Over the past five years, online sports wagering has become commonplace in the United States. DraftKings, FanDuel, and BetMGM have become household names. This is the result of the United States Supreme Court’s decision in Murphy v. NCAA, 584 U.S. __, 138 S. Ct. 1461 (2018). In Murphy, the Court struck down a federal law prohibiting sports wagering. Since that time, 33 states have legalized sports gambling in some form. As a result, online sports books have expanded access to wagering across the nation, making a sports bet as easy as downloading an app on your phone. Experts estimate that more than 20 million Americans place online bets and wager more than $12 billion on sports annually.
So, is it any real surprise that allegations of athletes and coaches betting on games has emerged as the latest challenge faced by college and amateur sports? On May 1, ESPN broke the story that the Ohio Casino Control Commission had taken the Alabama v. LSU baseball games off the board – meaning these games were no longer available for wagering. Three days later, the University of Alabama fired its baseball coach. And on May 8, the public learned that over 40 student-athletes at the University of Iowa and Iowa State University were under investigation for wagering on sports. These allegations appear to center on athletes betting on other sports in violation of league rules as well as athletes placing bets based on non-public information, i.e., tips or “inside information.” But the specter of athletes, coaches, or officials fixing games always looms large. This has been the primary concern since eight members of the Chicago White Sox were accused of throwing the 1919 World Series. (Major League Baseball suspended those players for life but, in 1921, a jury acquitted the players of all criminal charges.)
This is important because public interest in betting on games and even simply watching sports depends, in large part, on faith that the games are real – i.e., the integrity of the games. Therefore, professional and college sports executives and administrators, including league-level governing bodies like MLB, the NFL, and the NCAA, as well as the sports books and casinos making money off the wagering, have a strong interest in monitoring betting for suspicious activity. They must avoid any impression that insiders have a betting advantage, and they certainly want to avoid a game-fixing scandal that tarnishes their team, their school, or the entire sport and betting industry.
Today, monitoring compliance is easier than ever. Sophisticated data tracking allows gaming regulators, casinos, leagues, and even schools to spot suspicious trends in real-time. Companies like U.S. Integrity are building businesses out of using technology to spot wrongdoers. Simply tracking the wagering data can tip off investigators– e.g., activating new or dormant betting accounts, bets inconsistent with prior behavior of the bettor, high wagers relative to total betting on that game or similar games, geographic anomalies, etc. all grab the attention of the computers.
For example, in the recent example involving University of Alabama baseball, it appears as though individuals placed significant wagers on a sport that does not typically attract significant betting – regular season college baseball. In addition, those betters placed their bets in person inside Cincinnati’s Riverfront Stadium – i.e., they bet on an Alabama baseball game at a sports book in Cincinnati. These anomalies were spotted within minutes of the bet being placed and triggered an immediate investigation. The Ohio Casino Control Commission quickly took the game offline. Subsequent investigations by the Louisiana Gaming Control Board – the game was being played in Louisiana – and the University of Alabama uncovered that the Alabama baseball coach had informed the betters that his starting pitcher was not going to play just hours before the first pitch. In less than a week, Alabama fired its baseball coach.
This recent scandal highlights very important questions: what steps and obligations do the school and league officials have to educate, monitor, and ensure compliance at the team and player level given the ubiquity of sports gambling in many states? Implementing training, policies, and awareness of the risks of sports gambling is all the more important given the consequences for actions that advertisers intentionally depict as game-like and as easy as picking a few favorite players on your phone.
On the state level, while 33 states have authorized some form of sports gambling over the past five years, Texas is not one of them. Sports betting bills were offered in the 2023 legislative session (see House Bill 1942), but until the law changes, Texas remains a state in which sports gambling is illegal. See Texas Penal Code § 47.02 (making gambling a Class C misdemeanor punishable by up to a $500 fine). Indeed, even communicating information concerning gambling such as betting odds is a crime under Texas law. See Texas Penal Code § 47.05.
Importantly, regardless of legality, the NCAA prohibits all college athletes, coaches, and staff from betting on any sports in which the NCAA conducts a championship. See NCAA, 2022-23 Division I Manual, NCAA Publications, at § 10.3; see also Sports Wagering – NCAA.org. Put simply, college athletes cannot bet on college sports, MLB, the NFL, the NHL, or the NBA, among other professional sports. This also includes Super Bowl squares, NCAA tournament brackets, and “prop bets.” Id. at § 10.02.1. NCAA rules also expressly prohibit providing information to individuals involved in or associated with any type of sports wagering. Id. at § 10.3.Violating these rules can result in loss of eligibility. Id. at §10.4.
Likewise, Texas high school sports associations frown upon sports gambling. The University Interscholastic League, or UIL, which governs public school sports in Texas has expressly disapproved of sports gambling. (See UIL Sportsmanship Manual at 12.)
It is worth noting that many of the above-cited laws and rules do not directly address placing wagers based on “insider” information. As anyone in the securities industry knows, trading stocks based on insider information is clearly illegal. See, e.g., Dirks v. SEC, 463 U.S. 646 (1983). But the law is less clear in the context of sports betting. Many states ban certain classes of individuals from betting on certain sporting events, essentially assuming that certain groups are insiders and are privy to non-public information. Only six states’ laws, however, specifically try to address betting based on insider information – Indiana,[1] Massachusetts,[2] New Jersey,[3] New York,[4] Tennessee,[5] and West Virginia.[6] (In the United Kingdom, however, the Gambling Commission has outlined very specific rules on the use of insider information.)
League rules tend to be clearer. For example, Article 2, Section 5 of the NFL’s Gambling Policy threatens suspension of lifetime ban for “tipping.”
Unless duly authorized, NFL Personnel are prohibited from using, disclosing or providing access to confidential, non-public information regarding:
- any NFL game or event;
- any participating individual’s availability for or performance in any NFL game; or
- any other conditions material to any NFL game for gambling-related purposes, whether directly or through another person.
And that’s in states where sports gambling is legal. The consequences for gambling that violate state laws or even league rules can be severe. Ever since the 1919 “Black Sox” scandal, Major League Baseball has strictly enforced its gambling prohibitions, including rejecting pleas to reinstate all-time hit leader Pete Rose from his lifetime ban for betting on baseball. Four decades ago, the NFL suspended quarterback Art Schlicter for gambling. As recently as 2022, the NFL suspended five players for violating its gambling rules. Notably, the NFL expressly pointed out that it found “no evidence indicating any inside information was used or that any game was compromised in any way,” demonstrating the League’s primary concern is public perception of the integrity of the game. College athletes from Boston College, Arizona State, Auburn, Maryland, Toldeo, University of San Diego, and Tulane, among others, also have run into trouble for betting on sports. Well-known professional athletes in the NBA and on the PGA Tour also have been rumored to have gambling issues and even secret suspensions from play. NBA referee Tim Donaghy was caught and sentenced to fifteen months in federal prison for his role in fixing NBA games in the 1990s and early 2000s.
Indeed, despite the Murphy decision, many aspects of sports gambling are still illegal with the common theme of preventing unwelcome intrusions by interstate or international gambling businesses into states that otherwise prohibit gambling. For example, under the Wire Act, 18 U.S.C. § 1084, conducting a gambling business that makes use of interstate wire communication facilities to place wagers across state lines or to assist in placing such wagers is a federal crime, unless such betting is legal in both the state where the bet originated and the state where the bet was placed. See United States v. Cohen, 260 F.3d 68 (2d Cir. 2001).Other federal gambling laws include the Illegal Gambling Business Act, 18 U.S.C. §1955 (prohibiting interstate gambling businesses that are unlawful in the state where conducted) and the Unlawful Internet Gambling Enforcement Act, 31 U.S.C. §§ 5361-67 (expressly addressing Internet-based gambling by outlawing accepting payments related to Internet gambling that is illegal in the place where the wager is placed, received or transmitted). The U.S. Department of Justice also prosecutes gambling under the Travel Act, 18 U.S.C. §1952, when interstate commerce is used to conduct an illegal gambling business, under the RICO laws, 18 U.S.C. §1962, when there is a pattern of unlawful gambling offenses or collection of unlawful gambling debts, and under the money laundering statutes, 18 U.S.C. §§ 1956 and 1957.
Athletes, coaches, staff, and league officials may be tempted to be sanguine about gambling, thinking its “mostly legal,” everyone is doing it, and no one in my organization is going to “fix” games. But as the Alabama baseball situation demonstrates, even a simple phone call, even an innocent or overheard remark to a friend about injuries or lineup changes, can lead to someone placing an illegal bet, a suspicious activity report, and ultimately firings, suspensions, or even criminal charges.
The bottom line for athletes is: stay away from gambling on sports even if all your friends and classmates are doing it. Whether you are a high school athlete, college athlete, or even a pro, your eligibility is at stake. And if you are implicated or accused of gambling on sports, seek legal counsel right away.
The bottom line for athletes is: stay away from gambling on sports even if all your friends and classmates are doing it.
For organizations like schools, athletic associations, professional clubs, be proactive. Educate your players, coaches, and staff regarding the rules, the hazards of gambling, and even places where addicted gamblers can receive confidential help. Consider drafting and enforcing policies or rules such as those used by the NFL. Consider working with professionals who specialize in monitoring suspicious activity. And finally, when a troubling matter eventually arises, retain counsel, conduct a thorough but prompt investigation, and act decisively. On April 27, Brad Bohannon was the University of Alabama’s baseball coach; on April 28, suspicious wagers were placed on an Alabama baseball game; and by May 4, the University of Alabama had terminated its baseball coach.
This update is not intended to provide legal advice, and no legal or business decision should be based on its contents. Please consult with your legal counsel for guidance. For questions relating to fraud, lobbying, and government relations, please contact Arthur Gollwitzer (agollwitzer@jw.com; 512.236.2268) or any member of our Investigations & White Collar Defense team.
Meet Art
Meet ArtArthur Gollwitzer combines experience gained as a federal prosecutor with 25 years in private practice to represent clients in patent, copyright, trademark, and trade secret disputes, including jury trials and appeals. In addition to defending and enforcing intellectual property rights, Arthur is highly experienced in investigations and criminal litigation. Arthur writes and speaks frequently on patent litigation reform and other intellectual property issues. He has been admitted to practice before the U.S. Courts of Appeals for the Second, Fifth, Seventh, and Federal Circuits and the U.S. District Court for the Eastern, Northern, Southern, and Western Districts of Texas. Arthur has also litigated matters in the Southern District of New York, the Northern District of Illinois, the Central and Northern Districts of California, the Northern District of Indiana, and the Eastern and Western Districts of Wisconsin.
[1] Indiana Gaming Commission, Emergency Rule dated May 7, 2021).
[2] Mass. Gen. Laws. Ann. Ch. 23N, § 11.
[3] N.J. Admin. Code § 13-69N-1.1.
[4] N.Y. Rac. Pari-Mut. Wag. & Breed. Law § 1367.
[5] Tennessee Sports Gaming Act, 2019 Tennessee Laws Pub. Ch. 507
[6] W. Va. Code §29-22-1; Leg. Rule 179-09
