NCAA Cracks Down On Daily Fantasy Sports, Gambling, Even As Pro Leagues, Media Partners Embrace Them

Just as more Americans are embracing sports wagering to spice up their Saturdays, college athletics administrators are warning employees, players and even media partners not to get carried away with the craze. As pro sports leagues and government officials mull the legality of daily fantasy sports games and sports gambling in general, the NCAA took multiple steps this week to make it clear its officials aren’t budging from their anti-wagering stance

ESPN opted this week to discontinue its use of “cover alerts” – references to point spreads in sports gambling – during NCAA broadcasts after several college football administrators expressed discomfort with the gimmick, SportsBusiness Daily reported. Hours later, Oliver Luck, a top NCAA official, warned a group of athletic directors Tuesday that any player who participates in daily fantasy games will lose a year of athletic eligibility.

Luck’s reiteration of the NCAA’s bylaws contradicted the organization’s previous support for a 2006 law that distinguished fantasy sports as a game of skill rather than a form of betting. Professional sports leagues, especially the NFL, are full-fledged supporters of daily fantasy games, and some commissioners, including the NBA’s Adam Silver, openly advocate for federal legalization and control of sports gambling. But the NCAA, which cites the amateur status of its athletes as central to its mission and the key to its controversial policy of not paying its players, must walk a dubious line between opposing these games and openly profiting from the attention they bring to college sports.

“They’re stuck in the middle. They don’t want the courts, the Congress, society to see how bogus their claim that what drives the popularity of the sport is what’s different, that they’re not paying the athletes, that it’s not pro sports,” said Andy Schwarz, a founding partner at OSKR and consultant for former UCLA basketball player Ed O’Bannon’s antitrust lawsuit against the NCAA. “They don’t want all the trappings of pro sports, but they want the revenues of pro sports.”

The NCAA has made a strong effort to police sports gambling in recent years, even as the industry has gained unprecedented momentum throughout the United States. Americans will wager $95 billion, legally and illegally, on professional and college football in 2015, the American Gaming Association said this month. Daily fantasy sports outlets like DraftKings and FanDuel will give away more than $3 billion in prizes this year, according to ESPN, and have raised countless more millions through deals with pro sports organizations and investors.

Fantasy sports were formally legalized as part of the Unlawful Internet Gambling Enforcement Act of 2006 (UIGEA). At the time, the United States’ four major professional sports leagues and the NCAA expressed support for the measure, citing a desire to “preserve the integrity of our respective sports,” according to ESPN. Just five states have full bans on daily fantasy sports, though several others, including New Jersey, are considering similar legislation. Only four states – Nevada, Montana, Oregon and Delaware – allow legal sports gambling in the traditional sense.

While UIGEA became law years before the invention of daily fantasy sports, pro sports leagues have largely embraced the concept. The NFL’s 32 teams split more than $7 billion in revenue in 2014, thanks in no small part to the frenzied attention fantasy football generates. Most NFL teams have individual partnerships with FanDuel or DraftKings; some teams even have branded in-stadium lounges devoted to daily fantasy sports. The NBA has its own partnership with FanDuel, while the MLB, NHL and MLS have deals with DraftKings.

The NCAA is in a difficult position. While the organization previously supported the legalization of fantasy sports, the daily games have added a new wrinkle. FanDuel and DraftKings offer monetized wager pools based on NCAA football games, where users can select amateur players for their “teams” based on a fictionalized salary cap. For college administrators who have said over and over again that college football players are “student-athletes” rather than employees, the image of dollar signs next to player names is extremely problematic.

Administrators from multiple NCAA conferences, including the Pac-12 and the SEC, purportedly sent letters to FanDuel and DraftKings demanding they stop offering college football contests. Neither organization has responded. At the same time, advertisements for FanDuel and DraftKings are still running during college football games.

“The NCAA, I think, is in an even more precarious situation. Even though they haven’t jumped on the daily fantasy bandwagon, they were big supporters of the 2006 law that had the carve-out for fantasy sports,” said Keith Miller, a law professor at Drake University in Iowa. “Now, for them to say we are shocked that athletes might be engaging in daily fantasy sports is either disingenuous or hypocritical.”

Officials imposed their ban on daily fantasy games from a desire to protect the “integrity of the game,” a stance in line with the classic assertion that legalized sports gambling would open up athletics to corruption in the form of fixed outcomes and point-shaving.

“Fantasy sports leagues threaten both the integrity of the game and the well-being of student-athletes,” Mark Strothkamp, the NCAA’s associate director of enforcement, told ESPN.com. “NCAA member schools have defined sports wagering as putting something at risk – such as an entry fee – with the opportunity to win something in return, which includes fantasy league games. Because of this, student-athletes, coaches, administrators and national office staff may not participate in a fantasy league game with a paid entry fee.”

To attempt to ban participation in paid fantasy games is to deny a fundamental reality about American sports. Fans are betting on football, whether openly or otherwise. ESPN has paid the NCAA billions of dollars to broadcast college football games, including the playoffs and the national championship game.

ESPN recognizes the inescapability of sports betting in America, and the use of “cover alerts” was an attempt to capitalize on it. In addition, the network recently premiered a late-night version of "SportsCenter" hosted by Scott Van Pelt, who has an entire segment dedicated to “bad beats” – gambling lingo for a last-minute, upsetting change to a game’s outcome. ESPN told SportsBusiness Journal that "cover alerts" will no longer be featured, but gambling talk during broadcasts will continue.

“It just lays out there what everybody knows, and that is people are betting on sports,” Miller said. “[Daily fantasy sports] filled a void, because people couldn’t bet on sports outside Nevada, and now DFS has taken on its own life, even apart from sports betting. The NCAA, they’re just so far behind the curve on this.”