David Stern Open to Legalized Sports Betting

From Sports Illustrated....

As part of SI.com's all-decade project highlighting the best and worst of sports in the 2000s, I asked commissioner David Stern to examine the last 10 years while also envisioning what the future may hold -- including legalized sports betting on NBA games, unadulterated zone defenses, a possible lockout and a new form of expansion to Latin America.

5 Big ideas from David Stern

• Will sports betting be legalized? From my point of view, that is the big question created by the Tim Donaghy scandal, and with this groundbreaking interview, Stern moved closer than any major commissioner in modern times to an acceptance of legalized betting on his games.

Stern made no commitment to legalized gambling on NBA games in our wide-ranging conversation last week at league headquarters in New York. He did, however, open a dialogue that could ultimately lead to a new relationship between the NBA and legalized sports betting. It's important to grasp the context as detailed below, but for the first time he referred to nationally legalized gambling on the NBA as a "possibility" that "may be a huge opportunity."

By federal law, betting on professional basketball and other American sporting events is legal mainly in Nevada (limited sports betting has also operated in Oregon, Delaware and Montana). Even in Nevada, Stern has objected to legalized wagering on NBA games. The Maloof family, owners of the Sacramento Kings, agreed for years to prohibit legal bets on NBA games at their Las Vegas casino, the Palms.

But the NBA has already begun to soften its stance. Its 2007 All-Star weekend was held in Las Vegas, advancing speculation that a franchise may someday move to a gambling capital that previously had been viewed as taboo by pro sports leagues. And last year, the NBA allowed the Palms to post odds on all NBA games except those involving the Kings.

My take, as written several times over the years, is that legalized betting on professional sports in the U.S. is inevitable for two reasons: (1) If sports wagering becomes a legal and taxable form of revenue, then governments will actively police sports betting in order to protect that revenue base, as well as to safe-guard the leagues that create the windfall of new taxes; and (2) Betting on games will create more fan interest and, ultimately, bring in more money to the NBA and other leagues.

I started the conversation with Stern by asking whether his league and others need to develop a comprehensive new approach to their relationship with sports betting. That approach has changed very little in the nine decades since the infamous "Black Sox" gamblers conspired to fix the 1919 World Series.

Stern agreed, in general, with that point of view. He responded by noting that other leagues around the world were addressing betting scandals similar to the NBA's.

"We used [the Donaghy revelations] as an opportunity to get better, to coordinate with law enforcement and go through a variety of processes that I don't necessarily want to detail publicly, but you are on ready alert," he said. "And we're mindful of what can happen, because we're more-than-interested bystanders in the European football scandal. Two-hundred [soccer] games are being looked at by law enforcement across the continent. It's fascinating to see what's happening. And we're mindful of the cricket [2007 World Cup match-fixing] issues, of the football referees in Germany -- there's a lot going on."

Then he made a new point. "The betting issues are actually going to become more intense as states in the U.S. and governments in the world decide that the answers to all of their monetary shortfalls are the tax that is gambling."

The obvious question then is, Now that governments have legalized gambling, should sports leagues follow suit and enable betting on their games? While Stern didn't provide a definitive answer, he furthered the debate simply by dealing with the subject of sports betting in an open way.

The most stunning revelation of the Donaghy scandal has been the public's ambivalence. The fans don't appear to care that a referee was betting on (and very likely fixing) NBA games. A gambling scandal involving a referee was supposed to be the doomsday scenario for any sports league, but NBA ratings have gone up in the two full seasons since Tim Donaghy became a household name.

The common thread that ties Donaghy to other betting scandals around the world has been the role played by syndicates that bet illegally. These underground gambling rings -- like the mob-associated group that co-opted Donaghy -- would have a harder time operating in the U.S. if betting on sports becomes legal. As it stands now, sports betting is an illegal, multibillion-dollar enterprise that goes largely undetected by law enforcement outside Nevada. If we all accept that gambling on sports is a fact of life that can't be ignored or wished away, then the question becomes whether it is better to legalize it and actively police it, or leave it underground where it remains murkier and harder to detect.

Of course, I'm abridging this argument, because gambling syndicates would remain in operation offshore and could still try to fix outcomes against the spread. But that doesn't change the fact that billions of dollars wagered within the U.S. go unregulated and untaxed. It is a mob-driven industry, and ultimately the mob was able to co-opt Donaghy.

I asked Stern if it is in the best interests of his league to seek legalization of sports betting. He sighed with his head down, as if to emphasize the gravity of what he was going to say.

"It has been a matter of league policy to answer that question, 'No,' " he said. "But I think that that league policy was formulated at a time when gambling was far less widespread -- even legally."

He went on to provide a brief lesson in history involving J. Walter Kennedy, the NBA commissioner from 1963-75. "Walter Kennedy testified in Congress many years ago, probably over 40, that gambling -- any gambling, not just sports -- should not be allowed in Atlantic City, that gambling shouldn't be expanded," said Stern, who was a lawyer for the NBA at that time. "I remember it because I wrote a statement. It was the U.S. association of attorneys general, the U.S. attorneys association, the association of chiefs of police, the clergy of all denominations -- all lined up to say that expanding [was wrong] ... and I don't think lotteries were legal back then.

"So that was the sin. And that's the way sports grew up in their opposition."

What has changed, Stern acknowledged, is that the NBA can no longer oppose gambling on moral grounds.

"Considering the fact that so many state governments -- probably between 40 and 50 -- don't consider it immoral, I don't think that anyone [else] should," Stern went on. "It may be a little immoral, because it really is a tax on the poor, the lotteries. But having said that, it's now a matter of national policy: Gambling is good.

"So we have morphed considerably in our corporate view where we say, Look, Las Vegas is not evil. Las Vegas is a vacation and destination resort, and they have sports gambling and, in fact, there's a federal statute that gives them a monopoly of types [on sports betting]. And we actually supported that statute back in '92."

Stern has long maintained that he doesn't want the NBA to turn into a point-spread league, and he talked about how NBA games create little of the sports-betting handle in Vegas, and that the majority of NBA fans have scant interest in the spread. I responded by noting that the NBA has created a variety of constituencies, including fans who wear NBA clothing, who play NBA video games and who view Kobe Bryant and LeBron James as Hollywood-level stars, which is not to forget the fans from any number of countries who follow the NBA patriotically via Dirk Nowitzki, Tony Parker or Yao Ming.

Why not make room under the big tent for the minority of fans who like to bet on NBA games?

"OK, but then you're arguing there may be good and sufficient business reasons to do that," Stern said. "And I'm going to leave the slate clean for my successor."

He smiled and added, "But it's fair enough that we have moved to a point where that leap is a possibility, although that's not our current position."

There you have it. That is a breakthrough. You don't hear baseball commissioner Bud Selig -- and you surely don't hear NFL commissioner Roger Goodell -- saying that legalized betting on their games is a "possibility." Sports betting is their third rail, and they've long maintained the anachronistic appearance of having nothing to do with it. (Even though illegal sports betting has helped turn the NFL into the No. 1 sport in America.)

As Stern acknowledged, gambling has gone mainstream since the scandal of 1919. The gambling industry will continue to grow as more and more casinos are built throughout the nation, such as the casino now being planned by Cavaliers owner Dan Gilbert for downtown Cleveland nearby Quicken Loans Arena.

Without committing himself in any way, Stern acknowledged that sports betting could create a new stream of revenue for the NBA -- not unlike the interest that March Madness betting pools have created for the NCAA tournament.

"You're right about the threat that we perceive, and we stay on it," said Stern of the menace of illegal gambling rings. "I think the threat is the same legal and illegal -- the threat is there.

"Gambling, however it may have moved closer to the line [of becoming acceptable], is still viewed on the threat side," he said. "Although we understand fully why, buried within that threat there may be a huge opportunity as well."