How much would you bet on the Patriots winning the coin toss at this Sunday’s Super Bowl? Or maybe you want to wager on Patriots tight end Ron Gronkowski scoring the game winning touchdown, or Greg “The Leg” Zuerlein nailing a 57-yard kick for the Rams.
Super Bowl LIII is not just about crowning the best professional football team in 2019. It’s also, thanks to the U.S. Supreme Court, the first national step into an expanded world of legal sports gambling.
This year more states than ever before will allow bets on Sunday’s big game. Wagers are legal in eight states: Delaware, Mississippi, Nevada, New Jersey, New Mexico, Pennsylvania, Rhode Island and West Virginia. The Supreme Court’s decision last term in Murphy v. NCAA permitted any state to legalize sports betting, and there is movement in 29 other states towards opening their doors, according to ESPN’s sports betting bill tracker.
Irwin Raij, co-chairman of the sports industry group at O’Melveny & Myers in New York, vividly remembers May 14 when the justices issued their 6-3 decision. He was in the middle of a sports team transaction and lawyers scrambled to see if the ruling affected the transaction. It didn’t, but he said he knew then it could affect future transactions and a lot more in the legal world.
Raij joined O’Melveny in 2017 after 16 years at Foley & Lardner and before that stints in the Clinton White House counsel’s office and in-house counsel to Gore 2000. As preparations were underway for game day, he spoke with The National Law Journal about the impact of the Supreme Court’s decision on the practice of sports law. The conversation that follows was edited for length and clarity.
➤➤ NLJ: Are other firms expanding in this area because of the Supreme Court decision?
Raij: I think a lot of firms are paying attention to the states. In the end, it’s about business and generating revenues and making things happen, but there’s more to it than that. There have been firms in the sports space for a long time and we’ve seen more firms get into it or expand the practice. It’s amazing to see the business evolve. Who are the people buying teams today? A lot of them are hedge funds. You may have a natural platform to cross over to those potential investors in sports.
➤➤ Tell us more about the firm’s sports industry group.
The year I came over, there was a concerted effort to reconstruct the sports practice. Historically the entertainment, sports and media practice had been in existence since the beginning of the firm and it helped Hollywood become Hollywood. We were one of the key firms in the entertainment industry for many years and still are strong. On the sports side, sports is entertainment and just runs under a different set of rules and construct. So we came together to have a dedicated, organized effort to help the firm focus on the business of sports. We always had a litigation side, but we’re really building up the transactional side of sports.
➤➤ Did the Supreme Court decision affect your practice?
I decided to launch an interdisciplinary task force that combined our group with others working on white-collar, cryptocurrency, money laundering and other issues that could come up. My practice is a little bit of everything. Personally, over 50 percent of my practice is on the stadium development side of the equation. How do you build or renovate stadiums, create unique financing structures, deal with complicated political stories. I love that kind of work. There’s no straight line to it. It requires at times patience, creativity, a willingness to listen. It’s all about bringing people together. Gambling is now an interesting question and how it impacts all of that work. Outside of that, it’s M&A work. I’m counsel for a start-up team and I’m working with a group that wants to buy sports teams.
➤➤ What’s been the impact of the Supreme Court’s sports betting decision?
There’s excitement about potential opportunities. For many years, this was not a discussion point, irrespective of the monetization opportunities. The leagues aren’t legalizing gambling. The Supreme Court said it’s the states’ right and so some of the stigma of gambling is disappearing, not unlike some other stigmas in society. We’ve seen an acceptance and that has led to a whole discussion about how to monetize it.
No doubt we’re going to see a significant revenue spike for all the leagues. States are interested from a revenue/taxing perspective. The leagues are interested not only from a monetization perspective, but they can develop new analytics on their customers. Millions of people have been betting offshore or illegally, and all of a sudden that information, there is the opportunity to collect it. Who they are? The more information you collect, the more you can monitor and protect integrity and enforcement in gambling.
It will affect real estate development, intellectual property, media rights and television content—I think it will have tremendous long-term impacts.
We don’t know everything yet but there sure seems to be an avalanche of opportunities while everyone figures out how this is going to work. Even while we’re doing that, there are revenue opportunities.
➤➤ What are the downsides, if any, of the high court’s decision?
The legalization of this should help with some of what people viewed as illicit elements of sports betting. There will be more comfort for people to do it publicly, more enforcement mechanisms. If we do it right, there should be better ways of addressing some of those potential negatives—risky behaviors, gambling addictions. This is something the Hatch-Schumer bill last year tried to address.
It should get us into a broader discussion of what is gambling and what is good and bad about gambling. There are concerns about federal laws like the wire act, the bribery act and interstate commerce issues. It would make sense for Congress to act to help states make decision. I don’t know that there’s any momentum as of today to get something done this year. Things could change. If there’s one scandal, you’ll see legislation quick.
➤➤ Most important question: Who is your pick to win the Super Bowl?
I’m Cuban American from Miami. I’m a Miami Dolphins fan. I’ve been in the cellar for so many years now, it’s just painful. I don’t care who wins this year. Let it be a fun game. I will watch. I’m looking forward to the commercials.