The Recent Phenomenon of Sponsorship Deals between Casinos and Professional Sports Leagues and Teams
In May 2018, the Supreme Court overruled the Professional and Amateur Sports Protection Act (“PASPA”) of 1992 in its decision in Murphy v. National Collegiate Athletic Association, reasoning that the act violated the Tenth Amendment.[1] Prior to the case, PASPA made it illegal to gamble on sporting events throughout the entire United States with very few exceptions.[2] In Murphy, the Court reasoned that states have the right to regulate sports gambling, and the federal government does not have the power to stop states from legalizing it.[3] Since Murphy was decided, eighteen states and the District of Columbia have legalized sports gambling,[4] and by doing so many states have generated large amounts of tax revenue.[5] However, states are not the only parties who have benefited financially from legalized gambling. Several sports leagues, as well as individual sports teams, have utilized legal gambling for their own financial gain by entering into exclusive agreements with casinos and sportsbooks.[6]
Since the Murphy decision, several major American sports leagues have entered into lucrative sponsorship agreements with casinos.[7] In July 2018, the National Basketball Association (NBA) announced that it had agreed to a three-year deal with MGM Resorts worth approximately twenty-five million dollars.[8] The agreement allows MGM exclusive access to NBA logos and trademarks as well as NBA data streams to enable accurate in-game betting.[9] At the time of the deal, NBA Commissioner Adam Silver stated that “[i]t was very important that we were able to establish through a commercial relationship that indeed we should be compensated for our intellectual property and our official data.”[10] This agreement allowed the NBA to set a precedent for other professional sports leagues, showing not only that these kinds of sponsorship deals were feasible, but also that it was possible to commodify intellectual property in the context of sports gambling. Just months later, the Major League Baseball Association (MLB) agreed to its own deal with MGM for a four year term reportedly worth eighty million dollars.[11] This deal was particularly notable because the MLB had been fervently against gambling for decades.[12] The league famously banned players for betting on games and even disciplined retired players for making appearances in casinos.[13] Similar to the NBA’s agreement, the MLB’s deal allows MGM to use its intellectual property and gives the casino exclusive rights to the league’s advanced statistics.[14] Finally, in January 2019, the National Football League (NFL) entered into a three-year agreement with Caesars Entertainment reportedly worth thirty million dollars.[15] This agreement is more narrow than the deals made by the NBA and MLB, as it only applies to casino gaming, but it does also allow Caesars to use NFL trademarks.[16] Individual teams, such as the Las Vegas Raiders and New York Jets, have also entered into exclusive partnerships with casinos and sportsbooks.[17]
Sports franchises have even started to place sportsbooks in their own stadiums as a way of profiting directly from legalized gambling. On October 3, 2019, Ted Leonsis, the owner of the Washington Capitals and the Washington Wizards, made a historic announcement that his company would put the first-ever sportsbook within a sports arena in the United States.[18] The retail sportsbook William Hill and Leonsis’s company came to an agreement in which Hill will lease approximately twenty thousand square feet within Capital One Arena—the home arena of both the Wizards and Capitals.[19] When completed, the sportsbook will offer betting kiosks and windows to both fans attending games as well as the general public.[20] It will also be open to the public on days when there are no games at the arena.[21] On September 3, 2020, the Cubs announced that the franchise had entered into a ten-year agreement with DraftKings valued at one hundred million dollars.[22] As part of the agreement, DraftKings will be able to construct a retail sportsbook at the Cubs’ home field—Wrigley Field—that will be complete with kiosks to allow fans to bet while at the stadium.[23] This deal marked the first instance of a MLB franchise committing to open a retail sportsbook in its stadium.[24]. Within just a matter of a few years, sports gambling could become an integral part of fans’ trips to their favorite ballpark or arena, which is a far cry from the taboo and illegal activity it was considered to be prior to the Murphy decision.
Following the Murphy decision, professional sports leagues and teams have quickly and eagerly seized the opportunity to profit from legalized sports gambling. Within the near future, we may see more of these sponsorship deals executed as more states legalize sports gambling as a solution to make up deficits caused by the coronavirus pandemic.[25] This may only be the beginning, as sports leagues and teams continue to look for innovative and creative ways to generate revenue from legal gambling.
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