LAS VEGAS — College athletics are going through a transformative time with Name Image Likeness (NIL) deals and sports betting partnerships both entering the marketplace near simultaneously.
While the vast majority of student-athletes can’t align with sportsbooks as part of NIL deals due to state laws (and university policies), there are no category exclusions in Colorado. Last year, MaximBet offered NIL contracts to all female athletes of 21-plus years of age in Colorado before later doing the same for men.
That created an issue for University of Colorado student-athletes of age because the school had previously inked a sportsbook partnership with PointsBet. Colorado student-athletes were reportedly precluded from doing NIL deals with MaximBet.
One thing is for certain: Some student-athletes across the country are getting first-hand training in financial literacy 101 these days.
“I remember meeting with some of our student-athletes and asking them if they ever paid taxes,” Ohio State Athletic Director Gene Smith said last week at Sports Business Journal’s Intercollegiate Athletics Forum at the Bellagio in Las Vegas. “None of them did because they were all dependents on their parents’ taxes. I told them, ‘Don’t worry about the NCAA, worry about the IRS.’ When Nissan does a deal, and they give you $10,000, you better hold back 40%.’”
Rob Welsh, co-author of “The Winning Playbook” with former NFL Pro Bowler Jonathan Scott, sees sports betting deals as a viable option for student-athletes moving forward.
“Being able to get paid on your Name Image Likeness in the sports betting world, why not?” Welsh said at the conference. “In today’s society, sports betting is all over the place. It’s acceptable. I would say like any business, the reality is you have to think about, ‘How am I going to re-save that money, and what’s the tax situation?’”
To that end, Welsh advises using an LLC, non-grantor trusts, and even a private family foundation if further distribution is required.
“Have their situation for the monies they’re receiving including this, agent fees, marketing dollars — whatever it may be — and be able to put the liability protection on all that, so they don’t own anything,” he said.
A Case Study in Inside Information
At a time when schools can reap the rewards of sports betting partnerships, there’s a need to be proactive when it comes to potential pitfalls in the college space.
That’s the opinion of US Integrity President & Founder Matt Holt, who stressed the need for educational initiatives for college administrators, athletic directors, coaches, and players in order to avoid or get out in front of crisis situations. Sports betting had always been anathema to universities until recently, but that is slowly changing.
“Most career collegiate administrators have been told to avoid it at all costs for the entirety of their careers,” Holt said.
US Integrity monitors betting activity to detect abnormalities in college and pro leagues. Holt discussed the importance of alleviating risks associated to insider information in the collegiate ranks.
“If you’re a gambling syndicate, and you know that Coach A never releases information, that also means that the oddsmakers, bookmakers, and sportsbooks also won’t get that information,” Holt said. “Thus, it’s more valuable. (Syndicates could say), ‘We’re going to spend our time, resources, and ability to try and send bribes to those players, coaches, and equipment managers because that information has more value.’”
One future tool could come with injury reports, which could simply list players as available or unavailable with non-disclosure of injury or suspension details to the public. Holt believes that would help prevent requests for inside information being made to players, coaches, and others close to the program.
“It minimizes the temptation,” University of Arizona Executive Senior Associate Athletic Director Erika Barnes said.
Barnes noted that many student-athletes are making regular appearances now as part of their NIL deals in an effort to build both their brands and relationships. They can come in contact with many people at these events aside from a business owner. Friends of friends, bad actors, or otherwise.
It will be incumbent upon student-athletes to realize what constitutes inside information, and how to avoid putting themselves in compromising positions moving forward.
“Being aware of the information you have because information is power,” Barnes said.