in the state's Petition For A Writ Of Certiorari included the following legal jab:

For years, the NHL, NBA, and MLB have located teams in Canada, where sports wagering is legal. The NBA hosted its 2007 All-Star Game in Las Vegas, and the NCAA has allowed the Pac-12, Mountain West Conference, Western Athletic Conference, and West Coast Conference to hold championship games in Las Vegas. The NFL has also hosted a game in London, which has legalized sports wagering, each year since 2007.

Only about 1% of all petitions are accepted for review by the Supreme Court. The five sports leagues must jointly respond to Christie's petition seeking Court review by May 14. The U.S. Department of Justice, which intervened in the case on the side of the leagues, has the same filing deadline. By mid-June, at the earliest, the Court will determine whether to take the case. That decision will be posted online, and if the leagues don't get the decision they want, they'll respond publicly—very publicly—without redactions. That, you can bet on.

Goodell was unsure if there had been specific cases of gambling-related game-fixing, yet referenced "three incidents."

THREE ILLUSTRATIONS

Illustrations by Stephen Doyle