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Eversheds Sutherland
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Check out our inaugural newsletter with the latest legal news in sports from the Courtside Counsel. Our team of attorneys are actively monitoring the need-to-know legal developments and issues involving the sports industry. Below are today’s highlights.
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NAME, IMAGE AND LIKENESS
What: The Tennessee and Virginia Attorney Generals (collectively, the AGs) filed suit against the National Collegiate Athletics Association (NCAA) in a Tennessee federal district court, alleging violations of federal antitrust law. United States District Judge Clifton Corker granted a preliminary injunction against the NCAA on February 23, 2024, prohibiting the NCAA from policing the actions of any athletes or boosters relating to Name, Image and Likeness (NIL) deals during the recruiting process. In issuing the ruling, Corker has determined that the AGs have a reasonable likelihood of winning the case.
Why this matters: The AGs assert that the NCAA is a monopoly and essentially engaging in price-fixing by prohibiting NCAA members from discussing potential NIL opportunities with prospective athletes prior to their college enrollment or transfer. If the federal court agrees, the court can require the NCAA to make certain fundamental changes to the rules that would likely overhaul the rules as we currently know them.
SPORTS GAMBLING
What: As the barriers to entry in legal sports gambling have fallen, lawmakers scramble to assess the negative ramifications of the increase in legal sports gambling.
Why this matters: With the recent Super Bowl in Las Vegas, Nevada, a regulated sports gambling state, eyes are turning to the unintended side effects of opening sports books. Sports gambling critics caution that the US is unprepared for the consequences of the dramatic surge in bettors amid ever-easier access from mobile technology, extensive exposure in mainstream media and endorsements from major leagues and star players. However, federal lawmakers are now facing resistance from the sports industry to place hurdles on the ease of access to sports gambling, as $300 billion has been legally wagered in the United States on sports.
Potential legislation alert:?Federal legislation could be in the works that would divert some tax revenues from sports operators towards compulsive gambling support services: ‘Out of control’: Congresswoman sounds alarm over ‘unchecked’ gambling boom | Gambling | The Guardian
What: Since the Supreme Court’s decision in Murphy v. NCAA, the sports betting sector has grown rapidly in an environment without uniform regulation.
Why this matters: According to the Treasury Department, this combination of rapid growth and varying regulatory regimes creates “significant and increasing money-laundering risks.” These risks have been present at brick-and-mortar casinos for decades, and the regulatory scheme has evolved to mitigate that risk. The patchwork of rules addressing online sports wagers leaves wide gaps that bad actors could easily pass through.
Potential regulation alert: To avoid liability for others’ malfeasance, the American Gaming Association is pushing for increased regulation, and individual betting sites are developing anti-money-laundering compliance programs. With the increasing likelihood that sports stadiums will add gambling options to fans’ in-game experience, it would be useful to implement compliance programs and control mechanisms.?
What: On February 1, 2024, the Georgia Senate passed a bill to authorize and provide for the regulation and taxation of sports betting in the state, but a requirement for a state constitutional amendment was added in a separate vote by 34 senators, casting doubt on its final approval. Efforts to enact a state constitutional amendment have previously failed, including in 2023.
Why this matters: Georgia legislators appear to favor the expansion of legal gambling within the state. However, the effort has been fraught with challenges, primarily stemming from divergent views on which forms of gambling to legalize and the appropriate legal avenue to pursue. Advocates for passing the bill without a constitutional amendment argue that sports betting can be authorized under the Georgia Lottery, approved by voters in 1992, which allows proceeds to be allocated to Georgia’s Pre-K Program and HOPE Scholarships. Some supporters of the bill with a constitutional amendment are proponents of directing sports betting proceeds to other purposes, such as need-based scholarships, whereas others believe voters never intended for sports gambling to be a part of the state lottery and should, therefore, have a say in the matter.?
What: In 2023, Ohio gamblers placed $7.7 billion in bets, more than double initial projections and about 97% of the revenue came from bets placed online.
Why this matters: As part of Ohio’s regulations around legalizing sports betting, gambling sites, and other providers are taxed at 20%. Winnings are taxed as income, and businesses with gambling licenses also pay fees. According to the Ohio Department of Education, the tax revenue from sports betting goes to education foundations and scholarship payments.
Trend alert: States that have legalized sports betting take anywhere from 6.75 to 51% of the sports betting proceeds in taxes (after prizes are paid to participants): Georgia Senate passes sports betting bill, but odds dim as constitutional amendment required | AP News
领英推荐
PRIVATE EQUITY TRENDS
What: Spanish clubs last week met to showcase and discuss projects funded by their shares of the $2.1 billion that private equity group CVC Capital Partners is investing in the Spanish league. Real Madrid and Barcelona opposed the deal and are not part of the agreement that gave Luxembourg-based CVC an 8.25% stake in a new company that manages TV rights from the Spanish league. More than one-third of the teams in the top five European leagues currently have financial backing from private equity, venture capital or private debt firms, according to a report released late last year by financial data company PitchBook. They have invested $5.4 billion in Spain, France, Italy, Germany and England, up from less than $71 million.
Why this matters: While fans and certain clubs oppose private equity group investments, some countries plan to make regulatory changes in order to accommodate these investments. For example, in 2021, Brazil passed a law allowing clubs to become anonymous soccer corporations. Argentina is also working to change legislation so investors can start bringing money into the country.?
Trend Alert: Regardless of the opposition, investment in the soccer industry is only expected to increase worldwide, and nearly all other major soccer nations are open and receptive to taking advantage of these increased private equity investments.
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