Paul L. Caron
Dean


Saturday, September 21, 2019

Sports Gambling, Taxes, And Higher Education

Kathryn Kisska-Schulze (Clemson) & John T. Holden (Oklahoma State), Betting on Education, 81 Ohio St. L.J. ___ (2020):

Two recent changes to U.S. federal law threaten the viability of colleges and universities. President Trump’s signing of the Tax Cuts and Jobs Act (TCJA) into law at the close of 2017 signified a continued trend of decreasing funds previously available to higher education. National and state funding cuts are resulting in a cost-value educational crisis in the U.S., with tuition increasing, students needing to borrow more, and academic programs and faculty lines being cut. In addition, college athletic departments assert that the U.S. Supreme Court’s holding in Murphy v. National College Athletic Association, which declared that the Professional and Amateur Sports Protection Act (PASPA) unconstitutionally commandeered state legislatures into maintaining laws prohibiting sports wagering, could jeopardize the integrity of college sports. Only by examining the foundational relationships between gambling, taxation, and higher education in the U.S. is it evident that Murphy could actually be the catalyst for generating revenue back into colleges and universities rather than the apocalyptic threat some have predicted.

Following Murphy, more than 30 states have introduced bills legalizing sports gambling. Of those, only two have legislatively earmarked a portion of the projected revenue back into higher education specifically. States’ de minimis interest in redirecting some of this revenue stream to colleges and universities is surprising for two reasons. First, public institutions directly finance the very sports that are helping to drive the newly-legalized sports betting market. In addition, there exists a strong historical affiliation between gambling, tax revenue, and education in the U.S. Consequently, college administrators should embrace sports wagering as a means of increasing the integrity of college sports and capitalize on this opportunity to recoup revenue lost due to the TCJA and states’ continued reallocation of funding away from higher education.

The intersection of sports gambling, taxation, and higher education is an undertheorized area of law. This article highlights the historic connections that bind them, and proposes a mechanism which public institutions and state legislators can adopt to better monitor sports-related integrity concerns while supplementing college and university budgets. This article is the first to harmonize the relationship between education and gambling post-Murphy; the first to introduce various state tax frameworks surrounding legalized sports gambling in the U.S.; and the first to introduce a fee-based model to help redirect funding from legalized sports wagering back into higher education.

https://taxprof.typepad.com/taxprof_blog/2019/09/sports-gambling-taxes-and-higher-education.html

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