Gaming, Colleges, & Ethics

Michigan State University (MSU) recently came under scrutiny for e-mail exchanges within the athletic department discussing the possibility of a corporate sponsorship between the department and Caesars Sportsbook. Staffers were excited about the possibility of partnering with the online sportsbook and a possible payout of one million dollars per year. In the end, the deal was actually more lucrative as MSU and Caesars agreed to a five-year contract worth $8.4 million (Betts et al., 2022). In total, eight universities have partnerships with online sportsbooks, and the number of these partnerships are expected to grow as athletic departments search for ways to raise additional revenue.

Although ethical questions abound regarding the partnerships between colleges and sportsbooks, the reality is that only twenty-five NCAA Division I athletic programs turned a profit in 2020 (Johnson Bowles, 2021). In a time of increased costs, across the board, what are the other 325 non-profitable programs to do if presented with the same opportunity? The United States online gambling market was worth $2.65 billion in 2021 and is expected to reach revenues of $7.61 billion by 2028 (BlueWeave Consulting, 2022). It is easy to understand why sportsbooks want access to college fan bases.

Additionally, the economic impact on states from online gaming has been significant. In 2018, the United States Supreme Court overturned a 1992 law prohibiting sports gambling which paved the way for the online gaming explosion. New Jersey was one of the first states to open online sports wagering and, as a result, had the highest total sports betting revenue within three years at $557.77 million (Hudson, 2021). Currently, twenty-three states allow online sports wagering with three set to begin in 2023, and the resulting tax windfalls have been massive. For example, the state of Indiana received more than $691 million from gambling taxes in the 2022 fiscal year (Wilson, 2022).  

Not all that glimmers is gold, however. Despite the nearly $700 million in tax revenue, Indiana consumers lost $2.5 billion on casinos and sports betting in 2022 (Wilson, 2022). As more states legalize online sports gambling, and access to sports wagering becomes easier, the losses across the country are likely to increase. This also corresponds with potential gambling addictions among U.S. adults, but particularly with those who are college-aged. The National Council on Problem Gambling estimates that gambling addiction among males aged 18 – 24 has grown thirty percent since the Supreme Court ruling in 2018 (Mercer, 2022). Additionally, college students gamble at a rate three times higher than the general population (Woods, 2016). This is especially true with college student-athletes since they have a higher rate of problem gambling than non-athletes (Wood, 2016), even though gambling is a violation of NCAA rules. 

In lieu of the addictive nature of sports gambling, do colleges have an ethical responsibility to avoid partnerships with online sportsbooks? After inking their partnership with Caesars, Louisiana State University sent an e-mail to students, including some under the legal gambling age of twenty-one, to “place your first bet (and earn your first bonus)” (Betts et al., 2022). This prompted a strong response from financial expert, Dave Ramsey, who called these schools “idiots” and said, “the No. 2 addiction in North America today — and fastest growing addiction in North America today — is online gambling. It starts with the sports betting as a gateway drug” (Louis, 2022). Senator Richard Blumenthal (D-Conn.) also expressed his concern and wrote a letter to Caesars asking them to end their affiliations with American universities (Acedera, 2022).  

As the cost of offering college athletics continues to rise, it is understandable that athletic departments will need to become creative to increase revenue. This may also turn into a ‘keeping up with the Joneses’ situation as athletic departments strive to maintain a financial competitive balance with each other. What remains to be seen are any unintended consequences to the student body as a result of these partnerships. Until recently, alcohol sales were rare in college stadiums and arenas, but even this prohibition has begun to relax at school across the country. Even as binge drinking remains an issue on college campuses, school officials may argue that the increased revenue is needed to maintain the budgets of the athletic departments. As institutions that are responsible for the stewardship of young adults, schools must wrestle with the ethical ramifications of these partnerships.

References

Acedera, S. (2022, November 30). Lawmaker asks Caesars Entertainment to end partnership with schools. The Sports Geek. Retrieved December 8, 2022, from https://www.thesportsgeek.com/news/lawmaker-asks-caesars-entertainment-to-end-partnership-with-schools/.

Betts, A., Little, A., Sander, E., Tremayne-pengelly, A., & Bogdanich, W. (2022, November 20). How colleges and sports-betting companies 'caesarized' campus life. The New York Times. Retrieved December 8, 2022, from https://www.nytimes.com/2022/11/20/business/caesars-sports-betting-universities-colleges.html.

BlueWeave Consulting. (2022, September 1). United States online gambling market to reach US 7.61 billion by 2028. GlobeNewswire News Room. Retrieved December 8, 2022, from https://www.globenewswire.com/en/news-release/2022/09/01/2508751/0/en/United-States-Online-Gambling-Market-to-Reach-US-7-61-Billion-by-2028-BlueWeave-Consulting.html.

Hudson, M. (2021, December 11). More states embrace online sports gambling as popularity soars. NBCNews.com. Retrieved December 8, 2022, from https://www.nbcnews.com/politics/politics-news/more-states-embrace-online-sports-gambling-popularity-soars-n1285169.

Johnson Bowles, K. (2021, December 15). Should institutions support sports programs that don't make money? Just Explain It to Me! Retrieved December 8, 2022, from https://www.insidehighered.com/blogs/just-explain-it-me/should-institutions-support-sports-programs-don%E2%80%99t-make-money.

Louis, S. (2022, December 2). Dave Ramsey just blasted US universities for promoting online gambling to students. MoneyWise. Retrieved December 8, 2022, from https://moneywise.com/managing-money/debt/you-freakin-idiots-dave-ramsey-just-blasted-us-universities-for-promoting-online-gambling-to-students-and-reaping-millions-in-fees-why-young-people-are-the-perfect-prey.

Mercer, M. (2022, July 12). As sports betting grows, states tackle teenage problem gambling. The Pew Charitable Trusts. Retrieved December 8, 2022, from https://www.pewtrusts.org/en/research-and-analysis/blogs/stateline/2022/07/12/as-sports-betting-grows-states-tackle-teenage-problem-gambling.

Wilson, L. (2022, September 12). Indiana nets $691m in gambling taxes; consumers lose $2.5B. The Center Square. Retrieved December 8, 2022, from https://www.thecentersquare.com/indiana/indiana-nets-691m-in-gambling-taxes-consumers-lose-2-5b/article_a53f75b2-32c2-11ed-9ac3-933d250e4188.html.

Woods, R. (2016). Social Issues in Sport (3rd ed.). Human Kinetics.

Brandon Podgorski is an Associate Professor of Sport Management at Trine University and the Director of the Trine Center for Sports Studies.