WLR42-4_Standen.pdf WLR42-4_STANDEN_FINAL_ME_8-27-06 8/31/2006 5:25:30 PM 639 THE BEAUTY OF BETS: WAGERS AS COMPENSATION FOR PROFESSIONAL ATHLETES JEFFREY STANDEN I. Gambling and its Prohibition........................................................ 640 A. League Prohibitions .......................................................... 642 B. Collective Bargaining Agreements ................................... 647 C. Compensation Restrictions ............................................... 649 II. Bets as Inducements to Player Performance ............................... 651 A. Agency Costs .................................................................... 653 B. Bets as Over-Inducements to Victory: Reservation Prices for Athletes .......................................................... 656 C. Bets As Under-Inducements to Victory: Performance Bonds .............................................................................. 661 III. Bettor Athletes ........................................................................... 665 Sports are appealing in part because they present unalloyed competition. Considerations other than the goal to win appear extraneous. Some fans appear to enjoy financial aspects relevant to professional sports as much as they enjoy the sport itself. For instance, some fans enjoy playing general manager, filling web sites with their analyses of how potential player trades or free agent acquisitions would comport with salary cap limitations. Likewise, many fans engage in sports fantasy leagues, gambling on fictitious games made up of fictitious teams populated by real players playing in real games. Finally, some fans fulfill their sports viewing enjoyment through gambling directly on the games themselves. Presumably, these fans’ taste for “financial sports,” such as fantasy trades, fantasy leagues, or wagers, shifts their attention away from the pure competition of the sports themselves. Despite this possibility, the American professional leagues appear to tolerate side action by Professor of Law, Willamette University. I am grateful for the research assistance provided by Ms. Cannon-Marie Green and Mr. Daniel Engler. The paper benefitted from the comments of the participants in the symposium, The Future of Sports Law, held March 17, 2006 at Willamette University. WLR42-4_STANDEN_FINAL_ME_8-27-06 8/31/2006 5:25:30 PM 640 WILLAMETTE LAW REVIEW [42:639 fans and fantasy league participants, and indeed welcome the added attention these financial fans bring to their players and leagues. The sports leagues produce the product that these financial sports fans consume; the leagues, however, do not capture the gains from their product. Although they appear to embrace financial sports fans, professional teams exhibit a different attitude toward players who bet. The professional leagues fear that, if team players were permitted to satisfy their taste for financial aspects of sports, their bets would sully contests, causing athletes to replace their striving to win with a desire to score points, to enhance individual performance, to constrain winning margins to betting lines, and even, in the worst case, to lose intentionally. Thus it is for these reasons that every one of the American professional sports leagues and sports federations prohibits its athletes from wagering on their own games. Some even extend that prohibition to wagering on any games within their leagues; others ban sports wagers entirely. Even associating with legal gambling operations can draw sanctions from league commissioners exercising their discretionary authority to protect the integrity of the game. This essay will suggest that the sports leagues’ reasons for banning betting do not justify the widespread prohibition. Players who bet on themselves do not necessarily act inimically to winning; in fact, under certain conditions, wagers may increase incentives to win. Allowing players to bet is unlikely to encourage players to throw games, or to try to achieve a victory within the parameter set by a point spread; in fact, permitting wagering may actually reduce incentives to throw games. More general moral considerations that surround the contemporary ban on betting, although significant in their own right, do not appear to present concerns about player conduct that differ from many other moral aspects to player behavior, the latter of which professional leagues habitually ignore. My guidepost through this discussion is the notion that choices are comparative, and that any problems or weaknesses that might inhere in a regime that permits athletes to gamble must be compared with those generated by extant practices. In this contest, betting comes out ahead. I. GAMBLING AND ITS PROHIBITION Gambling by players on their own athletic performance is not unusual. Certain professional sports, such as golf, tennis, horse