[Senate Hearing 106-1103]
[From the U.S. Government Publishing Office]
S. Hrg. 106-1103
S.2340, AMATEUR SPORTS INTEGRITY ACT AND GAMBLING IN AMATEUR SPORTS
=======================================================================
HEARING
before the
COMMITTEE ON COMMERCE,
SCIENCE, AND TRANSPORTATION
UNITED STATES SENATE
ONE HUNDRED SIXTH CONGRESS
SECOND SESSION
__________
MARCH 29, 2000
__________
Printed for the use of the Committee on Commerce, Science, and
Transportation
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SENATE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION
ONE HUNDRED SIXTH CONGRESS
SECOND SESSION
JOHN McCAIN, Arizona, Chairman
TED STEVENS, Alaska ERNEST F. HOLLINGS, South Carolina
CONRAD BURNS, Montana DANIEL K. INOUYE, Hawaii
SLADE GORTON, Washington JOHN D. ROCKEFELLER IV, West
TRENT LOTT, Mississippi Virginia
KAY BAILEY HUTCHISON, Texas JOHN F. KERRY, Massachusetts
OLYMPIA J. SNOWE, Maine JOHN B. BREAUX, Louisiana
JOHN ASHCROFT, Missouri RICHARD H. BRYAN, Nevada
BILL FRIST, Tennessee BYRON L. DORGAN, North Dakota
SPENCER ABRAHAM, Michigan RON WYDEN, Oregon
SAM BROWNBACK, Kansas MAX CLELAND, Georgia
Mark Buse, Republican Staff Director
Martha P. Allbright, Republican General Counsel
Kevin D. Kayes, Democratic Staff Director
Moses Boyd, Democratic Chief Counsel
C O N T E N T S
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Page
Hearing held on March 29, 2000................................... 1
Statement of Senator Breaux...................................... 8
Statement of Senator Brownback................................... 6
Statement of Senator Bryan....................................... 4
Statement of Senator Edwards..................................... 12
Statement of Senator Hollings.................................... 2
Statement of Senator McCain...................................... 1
Statement of Senator Stevens..................................... 3
Prepared statement........................................... 3
Witnesses
Berkley, Hon. Shelley, U.S. Representative from Nevada........... 17
Calhoun, Jim, Head Men's Basketball Coach, University of
Connecticut, Storrs, CT........................................ 29
Prepared statement........................................... 32
Fahrenkopf, Jr., Frank, President, CEO, American Gaming
Association, Washington, DC.................................... 43
Prepared statement........................................... 46
Gibbons, Hon. Jim, U.S. Representative from Nevada............... 14
Prepared statement........................................... 15
Graham, Hon. Lindsey O., U.S. Representative from South Carolina. 16
Kelly, Dr. Tim, Executive Director, National Gambling Impact
Study Commission, Alexandria, VA............................... 33
Prepared statement........................................... 36
Reid, Hon. Harry, U.S. Senator from Nevada....................... 9
Prepared statement........................................... 11
Roemer, Hon. Tim, U.S. Representative from Indiana............... 18
Prepared statement........................................... 20
Sandoval, Brian, Chairman, Nevada Gaming Commission.............. 75
Prepared statement........................................... 78
Siller, Bobby, Nevada Gaming Control Board....................... 84
Wethington, Jr., Dr. Charles T., President, University of
Kentucky, Lexington, KY........................................ 22
Prepared statement........................................... 25
Winters, Kenneth, Ph.D., Professor of Psychology, University of
Minnesota...................................................... 81
Prepared statement........................................... 83
Yaeger, Don, Senior Writer, Sports Illustrated................... 72
Appendix
Dobson, James C., Ph.D., Member, National Gambling Impact Study
Commission, President, Focus on the Family, prepared statement. 99
James, Kay Coles, Norfolk, VA, letter dated March 28, 2000, to
Hon. John McCain............................................... 100
Joint Prepared Statement by National Gambling Impact Study
Commission Members Richard C. Leone, President, The Century
Foundation and Leo T. McCarthy, President, The Daniel Group.... 101
National Football League, New York, NY, letter dated April 10,
2000, to Hon. John McCain, with attachments.................... 102
S. 2340, AMATEUR SPORTS INTEGRITY ACT AND GAMBLING IN AMATEUR SPORTS
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WEDNESDAY, MARCH 29, 2000
U.S. Senate,
Committee on Commerce, Science, and Transportation,
Washington, DC.
The Committee met, pursuant to notice, at 9:30 a.m. in room
SR-253, Russell Senate Office Building, Hon. John McCain,
Chairman of the Committee, presiding.
Staff members assigned to this hearing: David Crane,
Republican Professional Staff; and Moses Boyd, Democratic Chief
Counsel.
OPENING STATEMENT OF HON. JOHN McCAIN,
U.S. SENATOR FROM ARIZONA
Senator McCain. Good morning. Gambling on sports is a major
concern. In recent years, we have seen an alarming escalation
in the number and complexity of point-shaving schemes in
college sports. Campus gambling is reaching epidemic
proportions.
The study released just yesterday highlights statistics on
gambling activities among college referees. Out of concern for
this reality, the National Gambling Impact Study Commission
recommended, among other things, closing the Las Vegas loophole
that allows for legalized gambling on amateur athletics. The
bill I introduced last week, the Amateur Sports Integrity Act,
would do just that.
Opponents of this legislation argue that there is a
distinction between legalized amateur sports gambling and
illegal sports gambling. The firm distinction they attempt to
draw is one of convenience rather than reality. The report
produced by the Treasury Department's financial crimes
enforcement network entitled, ``Suspicious Activity Reporting
on Casinos'' discusses various ways in which the Las Vegas
sports books are used to launder money.
In several recent college sports point-shaving schemes, the
Nevada sports books were used as an integral part of overall
game-fixing operations and, beyond a doubt, the Vegas point
spreads published Nation-wide in newspapers and on sports radio
serve to advertise, promote, and to facilitate illegal sports
gambling.
The Gambling Commission stated in its final report, and I
quote, ``legal sports wagering, especially the publication in
the media of Las Vegas and off-shore-generated point spreads,
fuels a much larger amount of illegal sports wagering. By
closing the Vegas loophole and banning college sports gambling
completely, we will
end a practice that has turned college athletes into objects to
be
bet upon, exposing them to unwarranted pressure, bribery, and
corruption.''
Ironically, the degree of this threat of corruption is best
exemplified in the fact that Nevada, the only state where legal
gambling on college sports occurs, has banned wagering on
professional and amateur teams located within the state out of
concern for the corrupting influence of sports gambling. One
can go to Vegas and bet on any other team in the country, but
not on any game where a Nevada team is playing.
In an increasingly jaded world, legalized gambling on all
college athletes sends the wrong message to America's youth.
Collegiate competition serves as a laboratory classroom where
young student athletes struggle to apply the highest ideals of
the American character: courage in the face of adversity,
discipline, team work, and self-sacrifice. These ideals and
lessons are of particular importance in today's society. They
should not be reduced to a point spread in a spectacle for
wagering.
I want to thank all the witnesses for being here this
morning, and I would like to turn to Senator Hollings.
STATEMENT OF HON. ERNEST F. HOLLINGS,
U.S. SENATOR FROM SOUTH CAROLINA
Senator Hollings. Thank you, Mr. Chairman. I wanted to
particularly commend you for having this bill referred to our
Committee. Over the years--I have watched more recently the
preemption of this jurisdiction of our Committee over at
Judiciary. We would like to work closely with other committees
of the Senate. This Committee over the years has held a number
of hearings, as well as acted on legislation concerning amateur
and professional sports--having worked with other committees
and representatives of the private sector in doing so.
Admittedly, with respect to gambling we have had joint
jurisdiction with the Judiciary, but exclusively we have the
gambling on horse-racing bill by our distinguished Senator from
Louisiana, Senator Breaux, in the 101st and 102d Congress.
The reason I mention this taking over is in respect to the
FCC--the Kohl-DeWine merger bill that was referred to the
Judiciary Committee with respect to this merger, the public
interest analysis of the transfer of these licenses, that is
exclusively within the jurisdiction of the Federal
Communications Commission which is, of course, under our
Committee.
And then more particularly again a privacy bill, the only
committee that really had in-depth hearings and action is
Senator Bryan's bill on privacy with respect to the children,
and we passed that out, but we see now that the Judiciary
Committee has tried to take over on the online privacy,
Children's Online Privacy Protection Act.
So I really commend you on this particular measure here. I
had hoped our colleague, the chairman of the Judiciary
Committee, would have been here this morning. I will
communicate with him directly, but I wanted to make that
statement for the record, because you have been busy, and the
Committee has seen a slight erosion, and incidentally I
apologize for South Carolina.
[Laughter.]
Senator Hollings. In the newspaper this morning, David
Broder, there was no questions about it. I have been a
candidate and gotten nowhere, but this gentleman got somewhere,
and if you are going to run for President you have got to start
out 2 years ahead of time, start getting your money and your
organization. Our distinguished Chairman started out only 2
months ahead of time and got some money and got a heck of a lot
of support but very little organization, and when he hit my
State of South Carolina that thing was greased, and then they
inserted a pun.
That greasing, Senator Stevens, had tremendous filth that
finally came out from under the radar. Lee Atwater started that
nonsense 25 years ago, and Lee Atwater was alive and well in
the Republican primary in South Carolina, and it was not a
proud day for our state. The party won, or the Governor won,
but I wanted to publicly apologize to our Chairman, and as a
result of your endeavor I am convinced now that we are going to
begin to clean that up. Thank you a lot.
Senator McCain. I thank you, Senator Hollings. I thank you
for your friendship for many, many years, and I thank you for
your kind comments.
Senator Stevens.
STATEMENT OF HON. TED STEVENS,
U.S. SENATOR FROM ALASKA
Senator Stevens. That is a tough act to follow, Mr.
Chairman, but I do thank you for introducing this bill also,
and I am very pleased that this bill will amend the sports Act
that bears my name. I do think that there is no question that
we should be dealing with doping and gambling. I would like to
have my full statement appear in the record.
Senator McCain. Without objection.
Senator Stevens. I am concerned about the statistics that
the American Academy of Pediatrics have provided that more than
1 million American children are addicted to gambling, addicted
with a pathological gambling problem. I think that is as
important as the problem of doping.
Last year we provided $3 million to start an anti-doping
campaign through the Olympic Committee, the USOC. There is no
question that this is something that we should direct our
attention to, and I share the commitment of Senator Hollings to
the jurisdiction of this Committee. We never had the Amateur
Sports Act referred to the Judiciary Committee, and I hope my
friend will understand that this is an amendment to that Act,
and it deals with sports.
Gambling and doping are two of the major problems with it,
and I am pleased to see you are addressing them in this bill.
[The prepared statement of Senator Stevens follows:]
Prepared Statement of Hon. Ted Stevens, U.S. Senator from Alaska
Thank you, Mr. Chairman. I commend you on the introduction of the
Amateur Sports Integrity Act, though I am saddened by the need for our
Committee to address the problems of doping and gambling in high school
and college sports. Participation in sports should bring out the very
best in athletes and inspire observers. Doping and gambling undermine
the integrity of sports and have a corrupting influence on young
athletes.
I am hopeful that Title I of the Amateur Sports Integrity Act,
which creates a grant program for research into the use and detection
of performance-enhancing drugs, will provide us with information to
help us further address doping in sport.
Title II of the Act addresses gambling in high school and college
athletics. Statistics of the American Academy of Pediatrics indicate
that more than 1 million American children are addicted to gambling--
that's addicted--with a pathological gambling problem. This problem
must be addressed.
I look forward to the testimony of today's witnesses.
Senator McCain. Thank you, Senator Stevens, and you have
been the steward of the Olympics and amateur sports on this
Committee, and I very much appreciate your support for the
continued oversight jurisdiction by this Committee on those
issues and your involvement.
Senator Bryan.
STATEMENT OF HON. RICHARD H. BRYAN,
U.S. SENATOR FROM NEVADA
Senator Bryan. Mr. Chairman, thank you very much. Although
we disagree on this issue, I want to publicly thank you and
your staff for working with our staff and accommodating my
request for the witnesses to appear today. I want to say
publicly that I do appreciate it, particularly our last-minute
request, which you could very easily have said, look, you have
had three, you have asked for four, and I very much appreciate
that, Mr. Chairman.
Illegal sports wagering is a serious issue on our nation's
college campuses and a serious problem for many students. On
that we agree. NCAA officials estimate that every college
campus has student bookies, and that illegal gambling is a
growing problem among students and student athletes, and on
that we agree.
One study found in a survey of six colleges in five states
that 23 percent of students gambled at least once a week. The
same study found that between 6 percent and 8 percent of
students are probable problem gamblers. Unfortunately, the NCAA
solution to this problem is the legislative equivalent of an
air ball. It simply misses the mark.
The legislation before us today will do nothing to address
this issue or to solve this problem. The National Gambling
Impact Study Commission estimated that illegal sports wagering
in the United States ranged from $80 billion to $380 billion
annually. By way of contrast, legal sports wagering in the
State of Nevada last year totaled $2.5 billion, with roughly a
third of that amount bet on college sporting events.
Based on these figures, the amount of money wagered legally
in Nevada on college sports represents somewhere between 1
percent and a thousandth of 1 percent of the total amount
wagered on sporting events annually in the United States. The
NCAA and the supporters of this legislation ask us to believe
that eliminating this 1 percent of legal wagering in Nevada
will somehow curb illegal sports betting on our college
campuses. This presents a classic case of the tail wagging the
dog.
The tortured logic advanced by the NCAA in promoting this
legislation goes something like this. Illegal sports wagering
across the country depends on the publication of point spreads
in the newspapers. Newspapers only publish point spreads
because sports wagering is legal in Nevada. Eliminate legal
sports wagering in Nevada, and newspapers will no longer have a
justification for publishing the point spreads. And finally, if
point spreads are no longer published, illegal sports wagering
declines.
The facts: Newspapers are not the only source of betting
lines. Spend 5 minutes on the Internet and you can find dozens,
if not hundreds of Web sites with sports betting line
information. In addition, this information is available from
dozens of 800 and 900 telephone services.
Secondly, decisions about whether to publish betting lines
are made by newspaper editors responding to the interest
expressed by their readers and I would also suspect that
newspaper editors would argue vehemently that the First
Amendment protects their right to publish betting lines
irrespective of the locality of sports wagering in a particular
venue. Prohibiting legal wagering on college sports in Nevada
will not prevent newspapers across the country from publishing
betting lines as long as newspapers believe their customers
find this information useful.
The National Gambling Impact Study Commission invited the
NCAA to testify on November 10, 1998 at a hearing in Las Vegas
to provide their perspective on sports gambling and its impact
on college sports. As a followup to that testimony, the NCAA
was requested to submit additional information to the
Commission and in a letter dated January 28, 1999, it outlined
a number of recommendations aimed at addressing the problems of
sports gambling on college campuses.
Included in these recommendations are the following
gambling education awareness and prevention initiatives:
1) Industry-imposed curbs on youth exposure to gambling
advertising. I support this proposal;. 2) Government grants for
the development of gambling education programs. I support this
proposal; 3) A Government-funded national summit to examine the
impact of sports gambling on youth. I support this proposal;
and 4) training for health care professionals in screening
gambling disorders among youth. I support this proposal.
The NCAA also recommended two additional measures: 1)
greater enforcement of existing sports gambling and consumer
laws. I support this proposal; and 2) passage of federal
Internet gambling prohibition legislation. Not only do I
support this proposal, I have coauthored legislation with
Senator John Kyl which has already passed the Senate to
prohibit gambling on the Internet.
Curiously enough, there is no mention, none, in the NCAA's
letter of a recommendation to ban legal wagering on college
sports in Nevada. In fact, in sworn testimony before the Study
Commission on November 10, 1998, Mr. Bill Saum, the NCAA's
director of agent and gambling activities, stated, and I quote:
``The NCAA is opposed to legal and illegal sports wagering,
but much like this Commission [referring to the impact Study
Commission], we have not drawn a moral line in the sand that we
are going to come out and attempt to change the law.
Certainly, we would be adamantly opposed to any further
legalization across the United States. If we are going to have
sports wagering, let's keep it in Nevada and nowhere else.
Let's not allow individuals to wager from outside the state
lines.
So I do not think you will see the NCAA start a campaign to
remove sports wagering from the State of Nevada, but you would
see us jump to our feet if it would expand outside of state.''
Less than a year after Mr. Saum's testimony was given, NCAA
began lobbying Congress to ban legal wagering on college sports
in the State of Nevada, and here we are today with a piece of
legislation introduced with the full support of the NCAA that
directly
contradicts the sworn testimony of the NCAA's presentation on
gambling.
Unfortunately, the legislation addresses none of the
recommendations, not a one, that the NCAA claims are needed to
support the efforts to curb illegal gaming activity on college
campuses, each of which, as I have previously indicated, I
support.
Mr. Chairman, I would be happy to work with you and NCAA
and anyone else to develop a thoughtful, common sense approach,
by way of a legislative proposal or otherwise, that addresses
in a meaningful way the problems of illegal sports gambling on
college campuses in America. Unfortunately, in this instance
this legislation does not accomplish that objective, and I
oppose the bill.
Senator McCain. Thank you, Senator Bryan. I would like to
remind my colleagues we have a number of witnesses, including
our colleagues, in two panels, so I would appreciate it if you
would make your opening statement as brief as possible.
Senator Brownback.
STATEMENT OF HON. SAM BROWNBACK,
U.S. SENATOR FROM KANSAS
Senator Brownback. Thank you, Mr. Chairman, and welcome
back. Glad to have you here chairing the Committee again, and
on an important topic.
I introduced bipartisan legislation earlier this year,
along with Senator Leahy, on sports gambling, intercollegiate
athletic sports gambling ban. You folded that into this
legislation, and I think it is an excellent thing to do, and I
am strongly supportive of this legislation and a proud sponsor
of the Amateur Sports Integrity Act.
The legislation I had introduced earlier was in direct
response to the recommendations made by the National Gambling
Impact Study Commission that Senator Bryan was commenting on
earlier, which last year concluded a 2-year study on the impact
of legalized gambling in the country.
The recommendation called for a ban on all legalized
gambling on amateur sports, and is supported by the NCAA,
which, I might add parenthetically, represents more than a
thousand colleges and universities nation-wide, coaches,
teachers, athletic directors, commissioners, university
presidents, across the board. This bill would prohibit all
legalized gambling on high school and college sports as well as
the Summer and Winter Olympics.
Mr. Chairman, the nation's college and university system is
really one of our greatest assets. We offer the world the model
for post-secondary education, and frequently sports are the
window in which people first see those colleges. But sports
gambling has become a black eye on too many of our colleges and
universities.
Gambling on the outcome of college sporting events
tarnishes the integrity of the sport and diminishes the esteem
in which we and the rest of the world hold U.S. post-secondary
institutions. This legislation will remove the ambiguity that
surrounds gambling on college sports and make it clearly
illegal in all 50 states.
We should not gamble with the integrity of our colleges or
the future of our college athletics. Our young athletes deserve
legal protection from the seedy influences of gambling, and the
fans deserve to know that athletic competitions are honest and
fair.
Gambling scandals involving student athletes have become
all too common over the past 10 years. In fact, there have been
more point-shaving cases at the college and university level
over the past 10 years, in the decade of the nineties, than in
all previous time combined. These scandals are a direct result
of an increase in gambling on amateur sports.
It was just 2 years ago, during the Final Four, that we
learned of the point-shaving scandal at Northwestern University
involving their men's basketball team. This scandal involved
both legal and illegal gambling on several Northwestern games.
Kevin Pendergast was at the press conference when we
introduced the bill on banning gambling on amateur athletics.
He was a former Notre Dame place kicker who orchestrated the
basketball point-shaving scandal at Northwestern University. He
stated that he would never have been able to pull his scheme
off without the ability to legally lay a large amount of money
on the Las Vegas sports books. In fact, the last two major
point-shaving scandals involved legalized gambling in Las Vegas
sports books.
A study just conducted by the University of Michigan--and
Mr. Chairman, this one really troubled me, and it just came out
yesterday--found that 84 percent of college referees said they
had participated in some form of gambling since beginning their
careers as referees. Nearly 40 percent also admitted placing
bets on sporting events, and 20 percent said they gambled on
NCAA basketball tournaments. Two referees said they were aware
of the spread on a game, and that it affected the way they
officiated the contest.
This is just a new study out from the University of
Michigan. Some reported being asked to fix games they were
officiating, and others were aware of referees who, ``did not
call a game fairly because of gambling reasons.'' That is a
very troubling finding from the University of Michigan.
Opponents of our legislation have tried to discredit our
efforts by insisting we should be focusing our efforts on
curbing illegal gambling, not legal gambling. Now, I agree that
we should be looking at ways to help law enforcement and
institutions of higher education combat illegal gambling, and I
would hope that Senator Bryan and I could cosponsor legislation
to do that.
Legislation has been introduced that would create a panel
to investigate and make recommendations with respect to illegal
gambling. I am supportive of these efforts, but the fact
remains that gambling on student athletics, whether legal or
illegal, threatens the integrity of college sports. Banning
legalized gambling on amateur sports serves notice that betting
on college games or student athletes is not only inappropriate
but can and does result in significant social cost.
The National Gambling Impact Study Commission recognized
the potential harm of legalized gambling by stating that sports
gambling, ``can serve as gateway behavior for adolescent
gamblers and can devastate individual careers.''
Now, Mr. Chairman, I want to make one other point that we
raised at the press conference. I encourage colleges and
universities from across the country to contact the Nevada
Gaming Control Board and ask them to do for their colleges what
they do for Nevada schools. Presently, it is illegal to bet in
Nevada on a Nevada college team. You cannot go to Vegas and bet
on UNLV, on their basketball game, because the state
legislature in Nevada said that that would be unseemly and it
might have an impact or tarnish the image of UNLV sports.
Well, what is good for the goose is good for the gander. I
would like to ask, and did then and ask again now, the Nevada
Gaming Control Board if the Board of Regents of the University
of Kansas petitioned them to remove the University of Kansas
from the sports book, from the line, will you please remove
them, and will you state here today that yes, you will? If the
Governing body of that institution of higher learning asks to
be removed for the same reasons that UNLV was removed, will you
remove that institution?
If this is an issue of state's rights, I would hope that my
State has that right, to be able to be pulled off of the board,
and I hope that the presenters from the Nevada Gaming Control
Board will say ``yes'' today, that you will do that, that that
would be a more preferable way for us to move forward with this
issue of State's rights.
Mr. Chairman, we have a number of excellent presenters
today, and I am looking forward to hearing their testimony, and
I realize that a ban on collegiate sports gambling will not
eliminate all gambling on college sports. However, a total ban
will prevent another avenue for those participating in point-
shaving scandals to spread out their money.
We have already had people testify that they use the legal
book to spread out their money. If enacted, there will be no
ambiguity about whether it is legal or illegal to bet on
college sports. As part of a broader strategy to resensitize
the public to the problems associated with college sports
gambling, it will make a difference. We should not wait for
another point-shaving scandal in order to act, and we will have
another one if we do not act.
Mr. Chairman, thank you very much for holding this hearing
today. I look forward to the testimony of the witnesses.
Senator McCain. Thank you very much, and before I recognize
Senator Breaux, could our first group of witnesses--I notice
Senator Reid there, and Congressman Gibbons, and any of the
other congressional Members who are here, please come forward?
Senator Breaux.
STATEMENT OF HON. JOHN B. BREAUX,
U.S. SENATOR FROM LOUISIANA
Senator Breaux. Thank you very much, Mr. Chairman, and I
also would join our bipartisan welcome back to the Committee.
We are delighted to see you at the helm of the ship, and look
forward to working with you.
With all due respect to three authors of the legislation on
the Committee, and I have respect for all of them and certainly
do not question their motivation in offering the legislation, I
know they are truly motivated and trying to accomplish what
they want to accomplish with their legislation, but I will give
you 10 to 1 odds that if legislation was passed that it would
not affect gambling on amateur sports in America.
The reason I say that is because gambling on amateur sports
in America is already illegal. In 49 states it is illegal, and
the only state where it happens to be legal, which is Nevada,
is the state where that activity is regulated, where it is
reported, where taxes are collected on it, where minors are
banned from participating by law in the process, and yet in the
other 49 states gambling on amateur sports occurs every day.
It occurs in Washington. It occurs in our offices. How many
of our offices have had pools on the Final Four, and football
pools and everything else? I mean, how many states have illegal
bookmakers making book and bets on amateur sports all over the
country? Those activities, which are astronomical in terms of
the volume, are already illegal activities. They are not
reported, they are not regulated, taxes are not collected, and
minors are not banned--in fact they participate on a regular
basis.
So it is clear in my opinion what the problem is. The
problem is, we are not enforcing the laws in the 49 states
where this activity is already illegal, and the only state
where it is legal, it is regulated. It is regulated by law, and
the laws are being enforced.
So I think that the answer here is clear. Let's enforce the
laws that are already on the book. Address the problem the way
it should be addressed. The real problem is that it is not
regulated in the other 49 states, and I just would suggest,
with due respect--and again I do not question the motivation of
the authors of the legislation. They are well-motivated. I just
would suggest this is certainly not the answer to the problem,
to the extent that a problem exists.
Thank you.
Senator McCain. Thank you. Senator Reid.
STATEMENT OF HON. HARRY REID,
U.S. SENATOR FROM NEVADA
Senator Reid. Mr. Chairman, some of us do question your
motives. We have felt you have really moved forward on this
once Arizona lost in the first round of the NCAA tournament.
[Laughter.]
Senator McCain. Guilty.
[Laughter.]
Senator Reid. Mr. Chairman, I would ask your consent that
the full statement that I have prepared be made a part of the
record.
Senator McCain. Without objection.
Senator Reid. Mr. Chairman, first of all I say to my friend
from Kansas it is not true that the nineties has had more
point-shaving scandals than any other time. The facts are
clearly opposite that. I do not think we need to get into the
detail of this. I think the fact of the matter is that we have
legal gambling going on in the State of Nevada where Congress
for the last 15 or 20 years, it has really focused on state's
rights. Let each state do what they feel is best unless there
is some overriding national problem.
There is not one here. As Senator Bryan has so aptly
stated, the State of Nevada's overall gaming on college sports
is, he said, 1 percent. That is being generous. It is less than
1 percent of all gambling that takes place. That 1 percent or
less is legal. Someone comes to the State of Nevada to bet on a
game, you look, the odds are posted, people know what the odds
are going to be, if they win, they get paid off, if they lose,
there is no one going to be out beating them up on some street
corner because they did not pay off quick enough.
I think, Mr. Chairman, that knowing how you feel about
Government, that you should join with us in the legislation we
have sponsored that says, if we have a problem with illegal
gambling, which we all acknowledge there is on college sports,
let us take a look at it, find out where it is taking place,
and then get the Justice Department to do something about it.
The problem in Nevada, if you look around the newspapers in
the country, the odds are not posted from Las Vegas, they are
posted by newspapers. They have people that earn a living
posting the odds of these games. They do not come from Nevada.
So I would hope that you would join with us in our
legislation. After this legislation is passed and the study is
completed that there is some finding that Nevada is at fault,
then come back and look at it again. But I think you are really
jumping ahead of where you should be.
In short, Mr. Chairman, I believe that the experience that
I have had--and I benefit from experience. 4 years I was a
chief gaming regulator for the State of Nevada. I was chairman
of the Nevada Gaming Commission, and I know something about
illegal gambling.
I think we in Nevada have done a good job of regulating
gambling. We know what it means. You know, you are dealing with
cash, and unless you have good regulation and control, problems
develop. But as good--I know that the intentions of you and
Senator Brownback are good. You are good people, and you mean
well, but I would ask that you look at how we should approach
Government, and the way we are doing it in this instance is
simply wrong. The current laws, if they are insufficient, do
something about them. Why pick on the State of Nevada.
It is easy--the obvious answer is, it is easy because it is
something that you can pick at, and the NCAA, this has been fun
for them because it diverts attention from their incompetence.
The NCAA is incompetent in how they manage amateur athletics,
as evidenced by the young man at St. John's who traded a used
car for a used car and they suspended him three games from
playing basketball, and the numerous other instances of the
NCAA, how they have been unfair to assistant coaches. It took a
lawsuit to get assistant coaches so they were paid more than
minimum wage. So I understand why the NCAA is doing this. It
diverts attention from their lack of jurisdiction.
Mr. Chairman, you are a sister state. Arizona is a sister
state to the State of Nevada. The State of Nevada has bent over
backward to try to be good neighbors. We do not allow people to
play slot machines or to even drink alcoholic beverages until
they are 21 years of age, even though other states allow
somebody drinking alcoholic beverages when they are 18 years
old. We have tried to set an example so that Nevada cannot be
used as an excuse for pointing out how bad Nevada was in what
they personally have decided should be the law.
And I would hope that you would give Nevada the fact that
we have done a good job of regulating gambling. We have done a
good job of regulating college betting on games, and I would
hope that you will join us, I repeat, in the legislation that
we have initiated to take a look at illegal gambling on college
sports, and do something about it, and not look at the less
than 1 percent of gambling that goes on in college sports, and
when and if you are able to accomplish that, everyone raises
their hand and says, aren't we great, we have done this
wonderful thing by eliminating betting on college sports, when
you have eliminated less than 1 percent of it, and the saloons
and drug stores and service stations where this betting takes
place goes on as usual.
Thank you, Mr. Chairman.
[The prepared statement of Senator Reid follows:]
Prepared Statement of Hon. Harry Reid, U.S. Senator from Nevada
Talking Points:
First, let me stipulate, that I am opposed to illegal
gambling on college sports.
While I appear before this Committee today as a Senator I
want this Committee to understand that my testimony is based,
in part, upon my experience as the former Chairman of the
Nevada Gaming Commission.
Gaming is a cash industry that absent meaningful regulation
invites mischief.
Indeed, it works in Nevada because of the effective
meaningful regulatory framework that oversees this industry.
I believe the proposal before this Committee today misses
the mark in several key respects.
Illegal gambling, whether in the dorm rooms of our colleges
or the saloons and taverns throughout the country, is wrong and
more should be done to crack down on it.
However, banning lawfully regulated college gambling in
Nevada--which represents 1 percent of gambling on college
sports--will not address the problem of illegal gambling.
Where is the evidence that banning the 1 percent of legal
college wagering in Nevada will eliminate illegal gambling on
colleges?
Where is the evidence that current laws are insufficient?
I would suggest such evidence does not exist.
We do not need new laws--we need better enforcement.
I've proposed legislation directing the Department of
Justice to appoint a special task force to study and report to
Congress on the measures that could be taken to curb illegal
gambling.
I appreciate the NCAA's interest in protecting the integrity
of college sports.
But the NCAA's efforts to define this issue as arising out
of Nevada and afflicting college campuses is simply a red
herring.
Walk into any local bar or tavern and you're likely to find
an illegal bookie.
Walk into any office today and you're likely to find a pool
on the Final Four.
Will this ban eliminate this?
Are we going to start referring March Madness office pools
down to the Justice Department for prosecution?
Of course not, and the NCAA should abandon the use of this
red herring.
I believe they are in a position to actually do something to
clean up the beleaguered reputation of college sports right
now.
They are reaping millions of dollars in revenues from
contracts they're signing with broadcasters to cover these
games.
Perhaps they could be using some of that money to mount
educational campaigns not unlike those being done to combat
drug and alcohol abuse on our campuses.
I believe we need to follow the money a little more.
What is being done with all of this money?
I believe the NCAA has an obligation to put its money where
its mouth is and do something to curb this problem on their
member campuses.
The fault lies not in Nevada and the solution is not a ban.
I believe the solution involves a better understanding of
the illegal gambling, meaningful enforcement of existing laws
and greater cooperation from the NCAA.
That said, I also believe these bans neglect to recognize
the good work done by Nevada resorts to work with law
enforcement in preventing point shaving scandals on college
campuses.
They realize it is in their best financial interests not to
have any scandals.
That is why they go to such great lengths to provide a safe
regulated environment for the operation of their sports books.
Finally, I wish to say a few words about states rights.
Since 1994, Nevada, more than any other state in the union,
has been targeted for federal initiatives that are anathema to
the people of Nevada.
Whether it's nuclear waste or morality based anti-gambling
initiatives--the Republican Congress has sought to subvert and
trash the 10th Amendment rights of the state of Nevada.
It is at best ironic that the party which professes to care
most about states rights is again pushing legislation which is
clearly so violative of those rights.
Senator McCain. Thank you, Senator Reid.
Senator Reid. Mr. Chairman, if you do not have any
questions for me, could I be excused?
Senator McCain. Please. Please. I know we have a vote
coming up. I thank you very much, and I thank the patience of
all of my colleagues from both sides.
Senator Edwards.
STATEMENT OF HON. JOHN EDWARDS,
U.S. SENATOR FROM NORTH CAROLINA
Senator Edwards. Thank you, Mr. Chairman. Mr. Chairman, the
people of North Carolina are excited about having their state
represented in the Final Four this coming weekend and, in fact,
with any luck, I plan to be there on Saturday and hopefully on
Monday night, and we are excited because of our love for our
state, our pride in the University of North Carolina, and
appreciation of the student athletes who have made basketball a
way of life in our State of North Carolina.
While the people in North Carolina are excited about the
Final Four for all of the right reasons, there are people in
Nevada who are excited for all of the wrong reasons. Bookies in
Nevada are on the edge of their seats because they stand to
make hundreds of thousands of dollars this weekend from
gambling on the Final Four. Instead of rooting for a university
because of loyalty, bookies in Nevada will root for a team for
one reason, and only one reason, money.
Gambling on college sports, which is currently illegal, as
we all know, in 49 states, has led to numerous point-shaving
scandals in the 1990's. In fact, there were more point-shaving
scandals in the nineties than in the previous five decades
combined. Eight major universities were cited in the nineties
for point-shaving scandals, and no school is immune, not even
the most well-respected programs. Something has to be done to
stop this, and that is why we are proud to cosponsor the
legislation that we are hearing about today.
I want to applaud Senator Brownback and Senator McCain, the
Chairman, for their work in this area as well as the numerous
other Senators who have been involved in this and have been
willing to look past partisan politics to what is right for
thousands of amateur student athletes on our college campuses
across the country.
The National Gambling Impact Study Commission, a study
funded by Congress and released in 1999, recommended that
betting on collegiate and amateur athletic events that is
currently legal be banned altogether. This report goes on to
say of sports wagering, it puts student athletes in a
vulnerable position it can serve as gateway behavior for
adolescent gamblers, and it can devastate individuals and
careers.
This ban has the support of Coach Dean Smith, Coach Herb
Sendek of North Carolina State University, Coach Krzyzewski of
Duke, and Coach Bill Guthridge of the University of North
Carolina, as well as more than 60 other coaches across the
country.
In addition, I have heard from school administrators from
all across North Carolina, from students who have been involved
in point-shaving schemes, and from the commissioners of the Big
South and Atlantic Coast Conference who support this ban. The
support of these groups is a clear indication that there is a
real and legitimate concern over the impact of legalized
gambling on college games. Student athletes should go to
college to receive an education, not to be involved in point-
shaving scandals. They should go to college to learn invaluable
lessons, not to make money from the gaming industry in Nevada.
This bill is not intended to solve all of the gambling
problems in America. It will not stop the millions of dollars
that are gambled illegally in office pools or over the
Internet. It will, however, start to restore some of the
integrity that college athletics has lost due to recent point-
shaving scandals, and it will prevent casinos in Nevada from
raking in close to $1 billion annually on amateur athletics. It
sends a clear and unmistakable signal that we believe gambling
on college sports is wrong.
When I watch the University of North Carolina play on the
hardwood in Indianapolis this weekend, I want to be reminded of
Michael Jordan hitting the game-winning shot against Georgetown
in 1982 in the national finals, and Grant Hill leading Duke to
victory over UNLV in 1991 in the national semifinals. I do not
want to think about the reasons why, if these games were played
this weekend, that the UNC-Georgetown game could be wagered on
but not the Duke-UNLV game.
Politicians in Nevada have outlawed betting on universities
in their very own state. They recognize the potential for
corruption that can be caused by gambling on college athletics.
If gambling is so bad that they do not allow wagering on their
own schools, why do they have the right to gamble on our
schools? I believe I speak for the majority of North
Carolinians when I say the casinos in Nevada should leave our
college athletes and institutions alone.
Now, we will hear today from folks in Nevada about how
well-regulated the gaming industry is, and how they helped
discover the point-shaving scandals. We will not hear much,
though, about the millions of dollars they give annually to
politicians. You will not hear them talk about the influence
their money has here in Washington, and you will not hear them
talk about the billions and billions of dollars their casinos
make by other means.
If the gaming industry truly wants to be a part of the
solution and not part of the problem, they will do away with
legal gambling on college sports. I support this ban not to
cripple the gaming industry. I will guarantee you that the
lights in Las Vegas will not go out if college sports gambling
stops. I support this ban because it is the right thing to do.
Student athletes should not be money-making magnets for casinos
in Nevada. They are students first and athletes second, and it
is about time we all started treating them that way.
Thank you, Mr. Chairman.
Senator Brownback. (presiding) Thank you, Senator. We are
going to call a vote now on the bill on the Committee.
[Laughter.]
All those in favor.
[Laughter.]
We have a vote on the floor, but we will keep this going
and Senator McCain and others will be back shortly.
Congressman Gibbons, we will go with you next.
STATEMENT OF HON. JIM GIBBONS,
U.S. REPRESENTATIVE FROM NEVADA
Mr. Gibbons. Thank you very much, Senator Brownback, and to
the Committee. I want to thank you and the members of the
Commerce Committee for allowing me an opportunity to express my
strong opposition to Senate bill 2267.
As the senior Congressman from Nevada, the only state where
sports wagering is legal, it is my pleasure to have the
opportunity to share my thoughts with you on this issue, and I
dare say in rebuttal to some of the accusations that have been
presented so far, that the point-shaving scandals have neither
been supported nor started by any of the legal gaming
institutions in the State of Nevada, and I think it would be an
error for anyone to associate or to ally the legal, highly
regulated sports betting industry in Nevada with the issues of
those illegal sports betting problems that were raised so far.
And like this Committee, and like you, Senator Brownback, I
firmly agree, and I join you in the commitment that maintaining
the integrity of our collegiate athletics is an important goal.
However, this bill misses that goal by a mile.
Considering the fact that there is absolutely no plausible
evidence to suggest that legal betting in Nevada in any way is
responsible for the illegal sports wagering occurring in,
around, and on our Nation's college campuses, also legal
wagering on sports in Nevada makes up only 1 to 3 percent
maximum, as you heard earlier, and that no one in the State of
Nevada under the age of 21, no one who is not an adult and
responsible for their own actions, is allowed to gamble in our
state. The other 99 to 97 percent of the illegal betting occurs
under existing federal and state laws in every of the 49 other
states in this Union.
By banning legal sports betting in Nevada, you will
actually eliminate a tool used by law enforcement to detect
unusual betting patterns leading to illegal activity such as
the point-shaving scandal involving Arizona state university
basketball players in 1994. Consequently, law enforcement
experts, including a former FBI official who you will hear from
today, have stated that a ban as proposed in S. 2267 will not
make a dent in illegal gaming.
So what would be the effects and, indeed, the unfortunate
consequences of this misguided legislation? Well, first, Senate
bill 2267 would create an unfortunate and undue economic burden
on the thousands of Nevada families whose livelihood depends
upon this industry. Second, Senate bill 2267 is an illegal
bookie's dream, as it would not in any way assist with the
enforcement of our current laws limiting sports gaming. Even
the NCAA director of agent and gambling activities has stated
on national television that when it comes to law enforcement
the NCAA has, and I quote, ``a good relationship with the
sports books in Nevada.''
Later today you will have the opportunity to learn more
about Nevada's tightly regulated and well-respected gaming
industry from the Nevada Gaming Commission chairman, Brian
Sandoval. Mr. Sandoval is a highly regarded regulator and will
detail the success Nevada has had in enforcing its gaming laws,
which include taking bets from only individuals who are
physically present in the state, and at least 21 years of age.
We need to support effective law enforcement measures which
reduce the pervasiveness of illegal sports betting on and off
our Nation's college campuses. Perhaps the NCAA should look in
the mirror and reconsider the numerous Final Four sweepstakes
which the NCAA and its corporate sponsors promote during March
Madness.
In closing, Mr. Chairman, it is my hope that this Committee
will not miss the opportunity to address the real problems of
illegal sports betting, rather than focusing on Nevada's highly
regulated industry in an attempt to remedy the social problems
of illegal sports wagering on college campuses.
I want to thank you and this Committee for the opportunity
to share my thoughts on this important issue, and I welcome
your questions.
[The prepared statement of Mr. Gibbons follows:]
Prepared Statement of Hon. Jim Gibbons, U.S. Representative from Nevada
Mr. Chairman:
I would like to thank you and the members of the Commerce
Committee, for allowing me the opportunity to express my strong
opposition to S. 2267, the Amateur Sports Integrity Act.
As the senior Congressman from the State of Nevada, the only state
where sports wagering is legal, it is my pleasure to share my thoughts
on this issue.
Like you, I firmly agree that maintaining the integrity of college
athletics is an important goal.
However, there is absolutely no plausible evidence to suggest that
the legal sports betting in Nevada is responsible for the illegal
sports wagering occurring mostly on our nation's college campuses.
Legal wagering on sports in Nevada makes up only one to three
percent of all sports bets nationwide. The other 97 to 99% occurs
illegally under existing federal and state laws.
By banning legal college sports betting in Nevada, you will
actually eliminate a tool used by law enforcement to detect unusual
betting patterns leading to illegal activity, such as the point shaving
scandal involving some Arizona State University basketball players in
1994.
Consequently, law enforcement experts, including a former FBI
official who you will hear from later today, have stated that a ban as
proposed in S. 2267 would not make a dent in illegal gambling.
So, what would be the effects of this misguided legislation?
First, S. 2267 would create an undue economic burden on thousands
of Nevadans, whose livelihoods depend on the upstanding reputation of
the casino-entertainment industry.
Second, S. 2267 would not, in any way, assist with the enforcement
of our current laws limiting sports gambling. Even the NCAA Director of
Agent and Gambling Activities has stated on national television that
when it comes to law enforcement, the NCAA has ``had a good
relationship with the sports books in (Nevada).''
Later today, you will have the opportunity to learn more about
Nevada's tightly regulated and well-respected gaming industry from the
Nevada Gaming Commission Chairman, Brian Sandoval. A highly regarded
regulator, Mr. Sandoval will detail the success Nevada has had in
enforcing its gaming laws, which include taking bets only from
individuals who are physically present and at least 21 years of age.
We need to support effective law enforcement measures which reduce
the pervasiveness of illegal sports betting on and off of our college
campuses.
And perhaps the NCAA should look in the mirror and reconsider the
numerous ``Final Four'' sweepstakes which the NCAA and its corporate
sponsors promote during ``March Madness.''
In closing, I would like to echo the concern recently expressed by
Washington Post columnist George Will on this issue. In his March 12th
column, he stated that this measure ``sets some sort of indoor record
for missing the point.''
It is my hope that this Committee will not miss the point, and that
it will not go forward with this legislation.
Banning a legal and well-regulated sports betting industry is a
misguided attempt to remedy the societal problem of illegal sports
wagering on college campuses.
Thank you for this opportunity to share my thoughts on this
important issue, and I welcome your questions or comments.
Senator Brownback. Thank you, Congressman Gibbons.
Congressman Graham, welcome.
STATEMENT OF HON. LINDSEY O. GRAHAM,
U.S. REPRESENTATIVE FROM SOUTH CAROLINA
Mr. Graham. Thank you very much. I do not know what more to
add, but let me just kind of give you a brief overview of how I
came to the issue.
I did not wake up one day thinking about this. The NCAA
contacted our office and we talked with Congressman Roemer and
Congressman Wolf, and it was in response to a perceived need,
if nothing else, by the NCAA that college sports betting has
gotten to be a problem and will continue to be, and there is
some objective evidence from the National Gambling Impact Study
Commission to suggest that we need to ban gambling on college
and amateur athletics, and I looked at the study, and it really
makes sense to me, and I would like to address a couple of
issues brought up by our friends from Nevada.
If I were in Nevada I would probably be doing what they are
doing, because it is an important issue in their state and
there is a lot of money involved, but this is not a state's
rights issue to me, Senator Brownback, and I appreciate the
chairman for having this hearing now, because we know what is
going on this weekend. There will be a lot of attention focused
on college athletics in a positive way.
In 1992 there was a national solution to a national problem
called the Professional and Amateur Sports Protection Act, and
within that Act Congress grandfathered certain states to allow
continued betting--Nevada, Oregon, Montana, and Delaware--and
we are just honestly dealing with Nevada.
I would argue that there is no state's rights issue here
because the legislation in 1992 prohibited any state from
starting legal betting, or engaging in legal betting on college
or amateur athletics. What we are having to do is revisit a
national solution and see if we need to close the loophole
created in 1992, and unfortunately I think the answer is yes.
Now, each member of the Committee, Mr. Chairman, can decide
on their own whether or not in the nineties college sports was
adversely affected by a billion-dollar industry in Nevada, and
you can make that decision without my input, but I would
suggest to you it is not a great leap in logic to suggest that
$1 billion on the line, some kid who is 18 years old, comes
from a poverty situation, may miss a foul shot, may drop the
ball when he could have caught the ball. It does not take much
reasoning, I think, to understand that $1 billion on the line
every year is going to affect the game adversely.
In 1992, we took a national approach to this problem. We
banned the future of legal betting on college and amateur
sports except in some states. Now it is time to revisit whether
or not that grandfather clause is serving the country well. I
would suggest to you from the NCAA's point of view and other
people involved within this issue, we need to revisit this
national solution again and close this loophole, because a $1
billion bet every year on college sports will eventually hurt
college sports if it has already not done so. That is why I am
here today, Mr. Chairman, for the love of the game.
Thank you.
Senator McCain. Thanks very much, Congressman Graham.
Congresswoman Berkley, welcome.
STATEMENT OF HON. SHELLEY BERKLEY,
U.S. REPRESENTATIVE FROM NEVADA
Ms. Berkley. Thank you, Mr. Chairman, Committee members,
for allowing me to testify before you today. March Madness is
upon us, and illegal gambling on basketball is sweeping the
country. I am sure that you are shocked, too, but I have
learned that illegal office pools are operating right under our
noses here on Capitol Hill.
Senator McCain. Congressman Berkley, let me point out
something to you. As long as the person who is running the pool
does not take part of the gambling, that it is not illegal in
America, so let us try to make that clear.
Mr. Graham. May I be excused, Mr. Chairman?
Senator McCain. Yes.
Ms. Berkley. Now, office pools are regarded as harmless
pastimes, but there is illegal gambling going on, and we should
be fighting against it. Organized on-campus and off-campus
betting operations will rake in massive profits, ruining lives
on and off campus. Unfortunately, some Members of Congress and
the NCAA think the best way to combat the menace of illegal
sports bookmaking--and this is shocking to me--is to outlaw
legal sports betting in Nevada.
Never mind that Nevada's legal sports betting is strictly
regulated, taxed, and available only to persons over 21 who are
physically present in Nevada, the NCAA still wants to outlaw
it, and the NCAA persists in pushing illogical legislation that
will do nothing to eliminate illegal sports betting in this
country.
This legislation takes the upside-down position that the
Nation's $380-billion-a-year illegal sports gambling problem
will go away if Congress outlaws legal wagering in Nevada, a
regulated business that generates far less than 1 percent of
the illegal action in the other 49 states. It does nothing to
fight illegal gambling.
The sponsors of this legislation fail to answer the
threshold question of how closing legal sports books in one
state will do anything about illegal wagering by college
students and others in the other 49 states.
The sponsors claim that it will send a message to young
people, but with all due respect to my colleagues in Congress,
I sincerely doubt that young people know or care whether
gambling is legal in Nevada, much less whether Congress has
acted, and I listened with great interest when Senator Edwards
spoke of the bookies in Nevada making hundreds of thousands of
dollars this past week for the NCAA tournament. I would say to
Senator Edwards that he look to the illegal bookies in North
Carolina and investigate how much money they will be making
while the Senator is sitting home cheering for his team.
We need better education and law enforcement, not a
punitive measure against one state's primary industry. Closing
our sports books to send this message is like closing
restaurants to send a message to young people about alcohol. We
need legislation that will attack illegal sports betting head-
on, and that is why I am introducing the Illegal Sports Betting
Enforcement Act that I hope you will take time to review and
support, and I would like to briefly compare the legislation.
My bill boosts law enforcement's efforts to crack down on
illegal betting operations, hitting hard at illegal book-making
rings. The NCAA bill does absolutely nothing to help law
enforcement. My bill would investigate the scope and uncover
the causes of illegal campus betting. The NCAA bill does
nothing, no studies, no investigations, no public service
statements, nothing. My bill calls on the NCAA to step up
gambling prevention programs on campuses. The NCAA proposed
bill takes no responsibility.
Mr. Chairman, Nevada is not the problem. Please look at the
Illegal Sports Betting Enforcement Act I am proposing. It is
clearly the better choice, and I want to thank you very much
for giving me the opportunity to share my thoughts with you. I
have long been an admirer of yours, never more so than over the
last several months.
Senator McCain. Thank you very much, Congresswoman Berkley.
Congressman Roemer, welcome.
STATEMENT OF HON. TIM ROEMER,
U.S. REPRESENTATIVE FROM INDIANA
Mr. Roemer. I would ask unanimous consent for my entire
statement to be entered into the record.
Senator McCain. Without objection.
Mr. Roemer. Thank you, Mr. Chairman. I first of all want to
thank you for holding this hearing, and I hope that the House
side will also hold a hearing so that the Members of Congress
can get the relevant and important and necessary information on
this act so that we can learn about it and we can vote it up or
down and not have people downtown or uptown, or people from one
side or the other in Washington, D.C. saying that this is dead
legislation. Let the Members of Congress decide whether or not
this legislation will pass.
I want to thank Mr. Brownback and Mr. Leahy, who I have
joined on cosponsoring this, and Mr. Graham for his support on
the House side.
You know, Mr. Chairman, we came just recently through the
Oscars, and we had Oscars awarded to different movie stars in
this country who are good at following direction, following
script and getting an Oscar for doing precisely that. It is
tough to get a ticket to an Indiana high school basketball game
or a Notre Dame football game on a Saturday because of the
magic and the uncertainty of the outcome of sports. It is not
scripted.
Nobody knows on a given day who might defeat whom on the
playing field. When a 17-year-old or an 18-year-old throws a
pass or steps to the free throw line, that magic and that
purity in this country is not questioned as to whether or not
that person is going to make it or miss it determined by the
sports betting line. If it is, then the integrity of our
amateur athletics are severely questioned, and we probably lose
support and audience for sports across the board. I am here
today because I believe in the magic of that competition and
the uncertainty of the outcome.
Now, I think the threshold questions to ask, Mr. Chairman,
are first, who knows the most about the threat to college
athletics today? Is it us, sitting in this room? Is it the
people downtown in Washington, D.C.? Or are they the college
presidents? Are they the college coaches? Are they the college
athletes?
Those three groups of people: coaches, presidents, and
athletes support our bill as one of the highest priorities for
them in this session of Congress. We have university presidents
writing to us. We have coaches, and you will hear from the
distinguished coach from Connecticut, a champion coach from
last year, Jim Calhoun, talk about this problem. We have Dean
Smith and Joe Paterno and Bob Davie and Matt Doherty on our
side on this issue.
Secondly, what is the value of this legislation? The value
is to protect the magic of sports and the integrity of
teenagers. Now, we can bet almost on anything in this country,
in America. They allow betting on Super Bowls, on horses, on
cock-fighting. They allow betting on all kinds of pro events.
All we are asking, Mr. Chairman, is to finish the job we
started in 1992, where 46 states were banned and now only one
is left, to finish the job that the National Gambling Impact
Study Commission asked us to do, and to protect our teenagers
and protect college, high school, and amateur sports.
I would conclude, Mr. Chairman, on two notes. One is a
quote from the president of the University of Notre Dame,
Father Monk Malloy, who when asked about what kind of priority
this is for him, he said the following, and I quote ``the
president of Notre Dame: ``nothing scares me more than the
potential harm unfettered gambling creates. Scandals erode
confidence that what is taking place is a real event. If people
begin to believe college athletics are scripted, then why
should anybody come to the games, and how is that in any way
consistent with what we stand for as an academic institution''.
Now, I am a big sports fan, as you are, Mr. Chairman, and
in Indiana, when the tiny, tiny school, Milan High School in
1954 defeated South Bend Central, and is the whole genesis of
the movie Hoosiers, that is the beauty of sport, the little guy
taking on the big guy, kind of like you did, the little guy
taking on the big guy.
[Laughter.]
The Russians thought they had us in 1980, and in hockey we
came back and we beat them, the hockey shots heard around the
world, and Kerri Strug, who hit that celebrated vault, won our
Olympic gold medal for the women's team. Nobody predicted that,
with a broken ankle. That is the beauty of what we are trying
to do.
We are not trying to eliminate sports betting. We are not
trying to eliminate all gambling. Protect as a value our
teenagers, and the integrity, the magic, the purity of college
athletics.
And finally, Mr. Chairman, we have heard a lot about what
will this do between the competition, what will do between our
emphasis that we want to put on going after maybe illegal
sports betting? It is awfully difficult for us to work
effectively to go after illegal gambling when the Government
sanctions legal gambling.
So with that, thank you again for holding this hearing.
[The prepared statement of Mr. Roemer follows:]
Prepared Statement of Hon. Tim Roemer, U.S. Representative from Indiana
Thank you very much, Mr. Chairman and members of the Committee. I
appreciate the opportunity to testify today in support of legislation
which Senators Sam Brownback and Pat Leahy, and Rep. Lindsey Graham and
I have introduced, to prohibit legal gambling on high school,
collegiate and Olympic sporting events.
In my home state of Indiana, we take our high school and college
sports very seriously. You can't get a ticket to a high school
basketball game in my district on a Friday night, or to a Notre Dame
football game on a Saturday afternoon. They are sold out for months and
even years in advance.
Why is that? What's the magic of high school and collegiate sports
that attracts so many student-athletes to compete, and draws so many
fans to watch?
To me, it's the purity and uncertainty of amateur sports. In an era
of movies and computer games, where the outcomes are scripted in
advance, you just don't know what's going to happen when a 17-year old
boy or girl steps to the line to attempt a game-winning foul shot or to
kick a field goal. Your home team may win, they may lose, but at least
you know the players tried their best in the pure spirit of
competition.
Today, that purity is being threatened by the growing influence of
gambling. Not by small-time office betting pools or parking lot wagers,
but by high-stakes, legal, government-sanctioned gambling: some $1
billion worth last year alone on college sports.
As long as that kind of big money is out there, and sports betting
is both legal and indeed encouraged by the government, the temptation
to shave points or throw a game will always be there. We will no longer
know if a player misses a layup, or drops a pass deliberately, or if he
just plain misses. And once we lose that certainty, we will no longer
know if amateur sports are still an act of competition, or just another
act that has been scripted not in Hollywood, but in the back rooms of
the legal betting parlors.
We are not proposing to ban gambling or even to ban all sports
betting. If this bill passes, there will still be plenty of venues
available for people to gamble, including the entire range of
professional sports. We are simply trying to put the segment of amateur
athletics that is played predominantly by teenagers off-limits when it
comes to government-sanctioned gambling.
This is the responsible thing to do. It will help protect the
integrity of amateur sports from the growing and increasingly negative
influence of sports betting. Just as importantly, it will send a strong
signal to the American public that we will not tolerate betting on
teenagers.
I understand that illegal sports betting is a serious concern, and
I agree that we need to do more to address this problem. But the fact
remains that gambling on student-athletes, whether legal or illegal,
threatens the integrity of college sports. You can't wage an effective
campaign against illegal sports betting, or even expect people to take
this problem seriously, as long as the government continues to sanction
legal sports betting.
When you talk to the people who are most affected by sports
betting, you find that coaches, student-athletes and university
presidents all support a ban on legal sports betting. They know
firsthand how pervasive the sports betting problem has become, and the
threat it poses to the integrity of their athletic programs and the
student-athletes who participate in them.
That's why our bill is the number one priority of the National
Collegiate Athletic Association and the nearly 1,000 colleges and
universities it represents. It is supported by our nation's most
respected college football and basketball coaches, 65 of whom recently
signed a letter to Congress urging passage of our bill.
It is supported by the Division I, II and III student athlete
advisory councils, which represent most of our nation's college
athletes, and by 33 other major organizations representing coaches,
athletes, athletic administrators, teachers, and presidents at the
university, college, junior college and high school levels.
Moreover, the National Gambling Impact Study Commission spent two
years studying the effects of legalized gambling, and recommended that
``the betting on collegiate and amateur athletic events that is
currently legal be banned altogether.'' Our bill is in response to the
Commission's recommendations.
As Fr. Edward Malloy, President of the University of Notre Dame,
recently observed: ``Nothing scares me more than the potential harm
unfettered gambling creates. Scandals erode confidence that what's
taking place is a `real' event. If people begin to believe college
athletics are scripted, then why should anybody come to the games? And
how is that in any way consistent with what we stand for as an academic
institution?''
Congress took the first step in 1992 by voting to prohibit legal
sports betting in 46 states. It's time now to finish the job. Let's end
legal sports betting and put the emphasis back where it belongs: on
athletes playing their best, not placing their bets. On beating the
competition, not beating the spread.
Think back for a moment on some of the greatest moments in our
nation's sporting history: tiny Milan High's remarkable triumph in the
Indiana state basketball championship, the U.S. men's hockey team's
improbable victory over the Russians, Kerri Strug's courageous vault to
win the Olympic gold medal. These events captivated our imagination
because they were real and unexpected.
If we allow amateur sports to become scripted, that magic will be
gone. Let's pass this legislation and keep high school and collegiate
sports as an institution, which all Americans--coaches, players and
fans alike--can value and trust. Thank you.
Senator McCain. Thank you, Congressman Roemer. Thank you
for your kind remarks. Thank you for being here. I would point
out it has been since 1963, when Roger Staubach was at the
Naval Academy, which was the last time Navy beat Notre Dame, so
not all is well in the world.
[Laughter.]
Mr. Roemer. I hate to disagree with you, but I hope that
string continues.
Senator McCain. Thank you very much.
I appreciate the patience of our panel members, President
Charles Wethington, president, University of Kentucky, Mr. Jim
Calhoun, the head men's basketball coach at the University of
Connecticut, Dr. Tim Kelly, executive director, National
Gambling Impact Study Commission, and Mr. Frank Fahrenkopf, who
is president and CEO of the American Gaming Association.
As you take your places, I would like to quote from an
article that was in Sports Illustrated but also carried in this
NCAA fact book. Steven Hedake Smith sunk himself more than
$10,000 in debt to a student bookie. To wash the debt, Smith
agreed to shave points off games. Smith then enlisted the help
of a team-mate to shave points off three more games when more
then $1 million in bets was placed on the games in Las Vegas.
Before he was sentenced, Smith told Sports Illustrated,
having been there, ``I can tell you how easily players can be
drawn into fixing games. Poor, naive teenagers plus rich,
greedy gamblers equal disaster.''
President Wethington, I thank you and the rest of the panel
for your patience. We thank you for being here on this very
important issue. Please proceed.
STATEMENT OF DR. CHARLES T. WETHINGTON, JR., PRESIDENT,
UNIVERSITY OF KENTUCKY, LEXINGTON, KY
Dr. Wethington. Senator McCain, thank you very much, and
thank you for inviting me to testify today on a matter of
concern to the NCAA and to the larger higher education
community, and that is gambling on college sports, and I would
ask my written statement in its entirety be included as a part
of the hearing record.
Senator McCain. Without objection.
Dr. Wethington. The excitement of college sports does not
get any better, as you have heard this morning, than during the
road to the Final Four and Mr. Chairman, I know that your
institution, like the University of Kentucky, we get excited
when our teams win and we get disappointed when our teams do
not advance, and so we are both in the same boat this year, I
believe. Our emotions are all tied up in the hopes and dreams
of these young players and the pride and respect we feel for
our institutions. We do not need anything more to enjoy these
games.
Gambling on the outcome of these games is not only
unnecessary, it sells short the talent and hard work that the
student athletes bring to the games, and has the potential to
jeopardize the integrity of this American tradition. In my 10
years as president, I have yet to hear genuine fans of
intercollegiate athletics suggest that they support collegiate
contests because they can bet on the outcome of the games.
Gambling on college student athletes and the games they
play, whether done legally in the sports books of Nevada or
illegally in any other state, or on the Internet, is a problem
for colleges and universities. Gambling on high school,
college, and Olympic sporting events we believe should be
prohibited in all states, and greater effort should be taken to
enforce existing laws that ban gambling on the athletic success
of our young people.
The Amateur Sports Integrity Protection Act will, we think,
eliminate the use of Nevada sports books in college point-
shaving scandals, eliminate the legitimacy of publishing point
spreads for college sports, and advertising for college spots
tout services. We sensitize young people in the public to the
illegal nature of gambling on college sports and inevitably
reduce the numbers of people who are introduced to sports
gambling.
When it comes to college sports gambling, whether a wager
is placed on the Internet, with a neighborhood bookie, or in
the most highly regulated casino in the world, the result is
the same. That remains the potential for the integrity of the
contest to be jeopardized.
Opponents of this legislation say that the problem is not
with legal sports gambling, but with illegal sports gambling.
We say there is a problem with both. For 4 years, the NCAA has
been battling to reduce illegal gambling on college sports.
NCAA staff worked with the FBI, local college law enforcement
and campus officials to address the illegal side of the
business, but it is hard when gambling on college sports is
legal in one place and not legal in another. It puts us at a
real disadvantage fighting illegal sports gambling, when legal
sports gambling is so glamorized. This not only sends a mixed
message to the other 49 states, it gives gambling on college
sports a celebrity status.
We must tackle this problem on multiple fronts. We cannot
stand by while this inappropriate activity threatens the
integrity of college games, places college student athletes in
a vulnerable position, destroys lives, and impacts campuses.
The Nevada gambling industry says they have helped us
identify gambling irregularities that have resulted in
prosecutions. They are right. They helped us convict the
Arizona state basketball players who agreed to shave points.
But they did not detect the Northwestern game-fixing scheme,
which also utilized the legal Nevada sports books, and more
important, we do not believe they have ever helped us prevent a
scandal. This action has taken place after the fact.
At a press conference in January to introduce Senator
Brownback's legislation, and Senator Brownback referred to this
earlier, the young man who master-minded the Northwestern
gambling scandal told the press, ``without the option of
betting money in Nevada the scheme would not have occurred''.
He cited two reasons. ``My local bookie could not have covered
a $20,000 bet on a game that was fixed, and conscience would
not let me cheat someone I know''.
Opponents of the pending legislation will also criticize
the NCAA for not doing enough. Our number one priority will
always be the support of colleges and universities in providing
participation opportunities for the 335,000 student athletes
who play intercollegiate athletics. We also provide 81
championships in 22 sports that gave more than 40,000 student
athletes last year the opportunity to say they were the best of
the best. The bulk of NCAA resources go, and will continue to
go, toward these two goals.
The two most important tools we have in fighting sports
waging are campus education and cooperation with law
enforcement. We have made significant progress in both of these
areas in the last 4 years. We have conducted countless seminars
around the country, including presentations by the FBI. We have
produced PSA's, posters and brochures annually, made awareness
presentations to coaches, student athletes, and officials at
our highest profile championships.
We have participated in hundreds of newspaper, television,
and radio interviews to raise awareness. We have passed
association-wide bylaws, put real teeth in our antisports
gambling campaign, and most importantly, engaged our 1,074
member colleges and universities in conducting local efforts to
raise campus and community awareness to the dangers of betting
on college sports.
This is tough trenchwork, and the job is made tougher by
the existence of a perfectly legal, deceptively glamorous open
sports book on intercollegiate athletics in Nevada. The
elimination of legalized college betting in Nevada will make
the task of waging war on illegal sports gambling an infinitely
fair fight.
We have established policies to prohibit all sports
gambling by campus athletics personnel, student athletes, and
NCAA employees. We conduct background checks on gaming
officials. We sponsor educational programs for student
athletes. We work with campus administrators to conduct sports
wagering workshops. We broadcast antisports gambling public
service announcements during our championships.
We have published a guide for students on the possible
negative effects of sports gambling and principles of good
financial management, and we are currently working with the
higher end community to develop research on college sports
gambling. Since being enacted in 1992, the Professional and
Amateur Sports Protection Act has been successful in holding
the growth of state-sponsored amateur sports gambling, but the
beachhead of legalized amateur sports wagering continues to
hold in Nevada casinos blunts efforts of the NCAA and higher
education to combat college sports gambling.
The insidious effects of legalized wagering on college
sports has been recognized by Nevada, as evidenced by the
state's own laws that prohibit betting on any Nevada team. The
effects go far beyond the Nevada state's line. Other states'
colleges and universities should be given the same protection,
and you have heard that referred to on more than one occasion
this morning.
Even though sports gambling is illegal in nearly every
state, point spreads on college games are published in
newspapers across the country, bookies are common fixtures on
college campuses, and new technologies allow bets on college
games to be placed over the Internet. The dollars involved are
big, and they are escalating every year. By clearly making
gambling on college sports illegal everywhere all the time, we
will strike a significant blow against an activity that
threatens the integrity of college sport.
This Nation's college and university system is one of our
greatest assets. We offer the world a model for post secondary
education. Betting on the outcome of college sporting events
tarnishes the integrity of sport and diminishes the esteem in
which we and the rest of the world hold U.S. colleges and
universities. For these reasons, the NCAA and its member
institutions respectfully seeks your help in eliminating from
the Professional and Amateur Sports Protection Act the
exemption that allows the Nevada casino industry to operate
collegiate sports betting schemes and thereby to jeopardize the
integrity of sport in America.
While we recognize that a ban on collegiate sports gambling
will not eliminate all gambling on college sports, it is a
significant start. Coupled with passage of legislation to ban
betting over the Internet, and more vigorous enforcement of
existing state and federal laws, we have a shot at curbing this
detrimental activity. If we miss this legislative opportunity,
the job of fighting illegal sports wagering elsewhere will be
infinitely more difficult.
NCAA and the colleges and universities that support this
legislation, along with the leaders of the high school
community, higher education and the U.S. Olympic Committee,
have no monetary interest in the outcome of this legislation.
Our goal is to protect student athletes and remove the unseemly
influences of sports gambling on our amateur athletes and the
games they play. We look forward to working with you to close
the gap that has not only allowed legal betting on college
sports to continue, but also fuels illegal betting on college
games.
Now, if you would, gentlemen, please turn your attention to
the television monitors to see the gambling PSA the NCAA is
running during the Final Four championship games on CBS and
ESPN, if I might do so, Mr. Chairman.
[The prepared statement of Dr. Wethington follows:]
Prepared Statement of Dr. Charles T. Wethington, Jr., President,
University of Kentucky, Lexington, KY
Chairman McCain, Senators Hollings, Brownback and other
distinguished members of the Committee, thank you for inviting me to
testify before you today on a matter of concern to the NCAA and the
larger higher education community--gambling on college sports.
The last two weekends have provided a wonderful opportunity for
sports fans to watch college basketball at its finest. The excitement
of college sports doesn't get any better than during the road to the
Final Four. Mr. Chairman and Senator Brownback, I am sure you felt the
same exhilaration I did when your home team played and won earlier in
the tournament; I am also confident that you shared the same feeling of
disappointment when your team played and lost two days later. Our
emotions are all tied up in the hopes and dreams of these young players
and the pride and respect we feel for our institutions. We don't need
anything more to enjoy these games--gambling on the outcome of these
games is not only unnecessary, it sells short the talent and hard work
that the student-athletes bring to the games and has the potential to
jeopardize the integrity of this American tradition. In my 10 years as
president, I have yet to hear genuine fans of intercollegiate athletics
suggest that they support collegiate contests because they can bet on
the outcome of the games.
Gambling on college student-athletes and the games they play,
whether done legally in the sports books of Nevada or illegally in any
other state, or on the Internet is a problem. Gambling on high school,
college and Olympic sporting events should be prohibited in all states
and greater efforts should be taken to enforce existing laws that ban
gambling on the athletics success of our young people. On behalf of
NCAA colleges and universities, athletics conferences and affiliated
athletics organizations, I ask for the Committee's help in achieving
these priorities.
Background--Congress Enacts Law to Prohibit Gambling on Amateur and
Professional Sports
In 1992, the Professional and Amateur Sports Protection Act (PASPA)
was signed into law by President Bush to prohibit gambling on most
sporting events. PASPA exempted four states that already conducted, or
had enacted legislation that permitted them to conduct, sports gambling
within their jurisdiction. Nevada was the only state at the time and,
continues to be the only state, where legal gambling on college and
Olympic sporting events is conducted. Our collective instincts were
right in 1992 and we should have completed the job then. We should have
made sports wagering illegal in all 50 states. Now, eight years later,
there has been a blurring of the line between legal and illegal sports
gambling in this country. Sports gambling has become such a part of the
glamour of Las Vegas that it is fairly safe to conclude that many do
not know that gambling on college sports is an illegal activity in
virtually every state in the U.S.
National Gambling Impact Study Commission--Recommends Exemption be
Eliminated
In June 1999, the National Gambling Impact Study Commission,
comprised of bipartisan members appointed by the President and the
leadership of the U.S. House of Representatives and U.S. Senate, issued
their recommendations to Congress. Among the recommendations put
forward by the Commission was that ``betting on collegiate and amateur
athletic events that is currently legal be banned altogether.'' In
making this recommendation the Commission stated,
``Sports wagering threatens the integrity of sports, it puts
student athletes in a vulnerable position, it can devastate
individuals and careers.''
We agree with the Gambling Impact Study Commission that legal
gambling on college sports fuels the larger illegal sports gambling
industry and should be discontinued.
Pending Legislation Closes a Loophole in 1992 PASPA Law--Helps Protect
the Integrity of College Sporting Events
S. 2021 the pending legislation will remove any ambiguity
associated with betting on college sports by making it clearly illegal
to gamble on college games in every state. This will help curb the
destructive and unseemly practice of gambling on the athletics success
of our nation's young student-athletes. Nearly a billion dollars was
bet legally in Nevada on college games last year. Although rare, the
NCAA has experienced several high profile gambling related incidents
involving student-athletes in the last decade. The most significant of
these scandals involved money wagered legally in Nevada casinos. As the
amount of money legally wagered on college sports escalates, the
pressures on student-athletes to provide inside information on the team
for gambling purposes or to ``shave'' points and fix games is bound to
increase as well. The pending legislation will close the loophole of
the 1992 legislation, aid in preserving the integrity of college
sporting events, and assist in protecting student-athletes from
pressures to influence the outcome of a game or contest.
While it is true that Nevada casinos have been helpful in
monitoring unusual shifts in wagering on college games, this hardly
ensures protection from point shaving scandals. In fact, recent point
shaving scandals have utilized Nevada sports books without being
detected; the Northwestern University case is a prime example. A
blanket prohibition on collegiate sports betting will reduce
significantly the outlets available for placing wagers and, in doing
so, will undoubtedly have an impact on the number of individuals
gambling on the games. The fact is, even when the Nevada casinos helped
identify the point shaving activity, it was after the fact. We are
fearful that the scandals identified by the Nevada sports books are
only representative of a larger problem of legal wagers on ``fixed''
games that largely goes undetected. We are not aware of the Nevada
sports books ever having prevented a college gambling scandal from
occurring.
Publication of Point Spreads in Most Newspapers Contributes to Illegal
Sports Wagering
According to the National Gambling Impact Study Commission report:
``One reason Americans may not be aware of the illegality of
sports wagering is that the Las Vegas `line,' or point spread,
is published in most of the 48 states where sports wagering is
illegal.''
The pending legislation will eliminate any justification for the
publishing of point spreads (betting odds) on college games in our
nation's newspapers. In addition, a ban on all collegiate sports
gambling may help curtail the widespread advertising of sports
handicappers' services (associated with college football and
basketball) in newspapers, magazines and on television. Point spreads
contribute to the popularity of sports wagering. In short, a uniform
prohibition will re-sensitize the public to the corrupting nature of
this activity and encourage newspapers to follow the lead of the
Washington Post, which voluntarily refuses to publish the betting line
on college games. Furthermore, the gambling industry points to Internet
gambling as the future source of point spreads. Congress' passage of
the Internet Gambling Prohibition Act would have a significant impact
on U.S. access to online sports gambling sites.
Nevada Prohibits Betting on Any of Nevada's Own Teams to Protect the
Integrity of those Events
Nevada is currently the only state where collegiate sports gambling
occurs. Proponents of Nevada sports books argue that regulated sports
books pose little threat to the integrity of sports contests and that
illegal sports gambling is the culprit. However, Nevada gaming
regulations clearly recognize the potential danger that legal sports
gambling presents. The regulations not only prohibit Nevada sports
books from accepting bets on college athletics events that occur in the
state, but they also prohibit gambling on any games of Nevada
institutions played outside the state's borders. Inexplicably, this
protection does not extend to any of the institutions located in the
other 49 states. On February 11, the NCAA wrote to Steve DuCharme,
Chairman of the Nevada Gaming Control Board. The letter specifically
asked the Nevada Gaming Control Board to grant a request by a NCAA
member college or university to have the institution's name removed
from the betting boards at the Nevada sports books in much the same way
the Nevada institutions were removed. In a March 20 response, the NCAA
request was not granted. DuCharme merely said other institutions are
afforded the same protections as Nevada's institutions because their
home states don't allow betting on their own home teams. However, the
letter failed to point out that other states, unlike Nevada, don't
allow betting on any other states' teams either. With the ease of
travel, the proximity of bettors to teams doesn't stop at a state line.
For example, nothing prohibits someone from placing a $9,500 bet on a
college game outside Nevada and then attempting to pressure a student-
athlete to influence the outcome of the contest. The same protections
afforded Nevada teams should be provided to the teams of all states.
Legal College Sports Gambling Operations Provide Avenue for Illegal
Sports Gambling Money Laundering
The legally and illegally wagered dollars on college sporting
events are thought to be in the billions but no accurate data on the
exact amount of illegal gaming on college sports is available.
Complicating the matter is the money laundering of illegal sports book
dollars through legitimate sports books. Steve DuCharme, Chairman of
the Nevada Gaming Control Board, is quoted in a February 1999, Sports
Business Journal article as saying:
``We've taken steps to crack down on the amount of illegal
money being laundered through legitimate sports books. We
really have no way of knowing [how much is laundered through
the legal sports books]. Based on transcriptions of wiretaps,
it is millions of dollars.''
These are federal law enforcement issues, meriting a federal
solution.
Discontinuation of College Sports Gambling Would Not Result in a
Serious Threat to the Nevada Economy
Fears that this legislation will be a ``serious threat'' to the
Nevada economy are not supported by the facts. In 1999, approximately
$2.3 billion dollars was wagered in Nevada sports books. Casinos
retained $99 million, a little more than 3.5 percent of the total
amount wagered on sports. According to Steve DuCharme, chairman of the
Nevada State Gaming Control Board, the amount kept by casinos on sports
gambling is ``very small'' compared to other casino games. Furthermore,
the amount wagered on college sports is only a little more then a third
of the total. In an industry driven by billions of dollars, (1999 total
casino revenues were $10.1 billion) the elimination of collegiate
sports gambling will have little impact on state revenues or on the
casinos' bottom line. The amount bet on college sports is only \3/10\
of one percent of overall casino revenues. In the midst of record
growth in the Nevada casino industry, the proposed legislation will
have virtually no impact on jobs.
The existence of legal sports gambling in Nevada is actually
limiting the growth of the Nevada economy in some areas. Most amateur
and professional sports leagues have policies against franchise
location and events staged in Nevada because of the presence of sports
gambling.
College Sports Gambling Serves as a Gateway for Youth to Addictive
Gambling Behavior--Youth Gambling Problem is a Concern
We are concerned that legal collegiate sports gambling fuels a much
larger illegal collegiate sports gambling trade--impacting America's
youth at an alarming rate. Sports gambling is a serious problem among
teenagers under the age of 18. A recent Gallup Poll reports that
teenagers say they start betting on college sports at age 10 and bet on
college sports at twice the rate of adults. Called ``the addiction of
the 90's'' by the American Academy of Pediatrics--their research
indicates that there are over one million U.S. teens that are addicted
to gambling. A recent Harvard School of Medicine report estimates that
6 percent of teenagers under 18 have serious gambling problems. In a
June of 1999 Gallup Poll, 18 percent of teenage respondents said they
had bet on college sports, contrasted with 9 percent of adults who
wagered on college games. The National Gambling Impact Study Commission
report calls sports wagering ``a gateway behavior for adolescent
gamblers.'' Prohibiting college sports gambling everywhere in the U.S.
would send a clear signal that the activity is illegal. In addition, a
federal prohibition would put an end to the mixed message to our young
people, limit exposure and reduce the numbers of people who are
introduced to sports gambling.
NCAA takes Concrete Steps to Address College Sports Gambling--Adopts
No-
nonsense Policies and Education Outreach Programs
The NCAA has not been sitting on the sidelines in confronting the
sports gambling issue and has taken significant steps to address the
very real problems associated with betting on college sports. The NCAA
has established policies that prohibit all sports gambling by campus
athletics personnel, student-athletes and NCAA employees. Student-
athletes are not eligible to compete if they knowingly provide
information to individuals involved in organized gambling activities
concerning intercollegiate athletics competition; solicit a bet on any
intercollegiate team; accept a bet on any intercollegiate team; accept
a bet on any team representing the institution or participate in any
gambling activity that involves intercollegiate athletics through a
bookmaker, parlay card or any other method employed by organized
gambling. Similar expectations apply to coaches, athletic directors,
and NCAA staff. Recently, the NCAA instituted background checks on
men's and women's basketball game officials. This was done to insure
that the game officials have not been involved in sports wagering
issues. In addition, the NCAA sponsors: educational programs; works
with campus administrators to conduct sports wagering workshops;
broadcasts anti-sports-gambling public service announcements during our
championship games aired by CBS and ESPN; has entered a partnership
with the National Endowment for Financial Education, to produce a
booklet entitled, ``Don't Bet On It,'' to educate students about the
dangers of sports gambling and to acquaint them with good financial
management strategies and is working to develop research in the area of
youth gambling and campus gambling.
The NCAA and its Membership Are Committed To Improving Student-Athlete
Experience
Opponents of the pending legislation to prohibit gambling on
college sports in all states criticize the NCAA for reaping profits
from college sports while not investing more in gambling prevention
programs. As mentioned above, the NCAA does support a number of
programs that address the sports gambling issue. In addition, a portion
of the NCAA's revenues fund programs such as the student-athlete
assistance fund, graduate assistance fellowships, life skills
education, clinics for disadvantaged youth and many other programs
designed to support and enrich the college experience for student-
athletes. The NCAA's 81 championship events for men and women at the
Divisions I, II and III level are funded through the television rights
revenues. However, the vast majority of NCAA revenues are returned to
NCAA Divisions I, II and III member colleges and universities to help
support their athletics programs. It costs $3.4 billion every year for
our member schools to provide the more than 335,000 student-athletes
with opportunities to play college sports. Even with the money
generated by television and marketing rights fees, there still isn't
enough money to pay the bill out of more than 970 programs, the number
of athletics programs not being subsidized is smaller than 70. That
said, the NCAA and its member schools continue to examine ways to
provide student-athletes with more support and enrichment
opportunities, including gambling related education, research and
outreach activities.
States' Rights Concerns
Sports gambling already is a recognized federal issue with federal
jurisdiction. In 1992, President Bush signed the Professional and
Amateur Sports Protection Act (PASPA) (28 USC Section 3701 et seq.).
PASPA prohibits the expansion of state-sanctioned, authorized or
licensed gambling on amateur sports. In addition, because college
sports gambling clearly has a substantial effect on interstate
commerce, Congress has the authority to legislate in this area.
Unfortunately, the 1992 PASPA legislation ``grandfathered'' (i.e.,
exempted) several states (Nevada, Oregon, Montana and Delaware) that
already conducted, or were contemplating, some form of amateur sports
gambling within their respective jurisdictions. While PASPA created a
federal law prohibiting states from sponsoring, operating, licensing,
advertising or promoting college sports gambling activities, the
``grandfathered'' states were allowed to continue to permit such
gambling within their borders. The proposed federal legislation would
eliminate the exemption for the above states as it relates to high
school, collegiate and Olympic sports gambling. Furthermore, the
position held by the gambling industry that one can bet on games of
other states but protects their own state tramples on the rights of
other states.
Conclusion
Since being enacted in 1992, the Professional and Amateur Sports
Protection Act has been successful in halting the growth of state-
sponsored amateur sports gambling. But the beachhead that legalized
amateur sports wagering continues to hold in Nevada casinos blunts
efforts of the NCAA and higher education to combat college sports
gambling. The insidious effect of legalized wagering on college sports
has crept far beyond the Nevada state line. Even though sports gambling
is illegal in nearly every state, point spreads on college games are
published in newspapers across the country, bookies are common fixtures
on college campuses and new technologies allow bets on college games to
be placed over the Internet or in a casino in innovative ways. The
dollars involved are big and escalating every year. By clearly making
gambling on college sports illegal everywhere and all the time, we will
strike a significant blow against an activity that threatens the
integrity of college sport.
This nation's college and university system is one of our greatest
assets. We offer the world the model for postsecondary education.
Betting on the outcome of college sporting events tarnishes the
integrity of sport and diminishes the esteem in which we, and the rest
of the world, hold U.S. colleges and universities. For these reasons,
the NCAA respectfully seeks your help in eliminating from the
Professional and Amateur Sports Protection Act the exemption that
allows the Nevada casino industry to operate collegiate sports-betting
schemes and thereby to jeopardize the integrity of sport in America.
While we recognize that a ban on collegiate sports gambling will not
eliminate all gambling on college sports, it is a significant start. If
we miss this legislative opportunity, the job of fighting illegal
sports wagering elsewhere will be infinitely more difficult. The NCAA,
and the colleges and universities that support this legislation, along
with the leaders of the high school community, higher education, and
the U.S. Olympic Committee have no monetary interest in the outcome of
this legislation. Our goal is to protect student-athletes and remove
the unseemly influences of sports gambling on our amateur athletes and
the games they play. We look forward to working with you to close the
gap that has not only allowed legal betting on college sports to
continue but also fuels illegal betting on college games.
[A television public service announcement was shown.]
Dr. Wethington. Thank you, Mr. Chairman.
Senator McCain. Thank you, Mr. President. Thank you for
being here and thank you for your leadership on this issue.
Coach Calhoun, I know you would rather be somewhere else.
STATEMENT OF JIM CALHOUN, HEAD MEN'S BASKETBALL COACH,
UNIVERSITY OF CONNECTICUT, STORRS, CT
Mr. Calhoun. Mr. Chairman, I really am happy to be here,
and there is only one other place I would rather be. I was
looking for a good physical therapist about a week ago and
could not find one, and could not cure the ills of an ankle
injury, but I am happy to be here, and Mr. Chairman and members
of the Committee----
Senator McCain. We thank you, and we congratulate you on
your many successes.
Mr. Calhoun. Thank you very much. As a coach and educator
for the past 32 years--and by the way, I see that Senator Kerry
is not here. If there is any interpretation of the Bostonian
accent, he will be able to help later on.
[Laughter.]
As a coach and educator for the past 32 years, as a head
basketball coach at collegiate institutions for 28 of them, I
have great concerns about gambling on college athletics. This
is not a new problem. We have had these point-shaving scandals
for the past 50 years.
At the University of Connecticut, legendary coach Hugh
Greer, who was considered to be the coach at Connecticut for
almost 30 years, died at age 54 after three of his players in
the early sixties were found to point-shave. One of those
players was incredibly close to Hugh, and his wife claims to
this day that the heart attack by which he died at age 53 was
caused by his grief over his beloved players, and the integrity
of the game that he loved, so this is not a new problem.
But as we reach the year 2000 and we were in the decade of
the nineties, more gambling scandals have occurred than in the
previous history of college athletics. The amount of money
being bet is starting to become beyond belief. Social
acceptance of gambling, and the fact that gambling has become
an integral part of the university culture, makes it imperative
that we extend the ban on betting on college games in all
states.
This, I realize, will not stop gambling, illegal or
otherwise, but I think it will greatly reduce the impact on our
student athletes and certainly on our game. Our game must
maintain its integrity. This is not a point-the-finger
attitude. It is merely a starting point. There is something
legal being done that, if stopped, will be a starting point for
us to attack illegal activities.
To me personally, and I know to many other coaches, and I
am speaking on behalf of them in many ways, the publishing of
point spreads and the legalized gambling on college games in
Nevada protects and legitimizes an illegal activity. Las Vegas
is a great entertainment city. I enjoy it. I realize at this
moment I probably will not be coaching the Rebels some day, but
the threat of the scandal to our game and our kids must be
reduced and hopefully stopped. I see this not as a panacea. I
see it as a beginning. This is something we can control. The
illegal activities is something we hopefully will control.
As a coach and mentor, and this is something I really want
to address myself to since so many other issues have been
raised today, and rightfully so, certainly, but as a coach and
mentor to my players, I have great concerns for them, concerns
that the university culture has built into its very fabric now
that gambling is an every-day activity. It exists in dormitory
life, it exists in fraternities every single day, and the fact
that many of our student athletes, all of our student athletes
live in this culture, our university culture, and they in fact
become the focal point of this billions of dollars being
wagered, is a very, very dangerous situation.
I am concerned that many of our kids come from modest
economic backgrounds, and this even places greater pressure
upon them to make a mistake in judgment which could ruin their
lives and certainly put a mark on them, the university, and
athletics in general. I am concerned that major college
athletics is highly pressured enough without additional burdens
of worrying about gambling activities. I see it from a personal
nature our kids being attacked from all sides. As money
increases, so does other types of activities.
I am greatly concerned that our kids are getting mixed
signals when they get up in the morning and read in the
newspaper what the, quote, betting line or spread is on a game
they are going to participate in that night. What kind of
signal are we telling our kid? We are telling them it is
legitimate.
I just note, I was going to take a job one time at a place
in Arizona a number of years ago--and I was not going to take
the job. I wanted to stay in New England, and I took over in
Connecticut, but anyways, I always remember my sister saying to
me, you're going to Arizona state and taking the job there, and
I said, no, I am not, and she says, yes, you are. Don't lie to
me. I said, what do you mean, lie to you, and she said, I read
it in the newspaper. You're going to Arizona state. With that--
--
Senator McCain. I'm sorry your sister was not correct.
[Laughter.]
Mr. Calhoun. Thank you. With that, our kids believe if it
is in the paper, it is true, and when it is seen every day and
every morning that Connecticut, although heavily favored last
night, only won by 7 points, there is a message going there. It
is a message that scares me.
And last concern, these are 18 to 20-year-old kids--and
trust me, I coach them, and they are kids. That I can guarantee
you, and they make the same judgments. Many times I tell
people, when they ask me to describe my job and I say simply,
if you can imagine yourself with your teenage children, and
have kids run up and down the court with shorts on, with your
paycheck in their mouth, what a comforting feeling that must
be.
They are kids, and that is what they are, and yet they are
in college, as many of us were, struggling to find their own
self-identity, and should not be the focal point of billions of
dollars of wagering. This is too much to ask of them. It is too
much to ask of any athlete.
At U Conn we still have, and will still have informational
seminars. We will bring the FBI in every year. We will bring
Bill Saum and the NCAA in. We do institutional daily reminders.
But if we can show the wisdom of the state of Nevada by banning
betting on our institutions, our collegiate institutions, with
the passage of this bill, I believe it will greatly reduce the
risk from gambling that we now face. It will not eliminate, but
it will be a great starting point.
And just on a personal note, I find the acceptance of
gambling by people in general is phenomenal. No one ever has a
problem saying to me, coach, you did not cover. They may say
any other thing, but there is such a great acceptance, and I
think a great deal of that has to do with the fact that there
is legalized gambling on college athletics, and there is a
point spread published every single day. It is a great danger
to our sport.
It is something that scares me every single day, and I know
it scares every other single coach who coaches kids, and when
you think it is coaching kids, much as many of us, all of us
here were at one point in time, it is an issue we must come to
wrestle with.
I want to thank you very much for having me here today, and
hopefully I gave you at least an insight as to how I feel about
our university kids. Thank you very much.
Senator McCain. Thank you very much, coach. I think it is
important to point out for the record a letter that was sent to
Senator Brownback that an overwhelming majority of your
colleagues in the coaching profession also support the very
articulate statement that you just made concerning the
importance of this issue. I think Americans look to you and to
them, and to people like Dean Smith and others, for guidance on
this issue, and I am very grateful that you would be involved,
and I know that coaches understandably are not generally
involved in issues of legislation. I am very pleased that you
would step forward, you and your colleagues in your profession,
and speak out so strongly on this very important issue, and I
thank you for taking the time to be here.
Mr. Calhoun. Thank you, Mr. Chairman.
Senator Brownback. Mr. Chairman, can we have that letter
put into the record at this point, and one from Dean Smith that
was on the same point? He has been very concerned about this
for a long period of time.
Senator McCain. Without objection.*
---------------------------------------------------------------------------
* The information was not available at the time the hearing went to
press.
---------------------------------------------------------------------------
[The prepared statement of Mr. Calhuon follows:]
Prepared Statement of Jim Calhoun, Head Men's Basketball Coach,
University of Connecticut, Storrs, CT
Mr. Chairman, I really am happy to be here, and there is only one
other place I would rather be. I was looking for a good physical
therapist about a week ago and could not find one, and could not cure
the ills of an ankle injury, but I am happy to be here, and Mr.
Chairman and members of the Committee, thank you very much. As a coach
and educator for the past 32 years--and by the way, I see that Senator
Kerry is not here. If there is any interpretation of the Bostonian
accent, he will be able to help later on.
As a coach and educator for the past 32 years, as a head basketball
coach at collegiate institutions for 28 of them, I have great concerns
about gambling on college athletics. This is not a new problem. We have
had these point-shaving scandals for the past 50 years.
At the University of Connecticut, legendary coach Hugh Greer, who
was considered to be the coach at Connecticut for almost 30 years, died
at age 54 after three of his players in the early sixties were found to
point-shave. One of those players was incredibly close to Hugh, and his
wife claims to this day that the heart attack by which he died at age
53 was caused by his grief over his beloved players, and the integrity
of the game that he loved, so this is not a new problem.
But as we reach the year 2000 and we were in the decade of the
nineties, more gambling scandals have occurred than in the previous
history of college athletics. The amount of money being bet is starting
to become beyond belief. Social acceptance of gambling, and the fact
that gambling has become an integral part of the university culture,
makes it imperative that we extend the ban on betting on college games
in all states.
This, I realize, will not stop gambling, illegal or otherwise, but
I think it will greatly reduce the impact on our student athletes and
certainly on our game. Our game must maintain its integrity. This is
not a point-the-finger attitude. It is merely a starting point. There
is something legal being done that, if stopped, will be a starting
point for us to attack illegal activities.
To me personally, and I know to many other coaches, and I am
speaking on behalf of them in many ways, the publishing of point
spreads and the legalized gambling on college games in Nevada protects
and legitimizes an illegal activity. Las Vegas is a great entertainment
city. I enjoy it. I realize at this moment I probably will not be
coaching the Revels some day, but the threat of the scandal to our game
and our kids must be reduced and hopefully stopped. I see this not as a
panacea. I see it as a beginning. This is something we can control. The
illegal activities are something we hopefully will control.
As a coach and mentor, and this is something I really want to
address myself to since so many other issues have been raised today,
and rightfully so, certainly, but as a coach and mentor to my players,
I have great concerns for them, concerns that the university culture
has built into its very fabric now that gambling is an every-day
activity. It exists in dormitory life, it exists in fraternities every
single day, and the fact that many of our student athletes, all of our
student athletes live in this culture, our university culture, and they
in fact become the focal point of this billions of dollars being
wagered, is a very, very dangerous situation.
I am concerned that many of our kids come from modest economic
backgrounds, and this even places greater pressure upon them to make a
mistake in judgment which could ruin their lives and certainly put a
mark on them, the university, and athletics in general. I am concerned
that major college athletics is highly pressured enough without
additional burdens of worrying about gambling activities. I see it from
a personal nature our kids being attacked from all sides. As money
increases, so does other types of activities.
I am greatly concerned that our kids are getting mixed signals when
they get up in the morning and read in the newspaper what the, quote,
betting line or spread is on a game they are going to participate in
that night. What kind of signal are we telling our kid? We are telling
them it is legitimate.
I just note, I was going to take a job one time at a place in
Arizona a number of years ago--and I was not going to take the job. I
wanted to stay in New England, and I took over in Connecticut, but
anyway, I always remember my sister saying to me, you're going to
Arizona state and taking the job there, and I said, no, I am not, and
she says, yes, you are. Don't lie to me. I said, what do you mean, lie
to you, and she said, I read it in the newspaper. You're going to
Arizona state. With that--our kids believe if it is in the paper, it is
true, and when it is seen every day and every morning that Connecticut,
although heavily favored last night, only won by 7 points, there is a
message going there. It is a message that scares me.
And last concern, these are 18 to 20-year-old kids--and trust me, I
coach them, and they are kids. That I can guarantee you, and they make
the same judgments. Many times I tell people, when they ask me to
describe my job and I say simply, if you can imagine yourself with your
teenage children, and have kids run up and down the court with shorts
on, with your paycheck in their mouth, what a comforting feeling that
must be.
They are kids, and that is what they are, and yet they are in
college, as many of us were, struggling to find their own self-
identity, and should not be the focal point of billions of dollars of
wagering. This is too much to ask of them. It is to much to ask of any
athlete.
At U Conn we still have, and will still have, informational
seminars. We will bring the FBI in every year. We will bring Bill Saum
and the NCAA in. We do institutional daily reminders. But if we can
show the wisdom of the State of Nevada by banning betting on our
institutions, our collegiate institutions, with the passage of this
bill, I believe it will greatly reduce the risk from gambling that we
now face. It will not eliminate, but it will be a great starting point.
And just on a personal note, I find the acceptance of gambling by
people in general is phenomenal. No one ever has a problem saying to
me, coach, you did not cover. They may say any other thing, but there
is such a great acceptance, and I think a great deal of that has to do
with the fact that there is legalized gambling on college athletics,
and there is a point spread published every single day. It is a great
danger to our sport.
It is something that scares me every single day, and I know it
scares every other single coach who coaches kids, and when you think it
is coaching kids, much as many of us, all of us here were at one point
in time, it is an issue we must come to wrestle with.
I want to thank you very much for having me here today, and
hopefully I gave you at least an insight as to how I feel about our
university kids. Thank you very much.
Senator McCain. Dr. Kelly.
STATEMENT OF DR. TIM KELLY, EXECUTIVE DIRECTOR,
NATIONAL GAMBLING IMPACT STUDY COMMISSION, ALEXANDRIA, VA
Dr. Kelly. Thank you, Mr. Chairman. I am Tim Kelly,
executive director of the National Gambling Impact Study
Commission, and I do appreciate this opportunity to be here to
give testimony on sports gambling and its effects.
Before I get started, I do also have copies of two letters
which I believe the Committee has already received, one from
the chair of the commission, Kay James, the other from two of
the commissioners, Richard Leone and Leo McCarthy, all of them
strongly in support of the legislation that you have put
forward, and we ask that they be entered into the record.
Senator McCain. Without objection.
Dr. Kelly. I also have submitted an attachment to my
remarks. Only 30 years ago gambling was illegal in most states
and generally considered to be contrary to the American worth
ethic. Serious gamblers had to travel to Nevada for casino
play, and the states had not yet plunged into lottery mania.
Today, however, there are over 800 casinos operating in 28
states. The lottery is played in 37 states plus the District of
Columbia, and all but three states have legalized some form of
gambling.
Gambling expansion has swept the Nation, and that is why
our commission was called into being. With revenues jumping
from about $1 billion in 1970 to over $50 billion today, the
National Gambling Impact Study Commission was charged with
conducting a comprehensive legal and factual study of the
social and economic impacts of legalized gambling.
Last year, the commission completed its unanimously adopted
final report, which can be found on the Web at www.ngisc.gov.
The report contains 77 far-reaching recommendations for state
and federal legislators, and calls for a national moratorium on
gambling expansion. The recommendation that addresses sports
gambling reads as follows:
The commission recommends that betting on collegiate and
amateur athletic events that is currently legal be banned
altogether.
This recommendation is especially noteworthy in light of
the fact that four of the nine commissioners represented or
endorsed gambling industry interests. Let me review the facts
that led to its adoption.
As you know, and as has been mentioned here, the
Professional and Amateur Sports Protection Act of 1992 made it
illegal for anyone to operate a gambling scheme based on
competitive games in which amateur or professional athletes
participated. It was intended to ensure the integrity of
athletic events, as has been pointed out this morning.
Congress was concerned that gambling potentially threatens
sports by providing tremendous incentive for point-shaving and
game-fixing, and thus puts players at risk. As Senator Bradley
stated at that time, interestingly, state-sanctioned sports
betting conveys the message that sports are more about money
than personal achievement and sportsmanship.
But the act did not apply, as we have heard, to states with
preexisting statutes providing for sports gambling, notably,
Nevada. Consequently, Nevada runs 142 legal sports books that
generate over $2.3 billion in revenue, including over $77
million from collegiate and amateur sports.
The commission heard testimony that sports gambling has
devastated families and careers and most alarmingly that it is,
indeed, rampant on college campuses, as has been stated. Cedric
Dempsey, executive director of the NCAA, stated that every
campus has student bookies, and we are also seeing an increase
in the involvement of organized crime with its wagering.
Gambling rings have been uncovered at Michigan State,
University of Maine, Rhode Island, Bryant, Northwestern, and
Boston College, among others. A University of Michigan survey
found that 5 percent of male student athletes provided inside
information for gambling purposes, bet on a game in which they
participated, or accepted money for performing poorly in a
game.
Although Nevada state-sanctioned sports betting is well-
regulated, it likely contributes to collegiate sports gambling
in two ways. First, it provides a ready resource for students,
student athletes, and student bookies looking for betting
information and/or an opportunity to place bets via the phone
or the Internet. Second, it provides the Los Vegas line or
point spread, which has been mentioned regularly this morning,
which is published throughout the country. The line provides
betting parameters and does tend to fuel illegal sports
wagering.
According to a recent Harvard study, an estimated 15.4
million Americans suffer from problem or pathological gambling,
often referred to as gambling addiction. Over half that number
are adolescents, 7.9 million. Gambling addiction can be
particularly devastating to the individual, his family, his
employer, or his school. The National Academies of Science that
we contracted with found that, and I quote, ``pathological
gamblers engage in destructive behaviors. They commit crimes,
they run up large debts, they damage relationships with family
and friends, and they kill themselves.''
The commission found that students who gamble on sports can
be at risk for gambling problems later in life. Sports wagering
can indeed act as a gateway to other forms of gambling, as has
been mentioned, and to gambling addiction. This is cause for
alarm, especially since the same Harvard study that I just
referenced found that, quote, ``compared to adults, youth have
had more exposure to gambling during an age when vulnerability
is high and risk-taking behavior is a norm. Consequently, these
young people have higher rates of disorder gambling than their
more mature and less vulnerable counterparts.''
The commission heard heartbreaking testimony from many
pathological gamblers, including a young man named Scott from
New York. Scott placed his first bet with a bookie his freshman
year in college. He found himself in debt within weeks. Later,
he stole $600 from his first employer, a supermarket, to cover
gambling debts. At age 24, Scott made the first of many trips
to Atlantic City, sometimes gambling as many as 50 hours
straight. His relationship with parents, friends, and even
girlfriends crumbled as his gambling addiction grew, and his
savings accounts dwindled to nothing. He ended up by embezzling
$96,000 from the stock brokerage where he was working, and then
wrote $100,000 in bad checks. Arrest, jail, and subsequent
house arrest did not deter him. ``I still went to Atlantic City
with an ankle bracelet on,'' he said from an in-patient
treatment center where he was being treated for gambling
addiction. ``Nothing mattered to me but gambling.''
Scott and others like him would have been better off if he
had not had to deal with sports gambling at age 18. The
commission recognized that there is much that the NCAA and
other youth school and college collegiate athletic
organizations can do to help prevent such tragedies. This
includes public service announcements during tournaments such
as the clip we just saw, better enforcement of existing law on
campus, and full NCAA clout brought to bear against
universities that tolerate gambling violations.
But the problem also requires dealing with the loophole
built into the sports protection act, which has been noted
several times this morning. Unless amateur sports gambling is
banned altogether, there will always be the resource of 142
sports books in the Las Vegas line for those wanting to gamble
on collegiate and amateur sports. Their misuse threatens the
integrity of collegiate and amateur athletics, puts student
athletes at risk, and makes it very easy for kids like Scott to
start a lifetime of gambling addiction.
Thank you, Mr. Chairman.
[The prepared statement of Dr. Kelly follows:]
Prepared Statement of Dr. Tim Kelly, Executive Director,
National Gambling Impact Study Commission, Alexandria, VA
Good morning Mr. Chairman and Members of the Committee. I am Tim
Kelly, Executive Director of the National Gambling Impact Study
Commission. I appreciate this opportunity to give testimony on Sports
Gambling and its effects.
Only thirty years ago, gambling was illegal in most states and was
generally considered to be a vice contrary to the American work ethic.
Serious gamblers had to travel to Nevada for casino play, and the
states had not yet plunged into lottery mania. Today, however, there
are over 800 casinos operating in 28 states, the lottery is played in
37 states plus the District of Columbia, and all but three states have
legalized some form of gambling. Gambling expansion has swept the
nation, with revenues jumping from about $1 billion in 1980 to well
over $50 billion today.
The National Gambling Impact Study Commission was charged with
conducting a comprehensive legal and factual study of the social and
economic impacts of legalized gambling. Last year the Commission
completed its unanimously-adopted final report, which can be found on
the web at www.ngisc.gov. The report contains 77 far-reaching
recommendations for state and federal legislators, and calls for a
national moratorium on gambling expansion. The recommendation that
addresses Sports Gambling reads as follows:
``The Commission recommends that betting on collegiate and
amateur athletic events that is currently legal be banned
altogether.''
This recommendation is especially noteworthy in light of the fact
that four of the nine commissioners represented or endorsed gambling
industry interests. Let me review the facts that led to its adoption.
Sports Gambling Nevada
As you know, the Professional and Amateur Sports Protection Act of
1992 made it illegal for anyone to operate a gambling scheme based on
competitive games in which amateur or professional athletes
participate. It was intended to ensure the integrity of athletic
events. Congress was concerned that gambling potentially threatens
sports by providing tremendous incentive for point shaving and game-
fixing, and thus puts players at risk. As Senator Bradley stated at the
time, ``state-sanctioned sports betting conveys the message that sports
are more about money than personal achievement and sportsmanship.'' But
the act did not apply to states with pre-existing statutes providing
for sports gambling--notably Nevada. Consequently, Nevada runs 142
legal sports books that generate over $2.3 billion in revenue,
including over $77 million from collegiate and amateur sports.
The Commission heard testimony that sports gambling has devastated
families and careers and, most alarmingly, that it is rampant on
college campuses. Cedric Dempsey, executive director of the NCAA,
stated that ``every campus has student bookies, (and) we are also
seeing an increase in the involvement of organized crime on sports
wagering.'' Gambling rings have been uncovered at Michigan State,
University of Maine, Rhode Island, Bryant, Northwestern, and Boston
College, among others. A University of Michigan survey found that 5% of
male student-athletes provided inside information for gambling
purposes, bet on a game in which they participated, or accepted money
for performing poorly in a game.
Although Nevada's state-sanctioned sports betting is well
regulated, it likely contributes to collegiate sports gambling in two
ways. First, it provides a ready resource for students, student-
athletes, and student bookies looking for betting information and/or an
opportunity to place bets via phone or internet. Second, it provides
the Las Vegas ``line,'' or point spread, which is published throughout
the country. The line provides betting parameters and tends to fuel
illegal sports wagering.
Sports Gambling as a Gateway
According to a recent Harvard study, an estimated 15.4 million
Americans suffer from problem or pathological gambling, often referred
to as gambling addiction. Over half that number are adolescents.
Gambling addiction can be particularly devastating to the individual,
his family, and his employer or school. The National Academies of
Science found that ``pathological gamblers engage in destructive
behaviors: they commit crimes, they run up large debts, they damage
relationships with family and friends, and they kill themselves.''
The Commission found that students who gamble on sports can be at
risk for gambling problems later in life. Sports wagering can act as a
gateway to other forms of gambling, and to gambling addiction. This is
cause for alarm, especially since the same Harvard study found that
``compared to adults, youth have had more exposure to gambling during
an age when vulnerability is high and risk-taking behavior is a norm;
consequently, these young people have higher rates of disordered
gambling than their more mature and less vulnerable counterparts.''
The Commission heard heart-breaking testimony from many
pathological gamblers, including a young man named Scott, a New York
native. Scott placed his first bet with a bookie his freshman year of
college. He found himself in debt within weeks. Later, he stole $600
from his first employer, a supermarket, to cover gambling debts. At age
24, Scott made his first of many trips to Atlantic city, sometimes
gambling as many as 50 hours straight. His relationship with parents,
friends, and even girlfriends crumbled as his gambling addiction grew,
and his savings account dwindled to nothing. He embezzled $96,000 from
the stock brokerage where he worked, then wrote $100,000 in bad checks.
Arrest, jail, and subsequent house arrest did not deter him. ``I still
went to Atlantic City with ankle bracelet on,'' he said from the
inpatient treatment center where he was being treated for his gambling
addiction. ``Nothing mattered to me but gambling.''
Conclusion: Ban Sports Gambling
Scott and others like him would have been better off if he had not
had to deal with sports gambling at age 18. The Commission recognized
there is much that the NCAA and other youth, school, and collegiate
athletic organizations can do to help prevent such tragedies. This
includes public service announcements during tournaments, better
enforcement of existing laws on campus, and full NCAA clout brought to
bear against universities tolerating gambling violations. But the
problem also requires dealing with the loophole built into the Sports
Protection Act. Unless sports gambling is banned altogether, there will
always be the resource of 142 sports books and the Las Vegas line for
those wanting to gamble on collegiate and amateur sports. Their misuse
threatens the integrity of collegiate and amateur athletics, puts
student-athletes at risk, and makes it very easy for kids like Scott to
begin a lifetime of gambling addiction.
Thank you, Mr. Chairman.
Attachment
GAMBLING BACKLASH:
TIME FOR A MORATORIUM ON CASINO AND LOTTERY EXPANSION
Thirty years ago, gambling was illegal in most states and was
generally considered to be a vice contrary to the American work ethic.
Serious gamblers had to travel to Nevada for casino play; states had
not yet plunged into lottery mania. Today, however, 29 casinos operate
in Mississippi, 14 in New Jersey, and 429 in Nevada; another 260
casinos operate on Indian reservations; and nearly 100 riverboat
casinos are chartered in six states.\1\ All but three states have
legalized some form of gambling. Pari-mutuel gambling, primarily
horseracing, is legal in 42 states; \2\ casinos are licensed in 28
states; \3\ and the lottery is played in 37 states plus the District of
Columbia.\4\
---------------------------------------------------------------------------
\1\ Final Report, National Gambling Impact Study Commission, 1999,
p. 2-6.
\2\ Ibid., p. 2-11.
\3\ Ibid., p. 2-6.
\4\ Ibid., p. 2-1.
---------------------------------------------------------------------------
Far from discouraging citizens from risking their hard-earned money
on gambling, states spend more than $400 million annually promoting
their lotteries with often misleading and deceptive advertising.\5\ In
fact, more dollars are spent encouraging citizens to gamble than are
spent for any other single state message.
---------------------------------------------------------------------------
\5\ Ibid., p. 3-15.
---------------------------------------------------------------------------
Gambling expansion has swept the nation, with 68 percent of the
population reporting they have gambled in the past year. They lost an
astonishing $50 billion in 1998, and there is ``no end in sight: every
prediction that the gambling market was becoming saturated has proven
to be premature.'' \6\ This explosion of gambling has produced enticing
benefits for some. A new casino brings new jobs and can be very
profitable, and most forms of gambling add significant revenue to the
public treasury. The revenue can be used to meet community needs such
as education or infrastructure development.
---------------------------------------------------------------------------
\6\ Ibid., p. 1-1.
---------------------------------------------------------------------------
But the expansion of gambling carries a high cost. Today, an
estimated 15.4 million Americans suffer from problem or pathological
gambling, often referred to as gambling addiction.\7\ Gambling
addiction can be particularly devastating to the individual, his
family, and his employer. The National Academies of Science found that
``pathological gamblers engage in destructive behaviors: they commit
crimes, they run up large debts, they damage relationships with family
and friends, and they kill themselves.'' \8\
---------------------------------------------------------------------------
\7\ Ibid., p. 4-1.
\8\ Pathological Gambling: A Critical Review, National Academy of
Science/National Research Council, 1999, p. 3.
---------------------------------------------------------------------------
Furthermore, the National Gambling Impact Study Commission found
that state lotteries function as a regressive tax that preys on the
poor. Those who can afford it least tend to play the most, while
benefits go to those who are better off.\9\ Gambling is capable of
addicting and impoverishing those who play.
---------------------------------------------------------------------------
\9\ Final Report, p. 7-10.
---------------------------------------------------------------------------
Perhaps most alarmingly, research shows that increasing numbers of
children and adolescents are gambling; they are more likely than adults
to become problem or pathological gamblers. For instance, a Louisiana
survey of 12,000 adolescents found that 10 percent had bet on
horseracing, 17 percent had gambled on slot machines, and 25 percent
had played video poker.\10\ The Gambling Commission found that
adolescent gambling is ``associated with alcohol and drug use, truancy,
low grades, problematic gambling in parents, and illegal activities to
finance gambling.'' \11\
---------------------------------------------------------------------------
\10\ Ibid., p. 7-20.
\11\ Ibid., p. 7-23.
---------------------------------------------------------------------------
That gambling expansion has exposed children and adolescents to
many forms of gambling is particularly disturbing in light of a recent
Harvard study that found that ``compared to adults, youth have had more
exposure to gambling during an age when vulnerability is high and risk-
taking behavior is a norm; consequently, these young people have higher
rates of disordered gambling than their more mature and less vulnerable
counterparts.'' \12\ The Gambling Commission learned that such
vulnerability could lead to tragic outcomes; one 16-year-old boy
attempted suicide after losing $6,000 on lottery tickets.\13\
---------------------------------------------------------------------------
\12\ Howard Shaffer, et al., ``Estimating the Prevalence of
Disordered Gambling Behavior in the United States and Canada: A Meta-
Analysis,'' 1997, p. 5.
\13\ Ibid., p. 7-25.
---------------------------------------------------------------------------
How did America become so addicted to gambling? Several factors are
clear. First, the lottery states have given a powerfully motivating
message to their citizens by declaring that gambling is not only
acceptable, but actually the right thing to do because it increases
state revenue for good causes. Second, the Indian Gaming Regulatory Act
of 1988 opened the floodgate for Native American casinos, which are
expanding more rapidly now than any other form of gambling. Third,
legislators at the state and federal levels have acted without the
benefit of objective information on the full costs and benefits of
gambling operations, since nearly all of the previous impact studies
have been sponsored by the gambling industry. The Gambling Commission
report provides the most comprehensive and objective evaluation of
gambling impacts to date. But more research is needed if policymakers
are to understand fully the likely consequences before moving ahead
with gambling expansion initiatives.
The Gambling Commission report, which was unanimously adopted,
calls for a moratorium on gambling expansion.\14\ This is especially
noteworthy because four of the nine commissioners represented or
endorsed gambling industry interests. The purpose of the moratorium: to
allow policymakers to review what has already been approved and to
demand better cost/benefit analyses before moving ahead with any new
initiatives.
---------------------------------------------------------------------------
\14\ Ibid., p. 1-8.
---------------------------------------------------------------------------
More than a moratorium, however, will be needed if America is going
to manage gambling for the public good as opposed to the public
treasury. The Gambling Commission report included 77 far-reaching
recommendations, all of which are worthy of consideration. Eight policy
recommendations, based upon but not identical to the Commission's
recommendations, should constitute a priority for federal and state/
tribal legislators. Legislative action based on these recommendations
would jump-start America's recovery from its addiction to gambling.
Before discussing these recommendations in detail, however, a review of
the seven major types of legalized gambling reveals the gravity of the
current problem.
Legalized Gambling in America \15\
---------------------------------------------------------------------------
\15\ Much of this section is derived from chapter two of the
Gambling Commission Final Report, titled ``Gambling in the United
States.''
---------------------------------------------------------------------------
Seven major forms of gambling are legal in America today, each
presenting a different array of costs and benefits, and each raising a
unique set of issues that must be addressed by policymakers.
Commercial Casinos. Commercial casinos (land casinos not owned by
Native Americans)--with their table games and slot machines--symbolize
the gambling industry for most Americans. Until this decade, casinos
were legal only in Nevada and Atlantic City, but during the past 10
years they have expanded into 28 states. In 1997, commercial casinos
took in $26.3 billion in revenue. Destination casinos (those with large
hotels) provide an important source of jobs, tax revenue, and
entertainment for their localities. Many customers enjoy the associated
food, entertainment, and conference facilities.
At the same time, there are costs associated with commercial
casinos. The 15.4 million pathological and problem gamblers account for
a significant portion of gambling revenues. They often end up hurting
not only themselves but also family, friends, and business partners.
Direct costs from their bankruptcies, arrests, imprisonments, legal
fees for divorce, and so on come to more than $5 billion each year. Who
should be responsible for these costs and liabilities?
A less visible but perhaps more insidious cost involves the
political clout that commercial casino interests inevitably develop.
Given the vast revenue generated by successful casinos, it becomes
increasingly difficult for other voices to be heard in the political
process. For instance, non-gambling retailers and restaurant owners may
find that their customer base dwindles after the introduction of
casinos and that local government turns a deaf ear to their complaints.
In fact, once gambling enters a community, local government tends to
become ``a dependent partner in the business of gambling.'' \16\
---------------------------------------------------------------------------
\16\ Ibid., p. 7-18.
Native American Casinos. Large-scale Indian casino gambling began in
the late 1980s. In 1988, Congress passed the Indian Gaming Regulatory
Act (IGRA), which set the stage for a rapid expansion of Native
American casinos--now numbering about 260. IGRA called for the states
and tribes to enter into compacts allowing casinos on Indian
reservations to offer whatever form of gambling is legal in the state.
It also called for gambling revenue to be used to promote the economic
development and welfare of the tribe. Thus, revenues are not subject to
state or federal taxation, but are to be used as an economic engine to
address tribal needs. In 1997, Indian casinos generated $6.7 billion in
revenue from gambling, much of which went to improve the health,
education, and welfare of the casino tribes.
Problem and pathological gambling among tribal members and their
customers is, of course, as much a concern here as it is for non-tribal
casinos. Concerns also have been raised about the adequacy of Indian
casino regulations and the distribution of funds among the tribes that
own casinos versus the majority that do not. Furthermore, some states
and tribes have not been able to agree on compacts that suit both
sides. All of these issues need to be resolved, perhaps within the
context of IGRA revisions and amendments.
Riverboat Casinos. Riverboat casinos are a new phenomenon, having begun
in Iowa in 1991 as a means for tourism and economic development. Most
of these casinos do not actually sail out on the rivers, but are simply
built over water as part of zoning requirements. In 1997, riverboat
casinos brought in $6.1 billion in revenue from gambling.
Often built deliberately on the borders shared with other states,
these casinos initially brought significant additional tax revenues
from the citizens of neighboring states. Eventually, however, the
adjoining states ended up building their own casinos to recapture the
lost revenue. Once the saturation point has been reached by neighboring
states, whether the economic benefits outweigh the social costs is not
clear. However, for this reason Iowa recently legislated a five-year
moratorium on casino expansion in order to better assess the full
impacts of gambling.
State Lotteries. Colonial America used lotteries to help fund public
works such as paving streets; since that time, there has been a
cyclical aspect to their usage. In the 1870s, gambling scandals
involving the bribery of state and federal officials led to lotteries
being outlawed altogether, along with most forms of gambling. The
current lottery revival began in 1964 with the New Hampshire lottery;
today, 37 states and the District of Columbia have lotteries.
Modern lotteries offer an array of products, including instant
scratch-off tickets, daily numbers drawings, weekly Lotto and Powerball
drawings, and video keno, which involves multiple drawings per hour. In
1997, U.S. lotteries produced $16.5 billion in revenue from tickets and
other sales. This revenue is used to add to the public treasury to
address education and/or other needs.
The Gambling Commission contracted with national lottery experts,
Drs. Cook and Clotfelter from Duke University, to research the impacts
of state-sponsored lottery gambling. They documented conclusively that
lotteries function as a regressive tax, taking from the poor and giving
to those better off. As Cook stated, ``It's astonishingly regressive.
The tax that is built into the lottery is the most regressive tax we
know.'' \17\ Those making less than $10,000 per year spend more than
any other income group, averaging $597 per year. Furthermore, the top 5
percent of lottery players account for over 50 percent of lottery
sales, spending on average $3,870 per year.
---------------------------------------------------------------------------
\17\ Ibid., p. 7-10.
---------------------------------------------------------------------------
A review of marketing strategies revealed that states advertise in
low-income neighborhoods, which tend to be saturated with lottery
outlets. They use ads that are ``misleading, even deceptive.'' \18\
Such ads are exempt from the Federal Trade Commission's truth-in-
advertising standards since they come from state governments.
---------------------------------------------------------------------------
\18\ Ibid., p. 3-15.
---------------------------------------------------------------------------
Another concern is the ease with which minors can participate in
lottery gambling, despite legal restrictions. For instance, a
Massachusetts survey found that minors as young as nine years of age
were able to purchase lottery tickets on 80 percent of their attempts,
and that 75 percent of the high school seniors reported playing the
lottery.\19\ Such experiences can function as a gateway to more
intensive gambling and to pathological gambling.
---------------------------------------------------------------------------
\19\ Ibid., pp. 3-14, 3-15.
---------------------------------------------------------------------------
All of this raises the fundamental question of whether states
should even be in the lottery business in the first place, spending
hundreds of millions of dollars each year encouraging citizens--
including those who can least afford it--to gamble their money away in
order to feed the state treasury. A growing number of people, such as
those citizens who recently rejected a lottery referendum in Alabama,
answer ``no.'' The role of the state is to provide for the public good,
not to feed the public treasury at any cost.
Pari-Mutuel Wagering. Pari-mutuel gambling consists primarily of
horseracing, but includes greyhound racing and jai alai. The term pari-
mutuel connotes the fact that wagers are put into a common pool, with
the odds dependent on the total amount bet on any given horse. Legal in
43 states, several of the major racetracks have been in operation since
the 1800s. Total revenue in 1997 amounted to $3.25 billion. Unique to
this form of gambling, the horseracing industry supports a thriving
agro-industrial economic sector of trainers, owners, breeders, and
stable owners. Although more than 150 racetracks are licensed, most
betting takes place through off-track sites or, more recently, through
cable and Internet broadcasts directly into the home.
A major policy issue has been raised by those tracks that have
attempted to add casino-like gambling devices such as slot machines to
their facilities in order to increase revenue. This, in effect, creates
a ``mini-casino'' in an area that was not necessarily zoned for
casinos. Additionally, concerns have been raised about the advisability
of beaming pari-mutuel gambling into homes via cable and Internet,
where children may participate.
Sports Wagering. Sports wagering is illegal in all but two states,
Nevada and Oregon, but is nonetheless popular in homes and offices.
Oregon only allows lottery players to include a wager on pro football
games. Nevada, on the other hand, has 142 legal sports books for
wagering on just about any prediction for professional or amateur
sports events. These books took in $77.4 million in 1997. However,
Americans wager an estimated $80 billion each year on illegal sports
betting, usually without realizing its illegality.
One reason that sports wagering is so widespread is the easy
availability of the Las Vegas ``line,'' or point spread, published in
newspapers across the country. Although some claim that the line
increases sports interest, it more likely simply increases sports
wagering.
Perhaps the worst effect of sports wagering is its impact on youth
and college students. The National College Athletics Association points
out that sports wagering seriously threatens the integrity of college
sports and puts student-athletes at considerable risk. There are
student bookies on most campuses, organized crime is often involved,
and consequences can be tragic--including suicide over an unpaid
gambling debt. A recent study found that more than 5 percent of male
student-athletes had provided inside information for gambling purposes,
bet on a game in which they participated, or accepted money for
performing poorly in a game.\20\ Furthermore, sports wagering can
function as a gateway to other forms of gambling and to pathological
gambling.
---------------------------------------------------------------------------
\20\ Ibid., p. 3-10.
Internet Gambling. First appearing in 1995, Internet gambling is the
newest form of gambling. Today hundreds of on-line casinos, lotteries,
and sports books advertised on mainline Web sites. With a credit card
number, customers can play a video version of blackjack, slot machines,
poker, roulette, or other games. One study showed that Internet
gambling revenues doubled in only one year, from $445.4 million in 1997
to $919.1 million in 1998.\21\ Some countries, such as Australia and
Antigua, have licensed Internet gambling operators within their
borders. Their products are, of course, accessible by anyone, anytime,
anywhere, via the Internet.
---------------------------------------------------------------------------
\21\ Ibid., p. 2-16.
---------------------------------------------------------------------------
Internet gambling, like Internet pornography, has been perceived as
a threat to children and adolescents precisely because it is so easily
available in the home and in college dorms. No one uses the Internet
more than America's youth, and no one is more vulnerable to its
temptations. Now, every parent has to reckon with the fact that
commercial gambling is available in the dens and bedrooms of their
homes via the Internet.
Internet gambling can be especially destructive for those who are
vulnerable to addictions, since it provides high-speed instant
gratification together with the anonymity of the home setting. A
Harvard researcher stated, ``As smoking crack cocaine changed the
cocaine experience, I think electronics is going to change the way
gambling is experienced.'' \22\ In other words, electronic gambling is
all the more destructive and addictive.
---------------------------------------------------------------------------
\22\ Ibid., p. 5-5.
---------------------------------------------------------------------------
For these and other reasons, including crime and fraud potential,
many policymakers are calling for the outright prohibition of Internet
gambling. Several states have passed legislation to that effect, and
Congress is considering a bill, introduced by Sen. Jon Kyl (R-Ariz.),
titled ``The Internet Gambling Prohibition Act.'' Furthermore, the
National Association of Attorneys General has called for the federal
government to prohibit Internet gambling, recognizing that the issue
cannot be resolved on the state level. The Gambling Commission, as
well, recommended prohibiting Internet gambling outright. However,
given the difficulty inherent in restricting commerce of any kind,
whether Internet gambling will be stopped is not clear.
Convenience Gambling. Convenience gambling refers to gambling machines
that have proliferated in communities and neighborhood areas such as
convenience stores, truck stops, and bars. These stand-alone machines,
which include video poker, video keno, and slot machines, are known as
Electronic Gambling Devices, or EGDs. Some states, such as South
Carolina, allow EGDs to operate just about anywhere on a 24-hour basis.
In other states, EGDs are run by the state lottery. In Nevada, EGDs can
be found in the airport, in supermarkets, in sandwich shops, and
elsewhere. Many states also have quasi-legal EGDs known as ``gray
machines'' that are not licensed to pay out winnings and are,
supposedly, for amusement only. In reality, winnings are often paid out
surreptitiously.
Convenience gambling in some ways represents gambling at its worst.
Since EGDs can be almost anywhere, avoiding them is difficult. In some
Las Vegas neighborhoods, for instance, a resident cannot even buy a
gallon of milk without walking past rows of gambling machines. This
makes it much more difficult for those who are vulnerable to addictions
to avoid playing and significantly increases the incidence of problem
and pathological gambling. For instance, South Carolina, with over
34,000 EGDs, is experiencing a surge of problem and pathological
gambling.
Furthermore, this is one more form of gambling that is particularly
detrimental to children and adolescents, as it presents them with
numerous opportunities to become introduced to gambling experiences at
an early age. Many of them will develop into problem and pathological
gamblers, having been put at risk for the sake of America's appetite
for gambling.
At the same time, economic benefits to the public treasury are
minimized since it is usually the local owner--not the state--collects
the lion's share of profits. For these reasons, the Gambling Commission
recommended not only that states no longer approve convenience
gambling, but also that they roll back existing operations. This is
precisely what happened in South Carolina, where a recent court
decision will likely lead to the removal of that state's 34,000 EGDs.
Federal Policy Recommendations
Since most gambling laws and regulations are established at the
state or tribal level, it is primarily up to policymakers at these
levels to take the lead in responding to the tough issues raised by
gambling expansion. However, a few areas require federal action. Policy
recommendations for the 106th Congress that, if enacted, would greatly
support state and tribal efforts to control gambling expansion, include
the following:
1. Ban betting on collegiate and amateur athletic events
altogether, and prohibit media from advertising the line on
those events. Sports wagering, especially on collegiate and
other amateur events, undermines the integrity of sports and
puts students and athletes at risk. It should be prohibited
where currently legal; where illegal, regulations should be
more rigorously enforced. Newspapers should be prohibited from
printing point spreads for athletic contests in areas where
sports wagering is illegal.
2. Amend truth-in-advertising laws to apply to Native American
and state lottery gambling ads. Many lottery ads have been
found to be misleading or deceptive; truth-in-advertising laws
currently do not apply to states or tribal entities.
3. Prohibit Internet gambling not already authorized and
develop enforcement strategies. Help foreign governments to
prohibit Internet gambling that preys on U.S. citizens. Because
of the dangers posed by Internet gambling--especially to
America's families and their children and adolescents who are
put at risk--Internet gambling sites should be prohibited.
State/Tribal Policy Recommendations
Because state and tribal policymakers set most of the nation's
gambling laws and regulations, they carry the heaviest burden for
assuring that those laws are crafted in the interest of the public
good. Following are policy recommendations for state and tribal leaders
that would not only go a long way towards reigning in uncontrolled
gambling expansion, but also would begin to address costs associated
with it:
1. Restrict contributions to state and local campaigns from
corporate, private, or tribal entities operating gambling
facilities in that state. Because campaign contributions by
gambling interests may unduly influence the political process
and because local government tends to become a dependent
partner in the business of gambling, states should adopt tight
restrictions on contributions to state and local campaigns by
entities--corporate, private, or tribal-that have applied for,
or have been granted, the privilege of operating gambling
facilities.
2. Prohibit convenience gambling (casino-like machines and
games) in neighborhoods, pari-mutuel facilities, and lottery
terminals. Convenience gambling, such as EGDs in neighborhood
outlets, has been shown to provide little to no social or
economic benefit, and to contribute to significant negative
costs.
3. Detach state government from the operation and promotion of
lotteries. Lottery states cannot avoid a conflict of interest
between the public good and the public treasury. They are
actively promoting an addictive product that functions like a
regressive tax and that is essentially contrary to the work
ethic on which viable democracy is based.
4. Enact and enforce harsh penalties for any gambling outlet
that allows underage gambling. America's growing addiction to
gambling puts children and adolescents at considerable risk for
gambling addiction through early and repeated exposure. State
and tribal leaders should enact and enforce harsh penalties for
any abuses regarding allowing or encouraging underage gambling.
Penalties and enforcement efforts should be greatly increased.
5. Establish a 1 percent gambling addiction tax on all gambling
operations dedicated to providing for research, prevention,
education, and treatment for problem and pathological gamblers.
The social costs inherent in legalized gambling, including
problem and pathological gambling and its consequences, have
not been adequately addressed.
Conclusion
The Gambling Commission report stated:
Gambling, like any other viable business, creates both profits
and jobs. But the real question--the reason gambling is in need
of substantially more study--is not simply how many people work
in the industry, nor how much they earn, nor even what tax
revenues flow from gambling. The central issue is whether the
net increases in income and well-being are worth the
acknowledged social costs of gambling.\23\
---------------------------------------------------------------------------
\23\ Ibid., p. 7-29.
Because the costs are high, especially for America's youth, a
moratorium on gambling expansion is needed now.
Some might argue that trying to stop gambling expansion is like
trying to stop a train barreling down the tracks--an exercise in
futility. The recent defeat of anti-gambling governors by pro-gambling
gubernatorial challengers in South Carolina and Alabama has often been
cited as a case in point. Indeed it is, but not in the way expected.
Consider the surprising outcome in those two states:
In South Carolina, where 34,000 video poker machines have
sprung up in convenience stores since they were surreptitiously
legalized in 1991, Governor Hodges was elected promising to
hold a statewide referendum to make video poker regulated,
taxed, and permanent. Common wisdom expected Hodges's
referendum to pass easily. Instead, concern over the soaring
cases of gambling addiction and minimal economic benefits from
convenience gambling carried the day. Even as Hodges's
referendum was unexpectedly heading for defeat, the South
Carolina Supreme Court invalidated the referendum as
unconstitutional. This will likely lead to the abolishment of
video poker throughout the state.
In Alabama, where Governor Siegelman was elected promising a
new state ``education lottery,'' the governor spent a great
deal of time and money promoting the lottery referendum to
ensure overwhelming approval. Instead, citizen concerns over
the regressive taxation inherent in the lottery, as well as
over having the government promote get-rich-quick schemes,
turned the debate around. The referendum was unexpectedly but
soundly defeated.
As the Weekly Standard stated in an article about these surprising
outcomes, ``It turns out voters needn't share the `private moral views'
of a religious conservative before they will reject the public morality
of state-sanctioned gambling. It turns out they need only be asked to
think about and directly act on the matter.'' \24\ The gambling tide
may be turning, simply by involving the voters in informed public
deliberation--the core of the democratic process.
---------------------------------------------------------------------------
\24\ David Tell, ``A Gambling Backlash?'' The Weekly Standard,
November 15, 1999.
---------------------------------------------------------------------------
It is time for policymakers to recognize that the rapid expansion
of gambling is putting children and adolescents increasingly at risk
and has led to a host of other negative social consequences that have
yet to be adequately addressed. Legislators should declare a moratorium
on gambling expansion and enact policies to break America's growing
addiction to gambling. They must reach out to the many broken lives
that have resulted from gambling addiction on a personal level and take
action to prevent America's youth from falling prey to gambling's
destructive potential. The above policy recommendations will jump-start
that process, but the Gambling Commission's Final Report should also be
consulted for additional resource data and information.
The question is not so much what can be done--there are many ways
to begin, as these recommendations illustrate. The real question is: Do
policymakers have the courage to act on behalf of the public good, as
opposed to the public treasury?
Senator McCain. Thank you very much, Dr. Kelly. Thank you
for your service on the commission. We appreciate it very much.
Mr. Fahrenkopf.
STATEMENT OF FRANK FAHRENKOPF, JR., PRESIDENT, CEO, AMERICAN
GAMING ASSOCIATION, WASHINGTON, DC
Mr. Fahrenkopf. Thank you, Mr. Chairman.
Mr. Chairman, you have just completed a campaign in which
straight talk was your mantra. In that spirit, let's hear
straight talk from all of us on this issue. Unfortunately, in
my view the NCAA and its supporters base their case before this
Committee on myths, not facts. They have not given the Congress
the straight talk you so highly value and the American people
so richly deserve. Let us examine just a few of these myths and
the actual facts.
Myth number 1, that Nevada sports books are somehow an
integral part of the problem of widespread campus gambling. If
that were true, the NCAA would have said so to the federal
commission, but they did not. The commission did find that
illegal sports gambling is as high as $380 billion annually,
making Nevada's wagering only 1 percent of the total. Nevada's
wagering, as Senator Bryan earlier indicated, is limited to
people 21 years of age and physically present in the state. By
contrast, illegal gambling is rampant on and off campus, even
though it is by definition illegal.
This month, around $70 million will be wagered in Nevada on
March Madness, while several billion--the NCAA itself says it
could be as high as $4 billion--will be wagered illegally
outside of Nevada.
Myth number 2. If Nevada sports books do not take college
wagers, point spreads will not be published in the newspaper.
Fact: newspapers acquire this information from noncasino
sources that are also available over the Internet. For example,
USA Today and many other papers print the line from a man named
Danny Sheridan, who is based in Mobile, Alabama, not the State
of Nevada.
I think this Committee ought to demand that the NCAA
provide a credible legal analysis that concludes that
newspapers in this country somehow are not going to assert
their First Amendment rights on this issue. I have talked to
some newspaper people, and I would hope that this Committee
would, also.
Myth number 3, that there have been more scandals in the
1990's than in previous decades. Senator Brownback, the NCAA
has not given you straight talk on this. There were many, many
scandals in the 1950's and 1960's involving many more players
and many more games, well before modern Nevada sports books
even existed, and they have been in places like Columbia
University, Manhattan College, City College of New York,
Bradley University and, Dr. Wethington, at the University of
Kentucky.
Myth number 4, that the Nevada sports books are somehow
involved in recent point-shaving scandals. To say Nevada sports
books were involved when a handful of people tried to make
money at the sports books' expense is like saying the victim of
a robbery is involved in the commission of a crime. The facts
are that these scandals originated with illegal student bookies
on campus that were found criminally responsible for these
scandals. But for Nevada's watch-dog role, the scandals might
not have come to light.
And not one single of these point-shaving scandals
originated in the State of Nevada. I want to make that very,
very clear, because there have been comments otherwise, and I
would recommend that this Committee, Mr. Chairman, talk to the
prosecutors. Talk to the prosecutors who were involved in the
Northwestern case. Talk to the prosecutors and law enforcement
in the ASU case. They will tell you a different story and give
you a different impression.
With regard to the Northwestern case, Senator Brownback,
those individuals were making bets in other states with illegal
bookies long before they ever came to the State of Nevada, and
were involved in point-shaving cases with those bookies.
Myth number 5, the NCAA is doing all it can to address
gambling problems. Well, the University of Michigan found that
nearly half of the Nation's male student athletes are gambling
even though such behavior is against NCAA rules. More
importantly, listen to the NCAA's own words. Under oath, they
told the federal commission that they were only taking ``baby
steps'' and not spending ``substantial sums of money'' to
address illegal gambling.
Last year they wrote the commission that the NCAA is only
scratching the surface in addressing the disturbing pattern of
gambling among college students. Now, this is the case despite
the fact that 5 years ago Sports Illustrated ran a three-part
investigative series whose summary is still a fact today, Mr.
Chairman, and I will just quote one part of that.
As I said, gambling is the dirty little secret on college
campuses, where it is rampant and prospering. This SI special
report reveals how easy it is for students to bet with a
bookie, become consumed with wagering, and get over their heads
in debt.
Just the TV revenues alone this weekend in Indianapolis,
with their new contract with CBS for $6 billion for just the
men's basketball tournament over the next 11 years will bring
in five times more in just one month to the NCAA as all of
Nevada's sports books will make on professional and college
sports wagering in an entire year.
I do have to commend, however, Coach Calhoun, who is here.
The State of Connecticut and his university have probably done
more than any other university in this country to deal with the
problem on their own initiative, and let me also talk for just
a moment about the NGISC report.
Let's get very clear, and I hope the Committee would look
very carefully at the National Gambling Impact Study Commission
report, because what that study report recommended was that
states--states, not the federal government--do something about
legal sports wagering.
The recommendation was to states. There were two exceptions
where that commission found that there was federal
jurisdiction. It had to do with Internet gambling, and Native
American gambling. All other matters having to do with gambling
the commission felt belonged with the jurisdiction of the
states under the Tenth Amendment to the Constitution, and in
fact the motion to deal with legal sports wagering says that
states should be the ones who handle this, not the federal
government.
Mr. Chairman, this is a problem that exists on NCAA member
campuses, with NCAA member students. Students are betting with
other students on the outcome of these games. They are doing so
over the Internet with illegal off-shore cyber bookies. Who
better than the NCAA to take the lead in all of this?
To ban college sports betting in Nevada to address this
problem is a lot like shutting down the Napa Valley to curb
binge drinking on campus. It has no relationship, and we are
not alone in this view.
The message was made, or a statement was made about mixed
messages being sent. I would hope that all of you would tap
into the NCAA's Web site this week. You want to talk about
mixed messages, they there promote sweepstakes with their major
sponsors, their major corporate sponsors, and Mr. Chairman, if
you dial in there, for $40 you can buy from the NCAA a bracket,
and you can remove from the bracket, something you can wipe
off, what is happening in the NCAA tournament, and they say in
their own Web site, suitable for office use, suitable for home
use.
So the question of whether or not the NCAA is living up to
their responsibilities, again, the NGISC recommended very
harshly that the National Collegiate Athletic Association do
something. They have tremendous power over their member
institutions, and they recommended that the NCAA require their
member institutions to have in place education programs dealing
with student athletes and nonathletes, telling them that gaming
is illegal in the United States on college campuses whether or
not you are talking about professional athletics or college
athletics. None of that, as far as we know, has been
instituted.
Let me conclude, Mr. Chairman, by saying we are not alone
in this. It is not just Nevada. I would hope that you would
look at the people who know and follow college sports in the
NCAA on a daily basis, and I am talking about sports reporters,
I am talking about columnists, people who follow it, whether or
not you are talking about Sports Illustrated, the Sporting
News, the Raleigh News & Observer, Chicago Sun-Times, Austin
American Statesman. You go through it. These are the people who
follow the NCAA and what is going on, and what the problems
are.
And I will conclude if I can, Mr. Chairman, by reading to
you what the NCAA, under oath, testified to the relationship
with Nevada at the commission hearings of the NGISC. Quote:
The relationship we have with Las Vegas is one that we talk
about openly. If we are going to battle this problem, we need
everyone's assistance. We help Las Vegas. Las Vegas helps us.
We have relationships with sports book directors that we can
call and make contacts with. I care not to share who these
folks are, but yes, we do have relationships, and we are not
afraid to say that we do, and we again are in this to protect
the safety and integrity of our kids and the integrity of the
contests, and when needed we will use that.
Mr. Chairman, we welcome straight talk on this issue, and
we would ask for you to get straight talk. Talk to law
enforcement. Talk to the prosecutors who have really been where
the rubber meets the road on this issue, and I think they will
tell you that Nevada sports books and their millions of law-
abiding customers are part of the solution, not part of the
problem.
Thank you, Mr. Chairman.
[The prepared statement of Mr. Fahrenkopf follows:]
Prepared Statement of Frank Fahrenkopf, Jr., President, CEO,
American Gaming Association, Washington, DC
THE FUNDAMENTAL DIFFERENCES BETWEEN LEGAL AND ILLEGAL SPORTS WAGERING
I. Introduction
Mr. Chairman and other distinguished members of the Committee:
I am pleased to be here today on behalf of the American Gaming
Association to discuss legal and illegal sports wagering and their
separate effects. We welcome this opportunity to set the record
straight about the fundamental differences between the legal sports
wagering that takes place on a relatively limited basis in my home
state of Nevada and the massive illegal gambling that flourishes in the
other 49 states, particularly on and around college campuses.
The American Gaming Association is the national trade association
for U.S. commercial hotel-casino companies and casino operators, gaming
equipment manufacturers, and vendor-suppliers of goods and services to
the commercial gaming industry. Our members are primarily comprised of
publicly traded companies that are carefully licensed and closely
supervised by state regulators. These companies are also subject to
federal supervision by the Securities and Exchange Commission on
general corporate matters as well as by other federal agencies on
specific gaming-related issues (e.g., taxation and money handling).
The U.S. commercial casino industry directly employs hundreds of
thousands of people and indirectly employs many hundreds of thousands
more in each of the 11 states that permit commercial casino gaming. Our
industry has invested billions of dollars in those 11 states on behalf
of its tens of millions of direct and indirect shareholders, including
several states represented on this Committee: Nevada, Michigan,
Missouri, Louisiana and Mississippi.
Our members are major sources of state and local tax revenues in
these 11 states and outstanding corporate citizens with stellar records
of commitment to the communities in which they operate. Just last
month, the gaming industry was singled out for recognition at a Capitol
Hill luncheon by local United Way organizations in the nation's major
commercial gaming markets for their charitable contributions and those
of their employees. In addition, commercial gaming companies purchase
billions of dollars of goods and services from virtually every state in
the country in order to serve our tens of millions of customers.
The American Gaming Association's Nevada members operate legal race
and sports books in their Nevada hotel-casino-resorts. For all
practical purposes, Nevada is the only state in which legal sports
wagering is permitted, by acts of Congress and the Nevada legislature,
on college and professional sports. (The Oregon lottery has a weekly
state lottery game based on professional football games during the NFL
season.)
II. Summary
We agree that rampant illegal gambling on sports, including among
college students, is a very serious national problem. We also share the
goal of protecting the integrity of amateur athletics. For these
reasons, Nevada's legal sports books are part of the solution, not part
of the problem. This is particularly true when the volume of legal
sports wagering is small relative to massive illegal gambling.
Nevada's limited legal sports wagering is easily distinguished from
the illegal sports gambling that should be of concern to this
Committee. There is no factual basis on which to lump them together,
nor is there any connection between the two. The argument that the one-
percent of sports wagering in Nevada somehow ``fuels'' the 99 percent
out-of-state that is illegal is absurd on its face. The NCAA knows
better because it did not seek to ban Nevada's sports wagering when it
made detailed recommendations to the National Gambling Impact Study
Commission (NGISC) just last year. In fact, the NCAA said it would not
do so.
The Committee does not need to merely take our word that, as
laudable as it is to reduce illegal sports gambling and protect amateur
athletics, the pending bills to ban legal sports wagering in Nevada
will not accomplish either objective. Instead, the Committee should
consider the independent views of commentators, editorial writers,
respected sports analysts, a sampling of which follows:
George F. Will--``Congress now is contemplating a measure
that sets some sort of indoor record for missing the point.''
The Washington Post, March 12, 2000.
FBI Special Agent Michael Welch--``The mob will always be
involved in sports bookmaking, whether it's legal in Las Vegas
or not.'' The New York Daily News, March 12, 2000.
Columnist Rick Reilly--``In fact, passing the bill would be
like trying to stop a statewide flood in Oklahoma by fixing a
leaky faucet in Enid. Nevada handles only about 1% of the
action on college sports. Not that bookies and the mob wouldn't
very much like to get their hands on that 1%.'' Sports
Illustrated, March 22, 2000.
Chicago Sun-Times--``A Nevada ban is more likely to push
wagers underground or onto the Internet . . . A ban will do
little to stop betting on college games.'' Editorial of
February 3, 2000.
Columnist Mike DeCourcy--``The NCAA has put no thought
whatsoever into its push . . . This is strictly a public
relations move that offers no tangible benefit.'' Column in The
Sporting News of January 19, 2000.
Business Week--``Now (the NCAA) is looking to fix its image
with a bill only a bookie could love'' (January 31, 2000).
USA Today Founder Al Neuharth--``University and college
presidents and coaches properly are concerned about the
integrity of campus sports. But the solution to the problem is
getting their own houses in order.'' USA Today column of March
17, 2000.
III. The Importance of Integrity to Nevada's Gaming Industry
The gaming industry, including those who operate Nevada's legal
sports books, share the goal of this Committee that the integrity of
amateur sports be protected for the following simple reasons.
First, many of us are former high school and college athletes and
have strong memories of our own experiences playing various sports.
Second, our Nevada members have legal duties as state-licensed,
regulated entities to follow, and moral obligations as good corporate
citizens to uphold.
Third, and too often overlooked, is that commercial gaming
companies have an overwhelming financial interest in maintaining the
integrity of all games that are offered to the public, particularly
those of our members who operate Nevada's sports books within their
resorts.
Our industry will rightfully lose public confidence, and with it
the customers on whom our employees and we depend, if the gaming
offered, including sports wagers, is not conducted fairly and honestly.
Furthermore, Nevada's legal sports books can lose money if a customer
places a sports wager when someone is attempting to manipulate the
outcome through point shaving.
It is for these reasons that legal sports books take elaborate
security measures and cooperate fully and regularly with federal and
state law enforcement agencies as well as with the professional sports
leagues and the NCAA. To their credit, the NCAA has acknowledged the
value of that assistance (see below). Thus, Nevada's sports books are
part of the solution, not part of the problem.
IV. Key Aspects Of Nevada's State-Regulated Sports Books
A. Overview
Legal sports wagering in Nevada is relatively small in volume,
accessible only by adults who are Nevada residents or visitors to the
state, strictly regulated, closely-supervised, subject to taxation, and
part of a broader entertainment experience that drives the industry
that is the backbone of Nevada's economy.
As with gaming and gambling generally, there are fundamental
distinctions between legal and illegal sports wagering. It is simply
wrong to lump them together or to manufacture connections between them
where none exist. These distinctions are not just of degree or shades
of gray, but bold differences that make them separate types of
activities that should be viewed accordingly by this Committee when
examining various types of sports wagering and their effects.
B. High School and Olympic Wagering Are ``Red Herrings''
At the outset, I would like to emphatically dispense with two ``red
herrings'' that the NCAA has thrown into this debate to divert
attention from the real issues.
First, there is no legal wagering on high school sports in Nevada
and representatives of national high school associations have
acknowledged that fact. By contrast, there no doubt is a serious
problem on high school campuses with students betting on sports and
otherwise gambling with other high school students.
Nevada's state-regulated sports books have nothing to do with what
happens in high school hallways across the country. Instead of being
allowed to get away with this maneuver, those high school groups that
have weighed in on the issue of Nevada's legal sports books should be
called to account for what they are or are not doing about the serious
problem of illegal gambling in their own schools. To do anything less
is to miss an opportunity to raise student awareness and thus affect
student behavior in a positive direction.
Second, when it comes to the Olympics, there has been only minimal
legal wagering on selected events such as the men's basketball ``Dream
Team'' several years ago. The wagering volumes on these events have
been very small. It is important to point out that a representative of
the U.S. Olympic Committee recently told the Associated Press that this
virtually nonexistent legal wagering has caused no problems.
Nonetheless, Nevada gaming regulators will have to determine on a case-
by-case basis whether any Olympic wagering is ever appropriate in the
future.
C. State Regulation of Legal Sports Books
Legal wagering on professional and college sports in Nevada is
subject to careful regulation by the Nevada Gaming Commission and the
Nevada Gaming Control Board. Only adults who are at least 21 years of
age and physically present may place a legal wager with a Nevada sports
book. Out-of-state wagering is strictly prohibited. Nevada's regulators
have taken steps in recent years to strengthen this and related
prohibitions. There is no suggestion, much less any evidence, that
Nevada's legal sports books are anything but well regulated and well
run.
Nevada's gaming regulators, including Gaming Commission Chairman
Brian Sandoval and Gaming Control Board Chairman Steve DuCharme, their
commission and board colleagues, and their staffs, can provide
additional information to the Committee on Nevada's strict regulatory
regime. You will find that there are sound reasons why Nevada's gaming
regulatory system is used as a model by other jurisdictions, not only
in the United States, but also around the world.
When it comes to the regulation of sports wagering, Bobby Siller,
the former Special Agent in Charge of the Las Vegas office of the FBI,
and currently a member of the Nevada Gaming Control Board told the Las
Vegas Review-Journal: ``From what I understand of this legislation (to
ban legal college wagers), it defeats the one system, the Nevada
system, which has the ability to detect illegal gambling'' (February 6,
2000).
D. Federal Law, Gaming Policy and Sports Wagering
1. The Professional & Amateur Sports Protection Act (PASPA)
Congress explicitly recognized the importance of legal gaming,
including sports wagering, to Nevada and its economy when the
Professional and Amateur Sports Protection Act (PASPA) was enacted in
1992. Far from being a ``loophole,'' as some now erroneously claim,
PASPA's ``grandfather clause'' was included by Congress to defer to all
states, including Nevada, with pre-existing sports-wagering statutes.
This was done to protect legitimate economic interests and legal
principles. Senate Report 102-248 reads in pertinent part as follows:
Neither has the Committee any desire to threaten the economy of
Nevada, which over many decades has come to depend on legalized
private gambling, including sports gambling, as an essential
industry, or to prohibit lawful sports gambling schemes in
other states that were in operation when the legislation was
introduced. (. . .)
Under paragraph (2) [of S. 474], casino gambling on sports
events may continue in Nevada, to the extent authorized by
state law, because sports gambling actually was conducted in
Nevada between September 1, 1989, and August 31, 1990, pursuant
to state law. Paragraph (2) is not intended to prevent Nevada
from expanding its sports betting schemes into other sports as
long as it was authorized by state law prior to the enactment
of this Act. Furthermore, sports gambling covered by paragraph
(2) can be conducted in any part of the state in any facility
in that state, whether such facility currently is in existence.
PASPA's preservation of previously enacted state statutes is
consistent with the fact that since the founding of our country,
states, not the federal government, have determined what gambling
should be permitted in each state, if any, and how any lawful wagering
is regulated. The principle of federalism underlying this division of
authority is enshrined in the Tenth Amendment to the U.S. Constitution.
A unanimous National Gambling Impact Study Commission, a majority of
whose members were self-described as ``anti-gambling,'' reaffirmed this
approach. (See Recommendation 3.1 in the NGISC's June 1999 Final
Report.) The primacy of state gaming regulation continues to enjoy
broad public support (75 percent in an American Viewpoint survey last
year).
Furthermore, the ``grandfather clause'' in PASPA is consistent with
the legislative purpose of that statute. The statute's legislative
history clearly reflects that PASPA's primary purpose is to prevent the
expansion of sports wagering as a state-sponsored activity via state
lottery games.
2. Nevada Has Relied On Current Federal Law For A Decade
Nothing has changed since 1992 to alter the legal and economic
basis for PASPA's prospective application. If anything, the passage of
almost a decade of time strengthens the case for not re-opening (much
less arbitrarily overturning) that ``grandfather clause.'' Until only
recently, there has not been a single complaint about it from the NCAA
or any other interested party, including when the NCAA testified on
several occasions before the National Gambling Impact Study Commission
just last year (see below).
In reliance on PASPA's ``grandfather clause,'' Nevada's casino-
hotel industry has invested tens of millions of dollars in state-of-
the-art race and sports books that are very popular with millions of
their adult patrons each year. This is particularly true in each of the
major ``mega-resorts'' that have opened on the Las Vegas Strip in the
past few years as well as sports books in resorts of longer standing.
The overall investment in each of the ``mega-resorts'' nearly exceeds
or does exceed one billion dollars apiece.
Furthermore, now that commercial casino gaming has spread to ten
other states, and Native American casinos have spread to about half the
states, mainly since PASPA's enactment, Nevada's ``grandfather clause''
has taken on even greater economic significance. Legal sports wagering
is one of the characteristics of Nevada's resort experience that
distinguishes it from that offered in other states.
E. Sports Wagering and Nevada's Destination Resorts Today
1. Overview
Legal sports wagering is enjoyed by many of Nevada's nearly 40
million visitors each year, nearly 34 million of which visit Las Vegas.
These visitors come from all 50 states and dozens of foreign countries.
For those who do so, placing a legal sports wager in a closely
supervised setting is just part of the broader entertainment experience
that destination resorts provide. The race and sports books offer a
safe and comfortable surrounding to view sporting contests on large
screen systems that in part duplicate the fun of seeing a game in
person.
Visitors no longer come to Nevada solely or even primarily for
casino gambling. Visitors increasingly spend their precious leisure
time and hard-earned vacation dollar on fine dining, viewing fine art,
playing golf and pursuing other recreational activities, and seeing
spectacular headliners and production shows, in addition to taking part
in exciting casino gaming. In addition, there are now many unique
retail outlets and national chains whose Las Vegas stores are among
their highest-grossing locations. Nevada is still the home for
professional boxing championships and other bouts, while more recently
it has become the home for professional golf tournaments, rodeo events
and NASCAR races.
When coming to Nevada, visitors to our state also frequently make
side trips to experience the great natural wonders of our region, from
the heights of the Sierra Nevada mountains near Lake Tahoe to the
depths of the Grand Canyon in our neighboring state of Arizona.
2. The Economic Significance Of Nevada's Sports Books
While race and sports book revenue is a small percentage of the
total gaming and non-gaming revenue in Nevada each year, this
comparison vastly understates the importance of legal sports wagering
to Nevada's tourism industry and the jobs that are dependent on it. For
example, this past January, an estimated 250,000 visitors came to Las
Vegas for Super Bowl Weekend when the hotel occupancy rate was
essentially 100 percent. The Las Vegas Convention & Visitors Authority
estimated that the non-gaming economic impact of these visitors was $80
million over that single weekend.
A similar economic impact is occurring this month during the NCAA
basketball tournament and will occur again this fall during football
season. The jobs generated are not only those in the race and sports
books, but extend throughout each of the hotel-casino-resort complexes
to maids, valet parking attendants, food and beverage servers, and
casino floor personnel. This job creation also includes those employed
by the airlines, rental car agencies and taxi services that transport
visitors to and around the fastest-growing major metropolitan area in
the country. These jobs, as well as general and tourist-specific
federal, state, and local tax levies, help generate billions of dollars
in federal, state and local government revenues annually.
F. The History of Nevada's Legal Sports Wagering
To understand legal sports wagering in Nevada, and the fundamental
differences between legal sports wagering and illegal sports gambling,
it is important to understand a little bit of history.
While legal race and sports wagering in Nevada dates back to the
1930s and 1940s, the modern race and sports books at hotel-casino-
resorts only go back to about the late 1970s and early 1980s. In the
earlier years, the legal wagering facilities were known as ``turf
clubs'' that were separate from hotel-casinos and largely offered
horseracing bets, with only small amounts of wagering on team sports.
This changed as a regulatory regime was put in place that allowed
hotel-casinos to operate legal race and sports books, as the popularity
of team sports increased, and as team sports became more widely
distributed over a wider variety of cable and non-cable TV channels
(many devoted exclusively to sports). The expansion of television
coverage allowed fans from the around the country to follow and develop
a loyalty to teams outside of their traditional ``home'' areas.
G. Legal Sports Wagering Is Dwarfed By Illegal Sports Gambling
A critical point to make about legal sports wagering in Nevada is
that it is relatively small, in fact almost infinitesimal, in
comparison to the various forms of illegal sports gambling.
According to the National Gambling Impact Study Commission's Final
Report, the ``guesstimates'' of illegal sports gambling range as high
as $380 billion each year (Final Report at page 2-14). By contrast, the
total legal sports wagering in Nevada is less than one percent of that
amount. The Final Report concluded that ``sports betting [is] the most
widespread and popular form of gambling in America'' (Final Report at
page 2-14).
This month's NCAA men's basketball tournament is a case in point.
The total amount wagered legally in Nevada will run between $60 and $80
million. (As with all legal sports wagering, the net revenue to the
sports books is less than five percent of the total amount wagered.) By
contrast, published reports indicate that in 1995 the FBI estimated
that the amount wagered illegally was $2.5 billion. That amount has no
doubt grown with the NCAA's marketing efforts and the growing
popularity of the tournament. NCAA president Cedric Dempsey was quoted
in the news media last year as estimating that illegal wagers on the
tournament would be closer to $4 billion that year. An article in The
Cincinnati Post (March 18, 2000) stated that $3 billion would be bet
illegally this month. The Christian Science Monitor (March 22, 2000)
said that, ``An estimated 10 million fans will go online to get odds or
more information on teams, often to place wagers.''
V. Illegal Sports Gambling Is A Serious National Problem
A. Overview
Distinct from legal sports wagering, illegal sports gambling takes
many forms. At one end of the spectrum are office pools and other
casual betting among friends that many argue is harmless. While in most
states this gambling technically violates the law, as the NGISC found
it is not prosecuted. On the other end of the spectrum is the dark
underworld of professional and amateur bookies in many communities and
on too many college campuses. These bookies often have direct or
indirect links to organized crime, as the NGISC learned in testimony
from a New York City Police Detective who has done undercover work in
this area (See NGISC hearing on September 11, 1998). This organized
crime connection extends, at least indirectly, to student bookies on
many college campuses (NGISC Final Report at page 3-10).
B. Illegal Sports Gambling Over the Internet
The most dangerous development in the growth of illegal sports
gambling is the Internet, whose illegal operators stand to benefit if
Nevada's legal sports wagers are banned. Given widespread access to the
Internet, including by minors, and the fact that persons operating
Internet gambling sites are unregulated and offshore, the negative
effects of this form of illegal gambling will only grow.
According to a recent in-depth report by Bear, Stearns & Co., there
are now more than 650 Internet gambling sites, including many that take
sports wagers. The growth in Internet gambling was 80 percent from 1998
to 1999. Thus, every home with a personal computer is a portal for
young and old alike to wager on sports and otherwise, illegally, with
unregulated cyber-casinos and cyber-sports books that lack the legal
protections that apply to Nevada's state-regulated sports books.
Internet gambling will be unaffected by a ban on Nevada's sports books
taking college sports wagers.
C. Illegal Sports Gambling Is Already Illegal
Illegal sports wagering thrives despite the fact that federal and
state law already prohibits it. For example, as a general rule, every
state prohibits all forms of gambling that are not expressly approved
by law, and then, only by state-licensed enterprises. This is equally
true for sports gambling. In addition, PASPA prevents additional states
from sponsoring sports wagering via state lotteries and from
authorizing it via private entities within their states. Use of the
telephone or the wires to transmit wagers across state lines has been
against federal law since the early 1960s. Sports bribery is a serious
federal crime. Other federal statutes prohibit the interstate shipment
of certain gambling paraphernalia and the transport of unregulated
wagering devices.
Thus, if merely enacting prohibitory laws were enough to deter this
activity, the problem would not be as severe as all concede it is
today. The solution, then, is not a matter of having more laws on the
books to prohibit illegal sports gambling or banning the very small
amount that takes places in Nevada. Rather, the solutions lie in
properly enforcing existing laws and making certain that the penalties
are adequate to deter violations. Congress should hear directly from
federal, state and campus law enforcement officials before deciding
whether to proceed with the pending legislation to ban college sports
wagering in Nevada to the exclusion of concrete steps to address
illegal sports gambling.
D. Illegal Sports Gambling on College Campuses is Out of Hand
The problems created by the various forms of illegal sports
gambling are compounded many times over on our nation's college
campuses. The NGISC concluded that, ``There is considerable evidence
that sports wagering is widespread on America's college campuses''
(Final Report at page 3-10).
First, given the extent to which our nation's colleges and their
students are wired to the Internet, a lone laptop in a single dorm room
on any campus in the country has more access to sports gambling sites
than there are legal sports books in Nevada. That access by underage
students will continue uninterrupted if Nevada's adult visitors and
residents are denied access to legal sports books. College
administrators should do something directly about access to Internet
gambling on their campuses, like installing appropriate filtering
software on campus-owned computers and limiting credit card marketing
to their students.
Second, according to no less a source than the NCAA, there are
illegal student bookies on virtually every college campus in the
country, including some with links to organized crime (as noted above).
This burgeoning phenomenon was well-documented as far back as 1995 when
Sports Illustrated published a three-part investigative series aptly
called ``Bettor Education'' that began with this ominous warning:
Gambling is the dirty little secret on college campuses, where
it's rampant and prospering. This SI special report reveals how
easy it is for students to bet with a bookie, become consumed
with wagering and get over their heads in debt.
The student-run illegal bookmaking operations described by Sports
Illustrated are so prevalent and profitable that fraternities
reportedly pass them on from graduating seniors to ``deserving''
underclassmen. If a January 12, 2000, article in the student newspaper
of the University of Pittsburgh is any indication, the description in
the Sports Illustrated article remains accurate today. (See, ``Gambling
teaches students painful life lessons,'' The Pitt News, and ``College
betting rampant'' in The Cincinnati Post of March 18, 2000.)
Students gambling with student bookies and students gambling
informally with friends are commonplace despite the fact that this is
blatantly illegal activity. By their own admission, the NCAA and its
member institutions have been unable or unwilling to contain that
activity. This phenomenon even extends to a large percentage of the
student-athletes over whom the NCAA has the most control, despite the
fact that any sports gambling (on professional or college games) is a
violation of existing NCAA rules.
The NGISC Final Report cites a University of Michigan survey of
NCAA Division I athletes published last year. The survey found that 45
percent of male student athletes gambled on sports (college or
professional). The mean amount wagered through an illegal bookmaker was
$57.25, or an average of $225 each month. Most alarming, four percent
reported having provided inside information, two percent bet on games
in which they played, and almost one-half of one percent (2 of the 460
male respondents) indicated they had received money for not playing
well in a game.
Despite the publication of the Sports Illustrated warning four
years earlier, the NCAA's staff painted a dismal picture of its efforts
at the NGISC's February 1999 hearings. William Saum, the NCAA's
Director of Agent and Gambling Activities, and David Nestel, the NCAA's
Assistant Director of Federal Relations, gave the following testimony
(according to the published hearing transcripts).
MR. SAUM: We are starting to make baby steps forward by merely
talking about it. (. . .) We have a major problem on our
campuses, we can remove the--if we can take action with the
student bookies on our campus, if we can convince our students
and our student athletes that the activity is illegal, and that
they should not accept it, we can convince our college
presidents, convince our student affairs officers, I believe
that that is a first step forward. (. . .)
I would say to you that three, four, five years ago, because we
weren't doing our part, that possibly our student athletes
didn't even know that laying a 20 dollar wager with a student
bookie in the frat house was a violation of rule, or illegal.
(. . .) (emphasis added).
MR. NESTEL: And that we have found that our administrators, not
just athletic administrators, but the college administrators on
campus don't recognize this as a problem, it doesn't smell, it
doesn't--a lot of this now with Internet gambling can go down
privately behind closed doors. And it is hard to recognize. And
so the message that can be sent here is that we need to raise
awareness. (emphasis added)
MR. SAUM: The NCAA, for the past 50, 55 years, has always cared
about the issue of gambling, but in September of '96 they
created the position which I'm fortunate enough to sit in. In
November they promoted that position to a mid-management level
position within the association. (. . .) We are also proposing
to add staff to the issue of gambling. We are willing to step
up to the plate with money. It will not be substantial sums of
money, it will be more money than we have ever spent in the
past. (. . .)
I'm not saying they are enough, they are not. Are we behind,
yes. But I think we are doing something. (. . .)
But certainly our institutions' feet must be held to the fire.
(emphasis added)
E. Conclusion
Mr. Chairman, with all due respect, diverting attention from the
serious problem on college campuses by concentrating solely on the
limited legal college sports wagering by adults in a controlled-setting
in Nevada, in the face of the spreading cancer on college campuses, is
not holding their feet to the fire as independent analysts have
recommended and the NCAA's testimony supports.
VI. The NCAA's Position On Legal Sports Books Is Not Factual
A. Overview
If legal sports wagering in Nevada were relevant to illegal sports
gambling, or threatened a matter as paramount as the integrity of
amateur athletics, the NCAA would have sought repeal of PASPA's
``grandfather clause'' long before now. Similarly, the NCAA would have
made a recommendation to the National Gambling Impact Study Commission
to repeal Nevada's ``grandfathered'' PASPA status. It did not do so.
B. The NCAA's Presentations to the NGISC Are Being Ignored
In its presentations to the NGISC, the NCAA concentrated almost
exclusively on illegal sports gambling without any claim of a
connection between legal wagering in Nevada and illegal gambling. The
most illuminating evidence is found in the November 10, 1998, hearing
in, ironically, Las Vegas. At that hearing, Mr. Saum concentrated on
the dangers and causes of illegal sports gambling without reference to
Nevada. The following exchange occurred with Commissioner James Dobson
(no friend of the gaming industry, to be sure):
DR. DOBSON: Mr. Saum, you addressed most of your comments to
illegal sports gambling. You didn't have much to say about
legalized gambling on sporting activities. Would you like to
comment on that?
MR. SAUM: Commissioner Dobson, Madam Chair and the rest of the
commissioners, we--fundamentally the NCAA is opposed to legal
and illegal sports wagering, but much like this Commission, we
have not drawn a moral line in the sand that we are going to
come out and attempt to change the law. Certainly, we would be
adamantly opposed to any further legalization across the United
States. If we're going to have sports wagering, let's keep it
in Nevada and nowhere else. Let's not allow individuals to
wager from outside the state lines. (. . .)
So I don't think you will see the NCAA start a campaign to
remove sports wagering from the State of Nevada, but you would
see us jump to our feet if it would expand outside of state
(sic). (emphasis added)
Later in the hearing, Mr. Saum was asked by Commissioner Leo
McCarthy to provide the commission with the NCAA's detailed sports
wagering recommendations. Those recommendations were furnished to the
commission in a six-page, single-spaced letter from NCAA president
Cedric Dempsey dated January 28, 1999.
First, the opening page of Mr. Dempsey's letter contains a
startling admission:
Despite our increased efforts in the area of sports gambling
education, the NCAA is only scratching the surface in
addressing the disturbing pattern of gambling behavior among
college students and youth. It is our hope that targeted
recommendations contained in the Commission's final report will
provide the impetus for much needed action while also bringing
focus to a problem that has long been overlooked.
The letter makes no mention of Nevada's legal wagering as a source
of the illegal gambling problem or as a threat to the integrity of
amateur athletics. There is likewise no request that Nevada's legal
wagering be banned.
Only several weeks after the NCAA's recommendation letter was sent
to the NGISC, the commission met for what was styled as a ``retreat''
in Virginia Beach, Virginia, on February 9 and 10, 1999. The transcript
of that hearing verifies that commissioners of all views on gambling,
pro and con, were unanimous in what can only be described as skepticism
bordering on incredulity about the NCAA's proposals that were linked to
them receiving federal funding. Several commissioners noted that the
NCAA receives hefty television rights fees and other revenues from the
uncompensated toil of college athletes. Commissioners suggested several
ways in which the NCAA could be more active in combating illegal
gambling on the sports events it sponsors.
For example, one commissioner suggested that NCAA membership
criteria include requirements that members have programs to adequately
address campus sports gambling problems, including mandatory codes of
conduct. Several commissioners strongly recommended that the NCAA run
more Public Service Announcements (PSAs) on gambling education during
major bowl games and tournaments and that these obligations be
incorporated in the NCAA's network television contracts. In response to
the NCAA's testimony that there was an absence of sufficient scientific
research to get beyond anecdotal evidence and supposition about what
needed to be done, several commissioners suggested that the NCAA take a
leading role since its members include leading research universities.
While these ideas were included in the NGISC Final Report as part
of Recommendation 3.13, it is unclear the extent to which the NCAA has
implemented them to date. For example, during the February 10, 1999,
NGISC meeting, the AGA suggested that the NCAA put the use of PSAs on
gambling education in its TV contracts. In response, Mr. Saum said that
the NCAA spent a paltry $25,000 on a video for men's basketball
programs that was turned into a PSA during the tournament in 1998. Mr.
Saum also said:
``So your point is well made. Can we do more? Absolutely, we
can do more. Can we be more creative? Yes. This is a journey we
are on, and a journey never ends, and we are not even at the
mid-point of this journey, so we will continue to take those
ideas, and yes, we need to do that.''
NGISC Chair Kay James specifically asked Mr. Saum if the NCAA would
do so with respect to PSAs in its TV contracts. Later last year, the
NCAA announced an unprecedented $6 billion contract with CBS just to
televise the March basketball tournament over an 11-year period. This
is up from $1.7 billion over eight years. While I have heard second-
hand that at least some PSAs on gambling education have been sighted in
the dozens of hours of network air time this month, there do not appear
to have been many on the air with much frequency. Not doing so on
``Selection Sunday'' earlier this month when millions of fans,
including students, started to fill out their bracket sheets was a lost
opportunity.
C. The NGISC's Final Report As It Relates to Sports Wagering
Given the self-evident differences between legal and illegal sports
wagering, and the NCAA's own testimony before the NGISC that it would
not start a campaign to change PASPA, the question of the hour is why
the NCAA is now on a singular mission to end college sports wagering
only in Nevada, the one place where it is regulated and above board.
Based on a meeting with NCAA representatives on October 5, 1999,
and on their subsequent public statements, their dramatic change in
course is at least rhetorically based on the NCAA's interpretation of
the NGISC Final Report. Congressional sponsors of legislation to
prohibit Nevada's legal sports wagering in the name of doing something
about illegal sports gambling have echoed the refrain that their
legislation ``merely implements'' an NGISC recommendation.
First, the NGISC Final Report should be read in its entirety when
it comes to sports gambling. In doing so, Congress should keep in mind
that sports gambling was not a central focus of the commission's
inquiry, in large part because the commission's charter limited it to
legal wagering while about 99 percent of sports gambling is already
illegal, yet remains wildly popular. Furthermore, the commission had
other priorities and areas of interest. Nonetheless, it did take
testimony from persons with a range of views on sports gambling, legal
and illegal, and the panel did make a series of unanimous
recommendations and one recommendation on which it was badly divided.
Second, when it comes to the NGISC recommendation to ban the very
small amount of legal sports wagering that is currently legal, several
important points must be kept in mind. Unlike the other recommendations
on sports and other topics, most of which were adopted unanimously,
only a bare majority of the nine commissioners approved Recommendation
3.7 to ban legal sports wagering.
There is no request in the wording of Recommendation 3.7 that
Congress re-open PASPA to repeal the Nevada grandfather clause. Thus,
this recommendation must be read in light of Recommendation 3.1, which
was adopted unanimously as the overarching principle of gaming
regulation:
The Commission recommends to state governments and the federal
government that states are best equipped to regulate gambling
within their own borders with two exceptions--tribal and
Internet gambling.
It is critical to note that there is no exception for sports
wagering when it comes to the level of government most suited to
determine whether a particular form of wagering should be legal within
a state. When the NGISC wished to recommend that Congress act in a
given area, it did so explicitly, not only by carving out two express
exceptions to the primacy of state regulation, but in the wording of
recommendations that expressly call for congressional action.
The correct interpretation of Recommendation 3.7 as being directed
to state policymakers and not to Congress to re-open PASPA is supported
by the ``legislative history'' of its consideration. Its author,
Commissioner James Dobson, first discussed the recommendation on April
7, 1999, at an NGISC meeting in Washington, D.C. The transcript of that
hearing includes the following statement by Dr. Dobson on the intent of
his recommendation: ``And I would like to recommend that we recommend
to the states that they ban legal betting on collegiate athletic
contests.'' (April 7, 1999 transcript at 136) (emphasis added).
D. Betting Lines In Out-of-State Newspapers
When AGA representatives met with NCAA staff on October 5, 1999, we
were told that ending point spreads in newspapers to put a dent in
illegal gambling was the primary reason for their proposal to repeal
the Nevada ``grandfather clause.'' There is considerable
misunderstanding about who creates betting lines published by
newspapers. Similarly, there is no factual foundation for the
assumption that terminating legal sports wagers in Nevada will affect
the availability of betting lines in the newspaper or otherwise, much
less that the lack of betting lines in newspapers, even if
accomplished, would have a material affect on illegal sports gambling.
We informed the NCAA in person on October 5, 1999, and in writing
on October 22, 1999, that initial betting lines are generated for legal
sports books by independent sports odds-making services. Decisions
about whether to publish betting lines from these and other services
are made by newspaper editors unconnected to Nevada's legal sports
books that enjoy First Amendment protections and respond to reader
interest.
For example, NCAA president Cedric Dempsey had explained in our
October 5 meeting that his organization had been unsuccessful in
persuading newspapers to stop publishing point spreads. He specifically
mentioned USA Today as an example. The fact is that the point spreads
published in that newspaper are provided by noted analyst Danny
Sheridan, as the sports section of that paper clearly states. Mr.
Sheridan is based in Mobile, Alabama, not in Nevada.
Even if Mr. Sheridan's line and other point spreads were to be
removed from newspapers, he and many others have Internet sites where
such information is readily available to the public. The same
information is also available from ``800'' and ``900'' telephone
services (some of which also take sports wagers illegally and even
advertise their services in major newspapers and magazines, including
campus publications.)
Several years ago, the NCAA tried to withhold tournament press
credentials for sports reporters from newspapers that publish point
spreads. The NCAA was forced to abandon that effort in the face of
First Amendment and other objections. There is no basis to conclude
that the NCAA would be any more successful just because legal wagering
is banned. To date, the NCAA has not provided any legal analysis to
support its assertion that banning Nevada's sports books from accepting
legal college wagers would remove the basis on which newspapers publish
this information. Since legal sports books are not responsible for
publishing this information, it would be a travesty to retroactively
terminate Nevada's limited legal college sports wagering on that basis,
particularly without ascertaining the position of the nation's
newspapers and receiving a legal opinion.
E. The Facts Behind Recent Point-Shaving Incidents On Campuses
In what appears to be a desperate attempt to generate support for
their legislative proposal, the NCAA has taken to rewriting the history
of recent point-shaving and other campus gambling scandals. While the
NCAA's rhetoric sometimes makes it sound as if campus scandals are
zooming into the stratosphere, other communications with Congress have
more accurately admitted that such events are ``rare'' (see NCAA letter
to Congress dated February 1, 2000).
The NCAA would have Congress believe that there is a cause-and-
effect correlation between the number of point-shaving scandals in the
1970s, 1980s, and 1990s, and the legal sports wagering in Nevada during
those decades.
At the February 1, 2000, press conference held in this very hearing
room at which the NCAA and congressional sponsors announced support for
their bill, the NCAA brandished a chart purporting to show such a
linkage. Literally ``off the chart'' were both the numerous pre-1970s
point-shaving scandals that occurred prior to Nevada's modern sports
books, and any mention of massive illegal sports gambling outside
Nevada, either before or after the 1970s. These glaring omissions
included no mention of the illegal sports gambling at the heart of each
of the point-shaving scandals in those decades.
The fact is that there were numerous point-shaving scandals, such
as those at the University of Kentucky and at several New York City
area colleges in the early 1950s, well before the modern legal sports
books. Sadly, the likelihood of more point-shaving scandals will be
unaffected by whether legal sports wagering is permitted in Nevada (and
it may actually increase without Nevada as a watchdog).
For example, there were eight point-shaving scandals in the 1990s,
according to the NCAA's chart. While eight is eight too many, such a
small number is the proverbial drop in the bucket when one considers
that tens of thousands of games were played in that decade without any
trace of undue influence.
Despite the relatively small number of these incidents, the NCAA
and its allies have attempted to recast how and why they occurred. Some
statements have used clever, loaded words like ``involved'' to describe
the relationship between the legal sports books in Nevada and those
persons on and off campus who were found legally responsible for these
scandals. When confronted, the NCAA has been forced to concede as
recently as two weeks ago on national television that our Nevada
members and Nevada's regulators helped uncover the scandal that rocked
Arizona state in the early 1990s. The NCAA's Mr. Saum also acknowledged
this assistance before the NGISC last year:
The relationship that we have with Las Vegas is one that we
talk about openly. If we are going to battle this problem we
need everyone's assistance. We help Las Vegas, Las Vegas helps
us. We have a computer right in my office that monitors the
line, and you know better than the rest of us how we can work
through that if the line changes.
We have relationships with Vice Presidents of--and sports book
directors that we can call and make contacts with. I care not
to share who those folks are. But, yes, we do have
relationships and we are not afraid to say that we do. And we,
again, are in this to protect the safety and integrity of our
kids, and the integrity of the contest, and when needed we will
use that.
(NGISC hearing transcript of February 10, 1999, at pages 39-
40).
Mr. Chairman, the computer line that Mr. Saum testified about will
go blank and those relationships will cease if Nevada's legal sports
books are prohibited from continuing to accept the limited college
sports wagers now taken.
The NCAA even went so far as to bring to its February 1, 2000,
press conference the former Notre Dame place kicker who was among those
convicted in connection with the point-shaving at Northwestern
University. Left out of the NCAA's summary of that case were several
critical facts. What the Committee will find if it consults the public
court records and those who handled these cases, or even the newspaper
articles printed at the time, is a story far different from that
implied at the NCAA's February 1 press conference.
Specifically, in both the Northwestern and Arizona state cases the
web of illegality began with student bookies that were allowed to
flourish on these campuses and infiltrate student-athletes as bettors
and sources of information. There is no suggestion in either of these
cases that legal sports books in Nevada were responsible for the
illegal student bookie operations. Also in each case, athletes got into
debt with student bookies and sought to wipe out those debts by
committing the reprehensible act of betraying their team mates and
besmirching the reputations of their own schools.
Mr. Dan K. Webb, a former U.S. attorney in Chicago who represented
one of the convicted campus bookies told the court at the sentencing
hearing that Northwestern was ``a haven for gambling'' and that the
atmosphere on campus ``nurtured'' his client's gambling addiction. (See
University of Cincinnati student newspaper, The News Record, April 7,
1999.)
Again in both cases, those involved attempted to ``fix'' more than
one game by influencing the final score and thus the point spread.
Illegal wagers with bookies were placed on earlier games and on later
games involved in each scandal. It was only when those committing these
illegal acts outside Nevada tried to make money at the expense of
Nevada's legal sports books on the later games in each scandal were
those sports books somehow ``involved'' in what transpired.
The role of Nevada's legal sports books was not as perpetrator or
witness with knowledge of what was happening back on campus illegally,
as the NCAA would have you believe. Just ask those who prosecuted these
cases. Instead, this so-called ``involvement'' was as a potential
victim, just as the victim of a street mugging is ``involved'' in the
incident. To close Nevada's sports books to college sports wagers on
this basis would be like closing banks to prevent bank robberies or
closing the New York Stock Exchange to stop insider trading.
Two simple facts betray the revisionist history of the Arizona
state and Northwestern cases that the NCAA would now have you believe
as they advocate their punitive legislation. First, when asked by a
reporter at the February 1, 2000, news conference, the former kicker
who was in part responsible for this sports bribery case admitted that
he went to Nevada to ``con'' the legal sports books and ``pull one over
on them.''
Second, the NCAA issued a statement when that scandal broke and
indictments were issued on December 5, 1997. There is no mention in
that statement of any role or ``involvement'' by legal sports books as
they now imply. This is true for a very simple reason: there was none.
The lack of ``involvement'' by Nevada's legal sports books is true in
this and other cases for a very compelling reason: as noted earlier,
legal sports books have a strong financial interest in the integrity of
the games and the accuracy of the betting lines on which wagers are
taken.
The NCAA and its supporters have tried to cheapen the role of legal
sports books in uncovering the Arizona state incident and helping with
other matters by saying that they ``only'' stopped them after the fact.
That is true for the obvious reason that they were not ``involved'' as
the NCAA now suggests and could not possibly have known about these
illegal arrangements ``before the fact.'' Finally, it takes
considerable hubris to blame our members hundreds of miles away in the
middle of the Nevada desert for not being so clairvoyant as to pick up
in advance what illegal activities were taking place on the distant
college campuses.
The NCAA also claims that there were more scandals in the 1990s
than in the previous decades combined. This accusation flies in the
face of the historical record as set forth in last year's University of
Michigan study that the NCAA otherwise often cites. The study outlines
a laundry list of serious scandals in the 1950s and 1960s that pre-
dated Nevada's modern sports books and make the incidents in the 1990s
look tame by comparison.
F. The NCAA's Other Arguments Are Misplaced
Equally disturbing has been a statement that a federal ban on
Nevada's legal sports books is justified because college athletes are
under financial pressure. First, a recent New York Times column
correctly points out that much of this pressure is a function of the
NCAA's rules and regulations. (``NCAA Tournament Highlights the
Carnival and the Cesspool,'' March 26, 2000, ``Millions are made while
the athletes are punished over pennies.'') Second, we appear to have
much more faith in the integrity of our college athletes than the NCAA.
The extremely small number of sports bribery cases indicates that our
student athletes are not succumbing to financial pressure as the NCAA
contends.
There have also been statements that the existence of college
sports wagering in Nevada amounts to commercial exploitation of
``teenagers.'' The NCAA certainly does not come to any such discussion
with clean hands, not with a $6 billion multi-year TV contract and a
list of blue-chip corporate sponsors that use college basketball
players to sell everything from pizza to motor oil.
In the same vein, we have also heard the NCAA speak about the ills
of sending ``mixed messages'' when their own corporate and network
sponsors have sweepstakes and contests on their respective web sites,
including via the NCAA's own official web site. This is taking place
even though current law and the pending legislation they support
expressly include ``sweepstakes'' among the activities that are not to
be linked to college sporting events.
VII. A Comprehensive Review And National Solutions Are Needed
Mr. Chairman, a very fair question of us is what should be done, in
the alternative, since we strongly believe that eliminating Nevada's
long-standing legal sports wagering is nothing more than empty
sensational symbolism, at best.
The answer lies in methodically going back to the NGISC Final
Report and the NCAA's recommendations to that panel, the breadth of
which are not reflected in the pending legislation the NCAA supports.
A case in point is the creation of a Justice Department study panel
as Senators Reid and Bryan, among others, have put forward in S. 2050.
The NCAA's January 28, 1999, letter to the NGISC contains compelling
reasons why such a panel is essential. Congress should have the benefit
of the informed views of such a panel before Congress considers
reversing a statute of long-standing to terminate a legal business only
to find out after the fact that doing so was unnecessary or perhaps
even counter-productive.
The NGISC Final Report also contains recommendations applicable
beyond the sports gambling context that are relevant to this subject,
such as federal Internet gambling legislation (on which we and the NCAA
are in agreement) and a minimum national legal gambling age of 21 (to
be implemented by the states).
VIII. Conclusion
In conclusion, Mr. Chairman, please permit me to express my very
deep regret that over the last several months we have been forced into
a pitched battle with the NCAA that was not of our choosing.
As our October 22, 1999, letter to NCAA president Cedric Dempsey
clearly shows, the AGA tried to find ways for our two organizations to
work together to reduce illegal sports gambling and to protect the
integrity of amateur athletics. While the NCAA never responded to that
letter (other than by coming to Congress to shut down Nevada's sports
books when it comes to college wagering), we have gone ahead without
them. For example, we are working with the Harvard Medical School
Division on Addictions on a national model program to address a variety
of potentially addictive behaviors that our young people need to avoid,
including illegal gambling. The NCAA has been AWOL on this project
despite being asked to participate.
The American Gaming Association has a proud record on key issues
just in the short time since we were created in 1995. We have partnered
with the National Center for Missing and Exploited Children on how to
handle guests who bring children to our hotels and casinos. We have
conducted training on this topic and implemented other ways to prevent
access by minors and to enforce the minimum casino playing age of 21.
We have also established voluntary advertising and marketing guidelines
to target these activities only at adults.
When it comes to pathological gambling and other responsible gaming
issues, the commercial casino industry's funding of cutting-edge
research through the National Center for Responsible Gaming was
commended by the National Gambling Impact Study Commission in its Final
Report. Much of this research is directed at how to understand and
reduce youth gambling problems.
The narrow legal issue of Nevada's status under PASPA is of direct
concern to only one out of the fifty states, even though we submit that
each of the other 46 states with various forms of legal gaming should
be very concerned about retroactive federal preemption of state gaming
decisions, as S. 2021 and S. 2267 propose.
Should the NCAA prevail in their crusade against legal sports
wagering, there will be millions of disappointed customers and many
displaced employees in Nevada, at least in the short term. If nothing
else, Nevadans have displayed their resiliency in recent years, first
as our state lost its long-held monopoly over commercial casinos and
then as the market absorbed thousands of new hotel rooms faster than
most expected.
Nevada will survive. We will find other ways to market the rooms of
those filled this month by sports fans who asked nothing more than to
be able to make a legal sports wager while enjoying everything else our
destination resorts offer.
However, passing S. 2021 or S. 2267 will do nothing to change the
atmosphere on our nation's campuses, where the problem clearly
originates when it comes to illegal sports gambling on campuses. The
NCAA and its members, who commendably acknowledged their shortcomings
as recently as last year, will have little additional incentive to act
more forcefully than they have to date. Similarly, nothing will have
been done to improve law enforcement on and off campus, increase
research, or bring treatment and prevention programs into wider use.
The conclusion of the University of Michigan study on the wider
extent of gambling problems on campus, particularly among student
athletes, said it best: ``The great American institution of
intercollegiate sports depends on a comprehensive response to this
problem'' (emphasis added).
We strongly urge you to reject the NCAA's well-meaning but
misguided proposal to ban Nevada's legal college sports wagers, and as
an alternative, convene a panel of experts from relevant fields in
keeping with what the NCAA once sought and with what the NGISC
recommended to Congress last year. The charge to this panel should be
to knock heads and develop a comprehensive set of measures for all
relevant parties, in and out of government, to implement.
Thank you for the opportunity to present our views on these
important issues. I would be pleased to answer your questions and be of
whatever other assistance the Committee deems appropriate.
Senator McCain. Thank you very much, Mr. Fahrenkopf. I
believe that if college sports gambling were made illegal, that
the newspapers would have no reason to publish the point
spreads, and I think if it was made illegal we would be able to
persuade newspapers not to publish point spreads on something
that has been declared illegal.
Mr. Fahrenkopf, Nevada does not allow gambling on the teams
that are based in Nevada. The University of Nevada, Las Vegas,
University of Nevada, et cetera. Is that not a bit of hypocrisy
there? They want gambling on the University of Connecticut's
point spread, but not on the institutions that reside within
their own state.
Mr. Fahrenkopf. Mr. Chairman, I think that is a fair
question, and despite the fact that Mr. Sandoval and Mr.
Siller, who will represent the regulatory agencies who are
going to be here, I think on the next panel, let me tell you
what my understanding is. It is a rule that has been on the
books for over 50 years, long even before the present
institution of modern sports books in our state, but the reason
goes something like this.
There is legal betting in Nevada, so these young student
athletes who attend those campuses are in an atmosphere, a
milieu where legal betting is going on. Can you imagine, if we
did not outlaw it in the State of Nevada, what the criticism
would be upon us?
But whether we are talking about Arizona, or North
Carolina, or Connecticut, there it is supposedly against the
law. Those students are not supposed to be around a gaming
milieu, but as we now know, that is not the case. What happens
is that the major sports betting in this country, the major
temptation of point-shaving and bookies takes place outside the
State of Nevada, Mr. Chairman.
Senator McCain. Well, I find your argument somewhat
unpersuasive, given that Laughlin, Nevada, is across the
Colorado River from the State of Arizona, a very short, 30-
second ride, and yet it is perfectly legal for gambling to take
place in Laughlin, Nevada, concerning an Arizona sporting
event, but not that of a Nevada-based institution.
Mr. Fahrenkopf. But, of course, there is a state line there
you mentioned Nevada has, and I think you know our industry as
well as any Member of this Congress, other than Senator Reid
and Senator Bryan, that we do a very good job of regulating----
Senator McCain. I am talking about an atmosphere that
prevails in crossing of a river to me is sort of an artificial
boundary.
At a January press conference, Kevin Prendergast, a sports
bookie and master mind of the Northwestern University
basketball point-shaving scandal told the press that he
traveled to Nevada and placed significant wagers on fixed games
at Reno casinos. Mr. Prendergast admitted that placing bets in
Nevada casinos was much easier than trying to con a bookie. He
went on to say, and I quote, ``without the option of betting
money in Nevada the scandal would not have occurred.''
Do you have a response?
Mr. Fahrenkopf. When I was commenting a few minutes ago in
response to some comments Mr. Brownback had made, talk to the
prosecutors in that case, Senator. Talk to law enforcement who
was involved.
You will find if you look at the record of that case that
Mr. Pendergast was involved in point-shaving cases and betting
long before they came out, at the final end, and they were
caught laying off money in Nevada. They were involved in cases
in four states, with illegal student bookies, long before that
came down the pike, and I think when you hear from Nevada
regulators, also the laws have been dramatically changed in
Nevada, the regulations, since that happened.
Senator McCain. Well, Mr. ``Hedake'' Smith and his friends
were able to place more than $1 million on the games in Las
Vegas. Again, I talk about the geographic proximity.
Mr. Fahrenkopf. I think they were caught, were they not,
Senator?
Senator McCain. They were caught, and in the 1999 issue of
Street & Smith's business journals, Steve Du Charme, head of
the Nevada Gaming Control Board, was asked the following
question: ``How much money is laundered through legal sports
books?'' The answer by Mr. Du Charme, ``we really have no way
of knowing. Based on transcripts of wire taps, it is millions
of dollars.''
I assume that some of those millions of dollars--and some
estimate a lot more of that money laundered--was through
scandals, which have been uncovered. To assume that the only
crimes that have been committed have been uncovered I think
flies in the face of the view of most observers.
Mr. Fahrenkopf. Well, I will tell you, I hope some of the
observers you talk to are the federal regulators who deal with
money laundering, and I hope you talk to them about the
cooperation that they get from Nevada casinos on this issue,
and you can ask again Mr. Sandoval concerning this. There is no
money laundering going on in Nevada, as that article implies.
Senator McCain. There is no money laundering going on in
Nevada?
Mr. Fahrenkopf. Well, how do I know? You are correct. You
correct me properly. I do not know. There is probably money
laundering going on every place in the United States at any
given time, but I think if you talk to federal regulators who
are charged with overseeing the money laundering activity in
this country, they will tell you probably Nevada does a better
job than most other places.
Senator McCain. I would hope so.
President Wethington, would you like to make any comments
in response to the other testimony that was presented here?
Dr. Wethington. Mr. Chairman, if I might make a couple of
comments, and to reiterate a couple of things that I had said
earlier.
1) of course we are concerned about illegal gambling, and
the NCAA has put most of its attention on that during these
last few years, and 2) we in the NCAA and on the college and
university campuses believe that gambling on young people,
legal gambling on young people is an issue, and it is one of
the issues we ought to be concerned about, and that we are
concerned about on our campuses, and we are trying in every way
we can to try to do something about that through education.
Through all of the efforts that both the universities and the
NCAA are making, we are trying to make a dent in gambling on
campus.
We believe that putting a ban on legal gambling on college
sports, on gambling on young people, is another weapon in our
arsenal. We would like to have that legislation to help us with
our overall thrust against gambling on college sports.
I would like to make one other point, and I had a note from
an NCAA staffer that says that it is incorrect that you can
connect to an NCAA Web site for a $40 sweepstakes, and so I
certainly would like to have the record indicate that there is
some question about whether the NCAA Web site has a connection
that enters a $40 sweepstakes.
Senator McCain. We will have our crack staff check that out
sometime within the next 6 months.
[Laughter.]
Coach Calhoun.
Mr. Calhoun. Well, once again, it is not a case of finger-
pointing, and it is not a case of a panacea. I do not think
anybody has brought that forward.
I think what we are bringing forward simply is, this is
something that is legal in one state and illegal in every other
state. It is a matter of attitude and perception that it is OK.
It is a starting point for us. No one here from the NCAA or
member institutions or college coaches are saying this will end
what has become a great problem. What I think it will do,
though, it will stop the perception that it is OK, that--and I
agree with you, Senator, certainly, that I think you can
persuade newspapers if something is illegal in every state in
America, they will not publish point spreads. I truly believe
that, by the way.
And I do think, as we stop that perception, we work from
there. As a starting point, I think a ban on gambling on
college athletics would be the first step, and hopefully we
would take it farther from there.
Senator McCain. A study was released yesterday on wagering
by college referees. Do you believe there may be college
officials betting on games, and do you believe that officials
might act to influence the outcome of games they are calling?
Mr. Calhoun. No. You know, I kiddingly said in the car
incompetence sometimes gets in the way. At least that is what I
have told them during the games.
[Laughter.]
But on a more serious note, I was astounded when I read the
report. I do not believe that any official has ever set forward
in a game to try to, quote, fix the basketball game.
Has it happened? I am sure it probably has, but I do not
believe that. I cannot see someone with the integrity of the
people that we work with--and I think on this point, by the
way, the NCAA has started a year ago, long before this came
out, in questioning and background checks on NCAA officials.
Senator McCain. Senator Bryan--and I want to thank the
witnesses. I thank you very much for taking the time to be
here.
Senator Bryan.
Senator Bryan. Thank you very much, Mr. Chairman.
Dr. Kelly, let me ask you a couple of questions here before
turning to the other members of the panel.
The number that has been bandied around here is that sports
wager in Nevada would constitute roughly 1 to 2 percent of all
of the sports gambling in America. Let me just make sure that
we have that as part of the record.
That is something that came from the Commission's own
report. Do you agree with that number?
Dr. Kelly. With one minor exception. I notice the figure
that has been bandied about is a $380-billion estimate.
Actually it was a range of $80 billion to $380 billion.
Senator Bryan. And I said that, but again, so that we
understand the premise here, we are talking about sports
gambling in America, $80 billion to $380 billion, Nevada sports
gambling would represent about, say 1 percent of that, and that
includes not only betting on college sports but also betting on
professional sports as well.
Dr. Kelly. That is correct.
Senator Bryan. So we are talking about something in the
range of 1 percent. I think the record is helpful on that.
Now, it has been asserted here by a number of witnesses
that, indeed, if we made sports betting illegal in Nevada on
college games that the line posted by many, many newspapers--
USA Today has been mentioned, and many others as well--would
simply disappear, and I guess my question is, in the course of
the Commission's examination of gambling, did you bring any
witnesses before the Commission from any of the major news
organizations, or the organizations that represent newspapers
in the country?
Dr. Kelly. I do not believe so, Senator.
Senator Bryan. So no testimony was offered or requested by
the Commission to indicate, in effect, look what would happen
if sports college betting were made illegal in Nevada?
Dr. Kelly. I believe we had testimony primarily from the
NCAA on these matters.
Senator Bryan. I am asking the people that are publishing
these lines, and a number of witnesses made this point, Dr.
Kelly, that if we made college betting in Nevada illegal, that
the newspapers would stop publishing the line, and I believe
you are telling me--I want to give you a chance to clarify the
record if I am misstating it--is that no witness was called
before the Commission to offer an opinion on that position from
either the newspapers themselves or organizations representing
the newspapers.
Dr. Kelly. Just to make sure I am hearing you, do you mean
did we have testimony from the media themselves as to whether
that would affect their publishing of the line?
Senator Bryan. Right.
Dr. Kelly. No, we did not.
Senator Bryan. Nor did you request any testimony from
organizations representing the newspapers--I mean, the
Publishers Guild, or the various national organizations?
Dr. Kelly. No. Again, it was primarily the NCAA.
Senator Bryan. Now, one of the statements that has been
made here is that the Commission--I believe Mr. Fahrenkopf made
this point, that the Commission recommended to state
governments and the federal government that states are best
equipped to regulate gambling within their own borders with two
exceptions, tribal and Internet gambling.
I believe Mr. Fahrenkopf was quoting from the
recommendation of the Commission itself--so that the record is
clear, that was recommendation 3.1 in the Commission's report--
that whatever one's view is of gambling, that essentially,
except for Indian gaming and Internet gambling, that that
should be an issue left to the states.
Dr. Kelly. That is correct, Senator. If I could just make
the point that the letters, nonetheless, that came from the
chair and to the commissioners were in support of this federal
legislation. However, you are correct.
Senator Bryan. I understand that, but even under both the
new math and the old math, those three letters would not
constitute a majority of the Commission.
[Laughter.]
Dr. Kelly. That is correct, Senator.
Senator Bryan. Now, Coach Calhoun, you have got a great
program. I have to say in recent years we have been somewhat
envious in Nevada with the great success that University of
Connecticut has had, a wonderful program, and let me just say I
do not think any of us would disagree with how serious illegal
gambling is on college campuses in America. It is a major
problem. Your point, you are talking about very young men
involved in your program, 18 or 19, and I quite agree. I do not
think anybody would quarrel with that proposition.
Let me ask you, though, is it not fair to say that part of
the problem is that many of these young people come from
backgrounds in which they have really have little or no money?
I mean, oftentimes some of these youngsters come from some of
the poorest neighborhoods in your own state, in my own state,
and in America.
To what extent, in your opinion, does the NCAA rule which
limits the ability of these athletes to earn outside income
have an impact on the temptations that they might have to talk
with an illegal bookie?
Mr. Calhoun. Well, first of all you are making some
stereotypes which are inaccurate. We have a mix.
Senator Bryan. I am not saying all, but some.
Mr. Calhoun. Clearly some, and I stated that previous to
that. Second, I think the greatest misnomer that I hear all the
time--and I have seen it, as a matter of fact, by student
athletes who have been involved in taking things, not
necessarily in gambling situations, but in others where--I
couldn't afford to buy a hamburger, and therefore I was
destitute.
The NCAA provides to a student athlete the right to get a
full scholarship, which is room, board, tuition, books, and
fees, so all his costs at the university are covered.
Senator Bryan. Those do not include his living expenses.
Mr. Calhoun. Well, it does include living--he has----
Senator Bryan. I am not trying to be contentious, but you
certainly have to have money to eat, and--you have to have some
money.
Mr. Calhoun. Room, board, which is food, fees, housing, et
cetera, books, all academic other----
Senator Bryan. Which we are fully supportive of.
Mr. Calhoun. And from that, based on economic need, a young
man can apply for a Pell grant, which is worth up to, I believe
at this point, $2,800. If he so qualifies he would receive all
$2,800 for, quote, spending money, so he would have a normal
college experience. I think this is what you were alluding to.
Other than actual housing and meals he also has the opportunity
for special assistance, which can range between, I believe,
$500 and $700, so a kid that is really needy, without even
working, can receive $3,500 of aid during a 9-month academic
year.
Now, whatever math we are doing, you can break it down that
you could probably afford a hamburger or go to the movies, do
some of those things, because I get very upset--now, I am not
saying we are doing enough. Clearly there are other situations
that I have a lot of feelings about that we need to do more for
these student athletes, but we have a tremendous problem at the
University of Connecticut if we are going to just cover men's
basketball or women's basketball. We have 600 other athletes.
What about them?
So the issue being simply--and the NCAA has gone forward to
allow kids to work during semester break now. Now, some of that
is not feasible, as you would understand, because you miss the
seasons, et cetera, but for some other sports, and many other
sports, it is, and there is something during the summer that
some of us might have done, and we at Connecticut have really
pushed our kids to do this. It is called work. It is a great
new experience.
Senator Bryan. I appreciate it. Your view is essential, you
do not believe it is a major problem.
Mr. Calhoun. No. No, I am not saying that at all. I say
there are certain problems, but I think the misnomer that these
kids come to an institution--and it is a misnomer--with room,
board, tuition, books, and fees, and all other academic-related
matters, and then are not allowed to seek any other financial
aid, is just not true.
We encourage all of our kids--we have a freshman class
coming in. They are being encouraged to make their Pell grant
forms out now by their families, special assistance forms, so
we encourage that. There are other things, and I am sure the
people in the NCAA know I feel very strongly, and a lot of the
coaches do, about other ways in which we can help these kids
who many times are on college campuses.
I did say in my statement that many of our kids do come
from modest backgrounds and could be more tempted, or make
misjudgments, and I truly believe that, but I think the idea
that kids do not have anything, once again, is totally
inaccurate.
Senator Bryan. I appreciate your comments.
Dr. Wethington, let me ask you a couple of questions, if I
may, and I think you are kind of appearing here on behalf of
the NCAA, and so some of these questions may be more broadly
focused.
Let me say that my daughter-in-law is from Lexington,
Kentucky. She lives in Nevada, and on her personalized plate
she has proudly emblazoned, Kentucky Cats.
Dr. Wethington. Tell her we very much appreciate that.
Senator Bryan. So we do have some family tie to the
University and the great program you have.
Let me ask you, are there any illegal bookies on the
University of Kentucky's campus?
Dr. Wethington. Mr. Chairman, I do not know any personally,
but I am certain that there probably are.
Senator Bryan. I am certainly not suggesting, Dr.
Wethington, that you would personally----
[Laughter.]
Dr. Wethington. If you ask me for an opinion, my opinion is
that there are.
Senator Bryan. And how many have been prosecuted since you
have been President of the University?
Dr. Wethington. I am not aware of any that have been
prosecuted since I have been president.
Senator Bryan. And what efforts do you as a university--I
am asking just to you, sir, because you are here. I am not
suggesting the University of Kentucky is probably different
from any other university in America, but what efforts, what
kind of commitment do you have in terms of your own law
enforcement efforts to locate these bookies?
Dr. Wethington. We have a considerable commitment to trying
to avoid the pitfalls that we believe that are there both for
legal and illegal gambling, and of course legal, there is not
an option for legal gambling on college sports in Kentucky, but
we have done it primarily through educational efforts, through
the bringing in of outside speakers, NCAA staff, FBI agents,
and former individuals who have been convicted of being
involved in college betting schemes in the past to try to get
our students, both our student athletes and the rest of the
students on campus acquainted with the issues.
Obviously, our law enforcement on campus police are always
looking for any activity that is illegal, whether that be
gambling or otherwise.
Senator Bryan. But your point, and you have been very
candid, and I appreciate that, in the years you have been
President no prosecution has been undertaken, to the best of
your knowledge?
Dr. Wethington. Not that I am aware of, to the best of my
knowledge.
Senator Bryan. Now, Mr. Fahrenkopf made reference to the $6
billion contract that the NCAA recently signed with CBS. How
much money is the NCAA as part of its budget dedicating or
devoting to this issue of trying to deal with this illegal
gambling on college campuses.
Dr. Wethington. Well, remember, Mr. Chairman, that the NCAA
is a collection of the member institutions.
Senator Bryan. Right.
Dr. Wethington. And we believe, at last account, as much as
94 percent of the revenue coming to the NCAA goes back to the
member institutions, either directly to the institution to
support
scholarships or to championships, which involve all of the
member institutions.
Senator Bryan. Let me accept your conclusion here. I think
the question is how much is being spent by the NCAA and the
reason why I ask that is because before the Commission they
testified they spent $25,000 on a video and that they would
like to be spending a lot more, but it would not be a
substantial sum of money. If that is correct, would you not
agree that it is somewhat hypocritical to come before us and
talk about how serious illegal betting on college campuses is,
something I happen to agree with, and yet spending a minimal
amount of resources to devote to that issue.
Dr. Wethington. I think all of us, Mr. Chairman, could
question the priorities of any organization or institution in
terms of its spending, but I can assure you that the vast
amounts of these moneys, the vast majority of the money goes
back to the member institutions. We then set the priorities for
the expenditure of those funds and in the case of the
University of Kentucky, I don't know what amount we are
spending, but a considerable part of the time and effort of all
of our staff are involved in anti-gambling activities. I don't
know how to put a dollar amount on it.
Senator Bryan. Well, maybe you could do so and get this
information from the NCAA. Another question along that line,
how many staff members at the NCAA national level are assigned
as their primary responsibility dealing with this issue of
illegal gambling on college campuses?
Dr. Wethington. I believe at this point there are three.
Senator Bryan. And how many member institutions do we have?
Dr. Wethington. 1,074, I believe at last count.
Senator Bryan. And three are assigned to this problem?
Dr. Wethington. That is correct.
Senator Bryan. Maybe you answer this question and if you
cannot, maybe you can provide the information. As I pointed out
in my opening statement that the NCAA testified before the
Impact Study Commission in November, I believe, of 1998 and
then they were asked to submit a followup letter in terms of
things that ought to be done. At no time during that testimony
did they indicate that the answer would be to eliminate legal
sports betting on college games in Nevada.
Dr. Wethington. Well, Mr. Chairman, I obviously was not a
part of that, but my sense of that is that this issue has been
one that has been continuing to escalate and that the farther
along we go, the member institutions are getting more and more
concerned about the overall impacts of gambling, both legal and
illegal, and that obviously the NCAA staff are there to
represent the opinions of the member institutions and I can
tell you now that the college and university presidents are
concerned about legal gambling, as they are about illegal
gambling.
Senator Bryan. Are you satisfied that out of a $6 billion
contract and making whatever priorities the NCAA wants to in
terms of remitting some of that money to college campuses, that
having three investigators or three people assigned to illegal
gambling is, in your judgment, is that a proper priority?
Dr. Wethington. I think it is a proper priority at this
point, Mr. Chairman. I don't pretend to believe that the member
institutions and the NCAA are devoting in every way the
resources that could be devoted to addressing this problem
because we have many other problems we are trying to address at
the same time, so again, it is a matter of priority. Clearly, I
believe that now the NCAA has got gambling high enough on its
agenda that sufficient resources and staff will be devoted to
the issue. I have no question about that.
Senator Bryan. Well, it just strikes me that three people
hardly represents the kind of priority that I think ought to be
devoted to this, but I respect the right of others to have a
different opinion. Let me just say that I thought the video was
quite good. Would you provide us some information? How often
did that video run? I have talked to people who watched a lot
of the recent tournament games. I have watched some myself. I
have not talked to anybody that saw it run more than once. Now,
this is not a comprehensive study, but if you happen to know
how many times did it run?
Dr. Wethington. I am informed that that video ran 18 times,
Mr. Chairman.
Senator Bryan. I thank you, and the last question before
yielding to my colleague here who I know has a lot of
questions. The National Impact Study Commission recommended
that the NCAA adopt mandatory codes of conduct on sports
gambling education. Has that been done at the University of
Kentucky?
Dr. Wethington. There is no university-wide policy. There
is under consideration this very semester, and in my opinion
there will be a recommendation from our athletics director, Mr.
C. M. Newton, and our vice-chancellor that there be a
university-wide regulation that deals with sports gambling.
Currently, the only regulation we have is the NCAA regulation
that does impact our student athletes and our athletics
personnel.
Senator Bryan. Mr. President, you have a provision in your
code of student conduct. Let us suppose I am a student at the
University of Kentucky. I am not an athlete, but I have been
caught involved in illegal gambling, not necessarily as a
bookie. Let's put that in once instance, I am a bookie; the
other instance, that I am just a student that placed a wager
through a bookie. What kind of disciplinary action, if any,
have you taken in those circumstances?
Dr. Wethington. We have not, Mr. Chairman, but that is part
of the regulation that we are proposing to put in place this
semester. Currently, we do not have any such.
Senator Bryan. And let me say, Mr. President, it may be
unfair of me to ask this of you at the University of Kentucky.
You are the witness before us. I do not mean to in any way
imply that your institution probably treats this differently,
but I think the point needs to be made. The NCAA assigns three
investigators or three people nationally and that many campuses
have not yet adopted these student codes of conduct, although I
commend your campus for being about to do so. No prosecutions
have taken place. Has any student ever been expelled, to the
best of your knowledge, from the University of Kentucky because
he or she has been involved in illegal gambling?
Dr. Wethington. Well, if there had been, Mr. Chairman, I
certainly couldn't reveal his or her name.
Senator Bryan. I am not asking the name. Anyone you know
of, sir?
Dr. Wethington. No, I do not.
Senator Bryan. I thank you.
Senator Brownback. This has been an excellent panel. I have
got a few questions that I would like to put forward. First,
maybe just to make sure the record is clear on this,
Recommendation 3-7 of the National Gambling Impact Study
Commission states ``the Commission recommends that betting on
collegiate and amateur athletic events that is currently legal
be banned altogether.'' That is from the Commission report.
There was some question about whether these two letters
constituted a majority or not. That is within the
recommendations. Am I reading that correctly, Dr. Kelly?
Dr. Kelly. That is the recommendation. I think the
counterpoint being made is that the first recommendation in
Chapter 3 was, and I would read it, ``the Commission recommends
to state governments and the federal government that states are
best equipped to regulate gambling within their own borders
with the two exceptions of tribal land Internet gambling.'' I
guess the hope here was that Nevada would take the lead on her
own.
Senator Brownback. But nonetheless, it is a recommendation
of the overall Gambling Impact Study Commission?
Dr. Kelly. Yes.
Senator Brownback. And then passed by a majority vote.
Dr. Kelly. It passed by a majority and the report in its
entirety was unanimously adopted.
Senator Brownback. So this is part of a unanimously adopted
report from that gambling impact study, is that correct?
Dr. Kelly. The entire report was unanimously adopted. That
particular recommendation passed by a majority.
Senator Brownback. The overall report is unanimous; this
one by a majority?
Dr. Kelly. Yes.
Senator Brownback. Thank you. I wanted to be clear on that.
If I could, Dr. Wethington, and thanks for really all of your
candid comments. I suppose if you are in a court of law, your
lawyer would be jumping up saying I object and not wanting all
of these answers to be put forward, but I appreciate and I am
glad you are doing it this way. That is the way you should be.
How many total employees does the NCAA have, do you know?
Dr. Wethington. I had better turn to the NCAA staff to get
the latest update. Approximately 320.
Senator Brownback. And then you have the three that are
currently dedicated at the NCAA for this issue probably going
to be jumping because of the impact. How many people on the
campuses around the country are involved in gambling? You
mentioned a number of people at the University of Kentucky as a
part of your thousand institutions. Do you have any idea how
many across the country are focusing any portion of their time
on gambling problems?
Dr. Wethington. I know of no way to put a number on that,
but I can tell you that my hope is, as it is in my institution,
that all of us involved in the administration of athletics
programs, including coaching personnel, are spending a part of
their time on anti-gambling measures.
So I believe you will find that virtually all of the
administration of our colleges and universities of their
athletics programs now consider it as a serious enough issue
that a portion of the time of these individuals are all being
spent on this issue and I like that much better than dedicating
full time people to that issue, since compliance with various
rules and regulations and otherwise is much broader than
gambling.
Senator Brownback. And so you are saying you have higher
level personnel but several FTEs, full-time equivalents per
college campus that are involved?
Dr. Wethington. Yes, in the large institutions, Senator
Brownback. In the large institutions. That would not be true,
undoubtedly, in the smaller institutions that are a part of our
organization.
Senator Brownback. And you are going to be stepping it up
further apparently too, because of the nature of the problem,
Dr. Wethington? We have had a lot of critics of the legislation
claim that if the NCAA were so serious about this ban, why
didn't they submit it as a recommendation to the Commission.
Could you address that issue directly to the Committee?
Dr. Wethington. I have addressed that in some fashion, but
could address it again and in that, I believe that this is
being, this is an issue that is getting of increasing concern
to all of the member institutions, to the colleges and
university presidents, the NCAA staff. Perhaps some of these
incidents in the nineties have caused us to put more time and
effort and attention on the matter than we might have
otherwise.
But in short, I simply believe that this is an issue whose
time has come, that we look back now at the action taken
earlier in the nineties, find a loophole here that we on the
colleges and universities and NCAA simply feel needs to be
closed for us to be able to address the overall issue of
gambling on college sports.
Senator Brownback. I have a couple of questions, if I
could, for Mr. Fahrenkopf. I appreciate your passion for your
industry, which is large. How big is the gaming industry in the
country?
Mr. Fahrenkopf. Well, you have got some form of legalized
gambling in 47 of the 50 states. There are three states that
have no form of legal gambling.
Senator Brownback. The total dollar amount of the gambling
industry in the U.S.?
Mr. Fahrenkopf. I forget who testified. Someone testified
that the gross revenue was around $80 billion for the entire
industry, but that includes lotteries, state lotteries that
exist in 37 states, plus the District of Columbia, horse
racing, et cetera.
Senator Brownback. Now, I take it you don't have much
dispute with Coach Calhoun on the problems that they are having
on college campuses?
Mr. Fahrenkopf. Absolutely, we agree, Senator.
Senator Brownback. You don't have a problem with him that
it is not a panacea, what we are proposing in this legislation?
Mr. Fahrenkopf. I will stipulate to that.
Senator Brownback. But it is a start.
Mr. Fahrenkopf. Well, I am not sure it is a start. I think
our position is this and that is why I urged during my formal
testimony that this Committee talk to law enforcement because
they will tell you that the fact that there is now legal
betting in Nevada and people out there who work with law
enforcement, that all of this they will tell you is going to go
underground. It is not going to disappear. We are not going to
stop gambling.
Senator Brownback. But if I could build on that question, I
take it from that logic that really we should have more legal
sports gambling across the country would be your answer, that
that would be the way for us to catch it in Kansas if we would
just make it legal, then we would have it investigated then.
Mr. Fahrenkopf. I would not advocate that position,
although to be kind to them, I think Dr. Kelly will tell you
there was some discussion. There were advocates of that during
the National Gambling Impact Study Commission that trying to
prohibit anything of this nature, you are going to have an
opposite result than what you seek, but I don't take that
position.
Senator Brownback. I am glad you don't take that position,
although the argument you put forward seems to be that would be
the best way to handle it. Do you, Mr. Fahrenkopf, I would like
to know whether you believe gambling on student athletes is
unseemly.
Mr. Fahrenkopf. That is a fair question. I think we,
however, live in a society today where, as we have indicated,
and I think the witnesses before this Committee have indicated,
since 1992 it has been against the law in 49 states to bet on
student athletes in 49 states. That is the law in this country
and what is happening is the law is not being enforced and the
American people are not following the law.
Senator Brownback. Well, I am just curious if you think it
is unseemly to bet on student athletes?
Mr. Fahrenkopf. Well, Senator, I heard you on C-span this
morning. I understand you said in that interview that you
placed a bet in a pool having to do with basketball, and I have
done the same.
Senator Brownback. I am asking you, do you think it is
unseemly to bet on student athletes?
Mr. Fahrenkopf. I do not.
Senator Brownback. You do not think it is unseemly?
Mr. Fahrenkopf. I do not. If it is illegal I do, but if it
is in a legal setting where it is tightly regulated and where
it is controlled and where the individuals involved in the
business are cooperating with law enforcement to try to solve
the illegal problem, I don't think it is.
Senator Brownback. And even if we had sports gaming cases
and ones that involved illegal betting, and even if it has an
impact on those and even if referees are involved in legal
ones, you don't find that unseemly?
Mr. Fahrenkopf. Well, the news that referees are involved,
that the Chairman mentioned, that is really, really a tough one
and, of course, I would agree with anyone who would condemn
that type of activity.
Senator Brownback. Well, I hope you would. One final point
that I would like to raise and we have other panelists, but we
would like to get the University of Kansas off of the betting
line in Vegas. If we got the board of regents or if you wanted
the Kansas legislature because I like states rights issues as
well, for them to directly petition the Nevada Gaming
Commission to remove the University of Kansas, actually to
remove all colleges in Kansas and maybe, I don't know, Arizona
might want to join in too, but have the state do it, would you
join us in pushing that they be removed from the board in Las
Vegas in Nevada?
Mr. Fahrenkopf. I would not personally. I represent the
industry that is involved, but you have a marvelous opportunity
in the next panel to ask the officials of the State of Nevada
who are charged with the legal responsibility.
Senator Brownback. I would hope as one who is such a great
advocate of states' rights and so passionate and clear on that,
that you would allow these institutions that are pleading for
some help and a start, not a panacea but a start, to say yes,
you are right, that is legitimate. If the University of North
Carolina wants off, I will work with you through this
association and will pull them off.
Mr. Fahrenkopf. Well, you know what, I work for people, I
have a board of directors. I couldn't make that commitment to
you.
Senator Brownback. Well, I would like for you and I think
that you could. I have other questions, Mr. Chairman, but we
have other panel members.
Mr. Fahrenkopf. Can I add one thing to the question you
asked, Senator Brownback? If you go back and look at the record
of the National Gambling Impact Study Commission, the motion
with regard to the sports betting says as follows: ``I would
like to recommend that we recommend to the states that they ban
legal betting on collegiate contests.''
Senator Brownback. I am asking you if you will allow the
states to say we don't want the University of Kansas, Kansas
State University or any other on your board in Vegas on your
betting line, then take us off and we pass it through the board
of regents in Kansas, we pass it through the state legislature.
You give us the body you want us to take it through, we will do
it. We want off. Then you guys should step forward and say OK,
that state has spoken and they are very clear in their speak I
mean, we will get the Governor to come and present it directly,
if you would like for us to, but get us off that betting line.
That is what we want off.
Mr. Fahrenkopf. One of things anyone who is familiar with
the industry in our state is that we are very, very tightly
regulated and controlled, anybody in our business, and as I
said, you are going to have an opportunity to talk to the
regulators who control our industry.
Senator Brownback. I would hope that you as an industry
would carry this on forward for our state and for many others.
Thank you, Mr. Chairman.
Senator McCain. Thank you very much. I want to thank the
panel for their patience and their time. It is not nearly noon
and we started this at 9:30 and I very much appreciate your
patience and that of the following panel. Thank you very much
for your contributions to this, what is obviously a very
important issue and I thank you very much.
Our next panel is Mr. Don Yaeger, Senior Writer, Sports
Illustrated, Mr. Brian Sandoval, Chairman, the Nevada Gaming
Commission, Dr. Kenneth Winters, Professor of Psychology,
University of Minnesota.
Mr. Yaeger, welcome. I am a long time reader of the things
you have written and we appreciate very much that you would
take the time to present your views to the Committee on this
very important issue. I appreciate the coverage that your
magazine has extended to this important issue in the past,
including the tragedy that took place in my home state of
Arizona.
STATEMENT OF DON YAEGER, SENIOR WRITER,
SPORTS ILLUSTRATED
Mr. Yaeger. I do appreciate the opportunity to have a
chance to chat with you on this subject. I am at Sports
Illustrated one of two investigative reporters at the magazine
and as a result, we have the opportunity to maintain I guess
you could talk about boxing as well.
[Laughter.]
But to hear and talk about gambling related issues, point
shaving allegations, rumors, the kinds of things that float
through the college sports world on a pretty regular basis. In
fact, we probably could dedicate one of the two of us full time
to just chasing these rumors, it happens so frequently and as
the discussion has come today, more frequently today than ever
before.
I wanted to just talk about a couple of stories that we
have done at Sports Illustrated, one of which, you stole my
thunder slightly, Senator, talking about Hedake Smith at
Arizona state. That's a story that we worked on for months and
months and we were fortunate enough to have Hedake actually
tell us and come clean with what it was led him to shave points
and how he did it, the whole process of how he did it, because
that is an important point here.
When Chairman Fahrenkopf said right here that he was in
fact, that Hedake Smith was caught by the system, I think a
real important point here is that yes, Hedake Smith is today in
a federal prison. I did speak with him this weekend because I
wanted to talk to him about this visit here. But Hedake Smith
wasn't caught by the system. They suspected that they had
committed, because of an overwhelming number of bets and the
bozos he was hanging out with, that that is what led to the
suspicion.
Hedake Smith was ultimately caught and convicted because
one of the people that was involved in his enterprise got
arrested on another charge and chose to trade Hedake Smith for
a lighter sentence on another issue, so it wasn't necessarily
that Hedake Smith was caught by the system of regulation in
Nevada. Hedake Smith was caught later when prosecutors were
able to get someone else to get Hedake Smith to talk to them.
Senator McCain. Even though there was a swirl of
allegations?
Mr. Yaeger. There was a swirl of allegations to the point
that in fact if I could just tell the story for a second
because I do think it is an important story for those of you
who don't know it to have.
This is a guy who was a definite NBA player, an incredible
talent. He got caught up in betting with bookies, got behind,
had to figure out a way to get out. The bookie presented him
with an opportunity that was to shave points. He did so on
several games. The amazing part is that on one of the games in
which he shaved points, he sat a Pac 10 record, hitting ten
three-pointers in a game. Everybody was amazed. How could a guy
be the Pac 10 conference player of the week and be shaving
points at the same time?
Well, Hedake Smith figured it out. I score a lot of points,
but I let the guy I'm guarding score points, too. Pretty soon,
it's all even, and so Hedake Smith's experience and what it
showed me when I was talking to him, it was just how basic, how
simple. He and I watched a bunch of games together because it
just so happened the story I was working on, we were working on
it during a basketball season. We watched a lot of games at his
home in Dallas.
I was amazed. I mean, he would point out, he said, you
know, isn't that slightly suspicious. His experience made me
suspicious of a lot of things, because again, no one suspected
when a guy hit ten three-pointers in a game that he was shaving
points. No one, not the FBI, not Las Vegas. It just so happened
that at the end of that season there was one game left. They
were all trying to make a ton of money.
Hedake Smith had told a couple of friends. They all rolled
up to Vegas and started spreading money all over casinos all
over town. They reached the plateau that actually sent all of
the regulators scrambling and that became such an issue in fact
that, and when you mention the swirl of allegations, that the
head coach of Arizona state actually discussed at half time
during his half time speech with the team the fact that there
were rumors out here that someone in this game is in on a fix.
Senator McCain. Mr. Sandoval, you never had any information
about this, did you?
Mr. Sandoval. Thank you, Mr. Chairman. This is an honor to
be before you. This occurred before I took the chairmanship.
Senator McCain. But the Nevada Gaming Commission did not
know anything about this, right?
Mr. Sandoval. The Gaming Control Board knew about it when
the bets were being made because the licensees told them.
Senator McCain. Did they investigate?
Mr. Sandoval. The Gaming Control Board did investigate.
Senator McCain. How come they didn't find anything out?
Mr. Sandoval. They did find something out, Mr. Chairman,
and it's my information they advised the Pac 10 and they
advised the Arizona State University.
Senator McCain. Why didn't they advise the law enforcement
agencies, since it was clearly a violation of the law?
Mr. Sandoval. We are a law enforcement agency.
Senator McCain. Why weren't charges brought? Why wasn't, I
mean, come on, Mr. Sandoval. If you knew a crime was committed
by notifying the Pac 10, is it exactly what we would expect of
a regulatory commission?
Mr. Sandoval. Mr. Chairman, I didn't say we knew a crime
was committed. We were suspicious of it.
Senator McCain. So the answer to my question is you didn't
know a crime was committed?
Mr. Sandoval. We were suspicious of one.
Senator McCain. But the answer, Mr. Sandoval, we like to
have people answer questions in this Committee, and my question
to you is, did the Nevada Gaming Regulatory Commission know
that a crime was committed?
Mr. Sandoval. No, we did not at the time.
Senator McCain. Thank you. Please proceed, Mr. Yaeger.
Mr. Yaeger. But I do think an important here in answer to
the discussion is that the bottom like is if one of Hedake
Smith's greedy friends hadn't been arrested on a theft charge,
all the suspicion in the world would have done no good. The
crime, Hedake Smith would have just been a man under a cloud.
He wouldn't be where he is today.
It happens that it happened a different way and I will tell
you just from my time covering college sports traveling with
players and meeting and spending time in dorm rooms and houses
with athletes, that there are a lot of people out there that
wonder, for every Stevan Smith who did get caught because of
the way he did get caught, how many out there aren't getting
caught. How many out there really are involved in some kind of
an enterprise to either profit or dig themselves out of a hole
as a result of their time and using their athletic talent to do
so.
A second story that we did at Sports Illustrated on a
similar subject is related to a bill that your colleague,
Senator Kyle also has on Internet gambling and I chose that
assignment because it got me to Antigua for awhile, but while
in Antigua, I did have the chance to sit in. This is the very
infancy of that industry at the time, nevertheless, in thirty
of these little Internet gambling sites. I sat in those
gambling sites and I had the chance on one day to actually talk
to a dozen of the people who were calling in to try to figure
out how do I set up an account with you, how do I begin betting
of the Internet.
Of the dozen, half were college students. I asked those
college students in conversation well, do you know athletes?
Oh, yeah. And one was from the University of Wisconsin. He told
me he hung out with several players on occasion, that at the
time, again, the whole Internet gambling thing was kind of an
early frenzy. None of us understood what it would become. I
mean, I heard just last week the number is up over 400 now,
Internet gambling sites where you can bet on college sports.
And I do understand you all are trying to regulate that,
but that Internet gambling issue, you combine that with the
whole, with the Hedake Smiths of the world, and I started to
realize those college kids, what they told me when I talked to
them on the phone from Antigua was that what they liked about
it was the Internet gambling allowed them to, they could bet on
their college sports, it would be great, and they could do it
with practical anonymity they didn't have to worry about. They
registered a credit card. They didn't have to worry about
having to really deal with a bookie. They didn't have to fly to
Vegas.
So I started to wonder and I started to talk to NCAA
officials. I started talking to coaches who really do have
their thumb or their finger on the pulse of this issue and I
really do think that if we had a few Hedake Smiths in the early
1990's, you throw the Internet in, you throw that anonymity, I
mean, who knows if the quarterback of the University of
Florida, when they open their season next fall against my alma
mater, Ball State, who knows if he spent that afternoon on the
Internet trying to figure out exactly what its going to take
and who would know. How would we know? Las Vegas is not going
to be able to prove it one way or the other.
There are other issues that I know you all have to take up
in a separate bill, but I think that you mix those two, the
Internet gambling issue and you mix the point shaving and you
really do have a recipe for disaster.
The bottom line is I do think that if you do eliminate
legal gambling in Las Vegas as a member of the media, I can't
speak for Ruppert Murdoch or I can't speak for the New York
Times. I would be shocked if anyone in our profession would
continue to run the betting line if you did, if you eliminated
illegal gambling. But I will tell you that by having Roxie
Roxborough in Nevada, you have someone out there that's deemed
immediately credible. Yes, you would still have betting. There
is no question you would still have betting if you had it, but
it would all be underground, but you would have less confidence
in it because the people out there betting in Cleveland, Ohio
wouldn't know what the line is in Dallas, Texas. Today they all
do. Why? Because you have legalized betting in Nevada. That
line that is drawn in Nevada allows people throughout the
country to feel some confidence, even if they are betting with
a bookie, that they are betting on something that is
legitimate.
Senator McCain. Mr. Yaeger, I thank you very much. And I
thank you for the continued efforts that you and your colleague
make on investigating a lot of things that unfortunately need
to be investigated in American sports. And I thank you.
Mr. Yaeger. Do not eliminate all this stuff too quickly or
I will be out of a job.
[Laughter.]
Senator McCain. Right. I think that there is enough in
boxing for you and I both to be employed for a long time.
Mr. Yaeger. Yes, sir.
Senator McCain. Thank you, Mr. Sandoval. Thank you for
being here. And thank you for the outstanding job that you and
your Commission does. I have urged on many, many occasions that
our Native Americans who engage in gaming model their
regulatory schemes and apparatus on what you do in Nevada. And
I thank you for the outstanding job that you and the Commission
in the State of Nevada does.
STATEMENT OF BRIAN SANDOVAL, CHAIRMAN,
NEVADA GAMING COMMISSION
Mr. Sandoval. Thank you, Mr. Chairman. And we are proud
indeed of what we do. I know there are several pending
questions. I would be happy to answer those right away or I
have a brief statement to make to the Committee.
Senator McCain. Please proceed with your statement, Mr.
Sandoval.
Mr. Sandoval. Thank you, Mr. Chairman.
I am Brian Sandoval, of Reno, Nevada. I serve as the
Chairman of the Nevada Gaming Commission. I am here at the
request of U.S. Senator Richard Bryan and Nevada's Governor
Kenny Guinn. They have asked that I assist this Committee, as
the representative of our state's gaming control system. I am
not here as a defender of Nevada's gaming industry. I am here,
however, as the chief gaming regulator in our state. I come
before you to present the facts about a gaming control system
that has evolved over more than half a century, to become the
model for jurisdictions in this country, as well as the world.
The Nevada gaming industry is subject to more extensive
controls than any nongaming industry anywhere in the world.
Sports wagers are taken in Nevada under the strictest
governmental controls possible. Integrity is the watchword,
beginning with the quality of the companies that are licensed
to accept those wagers. The investigations necessary to qualify
a company and its executives for licensing by our Commission
may cost it more than $1 million and take more than a year to
complete.
After our Commission licenses a sports book, we subject it
to the most vigorous enforcement standards and auditing
procedures. First and foremost, a patron must be 21 years of
age and physically present in the State of Nevada to place a
bet at a sports book. Sports books must guarantee payment in
full of all wagers. Any dispute over a wager between a patron
and a sports book is subject to immediate investigation and a
full adjudication process at no cost to the patron.
We require sports books to conduct business with a
computerized system that is inspected and approved. This system
must document every wager received, every win paid out, the
result of each sporting event, and every change in odds. The
wagering areas are under constant video surveillance. Sports
books employees must subject themselves to extensive background
checks, and management is put through an even more rigorous
licensing process.
In 1998, before the issues associated with this hearing
were publicized, the Nevada Gaming Commission significantly
revised and strengthened the regulations governing our sports
books. We adopted regulations that prohibit messenger betting.
It is illegal in Nevada for a person to place a bet for another
at a sports book for compensation. This was done to further
ensure that our sports books are not unwittingly used by
illegal bookies to hedge their bets.
Sports books are also required to obtain the name, address,
telephone number, social security, and driver's license number
of any patron who bets more than $10,000 on a single sporting
event, or an aggregate of $10,000 within a 24-hour period on
several events. This requirement discourages illegal bookmakers
and fixers from placing bets at Nevada casinos. We also
prohibit the use of any communication device by a patron within
a sports book. This is another tool to prevent unsavory persons
from using a Nevada sports book.
The ultimate tool at our disposal is the so-called black
book, or the list of excluded persons. Once a person is placed
in the black book, they are banned from Nevada's casinos for
life. After placement in the black book, it is a felony for a
person who is in the black book to enter into a licensed
establishment.
In fact, our black book's most recent entry was placed
there for attempting to place bets at Nevada sports books
related to his illegal bookmaking operation in California. And
I can assure you, Mr. Chairman, we stand ready to include more
people like him in our black book, and will cooperate with
anybody to do so.
This has only been a summary of the comprehensive
regulatory system in our state upon which we rely to ensure
integrity in the Nevada wagering system. A related goal of that
system is to identify any irregularity that may indicate a
breakdown in the integrity of athletic contests outside the
state. Nevada sports books closely monitor fluctuations in
betting activity as a possible indication of problems with a
sports event. If someone is attempting a fix, Nevada's books
may likely be the target. It is self-evident that failure to
detect a fix could cost a casino millions of dollars.
In addition, sports books set limits on the amount they
will accept on a bet on a game. A series of unusual bets will
cause a book to take that game off the board until the reasons
for such wagers can be investigated. As an added measure,
sports books continuously monitor point spreads at other sports
books by computer to ensure the integrity of the games.
And as we have discussed, without the vigilance of the
Nevada sports books and Nevada regulators, college point
shaving incidents may not have been brought to the attention of
the NCAA and law enforcement agencies. We believe the NCAA
staff will confirm the high degree of assistance they have
received from Nevada. For example, NCAA enforcement authorities
have a computer that receives the latest information from
Nevada on sports wagering activity.
It is undisputed that Nevada sports books are the first
line of defense against unlawful interference in college sports
events. If this bill becomes law, this protection would be lost
and illegal bookmakers would have fewer obstacles to attempt to
fix a game and perhaps cause an explosion in Internet or
illegal gaming.
As a final note, I know there has been criticism--and this
is to respond to Senator Brownback's concern--because Nevada's
gaming regulations prohibit wagers on our colleges for any
college game played inside our state, but allow wagers on games
involving other colleges outside the state.
Senator Brownback. Mr. Chairman, if I could.
I do not object to your limiting it to Nevada. That is
wonderful. Go ahead and do it. God bless you. I want Kansas off
of it.
Mr. Sandoval. Well, I will get there, Senator.
That provision was first adopted prior to the creation of
Nevada's present system of gaming control in 1959, which marked
a historical acceleration in the state's effort to eliminate
any underworld influence in Nevada casinos. The best
explanation for the provision is that it was created to combat
the perception from out-of-state bettors that Nevada residents,
because of their proximity to college athletes, could
potentially have information that allows them an advantage
concerning the outcome of a game. Due to this perception, and
not reality, the regulation has been retained.
The best analogy that I can think of is large corporations
which have a sweepstakes. Typically, the employees and their
families of that corporation are prohibited from participating
in the sweepstakes because, if they won the grand prize, there
may be a suspicion that something went wrong.
And on a personal note, as a graduate of the University of
Nevada, I am a big football fan as well. Each week, the Monday
after the game, there is a meeting of the boosters with the
coach. People ask questions: Who has been injured? How are we
going to do against Oregon? Et cetera. There is information
that is exchanged. And, again, I think that would create a
perception, if it were legal to bet on Nevada teams, that
Nevada residents who have close proximity to the athletes would
have an unfair advantage.
Mr. Chairman, on behalf of Governor Guinn and all the
residents of the State of Nevada, I appreciate the opportunity
to present a successful system of regulation that protects the
citizens of our great country and the integrity of amateur
sporting events. And, finally, on a personal note, I will be
traveling to your great State of Arizona to watch the Ohio
State Buckeyes, my other alma mater, play the Arizona Wildcats.
And if I ever thought for a moment that what we do in the
State of Nevada would have an effect on the magic, as a former
witness discussed, or the integrity of that game, I could not
sit before you today and give you the testimony that I am
giving. On the contrary, I feel what we do in the State of
Nevada helps preserve that, and I am proud of the system that
we have. Thank you very much, Mr. Chairman.
[The prepared statement of Mr. Sandoval follows:]
Prepared Statement of Brian Sandoval, Chairman,
Nevada Gaming Commission
I am Brian Sandoval of Reno, Nevada. I serve as the Chairman of the
Nevada Gaming Commission. I am here at the request of U.S. Senator
Richard Bryan and Nevada's Governor, Kenny Guinn, a former university
president. Governor Guinn asked that I assist this Committee as the
representative of our state's gaming control system.
I am aware of the various allegations that have been lodged against
Nevada casinos and their sports books. I respectfully suggest those
allegations have a basis more in myth than in fact. There is nothing in
the record that indicates legalized sports wagering in Nevada has
compromised the integrity of any athletic contest at any time or at any
place. Not one college sports scandal is the result of legal sports
wagering.
Legal sports wagering in Nevada is dwarfed by illegal sports
wagering outside the state. Some sources estimate illegal sports wagers
exceed $350 billion a year. By comparison, Nevada sports books annually
accept about $2.5 billion in wagers. This means Nevada sports books
account for less than 1% of the total amount wagered on sports events
in the U.S. annually.
These figures also speak to the American appetite for, and
acceptance of, sports wagering. We should not kid ourselves: whether
legal or illegal, the American public will continue to bet on the
outcome of sporting events, and we will not change this behavior
through legislation. Instead, we will simply drive the betting activity
underground in the one place where it is currently taxed, strictly
regulated, and purged of the credit and collection excesses of illegal
bookmaking operations.
I am not here as a defender of Nevada's gaming industry. I am here,
however, as the chief gaming regulator in our state. I come before you
to present the facts about a gaming control system that has evolved
over more than 50 years to become the model for jurisdictions around
the world.
Mr. Chairman, I and all the other members of the Nevada gaming
control system applaud your mission to protect our country and its
citizens against the harm caused by illegal gambling. It is a goal
toward which we continuously dedicate our efforts in Nevada and we
believe we have come closer to reaching it than any other state. I am
unaware of any evidence that there is any organized crime influence in
Nevada sports wagering or that Nevada college campuses have any of the
illegal bookmaking activities that apparently are prevalent on other
college campuses throughout the United States.
Our gaming control system not only is free of criminal involvement;
it is insulated from politics. Sen. Richard Bryan, who had an
illustrious record as Governor of Nevada, can testify how careful a
succession of governors have been to keep the gaming control system
independent from the Governor's Office and free of political influence
from any one.
The first appointment made by Governor Guinn to the State Gaming
Control Board was a decorated career agent of the FBI. When I was
appointed Chairman of the Gaming Commission, I was a member of a
successful law firm. The first action I took was to resign from my firm
and become a sole practitioner to minimize any possibility of conflicts
of interest that could interfere with the performance of my official
duties.
We in Nevada concur with the National Gambling Impact Study
Commission view that states are best equipped to regulate casino
gambling within their own borders and we take that responsibility
seriously.
The Nevada gaming industry is subject to more extensive controls
than any non-gaming industry anywhere in the world. And the gaming
industry has a record of adherence to those controls. The major
companies in Nevada gaming have billions of dollars invested in their
operations. The most recent example is the approximately $6.5 billion
that the MGM Grand proposes to pay for Mirage Resorts. Such an
investment can be jeopardized by any violation of Nevada gaming law,
whether in the operation of sports books or anywhere else.
Sports wagers are taken in Nevada under the strictest governmental
controls possible. Integrity is the watchword, beginning with the
quality of the companies that are licensed to accept those wagers. The
investigations necessary to qualify a company and its executives for
licensing by our Commission may cost more than one million dollars in
investigative and related expenses and may take more than a year to
complete.
After our Commission licenses a sports book, we and the Nevada
State Gaming Control Board subject it to the most vigorous enforcement
standards and auditing procedures.
Patrons are protected. Sports books must maintain a bond under the
control of state regulators that guarantees payment of wagers. Any
dispute over a wager between a patron and a sports book is subject to
immediate state investigation and a full adjudication process, without
any cost to the patron.
Our control system requires sports books to conduct business with a
computerized bookmaking system that we have approved. This system must
document every wager received, every win paid out, the result of each
sporting event, and every change in odds. The wagering areas are under
video surveillance. Adherence to a strict control system is required at
all times.
Nevada books must decline any bet attempted by someone who has been
paid by another person to do so, and it is a violation of our criminal
code for an individual to place wagers for compensation. In 1998,
before the issues giving rise to this hearing were ever brought up, the
Nevada Gaming Commission significantly revised and tightened up the
regulations governing our sports books. This was done to further insure
that our sports books are not unwittingly used by illegal bookies to
hedge their bets. In addition, books set limits on the amount they will
accept on a game. A series of unusual wagers will cause a book to take
that game off the board until the reasons for such wagers can be
investigated. Sports books continuously monitor point spreads at other
sports books by computer.
Nevada casinos are also subject to cash transaction reporting laws
that your own financial watchdogs--the GAO--have found to be more
demanding than those of the federal government. Nevada enforces these
casino cash transaction regulations evenly and strictly. Our Commission
has imposed fines of hundreds of thousands of dollars on Nevada casinos
for acts that are illegal under Nevada law but legal under comparable
federal law for casinos in other states. The toughest anti-money
laundering regulations in the world are those we impose on our sports
books.
This has been only a summary of the comprehensive regulatory system
in our state, upon which we rely to ensure integrity in the Nevada
wagering system. A related goal of that system is to identify any
irregularity that may indicate a breakdown in the integrity of athletic
contests outside the state. Nevada's books closely monitor any
fluctuation in betting activity as a possible indication of problems
with a sports event. If someone is attempting a ``fix,'' Nevada's books
may likely be the targets.
Without the vigilance of Nevada sports books, college point-shaving
incidents may not have been brought to the attention of the NCAA and
law enforcement agencies at all and certainly would not have been
discovered as quickly as they were. Nevada's sports books have been the
first to identify suspicious betting activity and to bring it to the
attention of law enforcement agencies and the NCAA. Before the National
Gambling Impact Study Commission, NCAA staff confirmed the high degree
of assistance they have received from Nevada and the value of that
assistance. For example, NCAA enforcement authorities have a computer
that receives the latest information from Nevada on sports wagering
activity.
Without Nevada's sports books, this first line of defense against
unlawful interference in college sports would be lost.
I acknowledge the good motives of those who believe that the
elimination of Nevada's sports books will eliminate the biggest cause
of illegal sports wagering. However, I respectfully suggest that a
close examination of the facts will not support that conclusion.
It also has been suggested that the point spreads published in the
nation's newspapers are a root of illegal wagering and that those point
spreads will disappear if Nevada's sports books are closed. In my view,
there is no factual basis for this view.
For example, persons who do not live in Nevada and who have no
relationships with Nevada casinos develop the USA Today and other
widely disseminated point spreads. Point spreads are readily available
from the great number of sports books operating elsewhere in the world,
many of them over the internet, which take bets on college sports in
the U.S. and which together far exceed the amount wagered in Nevada.
But more importantly, Nevada regulators have long recognized the
importance of point spread, or line, information to wagering activity
and have taken steps to maintain the integrity of this information.
Three companies, called line information services, are currently active
in providing point spread information services to Nevada sport books.
These companies are investigated and held to the same high standards as
the operators of gaming establishments and sports books. If they were
to somehow manipulate the line information, or supply it to illegal
bookies, their license to engage in business in Nevada would be in
instant jeopardy.
As a final note, I know there has been criticism because Nevada's
regulations prohibit wagers on our colleges or any college game played
inside our state but allow wagers on games involving other colleges
outside the state. That provision was first adopted prior to the
creation of Nevada's present system of gaming control in 1959, which
marked a historical acceleration in the state's efforts to eliminate
any underworld influence in Nevada casinos. I have been unable to
locate the record of why that provision was adopted some 50 years ago,
before the creation of the Nevada Gaming Commission and the
comprehensive system of regulation we have today. The best explanation
for the provision is that it was created to combat the perception from
out of state bettors that Nevada residents, because of their proximity
to college athletes, could potentially have information which allows
them an advantage concerning the outcome of a game. Due to the
perception, and not reality, the regulation has been retained.
Mr. Chairman, on behalf of Governor Guinn and the Nevada gaming
control regulators, I thank you for allowing me time to present facts
today. I hope they will help dispel the myths.
I spent some of my earlier years as a member of a Nevada
legislative committee with jurisdiction over gaming laws. Our approach
in fashioning solutions was to first establish the problem and the
reasons for it. I am sure each of you takes this same approach.
Therefore, I endorse the view that--without infringing on the
constitutional right of states to make their own decisions about legal
gambling--the Congress should make resources available for a meaningful
study of illegal wagering on college sports, including whether Nevada
sports books have any effect on it; the effectiveness of present
countermeasures; and the need for new countermeasures. I can assure you
of the full cooperation of Nevada's gaming regulators in that process.
Senator McCain. Thank you very much, Mr. Sandoval. And I
repeat my praise for the job that you and your Commission does.
And as I say, I have often urged my Native American friends to
enact your apparatus as their model, which, unfortunately, I
have not been able to succeed in doing. And when we get into
the Q&A, however, I think Mr. Yaeger's points are well made,
and I would be glad to hear your response to them.
Dr. Winters, welcome.
STATEMENT OF KENNETH WINTERS, PH.D., PROFESSOR OF PSYCHOLOGY,
UNIVERSITY OF MINNESOTA
Dr. Winters. Good afternoon. Thank you, Mr. Chairman and
other esteemed members of the Senate.
As a researcher in the field of youth problem gambling, I
appreciate this opportunity to offer my points of view.
Briefly, just a little bit about my background. I have been
studying this topic for about 10 years. I have been fortunate
to be funded by the National Center for Responsible Gaming, a
foundation that funds research projects. I was also a member of
the National Research Council's Committee on the Social and
Economic Impact of Pathological Gambling. As you know, this
Committee was commissioned to prepare the research report for
Congress and for the National Gambling Impact Study Commission.
Furthermore, I am also assisting the National Association
of Student Personnel Administrators in their efforts to
organize a national survey of gambling on college campuses. I
wanted to raise this to let you know there are other
organizations outside the NCAA who are looking at this issue
and trying to get a handle on the extent of the problem and the
kinds of things that could be done to prevent it.
I recognize that gambling is a legitimate form or
recreation. However, I am dismayed by the fact that gambling
has expanded so fast in our country in the past decade that
health officials and lawmakers have not been able to adequately
respond to the fact that some individuals fall victim to the
lure of gambling. Furthermore, it has been very difficult for
the experts to provide a reliable estimate of the expected
social and health impacts of this expansion or to evaluate even
the short-term costs that may or may not have already occurred.
Nevertheless, in the brief time I have I would like to just
briefly summarize three main points from research literature
concerning gambling by college students. This is not just
student athlete gambling, but gambling in general on college
campuses. Hopefully, you will find that this research knowledge
base will be important in the context of our discussion on the
proposed bill.
The first point, placing bets for money, particularly
social and informal betting, is very common on college
campuses. I know that this issue has been discussed a lot
today. I would like to emphasize, though, that a lot of college
gambling appears to be a very benign form of recreation by
students, with low amounts of money being wagered and at low
levels of activity.
However, a small but appreciable percent of college
students overindulge at a serious level. And these students can
be legitimately diagnosed or classified as problem or
pathological gamblers. The best estimate of the rate of problem
gambling among college students is somewhere in the range of 3
to 5 percent. In the context of what we know about adults, the
rate of problem gambling is about 1 to 2 percent. So we can say
that among college students, the rate of problem gambling is
threefold or more than among adult populations in our country.
The characteristics that are often associated with problem
gambling status among college students are being a male, having
a history of heavy alcohol use or use of other drugs, being an
average or below average student, and having at least one
parent with a current or past gambling problem. Being a college
student athlete does not statistically increase one's risk at
this point of our knowledge base.
Point number two: Research indicates that the games most
often played by college students are informal ones that do not
involve the provision of any sanctioned or legal venue. These
games typically include playing cards with friends, betting on
games of personal skill and sports betting. And those students
that get in trouble with gambling typically engage in these
three activities, as well.
Thus, placing a bet on the outcome of a sporting event by a
typical college student most often is a very social phenomenon
that does not involve any kind of activity with Nevada or legal
venue. Also, it is likely that the pattern of sports betting by
college students mirrors the pattern found among adults. That
is, it increases during the time of high-profile sporting
events, such as the Super Bowl and the NCAA Basketball
Tournament.
An important unknown to this issue of game preference is
Internet gambling by college students. I am glad that one of
the previous speakers noted this. We may be just seeing the tip
of the iceberg with this new form of gambling. Clearly, college
students with an interest in sports betting may readily
gravitate to the Internet to satisfy their habit.
The third point: There is a great need to increase the
awareness among college administrators about the potential
effects of gambling on the health and well-being of college
students. As a researcher, it is obvious that more data is
still needed. We know very little about the reliable extent of
problem gambling and the factors that lead a young person to
progress down a path of pathology. We also know very little
about to what extent specific games, including sports betting,
contributes to the development of problem gambling.
A related topic is to convince student health clinics to
regularly screen for gambling problems among students who
present for mental health or chemical dependency problems. One
of the most reliable findings from the National Research
Council's report was that problem gambling is highly associated
with other behavioral disorders, particularly depression,
alcoholism and drug addiction.
For example, the elevated risk for problem gambling is
about fivefold among those with already a substance use
disorder, compared to those who do not have a substance use
disorder. It is likely that problem gambling goes undetected in
the majority of these co-disorder cases, because screening for
gambling problems is not yet a routine part of student health
clinics. A related issue would be for colleges to develop and
implement expanded health awareness campaigns.
I will conclude with the point that I began with the issue
that the country is not directing a sufficient share of health
care spotlight on the incredible expansion of gambling. It is
my hope that this Committee will take a leadership role to
increase the country's sensitivity to the many health issues
surrounding problem and pathological gambling among our young
people.
If legislation is to be advanced to address this problem, I
encourage you to go down the path of legislation that has a lot
of teeth to it. This is needed to get the attention of young
people. Young people are rarely impressed by legislation from
Washington about their personal behavior. And it behooves us,
if we want to change human behavior, particularly among young
people, to make sure that the legislation matches our intended
goal.
Thank you, Mr. Chairman.
[The prepared statement of Dr. Winters follows:]
Prepared Statement of Kenneth Winters, Ph.D., Professor of Psychology,
University of Minnesota
Good morning esteemed members of the Senate. As a researcher in the
field of youth problem gambling, I appreciate having this opportunity
to offer my points of view. My background includes a 10-year history of
actively researching youth gambling, including a recent study funded by
the National Center for Responsible Gaming. I was a member of the
National Research Council's Committee on the Social and Economic Impact
of Pathological Gambling. This Committee was commissioned to prepare
the research report for Congress and the National Gambling Impact Study
Commission. Also, I am assisting the National Association of Student
Personnel Administrators in their efforts to organize a national survey
of gambling on college campuses.
First, I want to clarify my position on gambling. I am not anti-
gambling. I recognize this industry as a legitimate form of recreation.
However, I am dismayed by the fact that gambling has expanded so fast
in the past decade that health officials and law makers have not been
able to adequately respond to the fact that some individuals fall
victim to the lure of gambling. Also, it has been very difficult for
the experts to provide a reliable estimate of the expected social and
health impacts of this expansion, or to evaluate the short-term costs
that may or may not have already occurred.
Nevertheless, in the brief time that I have today, I wish to
briefly summarize three main findings from the research literature
concerning gambling by college students. It is important to place this
research knowledge base in the context of the debate on banning amateur
sports betting.
Issue Number One: Placing bets for money, particularly social and
informal betting, is common on college campuses. It appears that the
extent of gambling involvement by most students is probably quite
benign. However, a small, but appreciable, percent of college students
over-indulge at a serious level. These students can be legitimately
classified as problem or pathological gamblers.
The best estimate of the rate of problem gambling among college
students is between 3 and 5%. The characteristics that are often
associated with problem gambling status are 1) being a male, 2) being a
heavy alcohol user or a user of other drugs, 3) having average to below
average grades, and 4) having at least one parent with a current or
past gambling problem.
Issue Number Two: Research indicates that the games most often
played by college students are informal games that do not involve the
provision of any sanctioned or legal venue. These games include playing
cards with friends, betting on games of personal skill, and sports
betting. Students who are problem gamblers typically participate in
these games as well.
Thus, placing a bet on the outcome of a sporting event by a typical
college student most often is a very social phenomenon that occurs
without placing a legal bet in Nevada. Also, it is likely that the
pattern of sports betting by college students mirrors the pattern found
among adults: That is, it increases during the time of high-profile
sporting events, such as the Super Bowl and the NCAA basketball
tournament.
An important unknown to this issue of game preference is Internet
gambling by college students. We may be seeing just the tip of the
iceberg with this new form of gambling. Clearly, college students with
an interest in sports betting may readily gravitate to the Internet to
satisfy their habit.
Issue Number Three: There is a great need to increase the awareness
among college administrators about the potential effects of gambling on
the health and well being of college students.
More data are still needed from campuses across the country
regarding the extent and nature of problem gambling. We still do not
have an adequate understanding as to the onset and course of gambling
in general, and the development of problem gambling, in particular.
Also, we know so little as to how involvement in specific games, such
as sports betting, contributes to problem gambling.
A related topic is to convince student health clinics to regularly
screen for gambling problems among students who present for mental
health or chemical dependency problems. One of the most reliable
findings from the National Research Council's report was that problem
gambling is highly associated with other behavioral disorders,
particularly depression, alcoholism, and drug addition. For example,
the elevated risk for problem gambling is about five-fold among those
with a substance-use disorder compared to those without a substance use
disorder. But it is likely that problem gambling goes undetected in the
majority of these co-disordered cases because screening for gambling
problems is not yet a routine part of student health clinics. A related
issue is for colleges to develop and implement health awareness
campaigns.
Final Comments: I began by raising the question that this country
is not directing a sufficient share of the health care spotlight on the
incredible expansion of gambling. It is my hope that this Committee
will take a leadership role to increase the country's sensitivity to
the many health issues surrounding problem and pathological gambling
among our young people. Thank you.
Senator McCain. Thank you very much, Dr. Winters.
Mr. Siller, I understand that the tragedy of the tornadoes
impeded your progress here. And I am glad you were able to be
here. And thank you for going to all the trouble. Thank you for
being here.
STATEMENT OF BOBBY SILLER,
NEVADA GAMING CONTROL BOARD
Mr. Siller. Thank you, sir. And I appreciate the
opportunity to be here.
Life is choices, and yesterday I had a choice of having a
connecting flight in Arizona, and I chose Texas.
[Laughter.]
Senator McCain. Too many people chose that recently.
[Laughter.]
Mr. Siller. Obviously I did not mean it that way, Senator.
[Laughter.]
Senator McCain. Thank you for going to the trouble to be
here, sir.
Mr. Siller. But I am about as disappointed as you are about
that.
Senator McCain. Thank you.
Mr. Siller. Again, thank you for allowing me to speak to
you. I hope you will be patient with me. I found out yesterday
I was coming here, and spent all night, as you know, on
different flights in different cities trying to get here. And I
took down some notes and tried to get my thoughts together.
I welcome any questions after I give a brief presentation,
but I would like to start out by just telling you my name is
Bobby Siller. And I recently retired from the FBI, after 25
years with that wonderful agency. After my retirement in
January 1999, I was appointed to the Nevada Gaming Control
Board by the current Governor, Kenny Guinn. I must tell you
that I am not a gambler. And the most I have ever waged in my
life is about $10. And again, Senator, it was on the Texas
lottery, and I did not win.
However, I have investigated illegal gambling as an FBI
agent, as a field supervisor, as an FBI Headquarters supervisor
in the Organized Crime Section, and as the Special Agent in
Charge of the FBI in the Law Vegas Division. I am familiar with
illegal bookies and the influence organized crime has over
them. I have reviewed Senator Brownback's proposed bill and
legislation, and I do not believe that this bill will eliminate
or significantly reduce betting on college sports.
In my opinion, it would drive sports wagering further
underground, and create a greater possibility of organized
crime influence over sports wagering. There are already
significant laws on the books to address illegal college sports
wagering. There are 10 federal laws that I am personally aware
of that, either directly or indirectly, address itself to
illegal sports betting. And there are countless local laws in
cities and towns to address illegal wagering.
I would like to just illustrate for a very brief time
during my experience how law enforcement agencies and obviously
local governments prioritize their particular crime problem
and, based on budget and resources, how they address those
problems. I do not believe I have lived in a city or have been
assigned to a city where targeting bookies have been high on
the investigative or crime list of wanting to do something
about that problem.
I believe we all agree that illegal betting on collegiate
sports is a problem that must be addressed. I would like to
suggest an alternative to the legislation and an alternative or
suggestion that I believe addresses the problem. I spent many
years formulating strategy on the Safe Streets Initiative, on
Weed and Seed programs, on organized crime initiatives that
attack organized crime throughout the United States, and even
on our drug strategy.
I saw the drug strategy go from a local to an international
and back to a local, and user and distributors and various ways
of approaching that problem. But I do not believe I ever
participated in a strategy that really addressed illegal
bookmaking. And I have lived in cities where bookies, pretty
much everybody knows who they are and what they are doing--and
that is illegal bookmaking.
My suggestion is in three parts. The first part is that,
with the assistance of federal funding, we develop an
aggressive strategy that emphasizes zero, zero tolerance,
toward illegal bookmaking. I see illegal bookmaking as being
one of the major problems facing other communities, outside of
Nevada, regarding illegal bookmaker college wagering.
The strategy should be designed around targeting illegal
bookmakers across the country at peak college wagering times.
Now, what is unique about this, unlike the war against drugs,
Safe Streets and some of the other programs, is that it is not
necessary to have a sustained law enforcement initiative. We
can create and motivate local law enforcement and governments
to target with zero tolerance illegal bookmakers around March
Madness and the bowl games.
By doing that, illegal bookies, you take away all of their
options. You may not capture all of them, but you will create
an environment that is so difficult for them to profit that
eventually you will hit the heart of the problem. And the heart
of the problem, the way I understand what we are talking about
here, is college wagering. By having zero tolerance, with
support from the federal government on a collective strategy to
zero tolerance, just during that time period.
It does not have to be a sustained effort. And again, I
emphasize March Madness and the bowl games. Obviously the
federal funding would encourage local governments to devote the
resources and the funds to that problem.
The second part of my suggestion, and you probably already
have heard some of the things that I am going to talk about, is
to increase our efforts to educate college students regarding
gambling and illegal sports wagering. I believe that examples
are programs like when I was with the FBI, we had programs that
specifically targeted the athletes. We would send FBI agents
out to the various universities and colleges, and we even did
this with pro sports.
And we would sit down with those athletes and we would talk
about the vices that support prostitution and that support
gambling and what they may or may not be faced with. We gave
them examples of how they could be approached by organized
crime for point shaving, a classic case of what happened at
Arizona state at that particular game.
In essence, what I am saying is better educate our students
and our athletes regarding the pitfalls of sports wagering. In
Nevada, one of the first things I did when I became SAC of that
office is I got together with the athletic department. In that
particular case, the current Athletic Director Charlie
Cavanaugh. He and I talked about these issue. We talked about
the fact that there were a lot of young athletes coming in and
Las Vegas is a very fast-moving town, and they may not be
familiar with some of the fast life and the things that they
may be faced with.
We came to an agreement where I sent out FBI agents to sit
down with all of their athletes. We showed them a training film
that identified what they would be facing, how they should
behave. We were attempting to educate them. After being
appointed to the Board, I talked to the current SAC in Nevada
and personally sat down with him and, again, Charlie Cavanaugh,
and got the Board more involved in this. In brief, what I am
saying is an educational program that really gets to the heart
of some of the problems on the campuses as far as their being
vulnerable to organized crime's influence.
My third suggestion, and I strongly encourage you to resist
any temptation or resist any argument to support Internet
gaming. I think there should be an all-out ban on Internet
gaming. It may have already been mentioned to you by my
distinguished colleague, but there are more sports betting
sites available on a single campus computer than there are
sports books in Nevada. Any student can go on the Internet and
be exposed to more sports betting and other types of wagering
than we have in all of Nevada.
In summary, it is my position that this bill does not
address the issues. And I suggest that we target the real cause
of the problem, and that is illegal bookmakers, Internet
gambling, and that we do a better job of educating our college
students to resist sports wagering and educate them on gaming.
Thank you very much.
Senator McCain. Thank you very much.
Mr. Sandoval, do you agree with Mr. Siller that there
should be a ban on Internet gambling?
Mr. Sandoval. I do.
Senator McCain. Dr. Winters?
Dr. Winters. Yes. It is just, how are you going to do it?
Senator McCain. Because of offshore Internet sites?
Dr. Winters. Yes, the regulation. It sounds like a
nightmare. Some people say it is the gambling form of crack
cocaine, because of the ease and the ability to do it
privately, the kind of reward system that it can set up. It can
really hook people.
Senator McCain. How do we do it, Mr. Yaeger?
Mr. Yaeger. I do not know how you do it. I do know, from
having been down there, and I know that there is a case present
in New York right now, where I believe the U.S. Attorney from
New York--has that case been resolved? I know they were trying
one of the Internet gambling site founders up in New York. I
assume they probably found him guilty. Several others have
pled. But I think their issue is they would like to be
regulated. They would like to be regulated like Nevada. And
they are willing to move onshore.
This is what they tell me anyway. Most of them are willing
to move onshore and be regulated and taxed. But, again, the
problem becomes access to kids and how you figure out who is
doing that.
Senator McCain. Both Mr. Sandoval and Mr. Siller believe
that this legislation is not necessary. Do you agree with that,
Mr. Yaeger?
Mr. Yaeger. From what I have seen of it--and again, I got a
copy yesterday--I think that it is your first shot across the
bow. Again, like everybody else, if there was a silver bullet
out there, if there was an answer to it, I think all of you
would have taken it. I do not know. Does it completely
eliminate betting on college sports? No. But I do not think the
crafters of this legislation believe that that is true. But I
do think it would make a significant dent.
Again, talking to Hedake Smith this weekend, I asked him,
what if they outlawed college sports betting? And like Kevin
Pendergast, whose comments you heard when you introduced your
bill, he said, if there was not a legal venue, it certainly
would have been a lot harder. If there was not a point spread
that they could have signaled to me right before the game
started, that I knew that that was the point spread we had to
hit, it certainly would have been a lot harder. I know Hedake
Smith was not quite available to you, but he does believe that
this was a good piece of legislation, from my discussion with
him.
Senator McCain. Well, I thank you, Mr. Yaeger. And I will
continue to read with interest your journalistic efforts. I do
not think there is anyone who believes that this is the only
solution, but I do believe that for us to do nothing and rely
on educational programs is an evasion of our responsibilities.
I also think that Senator Brownback brings in a very
important kind of aspect to this, and that is states' rights.
Do not states have the right to not have to be subjected to
this? I think they do. I think they do.
Go ahead, Mr. Yaeger.
Mr. Yaeger. I am sorry to interrupt you. But if your State
Legislature had done, as Mr. Brownback is talking about, and
Arizona state was not on the board, Hedake Smith could not have
shaved points.
Senator McCain. I think you are right.
Dr. Winters, did you want to comment?
Dr. Winters. Well, he could not have done it through a
legal bookie. That does not mean the event could not have
happened.
Senator McCain. I want to thank the witnesses. I know the
hour grows late. And I know both Senator Bryan and Senator
Brownback have questions. I do want to thank you all for being
here, and I appreciate your patience. And again, I do believe
that this is an important issue, and I thank you for your
participation.
Senator Bryan.
Senator Bryan. Thank you very much, Mr. Chairman.
And I thank each of the distinguished members of the panel
for their very thoughtful comments.
Mr. Yaeger, I read the Sports Illustrated story on Hedake
Smith. That is pretty riveting stuff. I mean it was a real
tragedy what happened to that young man, and I do not think
anybody who has read that story does not have a lot of empathy
for him. But to put this in some context, long before the
Nevada sports books were involved, he had been participating in
a series of illegal bet transactions and point shavings; is
that not correct?
Mr. Yaeger. No, that is not correct. He had played dice in
high school, but he had not been betting. He had been betting--
if your question is, had he betting with an illegal bookie
before he agreed to shave points, yes. But then those bookies
were laying off in Vegas.
Senator Bryan. In other words, he was participating with an
illegal bookie before he himself began shaving points.
Mr. Yaeger. Absolutely.
Senator Bryan. And then, at least, as I read your article,
and correct me if I am wrong, even after he began shaving
points, there was no involvement with the Las Vegas sports
book? This came at a later point after this got much more
intense and much more involved, when they were talking about
much more money?
Mr. Yaeger. No.
Senator Bryan. That is not accurate?
Mr. Yaeger. From the very first game of the four games they
bet that he arranged to have points shaved on, all four were
laid off in Vegas.
Senator Bryan. Then I misread your article. I think your
underlying premise here is you do not think that the line would
be posted if indeed it were not legal to bet on college sports
in Nevada; was that not your testimony, sir?
Mr. Yaeger. I do not think it would be in USA Today.
Senator Bryan. It would not be in USA Today. Would you
agree, Mr. Yaeger, that indeed the Internet has hundreds of
sites?
Mr. Yaeger. Sure. And I said there was a secondary issue
here. I do not think solving one issue without trying to
address the other really does much good.
Senator Bryan. Well, I guess the point I am trying to make
is that I completely agree with you on the ban on Internet
gambling. In fact, the Chairman's colleague, Senator Kyl and I,
have cosponsored the legislation. As I said in my opening
statement, it has passed the Senate. I am hopeful that we can
get it passed in this Congress, because it seeks to address
this issue through the Internet service provider.
And I do not want to waste my time on the question going
into that, but I completely agree with you. But even if we are
successful in banning Internet gambling, there is nothing in
that legislation--nothing that I am aware of--that would
prevent the Internet having, as it does today, what the line is
on various college games.
Mr. Yaeger. I think the point I was trying to make is that
the advantage of having a legalized gambling capital like Las
Vegas, or like Nevada, is that you have a recognized and
respected line that people can look at and check in the daily
newspaper and make sure, if they are betting illegally, that
they are getting a point spread that is not outrageous. I think
my point was, if you eliminate that, and it is not out of the
newspaper, how does the guy in Cleveland know he is getting the
same line that somebody in Dallas is? What does it do to
underground gambling? I do think there are many questions
there.
Senator Bryan. But I guess my point, Mr. Yaeger, is that
there are 800 and 900 phone numbers where you can get this
information. There are Internet sites that would not be--even
if we are successful in this legislation, they would still be
able to post the line. And the point I am asking you, even if
the publishers agreed not to post the line in newspapers--which
they may or may not do; we have not had that testimony yet--
there would be other sources that these bookies would be able
to get the line, and people generally.
Mr. Yaeger. No question. And again, when I was asked to
come speak before you, I told the staff that I did not know
that there was a single answer, and I do not think there is.
And I hope that nothing I said today makes you think that I
believe there is.
Senator Bryan. And my point, Mr. Yaeger--and I am not
trying to give you a hard time--I understand that you believe
that if this bill is passed, that there will not be newspapers
publishing the line. That may or may not be correct; I do not
know. But the point I am trying to make is that it is available
through the Internet and 800 and 900 numbers. That would not
disappear.
Mr. Yaeger. Correct.
Senator Bryan. One of the things that surprised me is that
Dr. Wethington, the University of Kentucky President, speaking
on behalf of the NCAA, $6 billion is that new contract they
have entered into, and he said that 94 percent of that money
went back to the member institutions. Accepting those numbers,
and I am sure that that is probably accurate, that would still
leave $360 million that the NCAA, over the course of this
thing, would retain. And yet we are told that they hired three
people to address the issue.
You have watched sports; you have written about sports; you
are distinguished--how serious has the NCAA been, in your
judgment, about the illegal college betting on college
campuses?
Mr. Yaeger. I think they are more serious today than ever.
I think your points were well taken. I noticed that there was
not a lot of jumping up to their defense. And as you know, I
have been a critic of the NCAA in the past, Senator Bryan.
Senator Bryan. I know you have. And we happen to agree with
you on that criticism.
Mr. Yaeger. We have been there together.
Senator Bryan. Yes, we have seen that.
Mr. Yaeger. And so I do think that there are issues there.
The NCAA can do more.
Senator Bryan. Again, because you have followed this so
closely. I asked Coach Calhoun about this. But it strikes me
that a lot of these young people--not all--come from very
modest backgrounds. But I think the reality, if you look at
college basketball players and other college athletes, many of
them, not all, come from backgrounds in which there is not a
whole lot of money. Oftentimes, but not all, they may be
single-parent homes, and when they come to college, they do not
have anything.
And yet the colleges benefit enormously in terms of
publicity and the money from the talents that these young
people display. A young person walks down the street, and in a
sports store, sees his jersey, and it costs 70 bucks. And he
says, I cannot even afford to buy that jersey. To what extent
do you think that the way in which the rules currently exist
with respect to the limitations on what athletes can earn and
that sort of thing, to what extent do you think that creates an
environment for temptation for these college athletes?
Mr. Yaeger. I do not think there is any question that that
is part of it. And it is not just about gambling; it is about
money from agents, as well. I think those are the two major
fears that the NCAA and most colleges have, is that the current
economic structure of college sports does lead many of those
athletes to say, why does Jim Calhoun make $400,000, for me to
wear a pair of shoes that I am not getting paid for?
And, in fact, and this is not new; N.C. state had this
issue years ago when Jim Valvano was there, and players said
it. Players said, yes, I could not believe the amount of money
my coach was making for shoes I was not wearing. Was I going to
take money? Sure.
So, yes, I think there is a relationship between those
issues. What is the number? What do you pay an athlete that
makes him not do it? I do not know. Those are issues for people
with a much better education that I got at Ball State.
[Laughter.]
Senator Bryan. Mr. Yaeger, Mr. Siller offered some
suggestions here which I thought were helpful, his three
points. Any comment with respect to those three points that he
made? Which, as I recall was, in effect, providing more federal
money to local law enforcement agencies, working with their
state counterparts, to target this illegal bookmaking, and
specifically during times of the year.
I think he talked about March Madness; that may not have
been his term, but mine. And the various Bowl games, as well.
He also talked about the need for intensified education of
these young people and colleges in terms of what the risks are
involved. And the third thing, I think, that he recommended was
the banning of Internet gambling. And I think you have already
answered that question.
Mr. Yaeger. Far be it from me to ever argue with an FBI
agent while he is sitting this close.
[Laughter.]
Senator Bryan. He is retired, so you can speak candidly.
Mr. Yaeger. Clearly, issue three, I think you know how I
feel about it.
The issue of trying to figure out how to put more federal
funds into enforcement of those laws that already exist
certainly makes a lot of sense.
But on education, I will tell you, the PSA is wonderful. I
have been with enough college athletes that you can run those
all day long and, with all due respect to the people who
appeared in it, it would not surprise me if one day we are all
here to regret the fact that maybe one of those guys did
something wrong.
So the truth is that all the education in the world does
not help, because the temptations are enormous. The dollar
figures are outrageous. And the economics, as you pointed out--
hey, I came from a different household than what you are
talking about, but I would tell you, I might have been tempted,
too, when I was in college. So we have to be real about what is
going on in college sports, too. So I do think some of those
things are absolutely problems.
Senator Bryan. Dr. Winters, I will ask this question to
you. As you studied this issue, you used the words ``socially
benign,'' I think, with respect to some gambling that occurs.
Again, putting this in context, I suppose--and I am not going
to ask this question, Mr. Chairman--but I suppose if we asked
the question, how many folks in the room today have
participated at one time or another in an office pool--and I
freely acknowledge that I have for a couple of bucks, 3 or 4
bucks--I suspect that most, not all, would have done so.
And I think what you are telling us is that you do not find
that type of gambling, although technically illegal----
Senator McCain. No, not so.
Senator Bryan. A lot of social gambling going on.
Senator McCain. As long as a pool, that person who runs it,
does not take a percentage of that pool, it is legal.
Senator Bryan. You think it is legal, then?
Dr. Winters. Betting on a golf game between two people, a
wager, informal, social, that would not be illegal. So a lot of
gaming, gambling, betting, is friendship stuff, social, benign,
as I have termed it. Some people say in Minnesota, we took a
gamble by voting in Jesse Ventura.
[Laughter.]
So there is even political gambling that is part of the lay
of the land. And kids do it. It starts early. At the grade
school level, you are getting plenty of people saying there is
a little bit of this and that. There are the Pokeman cards now
which is the latest.
Senator Bryan. Did any of your research focus on what the
colleges themselves are doing to zero in on that hardcore, I
think you said 3 to 5 percent, the number that you gave, which
may be triple what the adult, non-college counterpart problem
gamers, I guess--is that an acceptable term, problem gamblers?
Dr. Winters. Problem gamblers.
Senator Bryan. Problem gambling. What are the colleges
doing? I was struck, and Mr. Wethington happened to be our
witness today, so I do not want to pick on the University of
Kentucky.
Senator McCain. Could I mention to my friend and colleague
that Senator Brownback is also waiting.
Senator Bryan. He has been very patient. This will be my
last question.
Senator McCain. Thank you very much.
Senator Bryan. And that is a yes/no answer.
Senator McCain. I thank you, Senator Bryan. I know this is
a very important issue to you.
Senator Bryan. And I appreciate it, Mr. Chairman.
Do you believe there is not enough being done?
Dr. Winters. The radar screen for health problems among
colleges places gambling pretty low. You have got alcohol
abuse. You have got drug abuse. You have got many other things.
It is difficult to get that issue percolating to the top. But I
think there are some organizations besides the NCAA--I already
mentioned, the Student Personnel Administrators Association--
trying to get that moved forward.
Senator Bryan. I thank you.
And that is my last question. The only point I was trying
to make, Mr. Chairman, is here the NCAA comes in, Mr.
Wethington, a wonderful institution, the University of
Kentucky--no evidence of anybody ever being prosecuted for
illegal bookmaking. No evidence of any student being
disciplined for participating in this activity. I suggest that
that probably represent, across the country, in general, what
occurs. And now we are asking for federal legislation. It seems
to me that we ought to be looking at our own house first.
And I thank the chairman. And I apologize to my friend and
colleague from Kansas.
Senator McCain. I thank you, Senator Bryan. And I know that
this is a very important issue to you and your state. And I
appreciate that.
Senator Brownback.
Senator Brownback. And I know it is an important issue to
you and your state. That is why I came over and talked with you
ahead of putting the bill in. Because I think it is an
important issue.
I would think, Dr. Winters, we are probably going to be
back at a number of these hearings in the future, from what I
hear you describe, if we are talking about gambling and its
impact across the country. It just keeps growing. And you would
anticipate this is going to be ever-increasing, with the trend
lines we are on right now, an increasing problem we are going
to be facing; is that correct?
Dr. Winters. Yes. In fact, there has been enough data to
try to look at that. And the trend side looks, unfortunately,
on the up, in all populations, including young people. And not
only do most states have gambling, if you just start to tally
up how much gambling each state has, I think almost every
American is within about a 4-hour drive of high-stakes
gambling, and not just the lottery down the street. And the
high-stakes stuff is what of course gets people in trouble. And
then you throw in the Internet mix.
Senator Brownback. So we will be back here probably on
another topic, some other time, looking at this I would guess.
Mr. Sandoval, I appreciate your coming and I appreciate,
really, your making it in. And, Mr. Yaeger, I appreciate your
comments, too.
I just have one line of questioning. Mr. Sandoval, Nevada
has the right, as a state, to ban gambling on UNLV; is that
correct?
Mr. Sandoval. There is a gaming regulation, yes, Senator.
Senator Brownback. And in Nevada, the State of Nevada has
that right?
Mr. Sandoval. The current regulation reads that it
prohibits betting on University of Nevada, Reno, and University
of Nevada, Las Vegas, sports.
Senator Brownback. And Nevada has that right?
Mr. Sandoval. Yes.
Senator Brownback. Could you take me through the steps of
what Kansas needs to do to get our colleges off of the legal
sports book in Nevada? Take me through the steps of what we
need to do to get the University of Kansas, Kansas State
University, and others off the legal sports book in Nevada.
Mr. Sandoval. The only process that I am aware of, Senator,
is there is what is called the Gaming Policy Committee in the
State of Nevada, which is chaired by the Governor of the State
of Nevada, which has the Chairman of the Gaming Commission, the
Chairman of the Gaming Control Board, a member of the state
Senate, a member of the State Assembly, two members of the
public, and a member of an Indian tribe. And that is
essentially what I would see the vehicle to discuss this issue.
I guess, as an afterthought, I heard you state at the first
part of the meeting that this regulation that we are referring
to is for the protection of the Nevada schools. We do not see
it that way. We see it as a protection for the integrity of the
sporting events.
Senator Brownback. That is what this bill is about, the
integrity of the sporting events. So if we petitioned that
group, we have the possibility we can be taken off of the legal
sports book in Nevada? What do we have to do, do we have to get
a majority vote of that group? My state does not have the
right. You possess it in Nevada. Those are all Nevada citizens,
I understand, that you listed.
Mr. Sandoval. Yes.
Senator Brownback. But a majority vote of that group?
Mr. Sandoval. Well, Senator, it is an unprecedented
question. What I can assure you is that I would return to the
state and speak with Governor Guinn on that issue. And I am
sure there is a procedure to do that. But I think that is the
proper forum to discuss the very issue that you brought up.
Senator Brownback. But a majority vote of the list you gave
could get the University of Kansas off the legal sports book in
Nevada?
Mr. Sandoval. That would be my assumption as well. I can
tell you as a certainty today that that committee, if brought
together, sets policy for the gaming industry in the State of
Nevada.
Senator Brownback. Now, you are a member of that committee?
Mr. Sandoval. I am.
Senator Brownback. Would you vote for removal of the
University of Kansas from the legal sports book in Nevada?
Mr. Sandoval. I would not. And the reason for that is, as I
said before, I see what we do in the State of Nevada as a
protection for the integrity of the college game, to assure
that there are no improprieties in that game. And I think we
assist in that goal.
Senator Brownback. But you also mentioned earlier, I think,
that you were concerned about the perception for Nevada gaming
on Nevada schools. Is that correct? I believe that was the term
you used. You were dealing with the perception problem.
Mr. Sandoval. Thank you, Senator. The perception I am
referring to is that out-of-state bettors may perceive that in-
state bettors, because of their proximity to Nevada athletes,
may have an advantage in betting on the local teams.
Senator Brownback. Well, we believe we have a perception
problem, that there is a perception that there are more and
more problems with college athletics, more and more impact of
money, more and more impact in gambling. And we would like to
deal with the perception. If you do not believe that it is
truly a problem or that it is not unseemly to bet on college
athletes, we would like to deal with the perception. And we
seek a vehicle to deal with that.
You can provide us one through that means, although I think
that is pretty flawed. It still is all Nevadans determining the
impact on Kansas and on a Kansas school. I would certainly hope
that you would give extra weight to the desire of the state
that you are impacting and the schools and the institutions,
which we put in millions of dollars a year to our colleges, and
we are proud to do so, happy to do so, but sports is still that
front window through which much of it is viewed. That is the
gateway of viewership that it is seen. And you are having an
impact on the perception here.
I would really hope that that group would meet and would
provide a means, a legitimate means, not too difficult or
offensive, that a school could petition. That the Board of
Regents of Arizona State University could petition Nevada, and
that they would give extra weight to the desires of the legal
body governing that school to remove themselves from the legal
sports book in Nevada.
Mr. Siller, will you sit on this body, as well?
Mr. Siller. I do not sit on that body.
Senator Brownback. May I finish and get an answer from Mr.
Sandoval. I hope you will do that for us.
Mr. Sandoval. You have my commitment, Senator, that I will
go back to the State of Nevada and speak with Governor Guinn
about this issue. I will do that immediately upon my return.
Senator Brownback. Because we may have a way that we can
start to deal with some of these perception problems here, if
you will provide us that means, flawed as it is.
Mr. Siller?
Mr. Siller. My comment, Senator, if I may, just to support
my suggestions of zero tolerance to illegal bookmaking. I would
venture to say that--and I am taking an educated guess here--is
somewhere in the 90 percentile of all the bets in Kansas on
college wagering of sporting events are done by Kansans. And in
Nevada, it is just the same there. And I am not going to say
there is not the possibility that there could not be any link
between the two.
Senator Brownback. Are any of the bets laid off in Vegas?
Mr. Siller. Or bets laid off.
Senator Brownback. My Yaeger was testified to that.
Mr. Siller. I am saying that there is an extensive effort
to identify that. And I can tell you, as the board member in
charge of enforcement, that is a very high priority. And I
think that is where my experience, what I bring to that Board,
a high experience in identifying that. And I personally made
connections with my former agencies, with the United States
Attorney's Office, and other venues.
Senator McCain. Well, have you identified any of them?
Mr. Siller. Senator, I have only been on the Board a year.
And some of these investigations are ongoing. And I would love
to talk about them----
Senator McCain. Well, I would think that, as important as
your presence is, it has been going on for many years. And we
know that it has been going on. Everybody knows it. And yet, so
far, it has not been identified by either you or Mr. Sandoval's
organization. And that is not comforting.
Mr. Siller. Senator, I am probably not sure on what you
mean by ``identifying.''
Senator McCain. Well, has there been any charges brought
against people who were laying off bets in Las Vegas?
Mr. Siller. There have been investigations. There has been
coordination with other----
Senator McCain. Have there been any charges brought?
Mr. Siller. Yes, there have.
Senator McCain. There have been charges brought?
Mr. Siller. I would think that the Arizona case would be a
classic example of that, where it was Nevada who identified the
problem.
Senator McCain. It was Nevada that identified the problem?
Mr. Siller. It was.
Senator McCain. That is not according to Mr. Yaeger's
testimony, Mr. Siller.
Mr. Siller. If we are talking about the same case, and this
is the point shaving----
Mr. Yaeger. Nevada identified the problem. It was because
of a separate case.
Senator McCain. I was going to say, it may have identified
the problem, Mr. Siller, but nothing was done.
Mr. Siller. Nevada gaming identified the problem, reported
that violation to the Nevada Gaming and Control Board and to
the FBI. And as a result of that, that was the predicate to
initiating an investigation that eventually led to the
conviction of several individuals.
Senator McCain. In all due respect, what led to the
conviction was the arrest of one of his accomplices on a
separate offense that had nothing to do with your investigation
or anybody else's. The guy decided to come clean by turning in
Mr. Smith. That is the facts of the case. Is that not right,
Mr. Yaeger?
Mr. Yaeger. That is correct.
Senator McCain. So it has really nothing to do with what
you or Mr. Sandoval's organization did. It had to do with a
random arrest, where the guy was willing to turn in his friend.
My point is that you have not really done anything, and the
problem is well-known. And you have been there a year. And the
Commission has been in there for many years. And nothing has
been done. That is my point.
Mr. Siller. And I respect that. May I continue?
Senator McCain. Yes, please.
Mr. Siller. I would be interested to know how many cases or
violations that are being investigated or charges within
various states are on illegal bookmaking operations. And I do
not say that to challenge anyone, I say that to support my
position that the heart of this issue is illegal bookmakers.
And I think that each state should look at its current laws,
its current priorities, to addressing crime, and it self-
evaluate what have I done, how many convictions do I have. In
the case of Kansas City, all of the municipalities, how
important is it to and where is the priority as far as
enforcement to addressing illegal bookmaking operations?
And if you were to emphasize or create a zero tolerance
toward illegal bookmaking operations within the individual
states, you would be making a statement of zero tolerance,
eliminating the perception, ensuring that we all are concerned
about it.
Senator Brownback. And I have no problem with doing that.
Senator McCain. Can I just say that I think your point is
very well made. I thank you.
Senator Brownback. Yes, I think the point is well made, and
I agree. But I would hope you would also see the rest of this
problem, which either you seem to either be blind to or not
willing to particularly look at or consider. We all have quite
a bit at stake here of what is taking place. And I would hope
the Nevada Gaming Board would step up and work with the
colleges, that we would try to find some solutions that are
acceptable to them.
You make good money off of these college sporting events.
It is not big, apparently, from what you are saying of the
numbers. It is not a significant amount of money that is bet on
college sports relative to the entire industry. It is really
insignificant. You have got the group feeling like they have
got a clear problem with it. And the response back is to attack
the NCAA and say they are not doing enough. And I think they
agree and are saying, we are going to have to step up and do
more. But it is not a response on your part to say, well, maybe
we can do something, as well, in dealing with this.
And Nevada is clearly the center of gravity of the gambling
industry in the country. It needs to step up. And I would hope
to start working with people on these issues. Or, as Dr.
Winters is saying, we are going to be back more and more. And
there are other things, like Internet gambling. I agree that we
need to deal with that, as well.
You have not said much of anything that I disagree with in
your proposals. I happen to think, along with Mr. Yaeger, that
even if you put a lot of PSA's on, I am not sure it is really
going to change that much in attitudes. But we are trying to
reach out here and say, let us get something moving forward.
And I would really hope that, instead of just being very
defensive and attacking the NCAA, that we would say, OK, here
is what we can do, here is an avenue we will provide you in
North Carolina, in Indiana, Kansas, Arizona, to deal with what
we do not think is a problem but you think it is a perception.
We will handle it.
Mr. Chairman, thanks for a great hearing. And I want to
thank the panelists for being subject to our inquiry. It is not
a pleasant day to be subject to a Senate panel. It is probably
easier going to a dentist.
[Laughter.]
Senator McCain. Senator Bryan would like to have the next
and final word. And Mr. Yaeger needs to go.
Senator Bryan. Please, go right ahead. Thank you very much,
gentlemen for being here.
Mr. Chairman, I think it is a very fair and a balanced
hearing. I was struck by my friend from Kansas and his
exposition of states' rights. And I have a proposition to lay
off on him, if I may, to use a metaphor that has been cast
about here a good bit. His state wishes to send high-level
nuclear waste to Nevada.
[Laughter.]
We oppose that. Would he be willing to consider a petition
from our state, asking his state to forebear in sending this
lethal product to our state?
Senator McCain. May I say the Senator from Nevada strikes a
telling blow.
[Laughter.]
Senator Brownback. I will consider it as much as it looks
like I am going to get considered on mine.
[Laughter.]
Senator McCain. Dr. Winters, thank you for your very
insightful testimony.
Mr. Sandoval and Mr. Siller, I want to just say that I
appreciate what you do. I have the greatest respect and regard
for you both. I hope that we can work together to work through
what is clearly a problem. And I thank you for taking your time
to be here, especially you, Mr. Siller. I know that you had one
of the more interesting trips.
Mr. Sandoval, thank you for all that you do. And I
appreciate the back-and-forth in these hearings. I think it is
very important that we have spirited exchanges. Because, that
way, I think we can get more information out of these hearings.
And I hope that you are not reluctant to fire right back at a
anybody who fires at you.
I thank you all very much.
[Whereupon, at 12:55 p.m., the hearing was adjourned.]
A P P E N D I X
Prepared Statement of James C. Dobson, Ph.D., Member, National Gambling
Impact Study Commission, President, Focus on the Family
Gambling poses a grave threat to the integrity of college sports,
the welfare and well-being of the student-athletes involved, and the
reputation and credibility of our academic institutions. That is why I
and fellow members of the National Gambling Impact Study Commission
recommended a complete prohibition on gambling on collegiate and
amateur athletic contests.
Our recommendation came in response to the unprecedented rash of
college sports betting scandals in recent years, involving athletes
from some of our nation's most prestigious institutions. In addition,
our Commission found an epidemic of sports gambling on college
campuses, as well as an alarming rate of gambling addiction among
college students.
Gambling proponents attempt to tell us that there is no link
between legal and illegal gambling on college sports, that the problem
lies entirely with illegal betting. They are wrong. The two are
inextricably intertwined. The legalization of this type of gambling in
Nevada conveys a false sense of legality to persons--especially youth--
across the nation. In addition, most major newspapers publish the point
spreads issued by Nevada casinos, further heightening both the sense of
legitimacy and the interest in college sports gambling nationwide.
Some of the recent collegiate betting scandals have directly
involved gambling at legal operations in Nevada. The former Notre Dame
University place kicker involved in the Northwestern basketball betting
scandal stated flatly, ``Without the option of betting money in Nevada,
the Northwestern basketball point-shaving scandal would not have
occurred.''
Those whose job it is to protect the student-athletes fully
recognize the threat posed by legal gambling on college sports. That is
why more than 60 of the most recognized football and basketball coaches
in the National Collegiate Athletic Association support this ban.
Even the gambling regulators in Nevada understand the dangers of
allowing gambling on college athletics, which is why they have wisely
prohibited betting on games involving institutions from that state. Yet
they are unwilling to extend those same vital protections to college
student-athletes from the other 49 states.
Unless Congress acts to amend this loophole in the law, more
scandals are almost certain to follow. Indeed, the incidents that have
come to our attention may only represent the tip of the iceberg. A 1999
University of Michigan survey of male college athletes revealed that 5
percent had either gambled on a game in which they played, provided
inside information for gambling purposes, or accepted money for
performing poorly in a game. These statistics, if accurate, mean that
the performance of four or five players on every Division I college
football team in America may be susceptible to gambling influences.
There is only one reason to allow this exploitation to continue.
That is so that Nevada casino operators can continue to line their
pockets with the estimated $800 million legally gambled on college
sporting events each year. That is hardly sufficient reason to continue
to jeopardize the future of thousands of our most promising young
people.
No one is naive enough to suggest that this proposal would
eliminate all gambling on college sports. But it represents the most
important first step that can be taken to significantly reduce this
scourge that threatens so many institutions and careers.
I applaud this Committee's willingness to tackle this politically
charged issue. I urge each member of this Committee, and the rest of
your colleagues in Congress, to place the welfare of college student-
athletes, the integrity of collegiate sports, and the reputation of our
academic institutions ahead of the financial interests of a handful of
casino operators.
This is a tremendous opportunity for Congress to demonstrate its
willingness to stand for principle in the face of the full-court press
being applied by powerful gambling industry lobbyists. Passage of this
legislation would be a major step in increasing the faith of American
citizens in this body of government. I would be pleased to use the
reach of my daily radio broadcast to inform our constituents about such
courageous efforts.
______
Kay Coles James,
Norfolk, VA, March 28, 2000.
Hon. John McCain,
Chairman,
Committee on Commerce, Science, and Technology,
United States Senate,
Washington, DC.
Dear Chairman McCain:
Thank you for the invitation to testify before the Senate Commerce,
Science, and Transportation Committee on Wednesday, regarding sports
gambling. I regret that previous commitments prevent me from being with
you in person, but hope that you will include my comments in your
deliberations.
As you know, I was privileged to serve as the Chairman of the
National Gambling Impact Study Commission, a nine-member bipartisan
body created by Congress to ``conduct a comprehensive examination of
the social and economic impacts of gambling on communities, businesses
and individuals.'' Over a two-year period, the eight Commissioners and
I heard hundreds of hours of testimony, traveled across the country to
see the impacts and practices of gambling firsthand, and spoke to
thousands of individuals whose lives have been impacted by gambling. In
addition, we commissioned our own research and reviewed numerous other
studies and articles.
The subject of sport wagering was discussed during a site visit to
Las Vegas, Nevada on November 10-11, 1998, as well as during
subcommittee meetings later in the Commission's work. Our final
report--which was approved unanimously by the nine commissioners--was
submitted on June 18, 1999. In the chapter on Gambling Regulation, the
Commission recommended that ``the betting on collegiate and amateur
athletic events that is currently legal be banned altogether.''
I applaud the efforts of Senators Brownback and Leahy and yourself,
as well as those of Representative Lindsay Graham in the House, for
responding to the Commission's recommendation and for your efforts to
address this important issue.
There are those who argue that gambling is an activity that has
historically had both benefits and costs associated with it. One of the
most difficult tasks confronting the Commission was trying to develop a
method by which the social costs and benefits and the economic costs
and benefits could first be credibly ascertained and then weighed
against one another to determine the overall net impact of gambling.
This is, after all, the difficult task facing policy-makers considering
the expansion or limitation of gambling in their communities.
For instance, the Commission witnessed the economic benefits
brought to a community by the development of certain destination resort
casinos. Less evident but certainly present were the social costs and
benefits associated with an increased level of gambling. In other
states, the net economic costs and the net social costs of an activity
like video poker were quite evident.
Regarding sports wagering, the Commission found that:
Because sports wagering is illegal in most states, it does not
provide many of the positive impacts of other forms of
gambling. In particular, sports wagering does not contribute to
local economies or produce many jobs. Unlike casinos or other
destination resorts, sports wagering does not create other
economic sectors.
However, sports wagering does have social costs. Sports
wagering threatens the integrity of sports, it puts student
athletes in a vulnerable position, it can serve as gateway
behavior for adolescent gamblers, and it can devastate
individuals and careers.
NGISC Report, 3-10
Some of the data that most concerned us as a Commission regarded
the attitudes and involvement of young people with gambling. It is
important to remember that for minors, gambling is always illegal. But,
more importantly, the overwhelming societal exposure to gambling for
today's young people creates dangerous opportunities for abuse and
pathological behavior.
When interjected into the ideal of amateur athletics, gambling
creates potential abuses involving point-shaving, illegal behavior and
lasting damage to institutions and individuals and the destruction of
potential professional careers. In an ironic twist, the State of Nevada
prohibits betting on its own teams to protect any potential abuse and
illegal behavior at its colleges.
The National Collegiate Athletic Association has long recognized
the danger of this exception. Along with universities across the
country, they have done an admirable job in attempting to combat sports
betting at the college level. The Las Vegas loophole, however,
undermines the message of the integrity of amateur sports and
responsible, adult behavior.
Closing this loophole represents a common sense and reasonable step
and I commend your efforts to do so.
I would be pleased to provide you with any additional information
you might need or answer any questions.
Thank you.
Sincerely,
Kay C. James
______
Joint Prepared Statement by National Gambling Impact Study Commission
Members Richard C. Leone, President, The Century Foundation and Leo T.
McCarthy, President, The Daniel Group
We thank you, Senators Leahy and Brownback and other colleagues who
join you in proposing to ban legal gambling on high school, collegiate
or Olympic competitive athletic events.
Four years ago, with Public Law 104-169, Congress created the
National Gambling Impact Study Commission and mandated its nine
appointees, including us, to analyze the social and economic impacts of
legal gambling in America. After receiving over 140 hours of testimony
and initiating independent research on adult and juvenile gambling in
America, we sent you our 76 recommendations on June 20, 1999. These
recommendations address findings in six areas: regulation of gambling;
problem and pathological gambling; Native American gambling; technology
and the future of gambling; gambling's impact on people and places; and
future research needs.
One of those recommendations was to do specifically what you now
propose in this bill. Recommendation number 7 clearly states: ``The
Commission recommends that betting on collegiate and amateur athletic
events that is currently legal be banned altogether.''
The Commission's majority vote was based on at least four
convictions:
First, that juvenile problem and pathological gambling in our
country has increased to an alarming level. A meta-analysis completed
by the Harvard Medical School Division of Addictions estimated in 1997
that there were 7.9 million juvenile gamblers who were problem or
pathological.
Second, that betting on collegiate sports events by our youth was a
significant contributing factor to that population, with bookies
available on hundreds of college and university campuses in the nation.
Third, the ideals of amateur and collegiate sports are undermined
by a federal law that sanctioned bets on these events that originate
throughout the nation, yet are received and placed only in Nevada.
Fourth, that legal sports betting and the publishing of point
spreads in many mainstream news publications set a dangerous
precedent--in fact, act as a springboard to further propel the enormous
illegal sports gaming industry in this country.
Sports betting is legitimized by those who seek to profit from
public interest in betting and by those who consider it a harmless
pastime. But, what is a harmless ``vice'' for some is a life-altering
catastrophe for many others. Moreover, the corrosive impact on sports
is only hinted at by the occasional story of ruined athletes and ruined
lives that comes to light. It is one of the worst aspects of the
spreading culture of gambling in this country. Betting on school
games--at whatever level--is one place, at least, where people of good
will should be able to draw the line. It is no coincidence, for
example, that even Nevada prohibits bets on games between schools in
their state.
The Commission majority weighed the aspirations we have for
children and the efforts of parents and school officials who seek to
inculcate strong character traits and self-respect in millions of young
Americans against the $2.3 billion in profits for Nevada casinos. And
our decision was easy.
It was easy then and it is easy now. College sports coaches rarely
take public positions on legislation such as this. The fact that dozens
of the best known coaches of this nation are asking Congress to ban
betting on amateur and collegiate sports competition is a profound
statement--one deserving of not only our ears, but our action.
We join them today in respectfully asking the members of this
Committee and the entire Congress to protect what has been one of the
strongest examples of American idealism--amateur and collegiate sports.
______
National Football League,
New York, NY, April 10, 2000.
Hon. John McCain,
Chairman,
Committee on Commerce, Science, and Transportation,
Washington, DC.
Dear Senator McCain:
I write on behalf of the National Football League to comment on S.
2340, the ``Amateur Sports Integrity Act.'' We understand that the
Commerce Committee will shortly move to mark up S. 2340, and
respectfully request that this submission be incorporated into the
hearing record. Specifically, we write to urge in the strongest
possible terms that Title II of the bill be expanded to prohibit
gambling not only on amateur sports, but on professional sports as
well. Congress has not previously distinguished between gambling on
amateur and professional games, and Congress should not do so now.
Title II would add a new section to the Ted Stevens Olympic and
Amateur Sports Act (36 U.S.C. 220501 et seq.) to prohibit gambling on
amateur athletic games. The Professional and Amateur Sports Protection
Act of 1992 (28 U.S.C. 3701-3704) (``PASPA'') generally prohibited the
states from legalizing gambling on professional and amateur sports, but
it also grandfathered certain gambling that was authorized by state law
at the time of enactment. The effect of Title II of S. 2340 would be to
repeal this grandfather provision so far as gambling on amateur
athletic games is concerned, and to prohibit gambling on amateur games
as a matter of federal law. But Title II does not prohibit gambling on
professional games and instead allows such gambling to continue to the
extent grandfathered by PASPA. We respectfully disagree with the narrow
scope of Title II.
The National Football League strongly supported enactment of PASPA
in 1992. As Commissioner Tagliabue testified at the time, ``we do not
want our games used as bait to sell gambling. Sports gambling should
not be used as a cure for the sagging fortunes of Atlantic City casinos
or to boost public interest in state lotteries. We should not gamble
with our children's heroes.'' In his testimony, Commissioner Tagliabue
documented the efforts taken by the League to prevent sports gambling
or involvement with sports gambling by club owners, players, and anyone
else connected with our games. These efforts continue. Moreover, the
League currently supports, and is promoting the passage of, S. 692, the
Internet Gambling Prohibition Act of 1999, sponsored by Senator Kyl,
which would end the plague of Internet sports gambling that seeks to
evade the prohibitions of PASPA and the Wire Act. Copies of our
testimony in support of PASPA and S. 692 are enclosed.
During the floor debate on PASPA, Senator Bradley spoke eloquently
of the harms gambling inflicts on sports. Tellingly, he invoked his
experiences as a professional player as well as invoking the college
sports scandals of his younger days:
``Mr. President, where sports gambling occurs, I think fans
cannot help but wonder if a missed free throw, or a dropped
flyball, or a missed extra point was part of a player's scheme
to fix the game. If sports betting spreads, more and more fans
will question every coaching decision and every official's
call. All of this puts undue pressure on players, coaches, and
officials . . . [If sports gambling is legalized,] [s]ports
would become the gamblers' game and not the fans' game, and
athletes would become roulette chips. . . .
``I remember one game in Madison Square Garden. Toward the end
of the game, one of my teammates happened to throw the ball up.
We were ahead 6 or 8 points, I forget which. He threw the ball
up at the other end of the court and the ball went in the
basket. The next week the press speculated about whether it was
timed to beat the line on the game. . . . Earlier in my life,
when I was in high school and college, there were major sports
scandals. Sports-fixing scandals. But the state came in and
said this is wrong, and vigorously prosecuted.'' 138 Cong. Rec.
12989-90 (1992).
When Congress enacted PASPA, it made the judgment that the
prohibition should not be applied retroactively to sports gambling
operations that were already permitted by, and conducted pursuant to,
state law. See S. Rep. No. 248, 102d Cong., 1st Sess. 8, 9-10 (1991).
As the Judiciary Committee emphasized, however, ``all such sports
gambling is harmful.'' Id. at 8. The decision to grandfather certain
sports gambling from the prohibitions of the bill was based on other
considerations. The League accepted that judgment at the time with
great reluctance. As Commissioner Tagliabue stated:
``We have made it clear that we would support legislation that
prohibited any and all forms of gambling. We also recognize
that we live in a country, a great one, which operates by
consensus, and that in order to take a step forward, we have to
accept this form of legislation which contains a very narrow
grandfather provision.'' \1\
---------------------------------------------------------------------------
\1\ Prohibiting State-Sanctioned Sports Gambling: Hearing on S. 473
and S. 474 before the Subcomm. on Patents, Copyrights and Trademarks of
the Senate Comm. on the Judiciary, 102d Cong., 1st Sess. 64 (1991).
If Congress is prepared to reconsider the judgment it made in 1992,
that existing legal sports gambling should not be prohibited, there is
no justification--moral, legal, or otherwise--for limiting such
reconsideration to gambling on amateur sports. The harms that sports
gambling inflicts, as detailed in the enclosed League testimony, impact
professional sports no less than amateur sports. The harms it inflicts
are just as real, and the cost to the integrity and reputation of our
games, and to our values as a nation, are just as great. If anything,
the harms inflicted on professional sports by gambling may be even
greater than the harms inflicted on amateur sports because gambling on
our games is more widespread.
We have been fortunate during the last eight years that the NFL has
not been scarred by the type of gambling scandals that have occurred in
college sports. We have worked hard to educate and counsel our players,
coaches and game officials regarding the dangers of sports gambling,
and to take security measures to protect our employees from gambling
influences. The NFL and other professional sports leagues should not
now be denied the benefits of legislative action simply because we
cannot point to any gambling incidents but college sports can. The ill
effects of gambling apply equally to both college and pro sports.
For all of these reasons, if Congress is now prepared to revisit
the judgment it made in 1992, the NFL strongly urges that Title II be
amended to extend its prohibition (and its repeal of PASPA's
grandfather provision) to include gambling on professional sports.
Sincerely,
Jeffrey Pash,
Executive Vice President.
Attachment 1
statement of paul tagliabue, commissioner, national football league
before the subcommittee on patents, copyrights and trademarks,
senate judiciary committee
June 26, 1991
Mr. Chairman and distinguished members of the Subcommittee. I am
pleased to appear before you today to urge in the strongest possible
terms your adoption of the Professional and Amateur Sports Protection
Act (S. 474).
This important legislation builds on bills passed last year by the
House and the Senate--though not by both--to prevent the spread of
sports gambling. Like last year's bills, S. 474 would prohibit the
states from establishing sports lotteries. Going beyond those bills, S.
474 would prohibit any other form of sports gambling authorized by
state law based on professional or amateur games.
Mr. Chairman, we do not want our games used as bait to sell
gambling. Sports gambling should not be used as a cure for the sagging
fortunes of Atlantic City casinos or to boost public interest in state
lotteries. We should not gamble with our children's heroes.
As I mentioned in my testimony before this Subcommittee last
summer, I have been privileged to serve the National Football League
for more than 20 years--first as outside counsel and now as
Commissioner. In all this time, the League has vigorously protected its
reputation for integrity and the wholesome character of its games.
As the late Senator Kenneth B. Keating of New York said nearly 30
years ago in introducing the legislation codified in Title 18 that
makes it a federal crime to fix or attempt to fix sporting contests:
``Thousands of Americans earn a legitimate livelihood in
professional sports. Tens of thousands of others participate in
college sports as part of the physical fitness and character
building programs of their schools. Tens of millions of
Americans find sports a favorite form of recreation. We must do
everything we can to keep sports clean so that the fans, and
especially young people, can continue to have complete
confidence in the honesty of the players and the contests.
Scandals in the sporting world are big news and can have a
devastating effect on the outlook of our youth to whom sports
figures are heroes and idols.'' 109 Cong. Rec. 2,016 (1963).
Thus, we strictly prohibit NFL club owners, coaches, players and
anyone else connected with the NFL from gambling on NFL games or
associating with persons involved in gambling. Anyone who does so faces
severe disciplinary action by the Commissioner, up to lifetime
suspension. Our League's Constitution also prohibits any NFL
involvement with state lotteries. Our clubs cannot accept advertising
revenue from lotteries, and coaches and players cannot appear in
lottery ads or promotional events. We have advised the television
networks that neither gambling-related commercials nor the
dissemination of point-spread information are acceptable on NFL game
broadcasts.
Legalized sports gambling threatens all that we have worked for in
this respect--and more. We oppose the spread of legalized sports
gambling for four basic reasons.
First, sports gambling threatens the character of team sports. Our
games embody our very finest traditions and values. They stand for
clean, healthy competition. They stand for teamwork. And they stand for
success through preparation and honest effort. With legalized sports
gambling, our games instead will come to represent the fast buck, the
quick fix, the desire to get something for nothing. The spread of
legalized sports gambling would change forever--and for the worse--what
our games stand for and the way they are perceived.
Second, sports gambling threatens the integrity of, and public
confidence in, team sports. Sports lotteries inevitably foster a
climate of suspicion about controversial plays and intensify cynicism
with respect to player performances, coaching decisions, officiating
calls and game results. Cynical or disappointed fans would come to
assume ``the fix was in'' whenever the team they bet on failed to beat
the point spread. And legalized sports gambling involving head-to-head
betting threatens more than just public confidence in the integrity of
our games. Its proliferation would appear to athletes to give official
sanction to sports gambling and could threaten actual corruption of the
games by undermining the ability of professional and amateur sports
organizations to police themselves.
Third, legalized sports gambling sends a terrible message to youth.
Sports are very important to millions of our young people. Youth look
up to athletes. Our players cannot be expected to serve as healthy role
models for youth if they are made to function as participants in
gambling enterprises. Legalized sports gambling also sends a
regrettable message to our young people about government--that
``anything goes'' when it comes to raising revenues or bolstering local
economies, and that we might as well legalize, sponsor and promote any
activity so that the state can get its ``cut.'' This is a message we
can ill afford to send.
Finally--and perhaps worst of all--legalized sports gambling would
promote gambling among young people. Dr. Valerie Lorenz of the National
Center for Pathological Gambling recently told Time (Feb. 25) that the
rise in teenage gambling is linked to the spread of state lotteries
generally: ``The message they're conveying is that gambling is not a
vice but a normal form of entertainment.'' That negative message would
certainly be sent by a state lottery based on team sports. And, as Dr.
Lorenz has written, a sports lottery ``not only teaches youngsters how
to bet on football pools, but also encourages them to do so.'' \1\ What
is true in this regard for sports lotteries would be even truer for
casino-style sports gambling.\2\
---------------------------------------------------------------------------
\1\ Lorenz, ``State Lotteries and Compulsive Gambling,'' Journal of
Gambling Studies, vol. 6, p. 392-93 (1990).
\2\ For the reasons discussed by Professor Arthur R. Miller of the
Harvard Law School in his testimony last summer, state-sponsored sports
betting also misappropriates the goodwill and popularity of
professional sports and amateur sports organizations and dilutes and
tarnishes the service marks of such organizations. See Legislation
Prohibiting Sports Lotteries from Misappropriating Professional Sports
Service Marks: Hearing on S. 1772 before the Subcomm. on Patents,
Copyrights and Trademarks of the Senate Comm. on the the Judiciary,
101st Cong., 2d Sess. 251 (1990). It bears repeating that the NFL has
no desire to license or conduct our own gambling operations. In any
event, S. 474 would invalidate any state law that purportedly
authorized us to conduct such operations.
---------------------------------------------------------------------------
Mr. Chairman, no one opposes your legislation on the ground that
sports gambling is socially beneficial and should be encouraged. The
principal argument advanced in opposition to the legislation is that
federal action in this area is inappropriate and that the states should
be left to decide for themselves whether to sponsor or allow sports
gambling. Whatever superficial appeal it may have, this federalism
argument is without substance.
Team sports are a national pastime. Sports gambling is a national
problem and demands a national solution. The harms it inflicts are felt
beyond the borders of those states that sanction it. The moral erosion
it produces cannot be limited geographically. Once a state legalizes
sports gambling, it will be extremely difficult for other states to
resist the lure. The current pressures in such places as California and
New Jersey to institute casino-style sports gambling illustrate the
point. Since Oregon instituted its sports lottery two years ago,
proposals for similar lotteries have surfaced in a number of other
states.
We are not unsympathetic to the fiscal concerns that have motivated
sports lottery and casino-style sports gambling proposals in some
places. But those concerns cannot justify the great long-range harm to
our sport and others such proposals would entail--and to a generation
of young people whose attitudes toward team sports would be distorted
and diminished by perpetuating a gambling-oriented outlook. Nor should
Congress be misled by claims that legalization of sports gambling would
reduce illegal sports gambling in a state. According to the Director of
New Jersey's Division of Gaming Enforcement, ``most law enforcement
professionals agree that legalization has a negligible impact on, and
in some ways enhances, illegal markets.'' \3\ Illegal entrepreneurs can
always ``outmarket'' their legitimate counterparts, offering better
odds and, most important, tax-free winnings.
---------------------------------------------------------------------------
\3\Anthony J. Parillo, Proposal To Consolidate All Legalized Gaming
Enforcement Functions within a Single Agency of the Department of Law &
Safety, June 20, 1988, p. 188.
---------------------------------------------------------------------------
S. 474 breaks no new philosophical ground. It presents no new issue
of state prerogatives. Congress has previously recognized on several
occasions that gambling has no place in sports, professional or
amateur. Title 18 of the United States Code contains a specific federal
policy against state sports gambling. When Congress acted in 1974 to
exempt state lotteries from the prohibitions of the federal lottery and
gambling laws generally, it specified that those prohibitions would
continue to apply to state sports lotteries--i.e., lotteries that
involve ``the placing or accepting of bets or wagers on sporting events
or contests.'' 18 U.S.C. Sec. 1307(d). As the House Judiciary Committee
explained, the exemptions of Sec. 1307 were not intended to apply
indiscriminately to all ``gambling activities conducted by [a] state.''
H.R. Rep. No. 1517, 93d Cong., 2d Sess. 6-7 (1974).
Beyond the federal lottery and gambling laws, Congress has
legislated to protect the integrity of professional sports contests. In
1964, Congress made it a federal crime under Title 18 to influence or
attempt to influence by bribery any sporting contest. 18 U.S.C.
Sec. 224. The offense is punishable by a fine of up to $10,000 or
imprisonment of up to five years, or both. This is not merely an
``assimilative offense''--conduct that is criminal under federal law
because it is criminal under state law. Congress has recognized a
distinct federal interest in protecting sports from corruption. The
House Judiciary Committee called such corruption ``a challenge to an
important aspect of American life--honestly competitive sports.'' \4\
---------------------------------------------------------------------------
\4\ H.R. Rep. No. 1053, 88th Cong., 1st Sess. 2 (1963) (also noting
federal interest in ensuring the integrity of sporting contests even
where states decline to act); S. Rep. No. 593, 88th Cong., 1st Sess. 3-
4 (1963) (same).
---------------------------------------------------------------------------
In addition, Congress and the courts have recognized the need for
uniform national rules in dealing with professional and intercollegiate
sports. Congress, for example, has enacted legislation that, among
other things, limits the extent to which the NFL can televise games in
conflict with high school and college sporting events. 15 U.S.C.
Sec. Sec. 1291-1294. And numerous courts have held that it is
inappropriate to apply varying state laws and regulations to the
nationwide business of professional sports. See, e.g., Flood v. Kuhn,
407 U.S. 258, 284-85 (1972); Partee v. San Diego Chargers, 34 Cal. 3d
378 (1983). This same interest in national uniformity supports
congressional action with respect to the current issue.
The alternatives to congressional action are unattractive and
uncertain--and there is no reason why professional or amateur sports
organizations should be forced to resort to them in view of the federal
and nationwide interests at stake here and the interstate character of
the affected sports organizations.
Congress cannot afford to delay dealing with the problem of state-
sanctioned sports gambling. At the moment, the problem is basically
confined to Oregon and Nevada. If any significant number of other
states should follow their example, it will be far more difficult for
Congress to remedy the problem.
The NFL applauds you, Mr. Chairman, and Senators Hatch, Bradley,
Specter and the other co-sponsors of this bill, for assuming leadership
in Congress on this issue of great public importance. We hope that S.
474 will proceed promptly to markup and be sent to the floor for an
early vote.
I would be glad to answer any questions.
Attachment 2
statement of jeff pash, executive vice president, national football
league
before the subcommittee on technology, terrorism and government
information, senate committee on the judiciary
March 23, 1999
Mr. Chairman and members of the Subcommittee. My name is Jeff Pash.
I am the Executive Vice-President and General Counsel of the National
Football League. I appreciate the opportunity appear before you today
to express the NFL's strong support for the Internet Gambling
Prohibition Act of 1999. We strongly support this bill because it would
strengthen and extend existing prohibitions on gambling, including
gambling on sports events, and provide enhanced enforcement tools
tailored to the unique issues presented by Internet gambling. We join
the State Attorneys General who testified earlier and other sports
leagues in urging adoption of this important legislation.
Simply put, gambling and sports do not mix. Sports gambling
threatens the integrity of our games and all the values our games
represent--especially to young people. For this reason, the NFL has
established strict policies relative to gambling in general and sports
betting in particular. The League prohibits NFL club owners, coaches,
players and anyone else connected with the NFL from gambling on NFL
games or associating in any way with persons involved in gambling.
Anyone who does so faces severe disciplinary action by the
Commissioner, including lifetime suspension. We have posted our anti-
gambling rules in every stadium locker room and have shared those rules
with every player and every other individual associated with the NFL.
The League has also sought to limit references to sports betting or
gambling that in any way are connected to our games. For example, we
have informed the major television networks that we regard sports
gambling commercials and the dissemination of wagering information as
inappropriate and unacceptable during football game telecasts
Commissioner Tagliabue reemphasized this January that gambling and
participation in the NFL are incompatible. In a restatement of our
policies, the Commissioner reiterated that no NFL club owner, officer
or employee may own any interest in any gambling casino, whether or not
the casino operates a ``sports book'' or otherwise accepts wagering on
sports. The Commissioner specifically stated that no club owner,
officer or employee may own, directly or indirectly, or operate any
`on-line,' computer-based, telephone, or Internet gambling service,
whether or not such a service accepts wagering on sports. (Ex. A).*
---------------------------------------------------------------------------
* For Exhibits A-E, see Senate Hearing 106-170, Hearing on Internet
Gambling, Senate Judiciary Committee, March 23, 1999; pp. 27-53.
---------------------------------------------------------------------------
The League has been a strong proponent of federal efforts to combat
sports gambling. We strongly supported the passage of the Professional
and Amateur Sports Protection Act of 1992 (28 U.S.C. 3701 et seq.).
This 1992 legislation, known as PASPA, prohibits the states from
legalizing sports betting. The League also worked to promote the
passage of the Chairman's Internet gambling legislation in the last
Congress. Like PASPA, the proposed legislation is a logical and
appropriate extension of existing federal law and policy. The
precedents for federal action in this area were well canvassed by the
full Judiciary Committee in its report accompanying the 1992
legislation (S. Rep. No. 248, 102d Cong., 1st Sess. 5-8 (1991)).
The Internet Gambling Prohibition Act of 1999 is a necessary and
appropriate federal response to a growing problem that, as the States
Attorneys General have testified, no collection of states can
adequately address on an individual basis. Ten years ago, a gambler
might have used the telephone to call his bookie. Today, he simply logs
on. Gambling businesses around the country--and around the world--have
turned to the Internet in an obvious attempt to circumvent the existing
prohibitions on gambling contained in the Wire Act and PASPA. Many
offshore gambling businesses provide betting opportunities over the
Internet, effectively beyond the reach of federal and state law
enforcement authorities.
The bill is needed because it updates our laws to reflect new
technology. In its report accompanying the PASPA legislation eight
years ago, the Judiciary Committee noted the growth of ``new
technologies'' facilitating gambling, including the use of automatic
teller machines to sell lottery tickets, and proposals to allow ``video
gambling'' at home. S. Rep. No. 248, supra, at 5. It was, in
significant part, the specter or expanded gambling raised by those
``new technologies'' that spurred Congress to enact PASPA. In those
days, the ``new technologies'' did not yet include the Internet. That
day, however, has now come.
The problem of Internet gambling is significant--and growing.
According to recent publications, the Justice Department has estimated
that Internet gambling generated $600 million in revenue in 1997 alone.
(Ex. B).* A recent cover story in USA Today predicts that Internet
betting will grow to $2.3 billion by 2001. (Ex. C).* And an article by
Professor Goldsmith in The International Lawyer reports that some
experts expect Internet gambling revenue to grow even faster, up to $10
billion by the year 2000. (Ex. D).*
Internet gambling is so successful largely because so little effort
is required to participate. Unlike traditional casinos, which require
gamblers to travel to the casino and place their bets on-site, Internet
gambling allows bettors to access on-line wagering facilities twenty-
four hours per day, seven days a week. Gamblers can avoid the hassle
and expense of traveling to a casino, which in many parts of the
country requires out-of-state travel. Internet gamblers also can avoid
the stigma that may be attached to gambling in public on a regular
basis.
Internet gambling sites are easily accessible and offer a wide
range of gambling opportunities from all over the world. Any personal
computer can be turned into an unregulated casino where Americans can
lose their life savings with the mere click of a mouse. Many of these
gambling web sites have been designed to resemble video games, and
therefore are especially attractive to children. But gambling--even on
the Internet--is not a game. Studies have shown that sports betting is
a growing problem for high school and college students, who develop
serious addictions to other forms of gambling as a result of being
introduced to ``harmless'' sports wagering.
As the Internet reaches more and more college students and
schoolchildren, the rate of Internet gambling among young people is
certain to rise. Because no one currently stands between Internet
casinos and their gamblers to check identification, our children will
have the ability to gamble on the family computer after school, or even
in the schools themselves. And we must not be lulled by the paper tiger
set up by proponents of Internet gambling--that children cannot access
gambling web sites because they lack credit cards. It does not take
much effort for a child to ``borrow'' one of his or her parents' credit
cards for the few minutes necessary to copy down the credit card number
and use it to access an Internet gambling service.
The problems connected with Internet gambling transcend the NFL's
concerns about protecting the integrity of professional sports and the
values they represent. According to experts on compulsive or addictive
gambling, access to Internet sports wagering dramatically increases the
risk that people will become active, pathological gamblers. The
National Council on Problem Gambling has reported that sports betting
is among the most popular form of gambling for compulsive gamblers in
the United States. That means that once individuals become exposed to
sports betting, there is a real problem with recurrent and
uncontrollable gambling.
Conducting a gambling business using the Internet is illegal under
the Wire Act (18 U.S.C. Sec. 1084) and indeed has been prosecuted--for
example, in the case brought against six Internet sports betting
companies last March by federal authorities in the Southern District of
New York (Ex. E).* But as the prosecutors in that case plainly
recognized, asserting jurisdiction over offshore gambling businesses
that use the Internet can be problematic. More significantly, the Wire
Act does not include direct mechanisms for ensuring termination by
Internet service providers of access to online gambling sites.
---------------------------------------------------------------------------
* For Exhibits A-E, see Senate Hearing 106-170, Hearing on Internet
Gambling, Senate Judiciary Committee, March 23, 1999; pp. 27-53.
---------------------------------------------------------------------------
Just as Congress enacted the Wire Act to prohibit the use of the
telephone as an instrument of gambling, so Congress should now enact
specific legislation to prohibit the use of the Internet as an
instrument of gambling. And just as the Wire Act provides an effective
mechanism for bringing about the termination by telephone companies of
service to gambling businesses, so the Internet Gambling Prohibition
Act of 1999, through its injunctive relief provisions, would provide an
effective mechanism for bringing about the termination by Internet
service providers of access to gambling sites. In our view, Mr.
Chairman, providing such a mechanism for ensuring that Internet service
providers will terminate access to such sites is critical to any
legislation to combat Internet gambling.
In supporting the PASPA legislation to prevent the spread of
legalized sports betting, Commissioner Tagliabue testified:
``Sports gambling threatens the character of team sports. Our
games embody the very finest traditions and values. They stand
for clean, healthy competition. They stand for teamwork. And
they stand for success through preparation and honest effort.
With legalized sports gambling, our games instead will come to
represent the fast buck, the quick fix, the desire to get
something for nothing. The spread of legalized sports gambling
would change forever--and for the worse--what our games stand
for and the way they are perceived.'' Quoted in S. Rep. No.
248, supra, at 4.
Left unchecked, Internet gambling amounts to legalized gambling.
Its effects on the integrity of professional and amateur sports and the
values they represent are just as pernicious. Just as Congress
intervened to stem the spread of legalized sports gambling in 1992, so
it must intervene to stem the spread of Internet gambling today.
Mr. Chairman, we applaud your efforts and the efforts of your staff
to address this important problem. The Internet Gambling Prohibition
Act of 1999 will strengthen the tools available to federal and state
law enforcement authorities to prevent the spread of Internet gambling
into every home, office and schoolhouse in this country, and will send
the vital message--to children and adults alike--that gambling on the
Internet is wrong. We strongly support the passage of your bill.
Thank you.