Rogue Commissioner: NBA’s David Stern

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

No, that high-profile quote is not attributable to a member of the U.S. Congress, a state governor nor other public official or public figure. Most people had no clue who said it until it was published on December 11, 2009 in a Sports Illustrated interview that writer Ian Thomsen had with NBA Commissioner David Stern. In it, Stern reveals that his stance on legalized sports betting has softened.

But having been the NBA's face for the past 25 years, Stern has no less been a shrewd businessman. Moreover, as a studied attorney, he knows the meaning of precedent and its value in proving one's case.

As such, the prevailing precedent Stern created was his steadfast endorsement of the prohibition of legalized sports betting. And therefore, as he has now seemingly opened Pandora's Box, if but a crack, his juxtaposition may not be greeted with such warm and fuzzy feelings by the commissioners of the other professional sports leagues, as well as the NCAA.

For it was but a few short months ago, in July 2009, when the NBA joined suit with the NFL, MLB, NHL, and the NCAA in successfully defeating the state of Delaware in its attempt to legalize single game sports betting in its state.

The case in Delaware was based upon the legal theory that the 1992 federal law, known as the Professional and Amateur Sports Protection Act (PASPA), was not applicable to it. In three court hearings, the last before the full 12-judge panel of the U.S. 3rd Circuit Court of Appeals, found that Delaware was not entitled to offer sports betting a la Las Vegas-style sportsbooks sports betting.

So Delaware had to settle for NFL only three-game parlay style betting, which links together two or more individual wagers, but is dependent on all of those wagers winning together in order for the gambler to profit. In addition, all sports bets must be waged solely at Delaware's race tracks, Dover Downs and Delaware Park. Aside from a hit that the NFL took, however, the other leagues prevailed in winning their case.

In brief, states that offered lottery style or legalized sports betting from 1976-1990 were exempt from the PASPA, and it provided a one-year grace period for states, who had allowed sports betting over the previous 10-year period, to create legislation permitting sports wagering. Delaware, Oregon, Montana, and Nevada had such exemptions. But Delaware did not act within that one-year period, thus creating its present dilemma.

Since Delaware offered a three-game parley lottery on NFL games in 1976, it was offered no more than that which it had previously enjoyed.

The leagues, including the NBA, however, played no small role, along with several members of the U.S. Congress, in winning the case. They all appealed to U.S. Attorney General, Eric holder, in their opposition to grandfathering in any sports wagering of any kind. And in the end, Delaware came up short, where its last act would only be to appeal to the U.S. Supreme Court. It does not have any such plans at this time.

Back in 2007, Commissioner Stern agreed to hold the NBA's 2007 All-Star Game in Las Vegas, NV, which remains the only state in the Union which allows single bets to be taken at sportsbooks for every league in professional and college sports and for every team. The only exceptions are the NBA's Sacramento Kings and the Boston Celtics, along with the teams they are playing against on any given day. And such limitations are only with respect to specific casino properties.

The reason for that is that the Palms Hotel and Casino is owned by Joe and Gavin Maloof, who also own the Kings and previously owned the WNBA's Sacramento Monarchs. The other exception is Harrah's Entertainment, Inc., which owns a minority interest in the Boston Celtics.

As Harrah's own numerous Las Vegas casino hotels, no sports bets on Celtics games or their respective opponents may be taken at those Harrah casinos that have sportsbooks, as mandated by the NBA. Prior to 2008, the Palms Casino was not permitted to have sports betting on any NBA teams, but the NBA Board of Governors ruled to allow the Palms to join the rest of the Strip properties, doing so in October 2008.

And during 2007, David Stern had talks with Las Vegas Mayor Oscar Goodman regarding the mayor's interest in acquiring an NBA franchise for his city. But the future looked bleak at that time. Now the NBA's Summer League is a fixture there, as well as a training ground for USA Basketball and the U.S. Olympic team. And by 2008, Stern had decided to allow the NBA owners to decide whether there will be a future for an NBA club in Las Vegas.

Fast forward to 2009 and Stern now says, "Las Vegas is not evil. Las Vegas is a vacation destination resort and they have sports gambling." He apparently has come a long way from the 2007 All-Star Game when he was adamant about blocking any potential ownership opportunities for his league in Las Vegas. Apparently, the Maloof brothers have done a nice job convincing him otherwise.

The Tim Donaghy referee scandal, also in 2007, put a crimp in Stern's possible growing interest in a potential marriage with games of chance. At that time, Stern ordered the drafting of new policies with respect to NBA referees' off-season limit on gambling at legalized casinos. It is now permissible. However, sports betting is off-limits any time of the year. Ironically, Tim Donaghy's alleged gambling addiction started in legal gambling casinos, now endorsed for NBA referees by David Stern himself.

However, NBA referees are now more closely scrutinized and monitored in their off-court and off-season behaviors, requiring more invasive background and credit checks, while under the employ of the NBA.

And now it makes even more sense as to why Stern would insist that Tim Donaghy was a "rogue" or lone referee with regard to passing on inside information to illegal bookmakers and organized crime syndicates. Yet, both the FBI and the NBA's own internal investigation found that any of Donaghy's malfeasances did not alter game outcomes. Still, Donaghy was convicted and served 15 months prison time, including a fine of $500,000 and $30,000 in required restitution to the NBA.

Assuming that Stern had a grand scheme all along to eventually cash in his chips for a piece of the gambling revenue empire for the NBA, Donaghy merely mucked up the works temporarily, as Stern necessarily went into high gear damage control or virtual denial.

It was by mere coincidence, however, that the FBI even stumbled upon Donaghy, and obviously not through the lax mechanisms in place in Stern's house, which was neither equipped nor anxious to reveal any corruption in his ranks. An investigation by the federal government into the Gambino Crime Family is what prompted the FBI's findings; and was flawlessly staged as a complete surprise and seemingly unfathomable to the NBA's Stern.

And although David Stern might be out of step with the other professional leagues' commissioners, as concerns legalized sports betting, with the exception of his joining them in the Delaware lawsuit, he is right in line with multi-national corporations, global investors, foreign governments, U.S. state governments, and gamblers of all kinds in the U.S. and throughout the world.

If anything, one must agree that David Stern is a master at playing both sides of the fence and therefore may not be as inconsistent as many have criticized him for being since the Sports Illustrated article broke.

So is Stern a hypocrite or merely an evolved businessman wanting to cash in his chips, so to speak?

It is estimated that in the U.S. alone, nationalized legal sports betting income taxes and sin taxes could generate over $40 billion over 10 years. And that does not include the take that the NBA would stand to gain from ancillary revenue streams.

With the United Kingdom, Australia, other European entities, as well as China in the sports betting business, many in the U.S. Congress, for example, believe legalized sports betting and online gaming would but eliminate illegal off-shore gambling and would be a win-win both for the government and private enterprise, while removing the organized crime quotient.

But whether such comes to pass in the near future remains to be seen, although cash-strapped states remain hopeful. Yet, in this economy, it is anyone's bet. Yes "gambling is good." But is it not ultimately about greed?

And the NBA's appearance of duplicity will continue to have its critics:

"Apparently, the NBA is not as a concerned about the integrity of the league when their teams' owners' money is at stake." – Delaware House Majority Leader Peter C. Schwartzkopf (07/28/09)