Prop Betting in College Sports: Predict the Unpredictable

Abstract

Gambling has, and likely will always be controversial, but when students are involved, the stakes—both figuratively and literally—are higher. This may be one reason why the National Collegiate Athletic Association (“NCAA”) has been in the vanguard of attempts by US sports codes to block betting on their events. In this, we know, they have been unsuccessful but that hasn’t meant they have completely thrown in the towel. Their latest maneuver has seen them target one element of the sports betting market which they consider poses real dangers.

Proposition or “prop” betting is the concept of betting on components of an activity unrelated to the ultimate outcome. Common examples include how many home runs a baseball player will hit, how many yards a running back will get, or how many take downs a fighter will secure. As expected, when a person can wager on more aspects of a game, more money pours in.

The seemingly innocuous idea of prop betting has caused considerable controversy in college sports. In April 2024, as the NCAA March Madness tournament concluded, the NCAA denounced states for allowing prop bets on college athletes. Two primary rationales have emerged: athlete safety and player integrity. This article analyzes the positions of various states, the policy landscape, and the current legal status of prop betting on college athletes heading into the 2024-2025 college sports season.

Introduction

The striking down of the Professional and Amateur Sports Protection Act (“PASPA”) in 2018 may feel like ancient history, but it is worth noting that the NCAA was one of the main protagonists in this landmark decision. When the United States Supreme Court ruled against them in Murphy v. NCAA, it fired the starting gun on the explosion in sports betting that we have witnessed in the subsequent years.

PASPA was a federal law, passed in 1991 that made it unlawful for a state to “sponsor, operate, advertise, promote, license, or authorize by law or compact” a “lottery, sweepstakes, or other betting, gambling, or wagering scheme based, directly or indirectly (through the use of geographical references or otherwise), on one or more competitive games in which amateur or professional athletes participate.” The prohibition applied to all but four US states: Nevada, Oregon, Delaware, and Montana. New Jersey was also on the list of states permitted to legalize sports betting, but it failed to pass legislation in time. Several years later in 2010, New Jersey was successful in winning senate approval for a referendum and its electorate voted to legalize sports betting. The legislature enacted, and its Governor signed a law permitting sports gambling.

PASPA allowed the U.S. Attorney General or a professional or amateur team to sue and enforce a sports betting ban and, in the years from 2010 to the verdict of the Supreme Court in 2018, five sports leagues banded together and sued to enforce a ban under PASPA.

By the time the case got to the Supreme Court, the question was one of federalism—who decides whether sports betting is legal, the federal government or the individual states? The Court held that PASPA violated the anti-commandeering principle established in the U.S. Constitution, meaning the federal government had co-opted state legislatures to carry out the federal government’s agenda. Therefore, the decision on whether to permit or prohibit sports betting post-2018 was left to the discretion of each individual state legislature.

As the Court in Murphy observed, “Americans have never been of one mind about gambling, and attitudes have swung back and forth.” In the subsequent years, legislatures have tried, succeeded, and failed to legalize sports betting subject to myriad requirements.

Currently, 38 states and the District of Columbia, have opted to legalize sports betting including betting on college sports. Depending on the location, the precise contours of the sports betting enterprise are varied and particularized. This article focuses on a niche application of sports betting regulations: the intersection of college sports and prop betting.

College versus professional sports.

College sports invoke a host of paternalistic considerations absent from professional sports. At bottom, college athletes are students under the care and supervision of their schools. In addition to sports, they attend classes, sometimes live in dorms, and answer to a student code of conduct. While schools do not always live up to these expectations of the student experience, college sports remain a separate and distinct enterprise that is focused on educating students in addition to athletic performance.

Up until June 2021, college athletes could not earn any financial compensation for their participation in school athletics. This is despite the fact that college sport garners US$ billions in TV rights, gate receipts and other commercial income. In NCAA v. Alston, the United States Supreme Court acknowledged “American colleges and universities have had a complicated relationship with sports and money.” In Alston, current and former college level athletes sued the NCAA for violations of the Sherman Act by creating a monopsony under which the NCAA limited student-athlete compensation as an “unlawful restraint on trade.” Ultimately, the Supreme Court upheld the district court’s determination that the NCAA must abide by generally applicable anti-trust laws and therefore, could not enact rules limiting the cap on student-athlete compensation. The NCAA then developed working groups and initiatives to allow college athletes to be compensated for their name, image, and likeness (“NIL”). These are often referred to as publicity rights. They do not allow the schools to directly compensate athletes, but instead open the doors to endorsement deals and advertising campaigns subject to the laws of each school’s state.

Professional athletes, by contrast, do not face the same hurdles to compensation. Lebron James, NBA superstar, will earn US$47.6 million in 2024. For a more standard player, the NBA averages US$9.7 million in player salary. This is aside from additional endorsement deals and advertising revenue.

Wagering on college athletes, therefore, creates a further imbalance in the financial relationship between colleges and their athletes. Student-athletes, who have relatively little access to compensation, are now witnessing their school, their state, and the public making money off their performance through sports betting.

Prop betting versus standard game propositions.

Standard bets, often referred to as the “moneyline,” are simply wagers placed on who will win the quarter, half, game etc.

Prop betting refers to the concept of betting on an occurrence, or non-occurrence of an event during a sports game that is unrelated to the game’s outcome.12 In basketball, a bettor could wager on how many three-point shots Caitlin Clark will make in a given game. Regardless of whether the Indiana Fever wins, if the bettor is right, they will be paid out.

Prop bets dramatically expand the betting landscape because they can encompass nearly every aspect of a sporting event. For example, for a June 10, 2024 Major League Baseball Game (Rockies vs. Twins), prop bets include: Manuel Margot to get a hit (-210); Chris Paddack over 1.5 walks allowed (+155); Chris Paddack under 5.5 strikeouts (+115); and the list goes on. Because of the individual potential of each player, team, and game, prop bets can over-emphasize individual player performance. This offers the temptation among players to influence the outcome of events being bet on and is the reason that all sports ban players from betting on their sports.

In the professional arena, sports betting tempts even the well-compensated. For example, Major League Baseball (“MLB”) banned San Diego Padres infielder Tucupita Marcano for life for placing over 350 bets and wagering US$150,000 on MLB-related sports betting. The National Basketball Association (“NBA”) issued a lifetime ban to Toronto Raptors player Jontay Porter for disclosing confidential information to bettors. It has been reported that in at least one game, Porter left the game early, causing staggering wins on prop bets related to his performance.

The debate on prop betting in college sports.

The prop betting debate in college sports stands on two pillars: athlete safety and sporting integrity. In this spirit, NCAA’s president Charlie Baker called for the end of prop betting in college sports. For athlete safety, Baker raised concerns about player harassment, specifically related to prop bets on individual performance. The NCAA recently also reported that female athletes are subjected to approximately three times the harassment their male counterparts experience.

As to sporting integrity, Baker is concerned that players, who have achieved celebrity status on campus, could be subjected to liability when talking about everyday occurrences, such as who is sore from practice and how the players feel they will perform against upcoming rivals.

Despite Baker’s plea, sports betting regulation remains a state-by-state endeavor. As such, Baker’s appeal is only effective if it persuades legislatures to act to ban prop betting on college sports.

The Ayes

On the heels of Baker’s announcement, Louisiana’s Gaming Control Board, coincidentally announced that it would be banning prop betting on college sports beginning August 1, 2024. Louisiana was not the first state to ban prop betting on college sports, nor will it be the last.

The decision-makers as to whether or not to ban prop betting vary by state. First, a state’s legislature must authorize sports betting. Generally, the authorization comes with the creation of a regulatory body that promulgates regulations pursuant to the legislature’s authorization. The scope of that authorization again varies. For example, some states, like Arizona, banned prop betting on college athletes from the inception of the state’s legalization of gambling. A.R.S. § 5-1315(a)(2) specifically bans prop betting on individual athletes, but expressly permits “wagers on the overall outcome of a collegiate sports event or seasonal awards based on a player’s cumulative overall play.” This framework takes the decision-making authority away from the regulatory body (i.e., the Arizona Department of Gaming).

Other states, like, Ohio, enacted a constitutional amendment that creates the regulatory body charged with gambling integrity. The legislature then further defined the regulatory body’s authority. In Ohio, prior to the 2024 March Madness tournament, Ohio’s Casino Control Commission banned prop betting on college athletes. Its concern focused primarily on the first pillar of the campaign—athlete safety. Ohio’s governor explained that the decision was not made in haste and was in part prompted by an incident at the University of Dayton where athletes faced a social media backlash based on their individual performances.

Maryland Lottery and Gaming similarly banned prop betting effective March 1, 2024, with the purpose of “protecting college athletes from potential harassment related to their statistical performance.” Vermont’s Department of Liquor and Lottery followed suit shortly after and removed prop betting from its catalog of approved wagering events.

Other states like Colorado, Massachusetts, New York, Pennsylvania, Tennessee, Virginia, West Virginia, and Oregon have also banned prop betting on college athletes. In short, states banning prop betting on college athletes believe they are prioritizing athlete well-being by removing the temptation of harassment because it would be inconsequential.

Since the NCAA’s support for banning prop bets, the discussion has transitioned to include the second pillar of prop betting policy—gaming integrity. While not as prevalent in the college arena, college players may be tempted by the lure of sports betting. With the increased profile of professional betting scandals, state legislatures are beginning to consider whether prop betting is directly tied to a loss of integrity. New Jersey, for example, already bans prop betting on college athletes located within New Jersey. However, in contemplating an expansion of the ban to all college sports, New Jersey State Senator Kristin Corrado explained that both harassment and integrity are driving the legislation.

The Nays

Commentators have opined that the trend towards banning prop bets is less controversial than banning moneyline bets, particularly because college prop betting does not make up a substantial portion of the wagering market. Others point to inconsistency in the NCAA’s position suggesting that bans will not work if there is an active prop betting market in college sports as illegal providers will fill the gap. Alternatively, if the market is not significant, then bans will not address a material harm.

While an increasing number of states are considering bans on prop betting pursuant to the NCAA’s push, Montana is bucking the trend. The Montana Lottery said neither harassment nor integrity concerns are present in Montana. The state only has two large universities, a lower population, and a state-run lottery system. Accordingly, Montana does not feel the same pressure to protect its athletes as compared to more densely populated and high-profile states.

For the time being, Montana stands alone. The beauty of the United States’ collection of states is that it permits states to adopt legislation that best protects and caters to the individual needs of their population. While some may criticize Montana’s assessment, arguably its actions accurately represent the American dual-sovereign system. In the individual analysis of its citizens, Montana arguably made the best decision for itself. There is no prohibition that would prevent Montana from enacting a subsequent ban on prop betting if conditions were to change.

Other states, like North Carolina, have tried and failed to pass bans on prop betting legislation. Representatives opposed to the legislation argue that removing college prop bets to prevent harassment rewards “bad behavior by limiting people who are behaving the right way to place bets the way they want to.”

Alternative Approaches

The policy aims of protecting student athletes and sporting integrity are not subject to a one-size-fits-all approach. Other states have created novel compromises to curb the negative effects of sports betting on college athletes.

The West Virginia legislature granted the State Lottery Commission authority to permanently ban those individuals who harass athletes, coaches, or officials during sporting events. The NCAA has endorsed similar legislation and encouraged states to adopt reporting mechanisms to identify those bettors that harass student athletes and ban them from participation. Ohio, which already bans prop betting, has taken this step—the Casino Control Commission has the authority to establish a lifetime ban on any individual who threatens violence against anyone involved in a sporting event. The Ohio legislature enacted § 3772.031, which provides “[t]he general assembly specifically finds that the exclusion from sports gaming of persons who threaten violence or harm against persons who are involved in sporting events, where the threat is related to sports gaming, is necessary to effectuate the intent of Chapter 3775. of the Revised Code and to protect the interests of this state.” The statute goes on to delegate authority to the Commission the ability to manage a list of those patrons who should be involuntarily removed from participation in sports betting or casino gambling.

As noted earlier, states like New Jersey have endeavored to protect athletes inside their borders with more narrow bans on prop betting by restricting prop bets to out-of-state teams, insulating domestic players from harassment. Connecticut, which bans prop betting on in-state teams, has introduced legislation which could reverse its in-state ban given the success of the University of Connecticut’s women and men’s basketball teams. The new language would expand “what is considered a ‘sporting event’ by eliminating exclusions under current law that generally limit legal wagers on Connecticut colleges to only when they are involved in a tournament of four or more teams.” But, this proposed legislation still bans prop betting on college athletes regardless of tournament status.

For the several states which have yet to legalize any form of gambling the debate will continue to play out this year and likely beyond. With the backing of the NCAA, states seeking to legalize gambling will need to analyze the respective needs of their states.

Conclusion

“Americans have never been of one mind about gambling, and attitudes have swung back and forth.” Murphy, 584 U.S. at 458. Perhaps the NCAA got it wrong and there is no one size fits all for prop betting. While most states can agree that athlete harassment, especially of student athletes, is of paramount concern, banning prop betting is not necessarily the only way to rectify the harassment issue. Arizona, as the 48th state, had the benefit of observing the effectiveness of other state constitutions. For the states that have not yet joined the fray, it may be beneficial to take a step back and observe. The 2024-2025 season will be an experiment to see whether those states who have deemed themselves most affected by player harassment or a lack of integrity to see whether prop betting, or something more, is needed to cure the ills.