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Kelly is an Associate in the firm’s Boston office and is also a member of the firm’s Sports Law Practice. He focuses his practice on complex civil litigation, including jury trials in state and federal courts, with an emphasis on real estate and sports litigation. Kelly’s work in sports law includes representing an international fitness company in a suit against its competitor for false advertising and trade libel, representing former professional athletes in connection with trademark disputes, and providing general advice and support to in-house attorneys for professional sports franchises.

This week, the U.S. Supreme Court issued a landmark decision authorizing the states to decide whether sports betting should be legal within their borders. In its decision, the Court struck down certain provisions of the federal Professional and Amateur Sports Protection Act of 1992 (“PASPA”) that previously provided a general ban on legalized sports betting outside of Nevada. Below are key things every league, team, conference, and school should know about the Court’s decision to prepare for a future where sports gambling is commonplace.

Why The Court Found PASPA To Be Unconstitutional

As a key message in its opinion, the Court conveyed that PASPA was not unconstitutional because individuals enjoy a federally-protected right to participate in legalized sports betting. Rather, the Court struck down PASPA because of the specific manner in which the statute prohibited sports betting. More precisely, the Court held that PASPA’s prohibition on states from authorizing legalized sports betting “unequivocally dictates what a state legislature may and may not do” in violation of the anti-commandeering rule reflected in the Tenth Amendment of the U.S. Constitution.

Hold Your Bets, At Least For Now

Another key takeaway from the decision is that legalized sports betting still faces significant threats, even after the Court’s ruling. For instance, each state must undertake the potentially lengthy process of enacting new legislation to legalize sports betting within its borders. And even after a state completes that process, its new sports betting laws will likely face vigorous challenges from opponents and robust scrutiny by the courts because, as the Court noted in its opinion, “the legalization of sports gambling is a controversial subject” about which “Americans have never been of one mind.” Additionally, the Court’s decision also leaves the door open to future federal bans on sports betting, noting that “Congress can regulate sports gambling directly” if it chooses to do so.

So What Should You Do Now

In the wake of the Court’s decision, there are several actions that leagues, teams, conferences, and schools should take to prepare for a world where state-sanctioned sports betting is commonplace. Of course, the foremost priority across the sports industry is preserving the integrity of the game, and all stakeholders should work closely with state governments to develop appropriate laws and regulations in furtherance of that goal. Beyond that rather obvious imperative, leagues, teams, conferences, and schools should also consider:

  • Tightening restrictions on athletes’ affiliations with entities or investors in gambling enterprises;
  • Enacting new rules to regulate on-site sports gambling at sports venues;
  • Analyzing applicable bylaws, policies, and practices to identify any limitations on sports gambling activities;
  • Exploring appropriate “sports betting right and integrity fees” that might be collected from sports betting enterprises;
  • Creating robust internal controls to monitor compliance with applicable laws, league/conference rules, and team/school policies related to sports betting; and
  • Developing a framework to address sports gambling issues in collective bargaining agreements, player contracts, and scholarship offers.

The above list is far from exhaustive, as the prospect of legalized sports betting creates countless issues for all stakeholders in the sports industry. Still, leagues, teams, conferences, and schools should take immediate action to prepare for future laws legalizing sports gambling. Because with an increasing number of states introducing and enacting sports betting laws, the future may be upon us sooner than we think.

The vetting and hiring of a new coach is one of the most critical responsibilities athletic directors face. Athletic directors work to identify coaching candidates that will give the university’s teams an opportunity to win games. At the same time, they must also identify coaching candidates that will satisfy concerns of the various university stakeholders. The University of Tennessee’s recent coaching search demonstrates what happens when an athletic director fails to do the latter. The fallout at Tennessee serves as a cautionary tale for all athletic directors, and offers critical lessons that every athletic director must learn before embarking on a new coaching search.

The #SchiaNO Movement and Its Effect on Tennessee’s Coaching Search

In the early morning of November 26, 2017, the University of Tennessee’s then-Athletic Director, John Currie, boarded a plane destined for Columbus, Ohio. At the time, Currie intended for that trip to result in him hiring Ohio State’s Defensive Coordinator, Greg Schiano, as Tennessee’s next head football coach. Currie nearly succeeded in executing that plan, as he successfully procured Schiano’s signature on a memorandum of understanding and had a plane lined up to transport Schiano to Knoxville to be introduced as Tennessee’s coach later that evening. That announcement, however, never happened.

In the few hours it took Currie to travel to Columbus and meet with Schiano, Tennessee football supporters caught wind of Schiano’s imminent hire and united in a public backlash. Government officials, fans, students, alumni, national and local media, and even the White House Press Secretary spoke with a shared voice in opposition to Currie’s decision to hire Schiano, and they banded together around the catchy Twitter hashtag “#SchiaNO.”

In its core, the #SchiaNO movement was a reaction to deposition testimony of a Penn State whistleblower indicating that Schiano knew of Jerry Sandusky’s sexual misconduct but failed to properly report it to authorities while Schiano was employed as an assistant coach at Penn State in the 1990s. As the #SchiaNO movement grew, further reports detailing Schiano’s controversial tenure as head coach of the Tampa Bay Buccaneers added additional fuel to the fire.

With unprecedented speed, the #SchiaNO movement brought an end to Schiano’s candidacy and to Currie’s tenure as Tennessee’s athletic director. Within hours of its creation, the #SchiaNO movement caused Tennessee to back out of its memorandum of understanding with Schiano and transition the search to other candidates. In the following week, Tennessee removed John Currie from his position as Athletic Director and replaced him with former Tennessee head coach Phil Fulmer.

These events should serve as a cautionary tale for athletic directors across the country. Indeed, all athletics directors should be vigilant on the following issues before embarking on a new coaching search because there is a very real possibility their career will hang in the balance.

Vet Coaching Candidates the Way the Public Will Vet Them

In the immediate aftermath of the #SchiaNO movement, John Currie released a statement indicating that he “carefully interviewed and vetted” Schiano before he met with him in Columbus on November 26, 2017. According to his statement, Currie’s vetting process included a review of Louis Freeh’s 2012 investigation report detailing the findings of Freeh’s investigation into the Penn State/Sandusky scandal. Currie’s vetting process also included inquiries to The Ohio State University to confirm that Schiano was never called upon to testify as part of the investigation. Those steps were, of course, necessary for Currie to properly vet Schiano, but they were not sufficient. Absent from Currie’s statement was any indication of detailed investigation and consideration on Schiano’s tenure at Penn State.

Any consideration of Schiano should have included information likely available to Tennessee football supporters who would vet Schiano by searching Google, Twitter, and other online resources to find information published about Schiano’s coaching history. Even a cursory on-line search would have located the July 2016 Washington Post article entitled “Greg Schiano, Tom Bradley knew of Jerry Sandusky abuse at Penn State, documents show” that mobilized supporters behind the #SchiaNO movement. This would be an issue that would alert the need to conduct further investigation and to proactively explain a hiring decision despite such information.

Athletic directors must recognize their fan bases now have immediate access to extensive information regarding coaching candidates. Relatedly, athletic directors must not underestimate fans’ willingness and ability to unearth anything and everything ever published about a new coach. Failure to adequately consider and prepare for the results of public vetting may result in an embarrassing, and potentially damaging, outcome.

Use of a Robust Morals Clause in Coaching MOUs

When fully executed, a MOU between a coaching candidate and a university can serve as legally enforceable document that defines the parties’ rights and obligations before they enter a formal employment agreement. Accordingly, athletic directors must recognize the exposure for themselves and their employers to potential litigation the moment they put pen to paper and sign a MOU. In the Schiano saga, this threat of litigation is somewhat complicated by a partially-executed MOU.

Athletic directors can, however, take steps to mitigate such risks by including a morals clause within legal documents pertaining to athletic employment, including MOUs. Morals clauses have become standard provisions in endorsement contracts for sponsors that engage popular athletes to promote their brand and allow sponsors to terminate the agreement if the athlete engages in conduct that contrasts with community standards of honesty or good morals.

Tennessee’s coaching search is instructive as to the importance of morals clauses in MOUs with coaching candidates. If the Schiano/Tennessee MOU had a robust morals clause that provided Tennessee an exit option upon information implicating Schiano’s morals (particularly with respect to the course of prior athletic employment), the litigation threat from Schiano would be diminished.

Appropriate Standard of Review When Evaluating Coaches with a Tainted Past

A common refrain by those criticizing the #SchiaNO movement is that the deposition testimony connecting Schiano to the Penn State scandal constitutes double-hearsay that would be inadmissible in court. While that might technically be true (one Penn State assistant testified regarding what another assistant had told him about Schiano’s purported statements), that is not the determinative standard of review for athletic directors when evaluating a coaches with a tainted past.

The ultimate arbiters of an athletic director’s coaching decision are the various stakeholders of the university’s athletics programs, such as the board of trustees, administrative leadership, students, parents, boosters, and fans, not to mention the media. None of these stakeholders are constrained by the Rules of Evidence or bound by the standards of proof used by a court of law. For this reason, athletic directors must use a standard of review that accounts for this reality when evaluating coaching candidates with a tainted past. More specifically, athletic directors should adopt a standard of review that measures, at a minimum, the following three factors:

  • Severity of the Coach’s Suspected Bad Conduct: The #SchiaNO movement gained steam in significant part because Schiano’s suspected bad conduct was so severely reprehensible. But not all scandals are created equal. Athletic directors must identify where a coach’s suspected conduct falls on the severity spectrum and exercise increased caution when such conduct lies at a higher level of severity.
  • Reliability of Evidence Connecting the Coach to Suspected Bad Conduct: The evidence connecting Schiano to the Penn State/Sandusky scandal consisted of sworn deposition testimony from a non-party witness that held no direct financial interest in the outcome of the investigation. Though this testimony was based upon double-hearsay, it is still more reliable than the more speculative evidence connecting coaches to other well-known scandals. Athletic directors must gauge the reliability of evidence connecting a coach to suspected bad conduct and factor that reliability with other information into their decisions regarding that coach’s candidacy.
  • Coach’s Appeal in the Absence of Suspected Bad Conduct: Schiano has a career record of 68-67 as a collegiate head coach. His NFL head coaching record was even worse, as the Tampa Bay Buccaneers went 11-21 during his tenure and received criticism on Schiano’s locker room management. Recognizing this, athletic directors must consider a candidate’s appeal to a University’s stakeholders in the absence of any suspected bad conduct. That is certainly a key factor that stakeholders will consider when passing judgment on the athletic director’s hiring decisions.

The Schiano story provides an extreme example of how important these proactive actions are during a coaching search, and how swiftly an athletic director can be terminated for failing to follow them. The consequences may not always be as immediate and severe as they were for John Currie. However, make no mistake: athletic directors run the risk of damaging their careers and reputations every time they ignore these lessons during a coaching search, even if nobody creates a catchy Twitter hashtag to commemorate their mistake.

The New York State Gaming Commission issued temporary permits to five major daily fantasy sports operators on August 22, 2016, allowing DraftKings, FanDuel, Yahoo, FantasyDraft, and Draft to resume operations in the state of New York.  The timing is key as this occurs before NFL season kickoff and the Major League Baseball playoffs.  This development constitutes a huge win for these operators as well as the professional sports leagues holding an equity interest in DraftKings or FanDuel and the franchises holding sponsorship deals with those operators.

The permits are the final step in a lengthy and contentious process to establish rules for daily fantasy operators in the state of New York.  Last October, New York Attorney General Eric Schneiderman began an inquiry into daily fantasy, which concluded with the AG’s Office issuing cease and desist letters to DraftKings and FanDuel.  Shortly thereafter, the issue was taken to the courts where the AG’s Office sought an injunction prohibiting DraftKings and FanDuel from operating in New York. Continue Reading Welcome Back: New York State Gaming Commission Issues Temporary Permits to Five Daily Fantasy Operators