Scott B. Scheinberg and Joshua R. Sallmen, Associates at Jones Day, discuss the puzzles the online sports betting industry faces when it comes to consumer protection …
Whether it is about “investing” in actions even like GameStop or rushing to a convenience store to try to win $ 1 billion Mega Millions Jackpot, Americans are hungry for a get-rich-quick scheme. After all, it hasn’t helped that Congress continues to drag its feet to provide economic relief to Americans who have been affected by the COVID-19 pandemic. People want to engage in risky behavior in tough economic times, and online sports betting presents the perfect buffet of options.
Online sports betting remains a recent phenomenon. It has only been three years since the Supreme Court of the United States overturned federal law that limited sports betting to essentially a state. At the time, twenty states have legalized online sports betting. Many others have introduced legislation to do the same.
But as with any emerging industry, there are legal questions that need to be answered. How will income from sports betting be taxed? Will sports leagues benefit from reduced tax revenues? How will the government investigate and control potential fraudulent activity in order to protect the integrity of professional and amateur sports and to protect consumers?
Barstool Sports President Dave Portnoy may get a firsthand answer to the last question sooner rather than later. In early February 2021, the company hosted a ‘Rough N’ Rowdy ‘event, which is a recurring amateur boxing contest held in West Virginia. Bar stool acquired the Rough N ‘Rowdy brand in 2017. The February fight card was titled by the former MLB great José Canséco, who fought a Barstool trainee. Except he didn’t. Canseco was knocked out in ten seconds. He never landed a punch.
Rumors began to circulate that Canseco pitched the match and only agreed to fight to be paid over $ 1 million. Portnoy himself was at the head of the burden of these rumors. Immediately after the fight, Portnoy took to Twitter to say that Canseco “100% took the plunge”.
Barstool Sportsbook, which operates in Michigan and Pennsylvania, bet on the fight in Michigan. He did the right thing, especially after Portnoy’s comments, in reimbursement of bets on Canseco. Bar stool did not reimburse the $ 20 viewers spent to purchase the fight, however.
Barstool’s troubles did not end there. The fight is now under investigation by the West Virginia State Athletic Commission because the annual event was held in Mountain State and sanctioned by its athletic commission.
Under The Sports Betting Law in West Virginia, a person is guilty of a crime when he “offers, promises or gives anything of value to anyone for the purpose of influencing the outcome of a race, sporting event, competition or competition. Game. . . . “If a person is found to be in violation of this provision, they may face a fine of $ 5,000 to $ 10,000, jail time from one to five years, or both.
In this situation, it is not known what the athletic commission will conclude. Even though Portnoy’s actions exceed the bounds of sports betting law, another fact that raises eyebrows is that Portnoy was involved in almost every aspect of this boxing match. This was an event he promoted involving the company he founded and featuring his own intern that took place at a location owned by a company that owns a 36% interest in Barstool Sports. The whole storyline raises questions about the integrity of the fight that don’t appear to be addressed by West Virginia law. It also doesn’t help that since West Virginia law came into effect on March 3, 2018, the law has never been used to prosecute a bad actor.
The problem isn’t just in West Virginia. In one full article Written by Associate Professor Jodi S. Balsam of Brooklyn Law School, it examines the issue of the increased risk of match-fixing associated with the expansion of sports betting. It notes that none of the jurisdictions that had legalized sports betting at the time of writing in 2020 included the criminalization of match-fixing in enabling legislation. This leaves the only mechanism for punishing unlawful behavior to reckless sports corruption laws. She observes that in 2020, “of the forty-six jurisdictions with sports and bribery / forgery laws, Westlaw’s” notes and decisions “and” citing references “record a combined total of nine prosecutions, none is newer than 1987. “In addition, the existing statutes arguably leave holes and do not address” extortion, blackmail, coercion or lone wolf behavior, “according to Balsam. It remains to be seen whether these statutes will be dusted off and implemented in our burgeoning world of sports betting, but neither Professor Balsam nor we are holding our breath.
This comment does not take a position on whether Barstool actually committed an infringement. Such determination is best left to the appropriate investigative body which can gather all the facts and apply them to the law. The question is not whether there was criminal act in this single event. It is possible that Canseco acted alone to start the match or even possible that Canseco was truly eliminated in what has to be one of the fastest pay-per-view fights in history, though certainly not one of the fastest. most watched. But Barstool had full control over this event, and its own executive questioned the integrity of the event. West Virginia has done the right thing by opening an investigation, but if there has been foul play, there is arguably no strong regulatory or criminal investigation authority in West Virginia or any state. to punish him.
In other words, there is apparently nothing – with the exception of some old laws that have never been used in this context or any other since 1987 – to prevent a company from hosting an event in a location. other state or country, to bet on it and fix the result. . Indeed, after the suspension of mainstream sports at the start of the COVID-19 pandemic, sports betting began offering betting markets on table tennis matches detained “in an undisclosed location in Eastern Europe”. Months later, New Jersey suspended betting on some games after a match rigged alert of the Sports Wagering Integrity Monitoring Association, a private, non-profit watchdog body. And yet, in the face of evidence of impropriety on the events offered for betting to residents of New Jersey and other states, it is not clear whether New Jersey or any state has taken any action other than suspending betting. future bets on the players involved. But sports betting, such as FanDuel Sportsbook in Pennsylvania, continues to offer table tennis matches, as well as other minor and obscure events and competitions. If any of these events or competitions were rigged, the consumer would be at the mercy of the sports betting themselves to control it, as it does not appear that the current regulatory and criminal framework is up to the task. Blatantly, Michigan officials have not announced an investigation into the legitimacy of the heavily publicized Rough N ‘Rowdy event that its own residents have gambled on. It remains for us to hope that these less notable events are not corrected or altered.
Lawmakers and those in leadership positions in major professional sports leagues agree that protections must be in place to protect the integrity of professional and amateur sports, as well as consumers who place legal bets on the results of competitions. . Shortly after the Supreme Court’s annulment of the Professional and Amateur Sports Protection Act, leaders of major professional sports leagues testified before the House of Representatives about the need for such regulation. Jocelyn Moore, who is executive vice president of communications and public affairs for the NFL, declared, “The lack of clear standards for sports betting threatens the integrity of our nation’s sports competition, something Congress has sought to protect for nearly 60 years.”
Moore also suggested that the lack of clear regulations from states that have legalized online sports gambling is not an oversight. Instead, she testified, “[W]We are seeing a race to the bottom of the regulations. As a result, West Virginia may not have opened an investigation into the Rough N Rowdy event if Portnoy had refrained from tweeting about it to his 2.3 million followers. If a foul play occurred with the event and the perpetrators got caught, they may have Portnoy to thank. But a savvy match-maker won’t tell the world she’s tipped the scales, and under the current rudimentary investigation and discipline framework, she could get away without even an investigation. Maybe she already has. We do not know. And that is where the problem lies.
Scott B. Scheinberg is a partner at Jones Day and a member of the Commercial and Torts Litigation and Investigations and White Collar Defense practice groups. He has helped companies navigate a wide variety of investigations on topics ranging from environmental compliance to financial and accounting fraud. Scott attended law school at the University of Pittsburgh, where he was editor of the Law Review.
Joshua R. Sallmen is a partner at Jones Day and a member of the firm’s work and employment practice group. He defends employers against a wide variety of claims, including unpaid wages, unpaid employee benefits, and wrongful dismissals under state and federal laws. Prior to joining Jones Day, Josh served as Legal Assistant to the United States Court of Appeals for the Third Circuit. Josh attended law school at the University of Pittsburgh, where he was editor of the Law Review.
The opinions expressed in this commentary reflect exclusively the opinions of the authors and not those of Jones Day or any of its clients.
Suggested citation: Scott B. Scheinberg and Joshua R. Sallmen, The Fix Is In: Protect Consumers, Sports in Emerging Online Betting Industry, JURIST – Professional commentary, March 11, 2020, https://www.jurist.org/commentary/2021/03/scheinberg-sallmen-sports-betting-consumers/.
This article was prepared for publication by Vishwajeet Deshmukh, an editor of JURIST. Please direct your questions or comments to [email protected]
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