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77–989PS 2002

CHALLENGES FACING AMATEUR ATHLETICS

HEARING

BEFORE THE

SUBCOMMITTEE ON

COMMERCE, TRADE, AND CONSUMER PROTECTION

OF THE

COMMITTEE ON ENERGY AND

COMMERCE

HOUSE OF REPRESENTATIVES

ONE HUNDRED SEVENTH CONGRESS

SECOND SESSION

FEBRUARY 13, 2002

Serial No. 107–85

Printed for the use of the Committee on Energy and Commerce

(

Available via the World Wide Web: http://www.access.gpo.gov/congress/house

2

COMMITTEE ON ENERGY AND COMMERCE

W.J. ‘‘BILLY’’ TAUZIN, Louisiana, Chairman

MICHAEL BILIRAKIS, Florida

JOE BARTON, Texas

FRED UPTON, Michigan

CLIFF STEARNS, Florida

PAUL E. GILLMOR, Ohio

JAMES C. GREENWOOD, Pennsylvania

CHRISTOPHER COX, California

NATHAN DEAL, Georgia

STEVE LARGENT, Oklahoma

RICHARD BURR, North Carolina

ED WHITFIELD, Kentucky

GREG GANSKE, Iowa

CHARLIE NORWOOD, Georgia

BARBARA CUBIN, Wyoming

JOHN SHIMKUS, Illinois

HEATHER WILSON, New Mexico

JOHN B. SHADEGG, Arizona

CHARLES ‘‘CHIP’’ PICKERING, Mississippi

VITO FOSSELLA, New York

ROY BLUNT, Missouri

TOM DAVIS, Virginia

ED BRYANT, Tennessee

ROBERT L. EHRLICH, Jr., Maryland

STEVE BUYER, Indiana

GEORGE RADANOVICH, California

CHARLES F. BASS, New Hampshire

JOSEPH R. PITTS, Pennsylvania

MARY BONO, California

GREG WALDEN, Oregon

LEE TERRY, Nebraska

JOHN D. DINGELL, Michigan

HENRY A. WAXMAN, California

EDWARD J. MARKEY, Massachusetts

RALPH M. HALL, Texas

RICK BOUCHER, Virginia

EDOLPHUS TOWNS, New York

FRANK PALLONE, Jr., New Jersey

SHERROD BROWN, Ohio

BART GORDON, Tennessee

PETER DEUTSCH, Florida

BOBBY L. RUSH, Illinois

ANNA G. ESHOO, California

BART STUPAK, Michigan

ELIOT L. ENGEL, New York

TOM SAWYER, Ohio

ALBERT R. WYNN, Maryland

GENE GREEN, Texas

KAREN MCCARTHY, Missouri

TED STRICKLAND, Ohio

DIANA DEGETTE, Colorado

THOMAS M. BARRETT, Wisconsin

BILL LUTHER, Minnesota

LOIS CAPPS, California

MICHAEL F. DOYLE, Pennsylvania

CHRISTOPHER JOHN, Louisiana

JANE HARMAN, California

DAVID V. MARVENTANO, Staff Director

JAMES D. BARNETTE, General Counsel

REID P.F. STUNTZ, Minority Staff Director and Chief Counsel

SUBCOMMITTEE ON COMMERCE, TRADE, AND CONSUMER PROTECTION

CLIFF STEARNS, Florida, Chairman

NATHAN DEAL, Georgia

Vice Chairman

ED WHITFIELD, Kentucky

BARBARA CUBIN, Wyoming

JOHN SHIMKUS, Illinois

JOHN B. SHADEGG, Arizona

ED BRYANT, Tennessee

STEVE BUYER, Indiana

GEORGE RADANOVICH, California

CHARLES F. BASS, New Hampshire

JOSEPH R. PITTS, Pennsylvania

GREG WALDEN, Oregon

LEE TERRY, Nebraska

W.J. ‘‘BILLY’’ TAUZIN, Louisiana

(Ex Officio)

EDOLPHUS TOWNS, New York

DIANA DEGETTE, Colorado

LOIS CAPPS, California

MICHAEL F. DOYLE, Pennsylvania

CHRISTOPHER JOHN, Louisiana

JANE HARMAN, California

HENRY A. WAXMAN, California

EDWARD J. MARKEY, Massachusetts

BART GORDON, Tennessee

PETER DEUTSCH, Florida

BOBBY L. RUSH, Illinois

ANNA G. ESHOO, California

JOHN D. DINGELL, Michigan,

(Ex Officio)

(II)

3

C O N T E N T S

Page

Testimony of:

Aguirre, Michael, NCAA Division 1, Student-Athlete Advisory Committee 46

Berkley, Hon. Shelley, a Representative in Congress from the State of

Nevada ........................................................................................................... 7

Fahrenkopf, Frank J., Jr., American Gaming Association ............................ 35

Huma, Ramogi D., Chairman, Collegiate Athletes Coalition ........................ 41

McMillen, Tom, The Knight Commission on Intercollegiate Athletics ........ 40

Osborne, Hon. Tom, a Representative in Congress from the State of

Nebraska ........................................................................................................ 11

Saum, William S., Director of Agent, Gambling and Amateurism Activities, National Collegiate Athletic Association ............................................ 30

Material submitted for the record by:

Lennon, Kevin, Vice-President for Membership Services, National Collegiate Athletic Association ............................................................................. 69

Major League Baseball, National Basketball Association, National Football League, National Hockey League, letter dated February 11, 2002,

to Hon. Cliff Stearns and Hon. Edolphus Towns ....................................... 72

(III)

(1)

CHALLENGES FACING AMATEUR ATHLETICS

WEDNESDAY, FEBRUARY 13, 2002

HOUSE OF REPRESENTATIVES,

COMMITTEE ON ENERGY AND COMMERCE,

SUBCOMMITTEE ON COMMERCE, TRADE,

AND CONSUMER PROTECTION,

Washington, DC.

The subcommittee met, pursuant to notice, at 9:30 a.m., in room

2322, Rayburn House Office Building, Hon. Cliff Stearns (chairman) presiding.

Members present: Representatives Stearns, Shimkus, Bryant,

Pitts, Terry, Towns, John, Gordon, and Rush.

Staff present: Ramsen Betfarhad, policy coordinator, majority

counsel; Brian McCullough, majority counsel; Jon Tripp, deputy

communications director; Will Carty, legislative clerk; Brendan

Delany, staff assistant; and Bruce M. Gwinn, minority counsel.

Mr. STEARNS. Good morning, the Subcommittee on Commerce,

Trade, and Consumer Protection will start. One of our witnesses is

on her way, Shelley Berkley, the Congresswoman from Nevada.

Today, we are examining the challenges facing amateur athletics.

As my colleagues are aware, the committee has jurisdiction over

sports, in general, and as such will conduct oversight to identify

issues that require committee attention.

This hearing will focus on, but is not limited to, several issues

identified as relevant to amateur athletics. The Knight’s Foundation Commission on Intercollegiate Athletics issued a report in

June 2001 in which it identified many issues it considered problematic for the health of amateur sports at the highest level, collegiate

sports. The report was written in the context of the impact and relevance of collegiate sports relative to the intent and purpose of

higher education. However, the issues are relevant to most amateur sports and therefore provide an appropriate starting point for

the committee’s inquiry.

Among the issues the Knight Commission Report identifies that

it views as problematic, witnesses have been asked to address the

commercialization of collegiate sports and its impact. Additionally,

two other issues that have been addressed by previous Congresses

are gambling and student athlete welfare.

I especially want to thank my good friend, Mr. Towns, our distinguished ranking member for his work on behalf of the welfare of

student athletes. Commercialization lends itself to the so-called

‘‘big time’’ college sports of football and men’s basketball. The Commission believes that the popularity of college sports has attracted

more and more money which, in turn, increases the pressure to win

2

at all costs. The pressure leads to abuse in violation of the rules

to the detriment of the student athletes and the institutions.

The report identifies television contracts, equipment manufacturer contracts, stadium advertising and naming rights as problems affecting amateur sports. However, the report also notes that

commercial influence has trickled down to high school sports, in

particular boy’s basketball, and may figure prominently in parts of

the recruiting process.

Another issue concerns gambling and how it may affect amateur

sports. The Professional and Amateur Sports Protection Act, passed

in 1992, banned sports wagering in all States except those that already authorized it. Currently, sports wagering is legal only in Nevada. The National Gambling Impact Study Commission examined

the effects of legalized gambling from 1997 to 1999. As a result, the

Commission made a number of recommendations to address illegal

gambling.

Finally, we will look at the overall welfare of the student athlete.

As most of us are aware, the odds of a college athlete being drafted

into the NBA or the NFL are staggering. The Knight’s Commission

believes the premise of college sports as a training ground for professional sports is false and leaves too many student athletes illprepared for life after sports. There’s concern regarding low graduation rates of student athletes and preferential treatment of college athletes, including lower academic standards.

Additionally, the Commission states that the pressure to win has

resulted in circumvention of academic rules to the detriment of athletes.

Although the Knight Commission Report raises many issues and

just as many questions, it is the responsibility of this subcommittee

to bring all sides of those issues into a forum for open debate. So

I look forward to hearing from our Member panel: Congressman

Tom Osborne, who has a storied history with the University of Nebraska and can provide us a unique perspective from a coach’s

point of view. In addition, I welcome Congresswoman Berkley and

her state’s perspective on these issues.

We also have witnesses from the NCAA, the Knight Commission,

the Collegiate Athletic Association. I welcome them and look forward to their testimony as well. I know this hearing will be very

educational for all of us and will help us shed some light on the

myriad of issues facing today’s student athlete.

And with that the distinguished member from New York, the

ranking member, Mr. Towns.

[The prepared statement of Hon. Cliff Stearns follows:]

PREPARED STATEMENT OF HON. CLIFF STEARNS, CHAIRMAN, SUBCOMMITTEE ON

COMMERCE, TRADE, AND CONSUMER PROTECTION

Today, we are examining the Challenges Facing Amateur Athletics. As my colleagues are aware, The Committee has jurisdiction over sports, in general, and as

such will conduct oversight to identify issues that require Committee attention. This

hearing will focus on, but is not limited to, several issues identified as relevant to

amateur athletics.

The Knight Foundation’s Commission on Intercollegiate Athletics issued a report

in June 2001 in which it identified many issues it considered problematic for the

health of amateur sports at the highest level; collegiate sports. The report was written in the context of the impact and relevance of collegiate sports related to the intent and purpose of higher education. However, the issues are relevant to most amaVerDate 11-MAY-2000 09:34 Apr 23, 2002 Jkt 000000 PO 00000 Frm 00006 Fmt 6633 Sfmt 6621 77989.TXT HCOM1 PsN: HCOM1
3

teur sports and therefore provide an appropriate starting point for the Committee’s inquiry.

Among the issues the Knight Commission report identified that it views as problematic, witnesses have been asked to address the commercialization of collegiate

sports and its impact.

Additionally, two other issues that have been addressed by previous Congresses

are gambling and student-athlete welfare. I especially want to thank my good friend

Mr. Towns, our distinguished ranking member for his work on behalf of the welfare

of student-athletes.

Commercialization lends itself to the so-called ‘‘big-time’’’ college sports of football

and men’s basketball. The Commission believes that the popularity of college sports

has attracted more and more money, which in turn increases the pressure to win

at all costs. The pressure leads to abuse and violation of the rules to the detriment

of the student-athletes and the institutions.

The report identifies television contracts, equipment manufacturer contracts, stadium advertising and naming rights as problems affecting amateur sports, however,

the report also notes that commercial influence has trickled down to high school

sport—in particular boys basketball—and may figure prominently in parts of the recruiting process.

Another issue concerns gambling and how it may affect amateur sports. The Professional and Amateur Sports Protection Act (PASPA), passed in 1992, banned

sports wagering in all states except those that already authorized it. Currently,

sports wagering is legal only in Nevada.

The National Gambling Impact Study Commission examined the effects of legalized gambling from 1997 to 1999. As a result, the Commission made a number of

recommendations to address illegal gambling.

Finally, we will look at the overall welfare of the Student Athlete. As most of us

are aware, the odds of a college athlete being drafted into the NBA or the NFL are

staggering. The Knight Commission believes the premise of college sports as a training ground for professional sports is false and leaves too many student-athletes illprepared for life after sports. There is concern regarding low graduation rates of

student athletes, and preferential treatment of collegiate athletes, arguably including lower academic standards. Additionally, the Commission states that the pressure to win has resulted in the circumvention of academic rules to the detriment

of the athletes.

Though the Knight Commission report raises many issues, and just as many questions, it is the responsibility of this Subcommittee to bring all sides of those issues

into a forum for open debate. I look forward to hearing from our Member panel—

Congressman Tom Osborne has a storied history with the University of Nebraska

and can provide us a unique perspective from a coach’s point of view. In addition,

I welcome Congresswoman Berkley and her state’s perspective on these issues.

We also have witnesses from the NCAA, the Knight Commission, and the Collegiate Athlete Association. I welcome them and look forward to their testimony as

well.

I know this hearing will be very educational for all of us, and will help shed some

light on the myriad of issues facing today’s student athlete.

Mr. TOWNS. Thank you very much, Mr. Chairman, and I’m

pleased to join you at this hearing and to welcome my current colleagues to the committee. In addition to my former colleague and

friend, Tom McMillen and the rest of Panel today, I’ve long been

interested in issues surrounding amateur athletics and I’m happy

that the subcommittee has chosen to take a look at these issues.

It is my hope that this will not be the last hearing that we have

on this topic. I must admit that I have many questions for our Panelists today and not all of them have positive connotation. Let me

warn you in advance. Ten years ago, Congressman Tom McMillen

and I authored an extremely important piece of legislation, the Student Right to Know Act. This law forced NCAA member institutions to begin putting graduation rates on the internet and that

would inform potential student athletes of the graduation rates,

but it was also supposed to be put in Letters of Intent that they

would send students as well. When the law passed, there was joyous celebration and all the schools agreed that they would be in

4

full compliance with the law. And let me say this, I must admit,

I’m angry to learn that many schools are now openly thumbing

their noses at Congress and the law and I intend to ask about this

today as well.

I also suggest that perhaps there need to be stiffer penalties

against the NCAA or its member institutions that do not comply

with this law and I intend to search for a Federal remedy to this

growing problem. In addition to ensuring that student athletes

graduate, I’m also concerned about the appearance of increased exploitation of student athletes. There seems to be double or sometimes triple teaming that goes on between big time schools, agents

and corporations. Millions of dollars flow between these entities

and the student athlete sees none of it. Oftentimes, I believe that

the student is considered a means to an end, rather than a person.

Where is the NCAA member institutions’ commitment to its most

valuable resource, its student athletes? I look forward to hearing

about these issues as well.

Also, let me state my proud support for H.R. 641, the National

Collegiate and Amateur Athletic Protection Act of 2001. We need

to address the issue of gambling, but we need to do it the best way

possible, by going after the real problem, the bookies and other individuals who participate in illegal, unregulated gambling.

Last, let me say this. We need to do something about sports

agents. I’m sure that Mr. Gordon, my colleague from Tennessee

will have something to say about the Tennessee football start that

was denied his senior season and a chance to get his degree in 31⁄2

years. I might add for his mild involvement with an agent. And I

would welcome legislation that would place criminal penalties on

agents who attempt to sway student athletes before the appropriate time.

The issues surrounding the amateur athletics are unbelievably

complex. There are many ideas in an increasingly crowded arena.

I look forward to hearing the testimony today and the debate that

follows.

I’d like to thank you, Mr. Chairman, for holding this hearing. I

think it’s a very important hearing and I’m certain that as a result

of what we do and say here today, will help a lot of athletes in the

years to come.

Thank you. I yield back.

[The prepared statement of Hon. Ed Towns follows:]

PREPARED STATEMENT OF HON. ED TOWNS, A REPRESENTATIVE IN CONGRESS FROM

THE STATE OF NEW YORK

Thank you Mr. Chairman and I am pleased to welcome my two current colleagues

to the committee, in addition to my former colleague, Mr. McMillen and the rest of

the panel today.

I have long been interested in issues surrounding amateur athletics and I am

heartened that the sub-committee has chosen to take a look at these issues. It is

my hope that this will not be the last hearing we have on this topic. I must admit

that I have many questions for our panelists today and not all of them have positive

connotations.

Ten years ago, Congressman McMillen and I authored an extremely important

piece of legislation: The Student Right to Know Act. This law forced NCAA member

institutions to begin putting graduation rates on the Internet and better informing

potential student-athletes of their graduation rates. When the law passed, there was

joyous celebration and all the schools agreed that they would be in full compliance

with the law. And let me say this—I am angry to learn that many schools are now

5

openly thumbing their noses at Congress and the law and I intend to ask about this

today. I also suggest that perhaps there need to be stiffer penalties against the

NCAA or its member institutions that do not comply with this law and I intend to

search for a federal remedy to this growing problem.

In addition to ensuring that student athletes graduate, I am also concerned about

the appearance of increased exploitation of student athletes. There seems to be double or sometimes triple teaming that goes on between big time schools, agents and

corporations. Millions of dollars flow between these entities and the student athlete

sees none of it. Often times I believe that the student is considered a means to an

end, rather than a person. Where is the NCAA’s member institution’s commitment

to its most valuable resource—its student athletes? I look forward to hearing about

these issues as well.

Also, let me state my proud support of H.R. 641, the National Collegiate and

Amateur Athletic Protection Act of 2001. We need to address the issue of gambling,

but we need to do it the best way possible by going after the REAL problem—the

bookies and other individuals who participate in illegal, unregulated gambling.

Lastly, let me say this—we need to do something about sports agents. I am sure

that Mr. Gordon will have something to say about the Tennessee Football star that

was denied his senior season—and a chance to get his degree in three and a half

years I might add—for his mild involvement with an agent and I would welcome

legislation that would place criminal penalties on agents who attempt to sway student athletes before the appropriate time.

The issues surrounding Amateur athletics are unbelievably complex. There are

many ideas in an increasingly crowded arena. I look forward to hearing the testimony today and for the debate that follows.

Thank you Mr. Chairman and I yield back.

Mr. STEARNS. I thank my colleague.

The gentleman from Tennessee, Mr. Gordon?

Mr. GORDON. Thank you, Mr. Chairman. I want to add my welcome to our panelists and also a welcome back to Tom McMillen,

a friend and former colleague. As my friend and our ranking member pointed out, there are a number of issues here of importance.

One that I’ve been involved in is concerning sports agents. Let me

give you a little background and Mr. Osborne, it’s sort of a cardinal

rule in practicing law and really should be on being on a committee

that you don’t ask a question you don’t know the answer to. I have

been meaning to come by your office for a long time and talk to

you about this. I’m going to break the rule and just—I’d like to

hear your comments later, even though I don’t know what they are.

And let me give you some background. As you well know, oftentimes, sports agents will lure kids into deals or give them a gold

chain or a suit of clothes or whatever it might be. The result being

is that the kids will lose their eligibility, the schools oftentimes are

penalized, they lose their scholarship, yet there’s no penalty to the

sports agent. It’s an absolute free walk for them. I’m told by many

coaches that it’s an ordeal just keeping them away from the phone,

from just flocking on their best athletes.

A few years ago I introduced legislation that would ban or penalize agents that have that type of conduct. And I’ve been looking

through my file. I wrote letters to all the coaches around the country and many, many of them returned with a positive endorsement.

I’m looking for your letter and I haven’t been able to find those.

I don’t know whether you were there or not. The Junior College Association also endorsed this proposal. There was only one group

that didn’t and that was the NCAA. Their reasoning was that they

didn’t want any kind of government interference and so this

shouldn’t have occurred.

Interestingly, they later adopted and helped adopt some uniform

guidelines to be passed by different States, but we’re really no betVerDate 11-MAY-2000 09:34 Apr 23, 2002 Jkt 000000 PO 00000 Frm 00009 Fmt 6633 Sfmt 6602 77989.TXT HCOM1 PsN: HCOM1
6

ter off, no more States have laws against those types of agents now

than they did before. So I’m hoping that when we hear from the

NCAA, they may have had a change of heart and we might talk

a little bit about that later and I hope to have a chance to hear

from your perspective as to what are the perils of student athletes,

coaches that are trying to do the right thing, but can’t watch over

every minute and to the universities.

So I think you’ll bring a unique perspective to this. Again, I

thank all my panelists here today for joining us.

Mr. STEARNS. I thank my colleague. The gentleman from Nebraska, Mr. Terry.

Mr. TERRY. I have no opening statement but I will welcome

Coach Osborne, Congressman Osborne, my colleague in Nebraska.

[Additional statement submitted for the record follows:]

PREPARED STATEMENT OF HON. W.J. ‘‘BILLY’’ TAUZIN, CHAIRMAN, COMMITTEE ON

ENERGY AND COMMERCE

Thank you, Chairman Stearns. I think you picked an excellent time to begin the

Committee’s look at issues surrounding amateur athletics. The Winter Olympics,

now under way, celebrate all the positive aspects of sports and competition. And you

don’t have to be a diehard sports fan to recognize the dedication and sacrifices these

athletes make for the chance to compete against the best in the world. It’s done almost purely for the sake of competition.

Last week Americans enjoyed a heart-warming, patriotic moment when members

of the 1980 U.S. Olympic hockey team lit the Olympic torch to begin the games.

This miracle team of collegiate players beat the seemingly invincible Soviet team

and played on to win the gold. It was a team of amateurs nobody had heard of.

However, the Olympics are no longer a competition reserved strictly for amateurs.

Today’s U.S. hockey team will feature familiar names that play in the NHL. Although many athletes train for years to compete at the highest level without the

promise of a professional career after the games, some of the competitors are now

drawn from the ranks of professional sports. And while this does not indicate any

diminished desire to compete, it highlights the fact that times have been changing

in amateur sports.

We are well aware of the expansion of cable and satellite TV providing hundreds

of channels with 24 hour programming not widely available 20 years ago. Sports

coverage is as pervasive now as news coverage.

This dramatic change in both the amount and manner in which sports are presented to us is relevant to today’s hearing because of the potential ramifications.

Young collegiate athletes are often televised as much as their professional counterparts. The immense amount of focus, driven by our insatiable appetite for athletic

competition, has raised concerns about new pressures on amateur, and particularly

intercollegiate, sports.

What effect this attention has on the student athletes is debatable, and we will

be able to talk about some of the issues of concern this morning. However, singling

out any one group for blame would not be accurate. The more relevant question becomes where the line is drawn between an amateur and a professional. From that

point, appropriate rules and policy can be constructed.

I commend the Chairman for calling this hearing to examine some of the different

issues that affect amateur athletes who compete at the highest level of intercollegiate sports. Because the popularity of college sports has grown enormously, examining the challenges at the top of the hill is a natural starting point to assure this

is a worthwhile project.

I look forward to hearing from some of the experts, who have come this morning

to share their thoughts about commercialization pressures, gambling, and studentathlete welfare. Experience has taught us that water flows downhill, and we would

be foolish if we didn’t recognize that many of the issues we will discuss today involving big-time amateur sports, already influence the youngest of competitors and

therefore require an open, honest debate.

Based on the information we collect, I expect that we will develop a blueprint for

closer examination. We will then be able to determine what, if any, issues require

more Congressional attention and address each appropriately.

7

Mr. STEARNS. Let me move to our first panel and thank them for

coming. We’re especially honored to have Congressman Tom

Osborne before us. He’s had 25 years as a head coach of the University of Nebraska football program. He amassed three national

NCAA championships with three perfect seasons. His record was

87-11-1 and was inducted into the College Football Hall of Fame

in 1999. In addition, he earned an M.A. in educational psychology

and a doctorate in educational psychology from the University of

Nebraska in Lincoln. So if anyone can speak on these issues with

authority, it is our good friend Tom Osborne and I welcome you,

Tom.

I’d also like to welcome our good friend, Congresswoman Shelley

Berkley who represents the metropolitan Las Vegas area. Shelley

lives in Las Vegas, maintaining a deep sense of commitment to give

back to her community that opened the doors for her. After earning

her law degree at the University of San Diego School of Law,

Shelly returned to Las Vegas where she has extensive experience

in the Nevada hotel industry, the Nevada State House and is part

of the Nevada Board of Regents, so she also has some keen insight

into these issues, so Shelley, let me also welcome you too, and I appreciate your coming. And we’ll let you start with an opening statement.

STATEMENTS OF HON. SHELLEY BERKLEY, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF NEVADA; AND HON.

TOM OSBORNE, A REPRESENTATIVE IN CONGRESS FROM

THE STATE OF NEBRASKA

Ms. BERKLEY. I’d like to take this opportunity to thank the chairman and the ranking member for holding this very important hearing. I am also honored to be on the same panel as Coach Congressman Osborne. I know about his extensive career and we all take

great pride in it.

I want to thank you for the opportunity to discuss the challenges

facing amateur athletics and share with you my knowledge and

very serious concerns about this issue, having devoted 8 years of

my life to higher education as an elected member of the Nevada

University Board of Regents, I have extensive experience in dealing

with college athletics and with the NCAA.

My tenure as a Regent came during a time of tremendous growth

for intercollegiate sports at UNLV. As our athletic programs were

rising to national prominence I was witness to the NCAA’s often

misguided and arbitrary enforcement of its own rules as well as its

outrageously unfair distribution of wealth earned solely by the

hard work and talent of its student athletes.

As a recent ‘‘60 Minutes’’ segment points out, the NCAA billions

of dollars go to the folks at the top, not the student athletes. Here’s

one example. Eraste Autin, a University of Florida recruit collapsed

during a so-called voluntary summer workout and later died. By

NCAA rules, the University was not allowed to cover his hospital

costs and his family could not even collect the death benefit. Surely, the NCAA can allow a University to pay the hospital expenses

for a student athlete who dies while practicing the sports that are

making the NCAA incredible amounts of money. Why didn’t this

happen?

8

Because the workout was categorized by the NCAA as voluntary.

Now you could ask any student athlete. There’s no such thing as

a voluntary workout. You show or you don’t play. For many of

these students attending school an athletic scholarship is their

ticket and they know if they don’t play, they lose their scholarship

and they’re out of school. In the same ‘‘60 Minutes’’ story, the NCAA admitted that athletic scholarships fall $2,000 per year

short of what the students need to get by. This leaves the vast majority of student athletes living under the poverty line while the

NCAA rakes in the dough.

Now remember, you’re dealing with young students, often from

disadvantaged backgrounds, away from home for the first time.

The NCAA is supposed to look out for the best interests of our Nation’s sons and daughters as they pursue their collegiate athletic

careers, but I believe we need a watchdog to watch over the NCAA.

While these kids are living under the poverty line, the NCAA officials are living the life of the potentates that they have become,

high salaries and excessive expense accounts are just the tip of the

iceberg, and believe me, when these guys come to Las Vegas, they

live the life of Riley, drive the finest cars, stay at the finest hotels,

eat in the finest restaurants and see the most expensive shows. It’s

not from their own personal money that they have these expense

accounts.

I also know from personal experience that coaches and academic

institutions are often scared to death to speak out against the

NCAA for fear of retribution against their athletic programs. The

NCAA has a life and death hold over our collegiate athletic programs and our student athletes with no due process requirements

and no appeal possible. The NCAA has a monopoly and a strangle

hold on the fate of college programs across the country.

I have witnessed the result of the animosity of the NCAA against

a college coach firsthand when the NCAA decided to destroy the career of Coach Jerry Tarkenian of UNLV. They stopped at nothing,

including destroying the UNLV basketball program in order to end

the career of a college coach who dared to challenge the awesome

power of the NCAA, a coach who protected his players and cared

about this program and the success and well being of the students

under his care. After years of litigation and millions of dollars in

legal fees, I am certain paid for by the sweat of the student athletes, Coach Tarkenian won his lawsuit against the NCAA. Unfortunately, the program did not fare as well and a decade later,

they’re still recovering from the heavy handed penalties set down

by the NCAA and who suffers from the NCAA’s so-called justice?

The only ones who suffer are the student athletes who are victims

of a system they did not create and cannot change.

After 8 years as a University Regent, I developed relationships

with University Presidents, coaches and athletic directors across

the country. Last year, when the NCAA proposed legislation to outlaw legal wagering on collegiate sports in Nevada, I contacted several of these strong, brave men to ask whether outlawing legal wagering in Nevada would have any effect on illegal sports betting on

college campuses. Every one, each one stated categorically that it

would not. When I asked these same brave men if they were willing to buck the NCAA and testify against the legislation, each and

9

every one declined, citing fear of retribution against their program

by the NCAA, and I’ll get into this issue in a moment.

The NCAA has done nothing to ease the poverty in which many

of these student athletes are forced to live. The NCAA has done

nothing to redress the problems created by enforcement of its arbitrary, antiquated and unfair rules. Given the mindset of the NCAA

which neglects the need of the student athletes, is it any wonder

that the NCAA would try to seek the easy way out by proposing

an illogical, useless solution to another major problem that confronts our students?

That’s the problem of illegal gambling on our college campuses

and this is another area that the NCAA has failed miserably. Rather than helping college athletes, the NCAA has done virtually nothing to stem the tide of illegal betting on campus, even though it

has recently signed, recently signed a $6 billion contract to broadcast college games, $6 billion. The NCAA has chosen to make legal

sports betting in Nevada which has no link whatsoever to illegal

sports betting, its scapegoat, rather than mandate its member institutions, take their share of the NCAA profits and use it to develop programs to fight illegal college gambling. And don’t let the

NCAA fool you. The only public information regarding their budget,

the NCAA’s website lists their total operating revenue for last year

at over $345 million, a grand total of just over $15 million goes toward student athlete welfare and youth programs and services. The

NCAA lists a meager $263,000 or less than 1⁄100th of 1 percent of

having anything to do with sports agents and gambling. Keep in

mind that $6 billion television contract.

A couple of years ago, in response to questioning from then-Senator Richard Bryan of Nevada, the NCAA testified before the Senate Commerce Committee that out of 1,100 employees on its payroll, only one was assigned to fighting gambling on college campuses. Today, the NCAA pays lip service to combatting campus

gambling by sending out posters, posting warnings on their

website, airing a few commercials during the final four and blaming the State of Nevada for its failure to get a handle on this problem.

If the NCAA is really serious about fighting illegal amateur

sports gambling, well, then let’s get serious and I challenge the

NCAA to take its multi-billion dollar revenue, all generated by unpaid student athletes and not just a tiny fraction of it, and dedicate

it to fighting illegal gambling through aggressive enforcement and

prevention programs. We need a serious, real world approach to

this problem and that’s why Congressman Gibbons and I introduced H.R. 641 that Mr. Towns spoke of. The National Collegiate

and Amateur Athletic Protection Act, which attacks illegal gambling head on, and I challenge the NCAA to step up to the plate

and support this bill. Our bill boosts law enforcement’s efforts to

crack down on illegal betting operations, hitting hard at the illegal

bookmaking rings. The NCAA bill does absolutely nothing to help

law enforcement. Our bill would investigate the scope and uncover

the causes of illegal campus betting. The NCAA bill does nothing.

No studies, no investigations, no educational programs, nothing.

Our bill calls on the NCAA colleges and universities to step up

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gambling prevention programs on campuses. The NCAA proposed

bill takes no responsibility whatsoever.

I’m almost done. I have been tracking the NCAA for years. I witnessed their heavy handed tactics, lack of due process, arbitrary

and harsh punishments of schools that refuse to go along, the relatively light punishment of those schools favored by the NCAA, the

opulent salaries and lifestyles of the NCAA brass and the poverty

that many student athletes are forced to live in due to antiquated

rules perpetuated mindlessly by the NCAA.

I submit to you that the NCAA should be investigated. A full

congressional study would uncover an organization dedicated to the

proposition of taking care and protecting itself and doing as little

as possible to take care and protect the student athletes who are

generating the enormous amounts of money that creates the power

that the NCAA abuses on a regular basis.

Thank you very much, Mr. Chairman.

[The prepared statement of Hon. Shelley Berkley follows:]

PREPARED STATEMENT OF HON. SHELLEY BERKLEY, A REPRESENTATIVE IN CONGRESS

FROM THE STATE OF NEVADA

Thank you for the opportunity to discuss the challenges facing amateur athletics,

and share with you my knowledge and very serious concerns about this issue. Having devoted 8 years of my life to higher education as an elected member of the Nevada University Board of Regents, I have extensive experience in dealing with college athletics and the National Collegiate Athletic Association (NCAA).

Since coming to Congress, I have been astounded by Congress’ misconceptions

about Nevada’s gaming industry and the hypocrisy with which the NCAA operates.

My tenure as a regent came during a time of tremendous growth for intercollegiate athletics at UNLV. As our athletic programs were rising to national prominence, I was witness to the often misguided and arbitrary application of the NCAA

to enforce its own rules. In many respects the NCAA was more in need of investigation than the athletes, coaches and boosters that the NCAA investigated.

As a recent 60 Minutes segment points out, the NCAA’s billions of dollars go to

‘‘the folks at the top,’’ not the student athletes. Here’s one example: Eraste Autin,

a University of Florida recruit, collapsed during a voluntary summer workout and

died later. By NCAA rules, the University was not allowed to cover his hospital

costs and his family could not even collect a death benefit. Surely the NCAA can

allow a university to pay the hospital expenses for a student athlete who dies while

practicing the sport that’s making the NCAA money.

In the same 60 Minutes story, the NCAA fully admits that scholarships fall

$2,000 per year short of what athletes need to get by. This leaves the vast majority

of college athletes living under the poverty line while the NCAA rakes in the dough.

The NCAA is supposed to look out for the best interests of our nation’s sons and

daughters as they pursue collegiate athletics. But, I believe we need a watchdog to

watch over the NCAA. I know from personal experience that coaches and academic

institutions are often scared to death of the NCAA because they know that if the

NCAA doesn’t like you they are going to come after you.

Right now, one of the best female college basketball players in the country is

being forced to sit on the sidelines. Under the NCAA’s guilty-until-proven-innocent

stance, Linda Frohlich’s eligibility has been revoked until UNLV shows she did not

receive improper benefits while playing for a club team in Germany before attending

the school. Frohlich may very well be innocent of the NCAA’s allegations, but the

NCAA places the entire burden of proof on teenage college athletes. Even though

innocent until proven guilty is supposed to be the law of the land in the United

States, the NCAA carries out its actions with impunity.

Gambling on college campuses is another area where the NCAA has failed miserably. Rather than helping the college athletes who bring in their big bucks, the

NCAA has done virtually nothing to stem the tide of illegal betting on college campuses, even though it has a $6 billion contract to broadcast college games. The

NCAA has chosen to make Nevada its scapegoat rather than mandate their member

institutions take their share of NCAA profits and use it to develop programs to fight

illegal college gambling.

11

In the only public information regarding their budget, the NCAA’s website lists

their total operating revenue for 2001-2002 at over $345 million. A grand total of

just over $15 million goes toward ‘‘Student-Athlete Welfare and Youth Programs

and Services.’’ But the NCAA lists only a meager $263,000, or less than one hundredth of one percent, as having anything to do with sports agents and gambling.

Keep in mind they’ve recently signed a $6 billion television contract.

A couple of years ago, in response to questioning from then Senator Richard

Bryan (D-NV), the NCAA testified before the Senate Commerce Committee that

they only had 1 out of 1100 employees assigned to fighting gambling on college campuses. Today, the NCAA pays lip service to campus gambling by sending out posters, posting warnings on their website, and airing a few commercials during the

Final Four.

If the NCAA is really serious about fighting illegal amateur sports gambling, then

let’s get serious. I challenge the NCAA to take its multi-billion dollar revenue . . . all

generated by unpaid student-athletes, and not just a tiny fraction... and dedicate

it to fighting illegal gambling, through aggressive enforcement and prevention programs.

We need a serious, real-world approach to this problem. That’s why Congressman

Gibbons and I introduced H.R. 641, the National Collegiate and Amateur Athletic

Protection Act, which attacks illegal gambling head on. I challenge the NCAA to

step up to the plate and support this bill.

Our bill boosts law enforcement’s efforts to crack down on illegal betting operations, hitting hard at the illegal bookmaking rings. The NCAA bill does absolutely

nothing to help law enforcement. Our bill would investigate the scope—and uncover

the causes—of illegal campus betting. The NCAA bill does nothing. No studies, no

investigations, no educational programs—nothing. Our bill calls on the NCAA, colleges and universities to step up gambling prevention programs on campuses. The

NCAA-proposed bill takes no responsibility.

Thank you.

Mr. STEARNS. I thank the gentlelady.

Ms. BERKLEY. Very gentle.

Mr. STEARNS. Tell us how you really feel.

STATEMENT OF HON. TOM OSBORNE

Mr. OSBORNE. Thank you, Chairman Stearns, Ranking Member

Towns and members of the committee. It’s a pleasure to be here

today. It’s a pleasure to be with Congresswoman Berkley and I

must say that some of the things she said I would agree with, but

not all. So we’ll emphasize some of those points.

I’m currently a co-sponsor of the Student Athlete Protection Act,

H.R. 1110 which deals with gambling issues and that will probably

comprise the majority of my remarks. I understand there is interest in commercialization which I’m interested in and agents and

I’m interested in that too and I’ll be glad to answer questions regarding those issues.

First of all, as far as gambling is concerned, it’s bad for the

game. I think most everybody who has followed athletics can harken back to maybe the Black Sox scandal, what it did to major

league baseball, NYU, CCNY basketball scandals in the 1950’s,

University of Kentucky.

In the 1990’s, there were four major intercollegiate scandals involving intercollegiate athletics that involved gambling. Those four

scandals were more than the preceding 50 years combined. ASU,

Arizona State, was involved in one of those and in that investigation it was proven that $1 million of the gambling was bet legally

on intercollegiate athletics in the State of Nevada. I know a good

deal about the NFL. They’re scared to death of gambling. They

have several investigators in almost every major city and the

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NCAA, of course, is concerned as well because of the integrity of

the game.

Second, gambling is bad for the coaches. You have to win twice.

You’ve got win once on the scoreboard and then you’ve got to beat

the points spread. A lot of times in substitution it’s difficult because if you know the game is secure, but you haven’t beat the

point spread, a lot of folks don’t want to see a second and third

team in there. They don’t want to see you kneel down on the ball

when you can make another touchdown at the end of the ball game

and beat the point spread. And of course, that’s not in the best interest of the athletes and not in the best interest of the game and

not in the best interest of the coaches.

We often hear that there are many coaches and players who really favor legalized gambling in athletics, but they’re just afraid to

speak out. I have no—the NCAA has no influence over me at this

point. I’m out from under whatever surveillance they may have.

There are literally hundreds of coaches and thousands of athletes

who have played who are no longer governed by the NCAA and

they’re certainly free to speak their minds. But as I’ve talked to

people over the years I have run across none that I can think of,

now there may be somebody out there who thinks it would be good

for the game to have legalized gambling, but it certainly is a very,

very small minority if it exists at all.

Third, I would say gambling is bad for the players. As many of

you know, the first mistake that a player makes is betting on another athletic contest, probably isn’t his own. And he loses some

money and then pretty soon he decides well, you know, we’ve got

a great team and we can win for sure this week and I know how

practice is going, so I’m going to put down a bet on my own team

and double up and I’m going to get even again and then you double

up again and pretty soon you’re in the hole so far there’s no way

you can work your way out of it. And then there’s only one way

to get out. And the bookie or whoever is running the sports betting

will say well, all you’ve got to do is help us out a little bit and

you’re going to be okay. And so many players get sucked into the

issue, a few get caught, probably a lot of them don’t get caught.

Gambling certainly adds pressure to the players. If your team is

10 point favorite and you’re ahead by 9 and there’s 2 seconds left

in the game, the game is won. And you’ve got two free throws.

Those free throws are very meaningful because it may mean thousands of dollars or even millions of dollars, if you make them or

don’t make them. So that adds pressure.

The other issue is the fact that there’s always hate mail. We had

a guy who was a good player, had great promise. He fumbled the

ball in a critical game and we lost the game, first game we’d lost

in many games and he received so much hate mail, negative phone

calls and so one. Some of it was regarding gambling and the guy

was never the same. He never wanted to be in that position where

he pulled the trigger again. He played, he did all right, but it took

the heart out of him. So it does put pressure on players and it’s

unnecessary.

Let me last just address a loophole and I have great respect for

Congresswoman Berkley and others from Nevada and I understand

some of their concerns. And yet, gambling is illegal in intercolleVerDate 11-MAY-2000 09:34 Apr 23, 2002 Jkt 000000 PO 00000 Frm 00016 Fmt 6633 Sfmt 6602 77989.TXT HCOM1 PsN: HCOM1
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giate athletics, amateur sports in 49 States. In one state, it is legal.

Would the Congress, would the government say it’s okay to counterfeit money in one State and not in 49 States?

It has no effect because it’s only in this one isolated instance.

Well, obviously what goes on in one state, if it is legal, can have

an effect on the other States. And that’s exactly what happens in

gambling. If you’re a small time bookie and you don’t have a whole

lot of resources and you can maybe lay off $50,000 worth of bets

and you’ve got Florida, Florida State football or you’ve got North

Carolina and Duke in basketball and the action is getting pretty

heavy in the dorm or wherever, and you can see where it can get

to be $100- or $200- or $300,000, well you can lay those bets off

in Las Vegas legally at this present time. The $1 million that went

down on the ASU bets was bet legally in Las Vegas. And so to say

that that doesn’t have any effect on what happens in the other

States is not accurate. It is accurate. And so what kind of a message have we sent?

Have we said we really don’t think this is a good activity, it’s

really not good for the sport, it’s not good for the players, not good

for the coaches, but yet we’re going to give this exemption here.

And so that’s what I don’t understand what kind of a message

we’re trying to say and why we would provide that exemption or

that loophole. Again, there may be good arguments, but I’m not

real sure what they may be.

And last, let me just say that I would like to thank the members

of the committee for giving me this opportunity to testify. I’ll be

very happy to—I’m very interested in agent issues. I have some

strong views on that. I have some very strong views on commercialization. The fact that we’ve now gone to 12 games, actually, in

intercollegiate football and when I started out there were 9 and

we’ve got a lot of guys that are going to be playing 14 games this

next year. So that’s obviously for a profit motive. I am not always

a big fan of the NCAA. I don’t think I’m quite as negative as Congresswoman Berkley. I see some good things in the NCAA, but I

certainly will try to maintain an objective stance and I’d be glad

to answer any questions that you might have.

[The prepared statement of Hon. Tom Osborne follows:]

PREPARED STATEMENT OF HON. TOM OSBORNE, A REPRESENTATIVE IN CONGRESS

FROM THE STATE OF NEBRASKA

Thank you Chairman Stearns, Ranking Member Towns, and Members of the

Committee. I appreciate the opportunity to come and speak with you today about

something that is near and dear to me—the effects of legal gambling on college

sports.

In my 36 years as a coach of the University of Nebraska football team, I witnessed first hand the negative impact gambling can have on college athletics. The

following observations are based upon some of the experiences and insights gained

in coaching.

A) Organized gambling is bad for the game. The emphasis goes from that of appreciation for excellence and skill to point spreads and monetary gain. The best interests of athletic competition are served in an atmosphere that is conducive to good

sportsmanship and respect for opponents. Gambling creates an environment antithetical to wholesome competition and sometimes creates doubt as to the integrity

of the contest.

B) Organized gambling often has a negative impact on the fans. The point spread

is an arbitrary number that supposedly reflects the true strength of competing

teams. Fans with money tied to the arbitrary point spread derive less pleasure from

the spontaneity of sports. Rather than the excitement of the unpredictable nature

14

of sport, gamblers want the anticipated outcome that the point spread determines

days before the game. Sometimes the point spread is based on inaccurate or incomplete information. Point spreads are published in nearly every newspaper and are

mentioned on television and radio newscasts to the degree where fans’ expectations

are largely shaped by information from the gambling industry. If a team is favored

by 28 points and wins by three, in the minds of many fans the win is really a loss.

If, on the other hand, a team is a 21-point underdog and only loses by seven points,

the loss is viewed in a more favorable light. I recall talking to some fans whose team

had just won the first national championship in school history, yet, rather than

being excited they were disappointed because their team, a 17-point favorite, had

won by only two points. Fans often have a difficult time seeing the athletic contest

for what it was meant to be, that of a contest of skill, intelligence and endurance,

as they get lost in the economics of gambling.

C) Organized gambling is bad for coaches. Many times the coach is expected to

win twice—once on the scoreboard and once by beating the point spread. A coach

in charge of a team listed as a 35-point favorite starts the game behind 35-0 in the

minds of the gambling community, which includes a high percentage of fans. If the

coach’s team is heavily favored and is tied at halftime, there is a good chance that

the team and the coach will be booed at halftime. Most of the truly ugly incidents

that I encountered in my coaching profession were related to gambling. I have had

a mailbox blown up, a few death threats, obscene phone calls in the middle of the

night, and have heard the very common complaint that ‘‘I cost someone x amount

of dollars.’’ Since we did not beat the point spread, the person who lost the bet held

the coach personally accountable for the gambling loss. Many times it is highly unpopular with fans to substitute second- and third-team players once the outcome of

the contest has been decided if the point spread has not been beaten. The secondand third-team players need the experience and greatly appreciate the opportunity

to play yet their appearance in the game is not greeted with enthusiasm if it might

jeopardize beating the point spread. Similarly, not scoring a late touchdown or basket by letting the clock run out is viewed with great displeasure if there are point

spread implications.D) Organized gambling is bad for the players. There is a huge

amount of gambling on college campuses. This activity is heavily influenced by point

spreads. Very few athletic contests are viewed as even matches; therefore, point

spreads are established to provide bookies with a basis for gambling odds. Gambling

intensifies pressure on athletes. The player shooting a free throw with only two seconds left in a game in which his team has been favored by ten points and is leading

by nine is unnecessarily intense. The game is over as far as the win or loss column,

yet making the free throw can result in millions of dollars changing hands.

I coached an 18 year-old young man who I expected would be one of the best players ever in his position. We had won several games in a row, and momentum was

strong. But, in one game he fumbled the ball at a critical point, and despite strong

play by him and the team, we lost the game. The young man received hate mail

and threatening phone calls that permanently changed him. He continued to play,

but he never again wanted to be the player who pulled the trigger. His confidence

was irrevocably shattered.

Players sometimes accumulate gambling debts, and, when a debt grows to a certain magnitude, pressures are put upon the player to alter his/her play in the game

to affect the point spread. A great many of the point shaving incidents that have

hurt college athletics so badly and have left the athletes in dire straights have been

prompted by gambling debts that have mounted to the point where the athlete sees

no other way to pay for the debt. In the 1990s, this country saw more point-shaving

scandals and attempted scandals than the five previous decades combined. The

point shaving scandal at Arizona State University alone involved more money being

wagered that any point-shaving scam in the history of collegiate sports, $1 million

of which was wagered legally in Nevada casinos.

The National Gambling Impact Study Commission has weighed in on this issue.

In it’s final report, the Commission recommended a ban on all legal sports wagering

on college athletics. Clearly, it is time to address the issue of protecting student athletes from the growing and increasingly negative influence of sports betting. Amateur sports should be the protected playground of pure athleticism. Ironically

enough, there was a period of time when officials in Nevada agreed that wagering

on college kids is risky business, as they had a ban in place to prohibit sports wagering on Nevada teams. It is my understanding that they did this to protect the

integrity of Nevada’s sporting events. It was only when my colleagues and I renewed

our push for a complete ban on sports wagering did the Nevada Gaming Control

Board change this regulation, thus banning sports wagering on Nevada sporting

events. Obviously, it would seem hypocritical to push for legal wagering on other

15

states’ teams’ while prohibiting this same form of gambling on your own states’

teams.

While I am committed to finding ways to reduce and prevent illegal gambling on

collegiate athletics, I firmly believe that our first step must be closing the Nevada

loophole. Only then do we send the message that gambling on our college athletes

is wrong and puts the integrity of collegiate athletics in jeopardy. Consistency in

this argument is crucial. We would never think to allow one state in this country

to allow counterfeiting, while telling the other 49 states that counterfeiting is illegal.

Imagine the consequences of such a situation, with legal counterfeiting money flooding the rest of the states where this same action is illegal.

I am proud to be an original cosponsor of The Student Athlete Protection Act, H.R.

1110, to prohibit gambling on high school, collegiate and Olympic sports. I understand that this bill is not perfect, and it alone will not eliminate gambling on amateur athletics. However, consistency is key. We cannot continue to say that such

gambling is illegal in 49 out of 50 states. The college presidents, coaches and students who support this legislation cannot benefit financially from this legislation;

the only motivation is to protect the young people and the integrity of the games

they play. If we continue to allow betting on our amateur sports, the only winners

will be the Las Vegas casinos.

Thank you again, Chairman Stearns, Ranking Member Towns and Members of

the Committee, for the opportunity to speak to you today about this very important

issue. It is seldom I get to speak on an issue here in Congress in which I have so

many years of experience dealing first hand with the issue and I appreciate the opportunity to do so today.

Mr. STEARNS. I thank the members for their participation in

opening statements. I think we have a vote now. We have a general

vote and then we have another vote after that, so I think in the

best interest before we start the questioning because I think once

we start all of us do have questions and both of you are sort of experts in your areas that you’re talking about. So we just feel it

would be very helpful to be able to have the time, so we’re going

to adjourn the subcommittee and come back after the two votes. It

should probably be in about 10 to 20 minutes. So the committee is

adjourned until after the two votes.

[Brief recess.]

Mr. STEARNS. We’ll reconvene the hearing and the ranking member is on his way so I’ll start with the gentle lady from Las Vegas.

My question would be what percent of sports wagering in Nevada

is on college sports? And then the follow up question would be if

it’s very small, relatively insignificant, I mean why doesn’t Nevada

abolish it? I think those are probably the first leading questions

that you probably could anticipate us asking.

Ms. BERKLEY. Thank you, Mr. Chairman. Let me answer your

question this way. Three hundred eighty billion dollars is bet illegally every year on collegiate sports, that’s illegally. Two billion

dollars is bet legally in the Nevada sports books where you have

to be 21 in order to place a bet and it’s of course, needless to say

a very well regulated industry on the State and local level.

To answer your second question, if that’s the case and it’s such

a small percentage of the betting in the United States, why is it

that we fight so vehemently to retain it? I would answer it two

ways. One is economically. Right now after 9-11, after the tragedy

that this country has experienced, within 2 days after the attack

on the World Trade Center and the Pentagon, 20,000 people were

laid off in my District alone. Needless to say, we have a touristbased economy. When people stop flying and stop coming to Las

Vegas, 20,000 lost their jobs. We are experiencing tremendous economic displacement now in Las Vegas.

16

Mr. STEARNS. Still?

Ms. BERKLEY. Still. Now I will say that there have been some rehires, but it’s nowhere near where it once was and a lot of people

are going back on as an as-need basis which means they don’t get

their benefits. So my District has taken a terrible economic hit

after this attack.

The second thing it’s a bit of a principle and a States’ right issue.

The State of Nevada regulates its gaming industry including betting on sports activities in a very well regulated atmosphere, both

on the State and local level and you do have to be 21 in order to

place a bet. Now I will say that if you’re betting from your dormitory at the University of Arizona, you don’t have to be 21 to

place a bet, you can do it right from the comfort of your own dorm

room. And that’s betting illegally.

Mr. STEARNS. You said there was going to be two reasons. One

was the economy.

Ms. BERKLEY. The second was a States’ rights issue.

Mr. STEARNS. States’ rights issue. Okay.

Ms. BERKLEY. We don’t believe the Federal Government should

impose its will on the State of Nevada when it comes to this issue

where we are well-regulated and well-taxed on the State and local

level.

Mr. STEARNS. And Tom, basically, you believe—why do you believe betting on collegiate sports should be abolished, I guess,

would be—should all sports wagering, professional and amateur be

also banned?

Mr. OSBORNE. I’m not a big fan of gaming on athletics, in general, but I do believe that probably professional athletes are a little

bit different realm. I believe, as I mentioned the NFL and I believe

major league baseball, NBA are scared to death of some type of

gambling irregularity and you can see what has happened to Pete

Rose, whether you agree or disagree with Pete’s stance, what happened with Paul Horning and others, just examples of how fearful

they are that the integrity of the game is going to be compromised

by gambling. But I think when you’re dealing with young men who

basically at best have room, board, books, tuition and fees, that you

wouldn’t subject them to that additional stress and pressure. It’s

not fun for the coaches, but we get paid and we take the heat and

that’s part of the deal. But I guess philosophically, regardless of

amount, I can’t understand why we have the inconsistency of 49

States being regulated one way and one State not being regulated

and I think that sends a very powerful message to people around

the country as to what’s acceptable and what isn’t. So maybe some

can explain that to me, how we can resolve that, but that’s probably my biggest concern.

Mr. STEARNS. In your opening statement you talked about point

spreads and how that would have an effect. Let’s say we abolished

the idea of gambling, would still allowing point spread have an impact in your opinion?

Mr. OSBORNE. Well, of course, point spreads are what make it attractive, what make gambling possible because there are very few

athletic contests that are perceived as dead even, straight up. So

in order to have some type of a bet, if Florida State is playing Duke

in football, it’s going to be a 35 point difference and if Duke is playVerDate 11-MAY-2000 09:34 Apr 23, 2002 Jkt 000000 PO 00000 Frm 00020 Fmt 6633 Sfmt 6602 77989.TXT HCOM1 PsN: HCOM1
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ing Florida State in basketball, it’s going to be 20 to 35 points the

other way.

Mr. STEARNS. So the point spread increases the idea of gambling?

Mr. OSBORNE. I think it does and as many people in Las Vegas

will tell you, the point spread isn’t set in Las Vegas, it’s often set

by Danny Sheridan and others who do not reside in Las Vegas, but

I do believe that the point spread is very difficult because if as a

coach you’re favored by 35 and you win by 21, many people see it

as a loss. And that’s unfortunate. And it does have something to

do with how some people play the end of the game, if they haven’t

beat the point spread they’re going to keep the first team in there

and that’s unfortunate.

Mr. STEARNS. My time has expired. The gentleman from New

York?

Mr. TOWNS. Thank you very much, Mr. Chairman. Let me ask

you a couple of questions about the voluntary practices. Wouldn’t

it just be better if you can practice any time you want to practice,

rather than have a voluntary kind of practice which is not voluntary.

Mr. OSBORNE. Well, I don’t know too much about those, Mr.

Towns, because what we did was he had summer conditioning, for

instance, and that was strictly voluntary. We had a lot of players

who did not participate. The biggest motivation, I think for players

to be there, was that they knew that if they weren’t there that

somebody in their position was there. But you have some type of

conditioning program. You can’t just go out and start playing in

August and expect those guys to be ready to play. You have to

weight training. You have to running. You have to have conditioning. Of course, many of the deaths that occur every fall occur

from players who have not done proper conditioning and all of a

sudden they’re out there in full pads and it’s 110 degrees and the

humidity is 90 percent and they just can’t handle it. So I’m sure

there are places where involuntary is not involuntary. And I just

don’t know much about that, but there is great pressure internally

within a football team to be competitive. If you’re battling for a

starting job and you know that your competition is going to be

there working hard, it’s kind of hard for you not to show up too.

But we did not demand that players be there, but they generally

were.

Mr. TOWNS. Let me ask it this way then. Shouldn’t they have

health coverage, if they show up either way?

Mr. OSBORNE. As far as I know all of our injuries, anything that

was done was covered. If a player got hurt in the off-season, we

certainly paid for his surgery and we did everything that we possibly to make sure he was rehabilitated. So we didn’t treat an offseason injury any different than we did an in-season injury.

Mr. TOWNS. Let me ask you this, gambling is going to take place.

Wouldn’t it make more sense if the NCAA would spend some

money in enforcement and to be able to deal with it that way? It’s

going to take place.

Mr. OSBORNE. Well, I think the NCAA does send some folks out

and the greatest enforcer that they’re counting on is the coaches

and every coach that I know of is scared to death of a gambling

irregularity, somebody getting to one of his players. Northwestern

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is an example of a team that has great academic standards, normally impeccable credentials and yet you have one or two guys who

got involved in a spread and it was a horrible thing for their football program. And so we talked about gambling at Nebraska probably 8, 9, 10 times a year. I brought Art Schleester in one time.

Art was a guy who had gambling problems, was in jail, in prison

and he was sent out to speak to college teams. And he made some

impression on our players about what was going on and how difficult it was about a year later after he was at our campus he was

back in jail again. He relapsed. So a gambling addiction is every

bit as bad as an addiction to alcohol or drugs. In some ways, people

just really have a hard time letting go of it.

Mr. TOWNS. According to my understanding that the NCAA spends $263,000 on enforcement out of a $345 million which is peanuts. It doesn’t seem to be a serious commitment there.

So Congresswoman Berkley, we talked about it earlier and let

me just say your testimony, I think you’re very passionate. There’s

no question about that, but we just heard Coach Osborne, Congressman Osborne just indicate the fact that there is coverage for

people that volunteer to practice. Is that just something that happens maybe at Nebraska and no where else?

Ms. BERKLEY. Well, with all due respect to the Congressman, the

reality according to NCAA rules is that it can’t provide health insurance or any other benefit to a student athlete, to a player, unless it is provided to all of the other students on that college campus. So even though the players’ needs might be dramatically different than the other 20,000 students on the college campus, by the

NCAA antiquated rules, they can’t provide anything to the player

that they don’t provide to everybody else.

Mr. TOWNS. Right, so if a player is going to participate regardless

of whether it’s voluntary or whether or not it’s a called practice,

they should be covered.

Ms. BERKLEY. I believe that is absolutely correct.

Mr. TOWNS. Let me ask you a question about the gambling. Gambling is going to take place regardless, so what do you think the

NCAA should do in terms of enforcement?

Ms. BERKLEY. Well, when we know that they spend 1⁄100th of 1

percent on anti-gambling programs throughout the United States

on each and every one of their member institutions, I think that

demonstrates to me in a very profound way that they really are not

taking this issue very seriously and again, they would rather

scapegoat other—State of Nevada, legal gambling and so forth and

so on, rather than taking care of their own problem. And I believe

in institutional control. If these players know when they’re getting

recruited and when they come on the college campus, that gambling will not be tolerated and if they are caught gambling, they’re

going to (a) lose their scholarship, lose their place on the team and

be booted out of school. I will submit to you that this gambling

problem will be eliminated quite rapidly. The stakes are extremely

high and the NCAA and the member institutions have been looking

the other way for years in order to avoid a controversy and a problem. But if I could—I just wanted to clarify something that the

Congressman said earlier regarding the scandals in basketball in

years gone by and point out, because he pointed out the Arizona

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State scandal. The only way that the Arizona State scandal was

uncovered is when the—it was uncovered by the Las Vegas sports

books when they noticed that there was a discrepancy in the betting and the Las Vegas books reported it to the FBI and that’s how

that scandal was uncovered. And the FBI will tell you and they

have testified that it’s the Las Vegas books that point out the scandals and that’s how the FBI is able to uncover them.

Mr. TOWNS. Thank you. My time has expired.

Mr. STEARNS. I thank the gentleman. The gentleman from Tennessee, Mr. Bryant?

Mr. BRYANT. Thank you, Mr. Chairman, and I too add my appreciation to both witnesses who are very qualified to testify on the

relative positions today.

I do think, and I’m going to ask Coach Osborne in a minute if

he could comment a little outside the gambling realm on sports

agents and perhaps his concept of somehow athletes and college

being paid, but I do want to get back to the gambling and make

a couple of comments. I am concerned about the NCAA and their

quite a bit of bark about being opposed to gambling in any form,

but yet as has been pointed out by several members today and also

Ms. Berkley from Las Vegas, there’s very little real bite of the

NCAA, if you look at their budget and how much they commit to

actual enforcement or ferreting out or prevention of whatever you

might want to do if you’re really opposed to gambling at that level.

And I would encourage and I would hope as we’re in and out today

going to other Panels, I may not be here for Panel 2, but I would

hope that the NCAA witness will testify about that and perhaps

give us an explanation which would somehow explain why they

only spend less than 1/100th of their budget in this area.

On the other side of the coin in terms of gambling in Nevada,

I kind of agree with Coach Osborne on this as that being the odd,

the one State being allowed to do this. I suspect that the percentage of the sports wagering in Nevada is very small. I’ve heard as

low as 2 percent. I don’t think that’s probably significant from an

overall percentage. I don’t think that people are not going to go to

Las Vegas because they don’t have college gambling. I think a lot

of that money will probably migrate to other sports, professional

sports probably. But I would ask Congresswoman Berkley if she

had any studies or any evidence of financial impact on any part of

the tourism or gambling industry, if you would just file that as an

exhibit to the testimony. And I think there’s been a great deal of

discussion there, but my concern is over this idea that I am really

more concerned about high schools now and all the abuses that

have occurred in college, not only in gambling, but down the line

is moving down from colleges, to high schools. Both deal with amateur athletes and I know we can make a lot of jokes about the college players, but unfortunately, you’re almost able to make those

kinds of jokes today about the high school players. My favorite is

that when someone leaves college to go to the pros they take a pay

cut and that didn’t produce a laugh here, but it usually does in

other places. Maybe that just went over everybody’s head.

I do have concern and I still equate college sports more to high

school sports than I do to professional sports because one is amateur and the other is professional. So that’s where I’m kind of

20

drawing this line on whether we ought to have gambling legalized

or whatever on a sport. But again, that’s still a lot to be debated

there.

Coach Osborne, as a Member of Congress, you sort of wear two

hats today and I would like to ask if you could comment on those

subjects of the potential of problems with agents as well as the potential to pay, compensate these athletes over and above the scholarship amounts. I know some of them, I was surprised to hear this,

actually received Pell Grants too on top of the scholarships and I

thought there was some kind of economic test there and I didn’t

know that, but it was recently disclosed in a case we had in Tennessee where we had a young man pay off something with a Pell

Grant and I’m just wondering if you could have some comments on

that for the record.

Mr. OSBORNE. Well, I think first of all as far as agents are concerned, it’s a real problem in that most of the unscrupulous agents

who will call your players at all times of the year, they’ll contact

them as sophomores and juniors and all you can tell them is look,

if you get involved you’re going to lose your eligibility. Sometimes

they approach parents.

One difficult thing right now is that they often will tell them

well, we’re going to get you a special program. We’re going to have

you go to California. We’re going to give you a nutritionist, so once

you leave that campus, you don’t need a degree. We’re going to get

you drafted higher. Well, an agent can’t get you drafted higher, so

it’s been a real problem and it’s something that everyone fights.

Let me also say this. There’s a lot of cynicism regarding Congress. I run into it all the time. Everybody thinks Congress is

bought and everybody here knows that isn’t true, maybe a few or

irregular, whatever, and the same thing is true in intercollegiate

athletics. There have been tremendous strides taken. I know your

legislation regarding the publication of grades, maybe you don’t feel

it’s been done the way it should be done, but everybody that I knew

publicized graduation grades. And I think that’s been a step forward. We have drug testing. There is much less drug use in college

athletics than there is in the student body at the present time. We

have tremendous scrutiny regarding the rules. Recently, we had a

major institution got hit with violations, but compared to what it

was in the 1960’s and the 1970’s and the 1980’s, we have probably

2, 3, 4 percent of the major violations.

I have not in the last 10, 15 years, seen a guy get a car or clothes

or cash. Now I’m sure somebody somewhere has and we’ve seen it,

so don’t for 1 minute think that there has not been progress. When

you talk about several hundred thousand dollars spent on enforcement, the NCAA is us. That’s what I told everybody. Who is the

NCAA? It’s that entity out there, it’s those bad guys. But the

NCAA is the member institutions, it’s the membership that is involved. So you’ve got this tug of war. You’ve got the 30, 40 schools

that are big. And you’ve got 80 or 90 or 200 or 300 that are small.

And so you’re always fighting for who’s going to get their share of

the pie.

As far as scholarships are concerned, the one thing that I would

recommend is that we have the scholarship go not to the cost of

education, but cost of attendance because cost of attendance is

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roughly $3,000 more than room, board, books, tuition and fees because you have some transportation, you have some clothing, you

have some minimal entertainment. And I would say most college

athletes, the majority live well below the poverty level. The cynical

view again is that these guys are getting paid off and believe me,

if they’re getting paid off, I don’t know about it.

So anyway, the agents are a problem. I think that we should do

something about scholarship. I agree with that very wholeheartedly

and have for a long time.

Mr. STEARNS. The gentleman’s time has expired. The gentleman

from Tennessee, Mr. Gordon.

Mr. GORDON. Thank you. As I mentioned in my opening statement, the situation in many States now is that an unethical sports

agent can approach, solicit kids to leave to give them some type of

gift and then wind up with the student losing their eligibility. Oftentimes, the schools are penalized and yet there’s no penalty for

the sports agent. As a matter of fact, there’s probably an incentive

to once you lure them out, you get them in trouble, then they can’t

go back. So my legislation would correct that.

I guess a couple of questions, Mr. Osborne. One is how much of

a problem do you think that is, and second, do you have concerns

or what are the pros and cons about having a Federal uniform legislation, rather than State by State? I’ll yield to you.

Mr. OSBORNE. Well, I have not seen the particular language.

Maybe at some point I did, but I don’t remember what you have,

but it has been thrown back on the States. We tried many times

in the State of Nebraska to get some type of legislation passed and

we always had some folks who were saying well, these guys are

being exploited and if they can get a little extra money from an

agent, they ought to be able to take it and of course that’s absolutely ludicrous. And so I philosophically am much in favor of what

you’re talking about. I think we ought to have a uniform standard.

Some of the—a lot of the people who are agents are honorable, but

we have an awful lot of dishonorable people and many of them

have no professional qualifications. They have no expertise as a financial manager. They have no experience in contracts. They’re not

attorneys and I don’t think you always have to be an attorney in

that line of work, but there ought to some minimal standards that

an agent should meet and right now there aren’t any in most

States. And certainly there should be some ethical considerations

where if a player is coerced into an illegal contract, there should

be a period where he can opts out, where he can get his eligibility

back. The agent would be punished. I agree totally.

So I don’t think you’re going to have any argument with me in

what you’re proposing.

Mr. GORDON. Even if a State has a law protecting against these

types of unethical sports agents, what happens if the athlete goes

back to his home State and they don’t have that or if you have a

road trip and you’re going to another State that doesn’t have it,

then they can talk to them at that time. So I think clearly there

are problems here. There’s been an attempt to have a uniform legislation, yet we see no more States covered now than we saw earlier.

22

Mr. OSBORNE. I agree and I remember one time we were down

at the Orange Bowl in Miami and the starting quarterback, I was

looking for him and we were just getting on the bus to go to the

game and here he was sitting on a couch in the lobby and on each

side of him was an agent and this guy has got to go out there and

play in 2 hours and he’s got an agent in one ear and an agent in

the other ear. I was not real happy, obviously, at that point and

the guy didn’t court these guys. They just came up and they were

waiting for him when he came out of the elevator. And these guys,

if we had a law in Nebraska, might be exempt, I don’t know, depending on how it was written because this was in Miami, Florida.

So I do believe that there would be some, and I guess this would

be in violation of the NCAA wishes, but I would like to see a national standard.

I think we’ve got to be careful that we don’t try to legislate too

much. I think there’s that tendency in Congress to want to legislate

everything, but I would certainly like to see some kind of national

standard on agents.

Mr. GORDON. The only halfway credible argument that I could

think that the opponents would have and the only opponent of

course is the NCAA is that this is a camel’s nose on the tent, if

you do this, then what else is the Federal Government going to do?

Are they going to say that it takes 11 yards rather than 10 yards

to get a first down? Do you have concerns about that camel doing

anything here?

Mr. OSBORNE. Well, I guess that’s always a concern. I’m not a

libertarian, so I trust Congress to do the right thing most of the

time, but I do see some problems in the present system. We have

relied on the States. The States haven’t come through uniformly

and I think it would be very helpful if we did have a uniform

standard nationwide, so I would like to see your language and I’m

quite certain I would be very favorable to what you’re talking

about.

Mr. GORDON. Thank you.

Mr. STEARNS. I thank the gentleman. Mr. Terry?

Mr. TERRY. This is a question to you, Coach, first. There was a

statement made that coaches aren’t allowed to speak on NCAA

matters. Did you ever feel as a coach that you weren’t allowed to

speak on behalf of students? I know that you couldn’t, in Denver,

criticize the referees. I did that, but how about just various policies

to help students? I remember you being somewhat vocal on matters

of students’ rights. Did you feel that the NCAA muzzled you when

you were coach?

Mr. OSBORNE. No, I don’t think so. I felt very free to speak on

any issue. I think the idea being that some folks have not come

forth on the gambling issue who may be favorable toward gambling, but whatever, they want to avoid the stigma. They’re afraid

of retribution from the NCAA. And that may be. Maybe we can find

some folks out there, I don’t know. I haven’t run into them, but I’m

sure that Congresswoman Berkley may know of some. But I would

say the overwhelming number of coaches and players would say

that gambling has really not been very helpful and has probably

been very harmful to intercollegiate athletics and sometimes in

high school because some of the most pressurized situations that

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you’ll find down in the Gulf Coast of Texas where everybody,

they’re betting their paycheck, you know? And when your week’s

paycheck is up for grabs on the high school football game on Friday

night, Raymond Barry’s dad was a high school coach down there.

He said I coached NFL and he said I’ve never experienced pressure

like my Dad did. So gambling affects all of us and certainly the

high school athletes as well.

Mr. TERRY. That kind of leads or dovetails into my next question

for you to expand on one of the comments that you made and

there’s at least one member of the audience that was very emphatic

in their facial expressions, disagreeing with the comment about

laying off or hedging with legal bets in Las Vegas and the State

of Nevada and that there is a connection to the black market, underground bookies and a connection to those people in Las Vegas.

And when I was at the University of Nebraska in the early 1980’s,

there always seemed to be the frat house bookie. I was never in

a frat, but they were pretty common on campus and when I talked

to one of them about how they transact business because I was

very curious, he told me exactly what you said they do and that

they get to a certain level, then they lay off and then they lay off

and it’s the big dollars somehow get to Las Vegas. Would you explain how you learned that process or why you feel that it is connected to legal gambling and then Shelley, if you would like to follow up and say your experience, why you think the two aren’t related. But I’ll let Coach go first, since he’s a Nebraskan.

Mr. OSBORNE. We had a guy who was a former player and this

was several years after he got out and I always liked the guy and

I thought he had a lot of promise and he got started by going to

Las Vegas and laying down bets. It wasn’t always on intercollegiate

sports, but he would fly out there, he would get money from various people and he’d go out there and bet legally, I guess, for those

people and I’m sure at one point he must have gotten into college

sports betting as well, maybe that was his main activity. So I know

for a fact because he told me that that’s what he did. And he later

spent some time in jail. It was a tragic case because here was a

guy that was very talented and that was, among other things, what

he started doing.

So I do know that there are cases where if somebody is a small

time operator and he can’t cover all the action that that is a possibility to go where it is legal, but no matter what parameters we

talk about, I do not understand the logic of saying we’re going to

do this for this group of people, we’re going to let some school do

more than room, board, books, tuition and fees and all the rest of

them have to do room, board, books, tuition and fees. Why would

we do that? We don’t do that in anything else, so why would we

do that here? It does not pass, it doesn’t bear scrutiny, I don’t believe.

And so—and I think if we’re going to make it legal in Las Vegas

and we want to be consistent, we believing gambling is good, then

let’s do it in every state. Let’s do it one way or the other. Let’s not

do 49 and 1. Let’s do 50 and 0, one way or the other. And I think

that is within the purview of Congress to do that and I think that

should be done because we don’t do that in very many areas that

I know of.

24

Mr. TERRY. Shelley?

Ms. BERKLEY. Let me make it emphatically clear and I know that

the next Panel will probably be able to address this better than I,

but laying off bets is absolutely illegal in the State of Nevada and

if you are caught, you will go to jail. Now, no one is in favor of illegal betting on collegiate sports. As I said, before you came in, $380

billion is spent illegally every single year in this country; $2 billion

is bet through the Nevada sports books where you have to be 21

in order to place a bet and it’s a very well regulated industry in

the State of Nevada.

If you take this to the final conclusion, if you outlaw, if the line

is the problem, well, if it’s not legal in the State of Nevada, the FBI

is not going to be able to discover with the accuracy that they do

now any illegal betting activity that’s taking place and any scandals that are taking place throughout the United States on our college campuses and the FBI can testify to that because they testified last year that they were able to use the Nevada books in order

to detect any illegal activity.

If the line isn’t published in Las Vegas and it is published in the

Caribbean where Coach Osborne said it was, then if the line is the

problem, then not only would you have to ban the line being posted

in the newspapers, then you might as well tell the radios not to

broadcast the games and you might as well close down the television stations so that they don’t broadcast the games and then the

NCAA won’t get the $6 billion that they got from CBS in order to

broadcast the games and you won’t have all of these schools competing for those dollars that the NCAA gives them for winning the

championship and being in the Final Four.

So I don’t think we want to get into that and I certainly don’t

think that Congress wants to start regulating the way people behave in their recreational activities in the United States of America. And in the State of Nevada, collegiate sports betting is an

amenity and a recreational activity that people partake in when

they’re coming to Las Vegas to enjoy a wholesome family vacation.

Mr. STEARNS. The gentleman’s time has expired. Mr. John?

Mr. TOWNS. Would the gentleman just yield 1 minute?

Mr. JOHN. Sure, I’ll be glad to yield to the ranking member.

Mr. TOWNS. I keep hearing this one state. Isn’t it five States that

have the exemption? I think Montana, New Jersey, Oregon and

also Delaware and Nevada makes five.

So it’s not just one. I just want the record to reflect that.

Ms. BERKLEY. The difference is nobody else does it, but Nevada.

Mr. TOWNS. Right. But five States have the exemption. Right,

thank you.

Mr. JOHN. I want to thank the chairman and the ranking member for putting this hearing together. I believe that Coach Osborne

and Ms. Berkley will agree with me that collegiate athletics and

sporting events have changed over the last 10 years and some have

been for the good and some have been for the bad, but I believe

and this is more of a commentary than a question I’d like you guys

to comment on it. I believe that the problems that have emerged,

good problems or bad problems, have really been about commercialization. Let me give you an example. This is a great example

to show you about the money that’s involved in collegiate sports.

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Now it may be not pleasant for my two colleagues from Tennessee

to hear this example, but it’s a good example.

LSU this year happened to have a pretty good year. They were

in the SEC championship game against Tennessee. The difference

between them losing that game and going to the Cotton Bowl and

winning that game and going to the Sugar Bowl was $10 million.

Ten million dollars was the difference, split up between the SEC

schools and the remainder going to the University. When you factor

in the TV contracts, the equipment contracts, I don’t know of a jersey that I don’t see with the Nike swoosh and good for them. And

then you’ve got stadium advertising. I think one of the only

unnamed stadiums that I’m aware of as far as professional sports

in the country is the Louisiana Superdome and that’s about to fall

because they’ve advertised it. But it’s all about the money and I

think that it is something that we need to look at. Everything

trickles from there.

The winning at all costs attitude is what the Knight Commission

Report talks about. And what does that mean? That means we

must win because if we win, we’ll get those big contracts. And I

think that really is where the fertile ground is for the unethical

treatment of or conduct of some of the athletes, some of the schools

that get on probation. And that’s really, I believe, the root of some

of the problems.

I don’t think commercialization is necessarily all bad. There are

some good things that come out of the commercialization of college

sports. We get to see more games with pay per view, you know. It’s

entertainment. I happen to be a very big football fan, so it’s very

good in some ways. But I also believe that it is on the backside that

we need to take a look at. We’ve got amateur status. What does

that mean? I think that the definition may have stayed the same,

literally, but I think it’s taken on a whole different idea of what

an amateur status means and how far you can go.

I think there’s a whole realm of issues here to deal with. This

is the year 2002 and times have changed and maybe we need to

change some things about the way we deal with all of this.

One question that I have as a result, involves gambling. Do we

know the scope and the magnitude of illegal betting in this country

as a percentage of the total bets we’re coming off the heels of a

Super Bowl and that happens to be from what I am told, one of

the biggest gambling sports days of the year because most folks

that may not legal or illegal put a bet on a ball game, will do it

on the Super Bowl because of all the pomp and circumstances that

happen.

Do we know the scope of that? I’m curious, dollar amounts. I

mean I don’t know the answer to that. Maybe it’s a question for

the next panel.

Mr. OSBORNE. I don’t know that anybody knows. If it’s illegal, it’s

not made public and I’m sure there are estimates and I’m sure

folks on the other panel and maybe Congresswoman Berkley can

give you some figures. I could not do that.

Mr. JOHN. And I apologize, I understand that maybe this question was answered earlier. Go ahead, Shelley, I’m sorry.

Ms. BERKLEY. Okay, I actually did mention it, but I’m glad you

brought it up again. According to the FBI, approximately $380 bilVerDate 11-MAY-2000 09:34 Apr 23, 2002 Jkt 000000 PO 00000 Frm 00029 Fmt 6633 Sfmt 6602 77989.TXT HCOM1 PsN: HCOM1
26

lion is bet illegally in this Nation every year and $2 billion is bet

legally in the State of Nevada, but if I could direct your attention

to H.R. 641, one of the provisions of 641 is that we actually conduct

a study to see the depth of the problem and what we can do in

order to fix it before we pass any legislation that outlaws legal

sports betting in the State of Nevada where it’s only legal and

practiced in one state. So I would submit that if we pass and perhaps with the NCAA support, H.R. 641, that we can conduct studies, do an investigation and find out the depth of the problem, what

we’re talking about before we try to fix something that we don’t

know what it is we’re trying to fix.

Mr. JOHN. That’s my follow-up question. This is nothing new. I

mean sports betting has been around for quite a while. I guess the

bottom line answer is there’s some legislation out there. Should we

make all sports on collegiate betting sporting events illegal? Okay,

let’s look at that from a standpoint of if we do that, does it solve

our problem and I’d like for either one of you to answer that. I

mean if we make it illegal, does it stop the, as my friend from Nebraska says, the frat bookies? Because they were there in 1980

when I was at LSU.

Mr. OSBORNE. No, it isn’t going to stop that. We understand that.

And we’re not going to stop counterfeiting. At one time we couldn’t

stop bootlegging, but the question is what is the national stance?

What are we going to do? What is the standard? This is the body

that’s supposed to set the standards and are we going to say okay,

we give you a pass and we don’t give you guys a pass. That’s the

thing that I can’t understand.

One other thing I might mention is that until, I believe, this last

year, it was illegal in the State of Nevada to bet on teams from the

State of Nevada in Nevada. Now somebody might have recognized

the fact that there was the potential for great harm here. Now once

this began to come to light and this legislation was brought forward, then that loophole or that was plugged and they began to say

we can bet on our own teams, but for a period of time, they could

not bet on Nevada teams in Las Vegas or in Nevada and I think

because people recognize that there are some inherent harms. And

the reason I am here today is that there were four major scandals

on college campuses in the 1990’s and that was more than we had

had since 1940 combined. And so it is a huge problem and if Congress is going to sit here and look the other way to some degree

and I grant you that there’s a lot that’s going on on college campuses and we’re not going to put it out, but do we let that go in

one State and send a signal that it’s okay? And the last thing I

would mention is this. The mention has been made that the FBI

says well, this is a valuable took that we have Las Vegas that we

can go to because that’s the tip.

I would like those who follow to give us some data as to how

many cases actually were uncovered by the FBI because my understanding, it’s usually because somebody talked. And it may be a

case where the FBI picked up on some unusual odds, but I believe

in the great majority of cases that has not been the case, but that

is my conjecture and I may be wrong.

Mr. JOHN. Coach, real quick, and I know I’m pretty much out of

time, but if the chairman——

27

Mr. STEARNS. Go ahead, Mr. John.

Mr. JOHN. [continuing] will give me a little latitude here. The

four incidents that you referred to in the 1990’s, is there any way

to connect them to commercialization or the money in sports or

gambling? Or were you specifically talking about gambling situations?

Mr. OSBORNE. These were gambling situations.

Mr. JOHN. They were all gambling situations?

Mr. OSBORNE. Yes.

Mr. JOHN. They didn’t have to deal with students getting cars

and jobs and other things?

Mr. OSBORNE. They were point shaving and that type of thing.

As I said—— Mr. JOHN. Are there still incidents to your knowledge in schools

where violations and probation arise out of commercialization and

the money that’s involved in college athletics?

Mr. OSBORNE. As I mentioned earlier, my experience is that the

number of outright violations of cars, the clothes and the cash, that

type of thing,k has decreased dramatically. I would say by 90 percent. After SMU got the ‘‘sudden death’’ penalty in 1985, I didn’t

see—we recruited nationwide. Most schools recruit in two or three

States. We recruited everywhere. And so we had a pretty good feel

as to what was going on around the country. We didn’t know everything, but I can honestly say we went about 10 years there and I

didn’t think that I had a player bought away from us.

Mr. JOHN. That’s because of the enforcement or the recognition

that it was happening?

Mr. OSBORNE. Well, I think the ‘‘sudden death’’ penalty sent

quite a signal. SMU was shut down for 2 years. They didn’t play

a game. And when that happened, I think people realized that this

was serious business. Most coaches now have written into their

contract, that if they knowingly violate the rules, they’re gone. And

they get no compensation. That’s very appropriate.

Mr. STEARNS. The gentleman’s time has expired.

Mr. JOHN. I thank the chairman.

Mr. STEARNS. Mr. Pitts.

Mr. PITTS. Thank you, Mr. Chairman. Thank you, Representative

Berkley and Representative Osborne for your testimony. Representative Berkley, you mentioned that $380 billion is wagered illegally in sports betting according to the FBI. Do you know

how much of that is wager illegally for collegiate sports?

Ms. BERKLEY. That is the collegiate sports amount.

Mr. PITTS. $380 billion. Do you know how much is wagered on

professional sports illegally?

Ms. BERKLEY. I do not know. I could—$380 billion is bet illegally

in this country every year. About a third of that is bet on collegiate

sports.

Mr. PITTS. One third on collegiate. Do you know what percentage

of legal sports wagering is for collegiate sports?

Ms. BERKLEY. Say that again?

Mr. PITTS. What percentage of legal sports betting is wagered on

collegiate sports?

Ms. BERKLEY. I believe $2 billion is bet legally on collegiate

sports in Nevada’s books.

28

Mr. PITTS. That’s collegiate.

Ms. BERKLEY. Yes.

Mr. PITTS. Thank you. And can you tell us where the majority

of this sports betting is conducted? Is it in local communities? Is

it internationally? Is it off-shore? Do you have—does the FBI know

that?

Ms. BERKLEY. I believe we can provide you the information, but

it’s my understanding that that’s—most of that illegal sports betting on collegiate sports is bet on the college campuses.

Mr. PITTS. I guess I have a couple questions on just the general

welfare of student athletes, either of you can respond. Are the current rules and regulations regarding amateur athletes being adhered to and being enforced. Coach Osborne, you might want to respond. And are collegiate athletes more susceptible to outside influence than professional athletes?

Mr. OSBORNE. Well, yes, I guess my feeling is as far as NCAA

rules there is greater adherence now than there was 20 to 30 years

ago. It’s not perfect, but it’s a lot better than what most people

think. For instance, an athlete is only allowed 20 hours a week at

practice. We have to document that. I mean we could not have 4

hour practices. We never practiced more than 2 hours. And that included the weight room. That included anything that you did. And

at one time, there were kids spending 60 hours a week on their

sport and they had to go to school. And I think that that’s fairly

well enforced. I’m sure there’s people that fudge on it and some

people require some Sunday deal and they don’t count it and they

shouldn’t do that. As far as medical care, somebody mentioned earlier that if you provide it for athletes, you’ve to pay for all the other

students on campus, but I guarantee you, we didn’t give a knee operation to everybody in the University of Nebraska that hurt their

knee in intramural sports. We took care of our players. And that

was perfectly legitimate. And I don’t care what it was, if it was

football-related, they got taken care of and they got the best that

was available. We sent them to specialists. The drug testing, I

think that you’ll find that the number of drug cases in NCAA

sports is probably 2 percent or less. And you won’t find that anyplace else, in high schools, junior high schools or colleges. It is regulated and we got rid of them if they couldn’t handle it.

The graduation rates aren’t what they should be, but the problem is we got those guys sometimes within 3 hours of graduation

and the agent grabbed them when they were done with their eligibility, so we tried very hard to get them graduated before their eligibility was done. And if it’s a 4-year player, you only had 31⁄2

years. And after that, the agents had at them and NFL and all

that type of thing and that really is very difficult.

The other thing is the way it’s computed in graduation rates. As

you probably know, if a player comes to your school, decides to

transfer to another school and then graduates, he counts as a zero

for your school. You bring in 25 guys in football and you have 5

of them transfer and they all graduate, you’re already down to 80

percent because you’ve lost those 5 as far as your graduation rates.

So sometimes those graduation rates are a little misleading. We

did graduate at roughly 70 percent of our players which I thought

was pretty good under the circumstances, but still, anyway, I think

29

that things are relatively good, but the commercialization is huge

and going from 9 games to 12 in football which is standard now

and it’s strictly to make money because football makes money. In

some cases, basketball makes money and you’re having to pay for

Title IX and all of the other sports. And so we’ve had a tremendous

exponentially large increase in sports. We’ve gone from 15 sports

to 21, 22, 23, sometimes 30 sports. And it’s very difficult to pay for

that and football and basketball are basically doing it.

Mr. PITTS. And do you want to comment on the susceptibility of

college athletes to outside influences in comparison to professional

athletes, Coach? Are they more susceptible?

Mr. OSBORNE. Well, sometimes. I mentioned that most college

athletes probably 50 percent live below the poverty line. We’ve had

guys, we make them eat on the training table because if you gave

them the money they would spend it the first 3 weeks and sometimes the last week they were—they didn’t have enough to each on,

so they had to eat on the training table. And so that makes you

susceptible and that’s one reason I say that it shouldn’t be room,

board, books, tuition and fees. It should be room, board, books, tuition, fees, plus cost of attendance which is extra money for travel

and clothing and most clothes that figure is available and runs

around $3,000 extra. The Pell Grant, somebody mentioned that

earlier, the Pell Grant is not over and above the scholarship. It can

be figured in. You can cut down on the scholarship if a walk on

comes and doesn’t have scholarship, he can use a Pell Grant, but

you get up to the room, board, books, tuition and fees.

Mr. PITTS. Thank you, my time is up.

Mr. STEARNS. I thank you. The gentleman’s time has expired. All

questions, I think, have been expired, so we want to thank my colleague, Ms. Berkley and my colleague, Mr. Osborne, very much for

your indulgence and your helping us out in this hearing and we’ll

see you later.

And now our second Panel will come forward. Bill Saum, Director

of Agent, Gambling and Amateurism Activities, the National Collegiate Athletic Association; Mr. Frank Fahrenkopf, Jr., President

and CEO, American Gambling Association; our former colleague,

Tom McMillen from Knight Foundation, the Knight Commission on

Intercollegiate Athletics; and Mr. Ramogi D. Huma, Chairman, Collegiate Athletes Coalition; and Mr. Michael Aguirre, Division I Student-Athlete Advisory Committee of the National Collegiate Athletic Association and Mr. Lennon is available to answer questions,

if you have them.

So we’ll just start from my left and go to my right.

Mr. Saum, we welcome you and look forward to your statement.

30

STATEMENTS OF WILLIAM S. SAUM, DIRECTOR OF AGENT,

GAMBLING AND AMATEURISM ACTIVITIES, NATIONAL COLLEGIATE ATHLETIC ASSOCIATION; FRANK J. FAHRENKOPF,

JR., AMERICAN GAMING ASSOCIATION; TOM McMILLEN, THE

KNIGHT COMMISSION ON INTERCOLLEGIATE ATHLETICS;

RAMOGI D. HUMA, CHAIRMAN, COLLEGIATE ATHLETES COALITION; AND MICHAEL AGUIRRE, NCAA DIVISION 1, STUDENT-ATHLETE ADVISORY COMMITTEE

Mr. SAUM. Thank you, Mr. Chairman. On behalf of the National

Collegiate Athletic Association, I am pleased to have this opportunity to provide the committee with the NCAA’s perspectives on

the impact of sports wagering on college athletics. The NCAA membership has adopted specific legislation prohibiting athletics department staff members, conference office staff members and student

athletes from engaging in sports wagering activities as they relate

to intercollegiate or professional sporting events.

As a sports organization, the NCAA is well aware of the direct

threat of sports wagering that it poses on the integrity of intercollegiate contests. We are all aware of the recent point shaving scandals on the campuses of Arizona State University and Northwestern University. According to Federal law enforcement officials,

more money was wagered in the Arizona State case than on any

other point shaving scam in the history of college athletics. It is important to note that over $1 million was wagered legally in Nevada

casinos in the Arizona State case.

A blanket prohibition on collegiate sports wagering will significantly reduce the outlets available for placing wagers. The NCAA

also supports legislation to clarify the ban on internet gambling.

The proliferation of internet gambling is fueling the growth of illegal sports gambling on college campuses across the country. Federal legislation would make it clear that internet technology cannot

be used to circumvent existing laws which prohibit sports gambling.

The profile of the typical college student who gambles is someone

who believes he or she can control his or her own destiny, is willing

to take risks and believes that he or she possesses the skill to be

successful in their endeavor. In other contexts, these are considered

positive characteristics. These are traits that we recruit our athletes, but this profile is representative of many college athletes and

may, in part, explain why some student athletes are drawn to

sports wagering.

NCAA investigations have revealed that there is a high incidence

of wagering among college students. It is believed that student

bookies are present at every institution. The advent of internet wagering, which now enables college students to place wages over the

internet from their dorm rooms raises even greater concern. There

is certainly no dispute that the impact of sports wagering is being

felt on college campuses across the country.

On June 18, 1999, the federally appointed National Gambling

Impact Study Commission convened by Congress to examine the effects of sports wagering on the American society issued its final report after a 2-year comprehensive study. The Commission’s report

included a recommendation urging all currently legal sports wagering be banned. In making this recommendation the Commission

31

said ‘‘sports wagering threatens the integrity of sport. It puts student athletes in a vulnerable position. It can serve as a gateway

behavior for adolescent gamblers. And it can devastate individuals

and careers.’’

Placing legal wagers on games played by young people should not

be permitted. The existence of any type of gambling, illegal or

legal, on sporting events is a direct threat to the integrity of the

contest. The legally and illegally wagered dollars on college sporting events are thought to be in the billions. Complicating the matter is the money is laundered of illegal sports books through legal

sports books. Steve DuCharme, former chair of the Nevada Gaming

Control Board, is quoted in a February 1999 Sports Business Journal article as saying the following: ‘‘We’ve taken steps to crack

down on the amount of illegal money being laundered through legitimate sports books. We really have no way of knowing how much

is laundered through the legal sports books. Based on transcriptions of wire taps, it is millions of dollars.’’

The NCAA has taken significant steps to address the very real

problems associated with wagering on college sports. The NCAA

has established policies that prohibit sports wagering by college

athletics personnel, student athletes, and we, NCAA, employees.

The NCAA has instituted background checks on men’s and women’s basketball officials. This was done to ensure that the game officials have not been involved in sports wagering issues. In addition, the NCAA sponsors the following: educational programs that

provide assistance to campus administrators to conduct sports wagering workshops, broadcast of anti-sports wagering public service

announcements during games on CBS and ESPN, the production of

a booklet in partnership with the National Endowment of Financial

Education entitled ‘‘Don’t Bet on It’’ and also working with our student athletes on financial management strategies.

Legalized amateur sports wagering in Nevada continues to blunt

efforts of the NCAA and higher education to combat college sports

wagering. The insidious effect of legalized wagering on college

sports has crept far beyond the Nevada State line. By clearly making gambling on college sports illegal everywhere, all the time, we

will strengthen our efforts to maintain the integrity of college

sports. This Nation’s college and university system is one of our

greatest assets. Betting on the outcome of college sporting events

tarnishes the integrity of the sport and diminishes the esteem in

which we and the rest of the world hold the United States’ colleges

and universities. While we recognize that a ban of college sports

wagering will not eliminate all gambling on college sports, it is a

significant start.

Our goal is to protect the student athletes and remove the unseemly influences of sports wagering on our amateur athletics and

the games they play. We look forward to working with you to close

the gap that does not allow legal betting on college sports to continue, but also fuels illegal betting on college games.

Thank you.

[The prepared statement of William S. Saum follows:]

32

PREPARED STATEMENT OF WILLIAM S. SAUM, DIRECTOR OF AGENT, GAMBLING AND

AMATEURISM ACTIVITIES, NATIONAL COLLEGIATE ATHLETIC ASSOCIATION

On behalf of the National Collegiate Athletic Association (NCAA), I am pleased

to have this opportunity to provide the committee with the NCAA’s perspectives on

the impact of sports wagering on college athletics, students and student-athletes.

The NCAA is a tax-exempt, unincorporated association of approximately 1,260 colleges, universities, athletics conferences and related organizations devoted to the

regulation and promotion of intercollegiate athletics for male and female studentathletes. Like many other sports organizations, the NCAA has a clear, direct policy

regarding sports wagering. The NCAA prohibits participation in any form of legal

or illegal sports wagering because of its potential to undermine the integrity of

sports contests and jeopardize the welfare of the student-athlete and the intercollegiate athletics community. The NCAA membership has adopted specific legislation

prohibiting athletics department staff members, conference office staff and studentathletes from engaging in sports wagering activities as they relate to intercollegiate

or professional sporting events. These same rules apply to NCAA national office

staff.

Impact on the Integrity of the Sports Contest

As a sports organization, the NCAA is well aware of the direct threat sports wagering poses to the integrity of each intercollegiate contest. In the early 1950s, the

academic community and the public were shocked to learn that the City College of

New York men’s basketball team was involved in a point-shaving scandal. We are

all aware of recent point-shaving scandals on the campuses of Arizona State University and Northwestern University. The magnitude of these and similar incidents

should not be underestimated. According to federal law enforcement officials, more

money was wagered in the Arizona State case than on any point-shaving scam in

the history of intercollegiate athletics. It is important to note that over $1 million

was wagered legally in Nevada casinos in the Arizona State case. Likewise, in the

Northwestern case, wagers were placed legally in Nevada casinos.

Both legal and illegal sports wagering have been at the heart of nearly every

major collegiate sports wagering scandal. However, the presence of any type of

sports wagering, whether it be legal or illegal, is a potential threat to the integrity

of our contests. We believe that eliminating sports wagering will provide important

positive benefits for intercollegiate athletics. Nevada casinos have been helpful in

monitoring unusual shifts in wagering on college games, but this alone does not ensure protection from point-shaving scandals. In fact, some point-shaving scandals

have used Las Vegas sports books without being detected. A blanket prohibition on

collegiate sports wagering will significantly reduce the outlets available for placing

wagers and, in doing so, will undoubtedly have an impact on the number of individuals betting on the games. The NCAA also supports legislation to clarify the ban

on Internet gambling. The proliferation of Internet gambling is fueling the growth

of illegal sports gambling on college campuses across the country. In 1992, Congress

enacted the Professional and Amateur Sports Protection Act to prohibit the spread

of state-sponsored sports gambling. The intent of Congress in enacting this statute

is being undermined by the growth of Internet gambling. Federal legislation would

make it clear that Internet technology cannot be used to circumvent existing laws,

which prohibit sports gambling.

The influence of sports wagering is far reaching, and sports organizations continually live in fear that sports wagering will infiltrate and undermine the contest

itself.

Impact on Student-Athletes

As director of agent, gambling and amateurism activities, and a former campus

administrator and coach, I am acutely aware of the impact sports wagering can

have on the lives of college student-athletes. I have witnessed students, their families and institutions publicly humiliated. I have seen students expelled from college,

lose athletics scholarships worth thousands of dollars and jeopardize any hope of a

professional career in athletics. In most cases, the scenario is strikingly familiar.

Student-athletes who have begun wagering on sports incur losses beyond their

means to repay and, as a result, become vulnerable to point-shaving schemes. Sometimes they participate in such activities voluntarily in a desperate attempt to erase

their outstanding debt; other times, they are compelled by the threat of personal injury. In the latter cases, organized crime is often involved, and there are cases

where student bookmaking operations can be traced back to organized crime.

The profile of the typical college student who gambles is someone who believes

he/she can control his/her own destiny, is willing to take risks and believes that he/

she possesses the skill to be successful in this endeavor. In other contexts, these are

33

considered positive character traits. This profile is representative of many college

athletes and may, in part, explain why some student-athletes are drawn to sports

wagering.

NCAA investigations have revealed that there is a high incidence of wagering

among college students. It is believed that student bookies are present at every institution. The advent of Internet wagering, which now enables college students to

place wagers over the Internet from their dorm rooms, raises even greater cause for

concern. There is certainly no dispute that the impact of sports wagering is being

felt on college campuses across the country.

National Gambling Impact Study Commission Recommends Ban on College Sports

On June 18, 1999, the federally appointed National Gambling Impact Study Commission convened by Congress to examine the effects of sports wagering on American society, issued its final report after a two-year comprehensive study of all forms

of legal gambling activity.

The commission’s report included a recommendation urging a ban on all currently

legal sports wagering on college and amateur sporting events. In making this recommendation, the commission said, ‘‘Sports wagering threatens the integrity of

sports, it puts student-athletes in a vulnerable position, it can serve as a gateway

behavior for adolescent gamblers, and it can devastate individuals and careers.’’ Placing legal wagers on games played by young people should not be permitted.

The existence of any type of gambling, illegal or legal, on sporting events is a direct

threat to the integrity of the contest. Participants in college sporting events are even

more susceptible (than professional athletes) to outside influences who may attempt

to exert pressures on them to ‘‘fix’’ the outcome of a contest. The development of

new gambling technologies, such as programs designed to allow casino bettors to

wager on each individual play in a game, will undoubtedly increase the likelihood

that college student-athletes will be pressured and enticed into schemes where they

participate in influencing the outcome of a given college sporting contest. We must

remember that these are young people; betting on their performance is unseemly

and inappropriate.

Legal College Sports Wagering Operations Provide Avenue for Illegal Sports Wagering Money Laundering.

The legally and illegally wagered dollars on college sporting events are thought

to be in the billions. Complicating the matter is the money laundering of illegal

sports book dollars through legal sports books. Steve DuCharme, former chair of the

Nevada Gaming Control Board, is quoted in a February 1999 Sports Business Journal article as saying: ‘‘We’ve taken steps to crack down on the amount of illegal money being

laundered through legitimate sports books. We really have no way of knowing

[how much is laundered through the legal sports books]. Based on transcriptions of wiretaps, it is millions of dollars.’’

These are clearly federal law enforcement issues, meriting a federal solution.

Discontinuation of College Sports Wagering Would not Result in a Serious Threat

to the Nevada Economy.

Fears that federal legislation prohibiting sports wagering in Nevada will be a ‘‘serious threat’’ to the Nevada economy are not supported by the facts. In 2000, approximately $2.3 billion was wagered in Nevada sports books. Casinos retained $124

million, approximately 5.33 percent of the total amount wagered on sports. According to Mr. DuCharme, the amount kept by casinos on sports wagering is ‘‘very

small’’ compared to other casino games. Furthermore, the amount wagered on college sports is only a little more than one-third of the total. In an industry driven

by billions of dollars (2000 total casino revenues were $9.6 billion), the elimination

of collegiate sports wagering will have little impact on state revenues or on the casinos’ bottom line. The amount bet on college sports is reportedly only four-tenths of

one percent of overall casino revenues.

The existence of legal sports wagering in Nevada is actually limiting the growth

of the Nevada economy in some regards. Most amateur and professional sports

leagues have policies against franchise location and events staged in Nevada because of the presence of sports wagering.

College Sports Wagering Serves as a Gateway for Youth to Addictive Gambling Behavior—Youth Gambling Problem is a Concern.

We are concerned that legal collegiate sports wagering fuels a much larger illegal

collegiate sports wagering trade, impacting America’s youth at an alarming rate.

Sports wagering is a serious problem among teenagers under the age of 18. A 1999

Gallup Poll reports that teenagers say they start betting on college sports at age

34

10 and bet on college sports at twice the rate of adults. Called ‘‘the addiction of the

90s’’ by the American Academy of Pediatrics, its research indicates that there are

over one million United States teens who are addicted to gambling. A recent Harvard School of Medicine report estimates that six percent of teenagers under 18

have serious gambling problems. In a June report of the 1999 Gallup Poll, 18 percent of teenage respondents said they had bet on college sports, contrasted with nine

percent of adults who wagered on college games. The National Gambling Impact

Study Commission report calls sports wagering ‘‘a gateway behavior for adolescent

gamblers.’’ Prohibiting college sports wagering everywhere in the United States

would send a clear signal that the activity is illegal. In addition, a federal prohibition would put an end to the mixed message to our young people, limit exposure

and reduce the numbers of people who are introduced to sports wagering.

NCAA Takes Concrete Steps to Address College Sports Wagering—Adopts No-Nonsense Policies and Education Outreach Programs.

The NCAA has taken significant steps to address the very real problems associated with wagering on college sports. The NCAA has established policies that prohibit all sports wagering by campus athletics personnel, student-athletes and NCAA

employees. Student-athletes are not eligible to compete if they knowingly provide information to individuals involved in organized gambling activities concerning intercollegiate athletics competition; solicit a bet on any intercollegiate team; accept a

bet on any intercollegiate team; accept a bet on any team representing the institution or participate in any gambling activity that involves intercollegiate athletics

through a bookmaker, parlay card or any other method employed by organized gambling. Similar expectations apply to coaches, directors of athletics and NCAA employees. The NCAA has instituted background checks on men’s and women’s basketball game officials. This was done to ensure that the game officials have not been

involved in sports wagering issues. In addition, the NCAA sponsors the following:

educational programs that provide assistance to campus administrators to conduct

sports wagering workshops, broadcasts of anti-sports wagering public service announcements during the championship games aired by CBS and ESPN, production

of a booklet in partnership with the National Endowment for Financial Education

entitled ‘‘Don’t Bet On It,’’ which educates students about the dangers of sports wagering and acquaints them with good financial management strategies. We also are

currently working to develop research in the area of youth gambling and campus

gambling.

The NCAA and its Membership are Committed to Improving the Student-Athlete Experience

Opponents of an effort to prohibit gambling on college sports in all states criticize

the NCAA for reaping profits from college sports while not investing more in gambling prevention programs. As previously mentioned, the NCAA supports a number

of programs that address the sports wagering issue. In addition, a portion of the

NCAA’s revenues fund programs such as the student-athlete assistance fund, graduate assistance fellowships, life skills education, clinics for disadvantaged youth,

and many other programs designed to support and enrich the college experience for

student-athletes. The NCAA’s 84 championship events for men and women at the

Divisions I, II and III levels are funded through the television rights revenues. However, the vast majority of NCAA revenues are returned to NCAA Divisions I, II and

III member colleges and universities to help support their athletics programs. It

costs $3.4 billion every year for our member schools to provide the more than

335,000 student-athletes with an opportunity to play college sports. The NCAA and

its member institutions continue to examine ways to provide student-athletes with

more support and enrichment opportunities, including gambling-related education,

research and outreach activities.

Conclusion

Legalized amateur sports wagering in Nevada continues to blunt efforts of the

NCAA and higher education to combat college sports wagering. The insidious effect

of legalized wagering on college sports has crept far beyond the Nevada state line.

Even though sports wagering is illegal in nearly every state, point spreads on college games are published in newspapers across the country, bookies are common fixtures on college campuses and new technologies allow bets on college games to be

placed over the Internet or in a casino in innovative ways. The dollars involved are

big and escalating every year. By clearly making gambling on college sports illegal

everywhere all the time, we will strengthen our efforts to maintain the integrity of

college sports.

This nation’s college and university system is one of our greatest assets. We offer

the world the model for postsecondary education. Betting on the outcome of college

35

sporting events tarnishes the integrity of sport and diminishes the esteem in which

we and the rest of the world hold United States colleges and universities. While we

recognize that a ban on collegiate sports wagering will not eliminate all gambling

on college sports, it is a significant start. Our goal is to protect student-athletes and

remove the unseemly influences of sports wagering on our amateur athletes and the

games they play. We look forward to working with you to close the gap that has

not only allowed legal betting on college sports to continue but also fuels illegal betting on college games.

Mr. STEARNS. I thank the gentleman.

Mr. Fahrenkopf.

STATEMENT OF FRANK J. FAHRENKOPF, JR.

Mr. FAHRENKOPF. Thank you, Mr. Chairman, members of the

committee. Mr. Chairman, I’ve wandered the halls of this Congress

for almost 20 years now and prior to that time the halls of my

State legislature in Nevada and I’ve always thought that the basic

test for any proposed piece of legislation is that there should be a

demonstrable cause and effect relationship between the purported

problem to be addressed by the legislation and the proposed legislative action. I think in many ways Congressman John asked questions relating to that. We submit to you that the proposal by the

NCAA in dealing with this issue fails, not only the so-called nexus

test, but more importantly I think they fail the students who they

should be serving. And I’m not only talking about student athletes.

I’m talking about the general student body on campuses.

We accept as valid the allegations of the NCAA, in fact, they’ve

testified not only on the Hill here, but testified twice before the National Gambling Impact Study Commission that every college campus in America has an illegal student bookie on that campus taking illegal bets from students on NCAA sanctioned events. We don’t

argue with that. And with the numbers that many of your questions have already brought out from earlier witnesses, it’s not surprising. $380 billion is a lot of money and I see Congressman Pitts

has left, about one third of that amount is bet on college sports.

And in Nevada, on the 1 percent that’s bet in Nevada legally, it’s

also about the same ratio, one third of the amount that’s bet. And

I want to make clear that in Nevada, not only is it regulated and

policed and taxed as Congresswoman Berkley indicated, and you

not only have to be 21, but you have to be physically present within the State of Nevada. You can’t pick up the telephone from DC

or your home State and call Nevada and place a bet. Physically

present within the boundaries of the State of Nevada. That’s very,

very important and I’ll come back to that in a moment.

Now I’ve always considered Tom Osborne a god. Great coach and

a god to me. In fact, in my old political days I had him testify twice

before the platform committee of the Republican Conventions that

I presided over and I hate to disagree with him, but I do have to

disagree with him on two things. No. 1, there was some testimony

he gave about four incidents in the 1990’s which exceed all the—

you have a packet from us. And in that packet, there’s a chart. It

shows that between 1945 and 1974, there were 42 incidences of

point shaving. There were no Nevada sports books then. Since

then, since 1975, there have only been 4 instances. And the citations are here where you can find a listing of those. So I disagree

with the coach and I think he got bad research from somebody.

36

I also disagree with him on the use of the word ‘‘loophole.’’ He

used that word with regard to Nevada. If you go back and look at

the legislative history in both Houses of this Congress, in 1992,

when PASPA was passed, Nevada and four other States were

granted exemptions. Nevada, the legislative history says because of

their strong history of tight regulation, control and policing and because of its contribution to the economy of the State of Nevada.

Three other States had State lotteries that were using wagers on

athletic events. They were grandfathered. And the State of New

Jersey was given 1 year from the passage of PASBA to decide

whether or not they wanted to put in place legal sports books. So

it was not a loophole in any sense of the word.

Now I don’t disagree with anything else except one other thing

that Coach Osborne said. When he talked about stress and pressure on athletes and coaches, that’s not coming from Nevada. The

stress and pressure on those athletes and coaches are coming from

the illegal bookies that are on those campuses and surround those

campuses, that are out in the parking lot before those games. It’s

not Nevada. And there’s no evidence whatsoever. This is the fourth

or fifth hearing on the Hill that I’ve attended. Some I’ve testified

in in the last 3 or 4 years. Not one single witness has said and

Coach Osborne himself said, that doing away with the legal sports

wagering in Nevada is not going to solve the problem that is being

faced.

The only allegation of any impact whatsoever is that somehow

bets are being laid off. And let me tell you, maybe it was possible

10 or 20 years ago. Anybody who bets $2500 or more on a sports

wager in Nevada where it’s legal has to not only show identification, but has to fill out forms showing Social Security Number and

other information much similar to what we get with our securities

reporting requirements that banks and other financial institutions

have to do, historically, that’s been out there for money laundering

and that you’ve all been with concerned with with the Patriot Act

and some of those things with the Bank Secrecy Act. So they can’t

do that . The average bet in a sports book in Nevada is $50. And

if the total amount being wagered on sports is $380 billion and we

know that 1 percent is being wagered in Nevada, there’s certainly

not much being laid off. If you get law enforcement people in front

of you, they’ll tell you it is not being laid off in Nevada. That small

time bookies lay it off in big cities with other illegal bookies. That’s

where it’s being laid off, not in Nevada. And clearly, the question

of what should be symbolic about whether you like sports wagering

or not, isn’t enough and the Congresswoman touched on it for a

moment. If you in your State have a State lottery that you control,

that you regulate or you have horse racing or you have dog racing,

it all takes place within the borders of your State under the tenth

amendment to the Constitution. And we feel very strongly that

what is going on with sports wagering in Nevada takes place only

within the State, only affects people who are physically present and

there are severe tenth amendment problems.

So what is the right approach? Where can we get the nexus? And

I, Mr. Chairman, would submit that the NCAA actually came up

with solutions. You have in your packets a letter, written by Cedric

Dempsey, the President of the NCAA, to the National Gambling

37

Impact Study Commission. This was at hearings very much like

this where they laid out the problem. The Commission said what

do you recommend NCAA? What should we do to solve the difficulties that you’re talking about? And here it is. Nowhere in this document does it say anything about doing away with legal betting in

Nevada. Mr. Saum testified on two separate occasions before that

Commission and said they had no effort and they were not making

any effort to do away with Nevada, but they did make some suggestions. The NCAA talks about the Commission saying that they

supported doing away with the ban and that’s true. In one of the

only decisions made by that Commission that was not unanimous,

it was a 5 to 4 vote to take that position. And it was based on the

assumption, by those who supported it, if you look at the history,

Mr. Chairman, based on the assumption that if you did away with

the legal sports books in Nevada, that you would do away with the

point spreads and the point spreads would no longer be published

in newspapers of the United States. You also have in your packet

from testimony before the Judiciary Committee of this House, a letter from the American Association—and I’ll finish up real quick—

of Newspapers saying look, it’s constitutional first amendment

right for us to publish them and they don’t come from Nevada. As

Coach admitted, Danny Sheridan who is the leading analyst in the

country and does this points spread for USA Today lives in Mobile,

Alabama, not in Nevada. So the problem is not in Nevada. We believe and we’ve got that chart. I’m not going to go through it now,

my time is up, maybe it’s a question, that Nevada’s part of the solution, not the problem.

Mr. STEARNS. Your time is up.

Mr. FAHRENKOPF. Thank you, Mr. Chairman.

[The prepared statement of Frank K. Fahrenkopf, Jr. follows:]

PREPARED STATEMENT OF HON. FRANK J. FAHRENKOPF, JR., PRESIDENT AND CEO,

AMERICAN GAMING ASSOCIATION

In recent years, increasing attention has been focused on illegal gambling, particularly among youth. One of the most common forms of gambling engaged in by

youth is sports betting. According to studies by the University of Michigan, University of Cincinnati and the University of Memphis, illegal gambling is flourishing on

college campuses nationwide. The National Collegiate Athletic Association (NCAA)

itself concedes that there are illegal bookies on nearly every college campus in

America.

While we agree that there is a problem, we disagree with the NCAA’s simplistic

‘‘solution.’’ The gaming industry is among those supporting comprehensive legislation that would increase enforcement and penalties, evaluate the extent and causes

of illegal gambling, and require schools to put in place education programs for their

students. By contrast, the NCAA is advocating a constitutionally questionable federal ban on legal college sports wagering in Nevada. Despite the NCAA’s unsubstantiated claims, its proposal would do nothing to eliminate the widespread illegal gambling occurring on college campuses and elsewhere in this country.

BACKGROUND

In 1992, the U.S. Congress passed the Professional and Amateur Sports Protection Act (PASPA), which banned sports wagering in all states except those that already had authorized it. PASPA’s primary goal is to prevent state lotteries from basing games on sporting contests. As part of a carefully crafted legislative compromise,

PASPA expressly permits Nevada to continue offering state-regulated sports wagering. According to the Senate Judiciary Committee report on PASPA, Sen. Rpt. 102-

248: ‘‘[The committee] has no wish to apply this new prohibition retroactively... Neither has the committee any desire to threaten the economy of NeVerDate 11-MAY-2000 09:34 Apr 23, 2002 Jkt 000000 PO 00000 Frm 00041 Fmt 6633 Sfmt 6621 77989.TXT HCOM1 PsN: HCOM1
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vada, which over many decades has come to depend on legalized private gambling,

including sports gambling, as an essential industry...’’

Despite the fact that it is illegal in every state except Nevada, sports wagering

has flourished nationwide. The National Gambling Impact Study Commission’s final

report in 1999 estimated that between $80 billion and $380 billion is wagered illegally on sports every year in this country. According to Danny Sheridan, a sports

analyst for USA Today, up to $10 billion is wagered illegally during March Madness

alone.

The amount of illegal sports betting dwarfs the relatively small amount bet legally in Nevada, which represents only a tiny fraction—1 percent to 3 percent—of

all sports betting. In Nevada’s sports books, only adults over age 21 who are physically present in the state can wager on sporting events. The typical wager is less

than $50.

The genesis of the recent congressional debate over illegal sports betting stems

from the final report of the National Gambling Impact Study Commission (NGISC),

which from 1997 to 1999 studied the effects of legalized gambling in the United

States. The NCAA testified twice on this subject before the commission—stating

under oath that it had ‘‘no interest’’ in seeing a federal ban extended to Nevada.

In response to a request from the NGISC, the organization also outlined its recommendations to address illegal gambling. In a January 1999 letter to the commission, NCAA President Cedric Dempsey described a comprehensive solution, including research and study of college gambling, education and outreach, legislation prohibiting Internet gambling, and stricter penalties and enforcement of existing laws.

In contrast to these recommendations, the NCAA now focuses only on a misguided

legislative agenda that implements none of its original recommendations.

As part of its final report, the NGISC made two unanimous recommendations to

the federal government relating to sports betting. The commission recommended

that 1) the National Institute of Justice or another appropriate federal agency investigate the extent of adolescent participation in illegal gambling and all forms of

legal gambling; and 2) the NCAA and other educational institutions take steps to

reduce illegal gambling, particularly among young people. Unlike nearly all of the

other recommendations included in the NGISC’s final report, the commission voted

by a bare majority to recommend to the states that all sports betting be made illegal. The commission did so based largely on the erroneous assumption that ending

legal wagering in Nevada would stop point spreads from being published in newspapers nationwide.

THE ISSUE

The NCAA itself has confirmed that there is a serious problem with illegal betting

on college campuses. Instead of focusing attention on its own college campuses, however, the NCAA has pointed the finger at Nevada’s legal sports books, claiming that

the problem of illegal gambling by minors on campus ‘‘cannot be adequately addressed’’ until sports betting by adults is illegal in Nevada.

That argument is faulty for a number of reasons:

There is no connection between what occurs legally in the state of Nevada—where

sports wagering by adults is regulated, policed and taxed—and what occurs on college campuses. Students can easily place bets from their own dorm rooms, using

their personal computers to access the Internet and its thousands of offshore Web

sites offering sports betting. They also have access to illegal student bookies, whom

the NCAA says are on nearly every college campus in America. By contrast, betting

in Nevada sports books is limited to those over age 21 and physically present in

the state.

Just because gambling is legal for adults and regulated in Nevada doesn’t mean

illegal underage activity elsewhere can’t be effectively addressed. Gambling is one of

many activities that are legal only for adults over age 21. As with the campaign

to stop underage drinking, the gaming industry, educators, the government and others all must work together to prevent underage gambling. Nobody is seriously suggesting, for example, that alcohol needs to be banned everywhere in order to address

underage drinking. We tried that simplistic approach with Prohibition and it did not

work.

The isolated point-shaving incidents that did occur in the mid-1990s originated

outside of Nevada with illegal student bookies. For business and ethical reasons,—

Nevada’s sports books share the NCAA’s commitment to the integrity of college

sports. However, Nevada’s sports books cannot prevent every point-shaving incident

from occurring because they originate outside of the state; it is the responsibility

of the educational institutions, in conjunction with law enforcement, to address an

issue that starts on their campuses among their students. What the sports books

39

can do—and have done for years—is share betting information through a direct computer link with the NCAA. The NCAA publicly acknowledged the value of this and

other assistance from legal sports books during testimony before the NGISC and

more recently before the Nevada legislature. The FBI has publicly credited Nevada’s

sports books with spotting the point shaving taking place at Arizona State University in the mid-1990s.

There are other reasons why a ban on legal college sports betting in Nevada is

not part of the solution to the problem of illegal sports betting.

A ban on college sports wagering would not end the publication of point spreads.

The NCAA and college coaches argue that a ban on legal college sports wagering

in Nevada would pressure newspapers to stop publishing point spreads. This is simply not true. Nevada’s sports books are not the initial or the only source of betting

lines. In fact, one of the most popular sources of this information, Danny Sheridan,

is based in Mobile, Ala. Individuals outside of Nevada, including students, would

continue to have access to betting lines from off-shore Internet Web sites, independent sports analysts, toll-free phone numbers and newspapers. The Newspaper

Association of America told the House Judiciary Committee that its members would

continue to publish betting lines because it is a First Amendment right of free

speech and because it is a feature enjoyed by readers who, surveys confirm, simply

want to see who is favored in a game, not because they— intend to wager on it.

Point-shaving incidents are rare and do not occur because of the existence of legal

sports betting. While one incident is one too many, only a handful of point-shaving

cases occurred out of the more than 90,000 sporting events wagered on during the

1990s. Even the NCAA acknowledges that these incidents are rare. More players

and more teams were involved in point-shaving incidents in the 1940s and 1950s—

well before modern sports books existed in Nevada. This illustrates the fact that

sports bribery and illegal gambling are societal problems unrelated to the existence

of legal sports books that need to be addressed through education and enforcement,

not prohibition.

Sports betting is a legal recreational activity enjoyed by millions of Americans who

visit Nevada. Honest, hard-working and loyal sports fans are among the millions of

visitors who come to Nevada every year. Many of them visit during the Super Bowl

or March Madness to place typical bets of $50 or less, adding to the fun and excitement of a major sporting event. These visitors generate millions of dollars in nongaming revenue, supporting hundreds of thousands of jobs in the state. Nothing has

changed to alter the judgment of the Congress in 1992 that it would be unwise and

inappropriate for the federal government to ban sports wagering in Nevada and

hurt the state’s economy.

A federal ban on Nevada’s legal sports books raises serious constitutional issues.

If Congress approves this legislation, it will establish a dangerous precedent for the

federal government to intervene in state gaming policy decisions. The 10th Amendment to the U.S. Constitution states that activities that are not specifically spelled

out as responsibilities of the federal government fall within the purview of the

states; gambling is one of those activities that has always been decided by the

states. In fact, recent U.S. Supreme Court decisions have overturned other federal

statutes for encroaching on states’ rights. If Congress were to ban legal sports wagering in Nevada and the law were— challenged, the U.S. Supreme Court could

overturn the existing federal sports betting ban passed in 1992, thus opening the

door for other states to approve sports wagering.

AGA POSITION

The gaming industry supports practical, comprehensive legislation that will address the real problem of illegal gambling. The National Collegiate and Amateur

Athletic Protection Act of 2001, introduced Feb. 14, 2001, by U.S. Sens. John Ensign

(R-Nev.) and Harry Reid (D-Nev.) and U.S. Reps. Jim Gibbons (R-Nev.) and Shelley

Berkley (D-Nev.), would create a federal prosecutorial task force, increase criminal

penalties, implement National Institute of Justice and law enforcement studies into

underage betting, and initiate programs to reduce illegal gambling on college campuses. To date, over 50 members of Congress from both parties have agreed to cosponsor this legislation. Nearly every provision included in S. 338 and H.R. 641

came directly from recommendations made by the NCAA itself or the National Gambling Impact Study Commission.

The legislation already has won strong bipartisan support in both the House and

Senate and is the realistic solution to addressing the problem of illegal gambling.

Congressional supporters include U.S. Sen. Orrin Hatch (R-Utah), chairman of the

Senate Judiciary Committee; U.S. Rep. John Conyers, ranking minority member of

40

the House Judiciary Committee; U.S. Rep. Roy Blunt, chief deputy majority whip;

and U.S. Rep. Martin Frost (D-Texas), chairman of the House Democratic Caucus.

Mr. STEARNS. Mr. McMillen, you’re a welcome former member.

It’s always a delight to have you and we look forward to your opening statement.

STATEMENT OF TOM McMILLEN

Mr. MCMILLEN. Thank you, Mr. Chairman, and thank you members of the subcommittee and I thank you for the opportunity to

testify.

On behalf of the Knight Commission on the challenges facing

amateur athletics, I’ve been working on these issues a long time

and let me say I had dark hair when I started on these issues, but

over the last 10 years I worked as a member with Congressman

Towns and Bill Bradley to help pass the Student Right to Know

bill which has been a very positive effect on graduation rates disclosure.

I sponsored legislation that was very comprehensive to restructure the NCAA and deal with some of the anti-trust issues. I wrote

a book when I was in Congress called Out of Bounds, talked about

these problems, provided some prescriptions for reform. Under

President Clinton, I co-chaired the President’s Council on Physical

Fitness and Sports and we worked on the problems of obesity in

our children today, a growing problem, directly related to the fact

that we as a Nation are doing a lot for elite sports in this country,

but we’re doing very little for the grass roots in America.

And finally, as a member of the Knight Commission for the last

10 years we have been grappling with these issues. There’s a copy

of our latest report that was issued in June of 2001. It speaks eloquently to these problems and some of the solutions. And so what

I’m going to do is just briefly summarize a few points and look forward to your questions.

First of all, progress has been made over the last 10 years. The

NCAA has done some good things, particularly in the area of academic integrity. A lot of it has to do with the Student Right to

Know Bill and some of the measures in that regard, but there has

been progress made. But the fact is that there are some very serious alarming trends and they have to do primarily with the commercialization and the influence of money in our college sports.

This has resulted in and the reasons behind are more television

money, coaches making millions of dollars in salaries.

It’s no wonder that players are demanding health care and basic

stipends when coaches are making all this money. You have bigger

stadiums being built. You have schedules that are being dictated

by television, I mean today, it’s not uncommon for players to have

to play on Sunday night. That never happened when I played.

All this as a result of money and what Ced Dempsey said, the

President of the NCAA is that we have an arms war and what we

effectively are doing is having mutually assured destruction. We

are destroying the fabric of our institutions of higher learning. And

the fact is as was pointed out, I think, by Congressman Bryant,

this is now going into our high schools. We have a major problem

in our high schools and as we embark on a new century we have

to think of what we are doing in this country. We are the only NaVerDate 11-MAY-2000 09:34 Apr 23, 2002 Jkt 000000 PO 00000 Frm 00044 Fmt 6633 Sfmt 6602 77989.TXT HCOM1 PsN: HCOM1
41

tion in the world that built a system where we put school and

sports together. And as a result of that we have a super highway

right down our classrooms in this country. If you want to go to the

pros, you got to go to high school, you got to go to college. And it

has basically distorted our institutions of learning in this country.

In Germany and other countries of the world, they’ve kept their

sports and clubs away from their schools because they understood

the tremendous problems and distortions that could occur and it’s

exactly what has happened in this country.

We are suffering tremendous damage to our institutions and it

really is a situation where the athletic tail is wagging the academic

dog across the United States. And the problems, as I said, are

being outlined I think very cogently in this report, but you have to

understand in the 1980’s, it was remarked by Congressman

Osborne that there wasn’t a lot of sanctioning, but over half of our

major institutions in America were either sanctioned, either

censored or put on probation in the 1980’s.

The result of that is a loss of philanthropy, bad press, all the

things that happened to our schools when they do not abide by this

complex rule book that the NCAA promulgates. So we have some

very, very serious problems. I would like you to read the report. I

think you’ll find it interesting, but I think the most important part

of the report is at the end where it says, if it becomes impossible

for us to maintain a balance between academics and athletics in

this country, colleges and universities should get out of the business. And I think that’s the most important part of what the

Knight Commission reported.

I will say this, personally, I am not an optimist. I think we have

a very serious problem. I think these problems are going to continue to accelerate. I do not believe that self-reform can work. I do

not believe the NCAA can solve the issues of coaches’ salaries and

players demands and the proper revenue distribution models that

are needed to promote the things that are important for academics,

Title IX, all the things involving academic values. I do not believe

that the NCAA alone can do so and I think it’s going to require the

Congress to step in.

Thank you, Mr. Chairman.

[The Knight Foundation report is available at www.knight

fdn.org]

Mr. STEARNS. Thank you.

Mr. Huma. We welcome your opening statement.

STATEMENT OF RAMOGI D. HUMA

Mr. HUMA. Thank you. Chairman Stearns, Ranking Member

Towns and members of this committee, I would like to thank you

for inviting me to speak with you today. My name is Ramogi Huma

and I’m the founder of the Collegiate Athletes Coalition, a group

started by UCLA football players that seek to establish an effective

means for student athletes to voice their concerns and influence

NCAA legislation.

I started this group while playing football for the UCLA Bruins

and today Division I football and basketball players from 10 different universities are members of this group.

42

I’m here today to provide you with the student athletes’ perspective about the relationship between commercialization and student

athletes in NCAA sports. In order to be made possible by commercialization, Division I football and basketball players generate billions of dollars each year in NCAA sports. However, not enough resources are directed to ensure student athletes have basic protections. These student athletes are very grateful for their scholarships and for their opportunity to earn a degree, however, it should

be stated that this opportunity is earned and nothing is free for

these young men and women. As a condition of their scholarships,

these students put themselves through school with their own sweat

and blood. They partake in year-round strength and conditioning

workouts, countless hours per week of mandatory and voluntary

participation in the sport. Many sustain injuries and surgeries

throughout their careers and all risk permanent physical disability

and death.

Hard work and high risk are necessary to successfully compete

in games. These games draw huge crowds that in turn draw high

levels of commercialization. In NCAA, Division I football and basketball players generate an estimated $3.5 billion each year.

Commercialization is deeply rooted in Division I sports today and

the degree to which affiliated organizations and employees benefit

is seemingly without limits. Somewhere in this mix are the student

athletes whose talents capture this revenue.

I would like to make it clear that student athletes are not necessarily opposed to others benefiting from their talents, however,

the NCAA makes it possible for all to capitalize off the talents of

student athletes while imposing restrictions on student athletes

that leave them and their families at financial and physical risk.

Given the atmosphere of commercialization in NCAA sports in

which everyone benefits off the talents of student athletes to the

absolute fullest, student athletes across the Nation feel that a little

more of the resources generated should be directed to secure basic

protections for student athletes.

There are a number of NCAA rules that leave student athletes

financially and physically vulnerable. One example is the NCAA’s

capital in the amount of aid a university may give a student athlete. The NCAA formulated full grant and aid scholarship set at a

dollar amount that is below the cost of attendance of each university. Being full-time students and full-time athletes year round

leaves little time and energy to hold a job. However, many student

athletes feel like they have no choice but to work in order to make

up the difference between their scholarships and actual cost of attendance. These student athletes soon find that the NCAA actively

restricts them from seeking many opportunities for employment,

while capping the amount they can earn through part-time work in

academic off-season at $2,000.

I urge this committee to consider the financial and time management difficulties that this situation fosters when investigating the

graduation rates of student athletes.

The absence of protections for student athletes peaks in the summer during so-called voluntary workouts. These workouts are designed and facilitated by athletic programs and take place on university facilities. Although they are labeled voluntary, the truth is

43

1The Collegiate Athletes Coalition (CAC) is a student group started by UCLA football players.

Its purpose is to establish an effective means to voice the concerns of student-athletes and influence NCAA legislation. To date, football and basketball players from UCLA, the University of

Southern California, Stanford University, the University of Washington, Arizona University, Arizona State University, the University of Oregon, Boise State University, the University of Hawaii, and Saint Louis University have joined the CAC. These student-athletes have come together to pursue basic protections for student-athletes from all sports.

that there is tremendous pressure on student athletes to attend

these summer workouts. These workouts are effectively mandatory.

NCAA rules prohibit schools from paying for the medical expenses

of student athletes who are injured during these workouts. Also, if

a student athlete dies during or as a result of a summer workout,

the NCAA may not extend its $10,000 death benefit to the grieving

families. In addition, the NCAA does not enforce critical safety

guidelines to help prevent workout related deaths. During the 2001

off-season, three college football players died as a result of their

workouts. Devaughn Darling from Florida State University, Eraste

Austin from the University of Florida and Rashidi Wheeler from

Northwestern University, all died in their pursuit of higher education an din the name of NCAA sports. Two of the three grieving

families did not receive the NCAA’s death benefit because they

happen to die during summer workouts. In addition, a disturbing

question surfaced or whether or not each of these deaths could

have been prevented. After investigating these tragedies we found

that the NCAA does not play a role in making sure institutions

provide safe environments for their student athletes to work out.

The NCAA has recently canceled a meeting with the Collegiate

Athletes Coalition claiming that it did not know about our affiliation with the United Steelworkers of America. It is our position

that there is no legitimate excuse for the NCAA to ignore these important issues. At our request, this meeting was to focus solely on

preventing workout related deaths and extended eligibility for

health covered for work-related injuries and the NCAA’s death benefit.

If this committee can initiate the process of securing basic protections for student athletes who participate in NCAA sports, today’s

student athletes and generations of student athletes to come will

be forever grateful.

Once such protections are secured, student athletes will have a

more equitable place in the highly commercialized atmosphere of

Division I sports. And if I could just actually make a connection,

there is a student athlete perspective here in terms of gambling

and sports agents. We feel that student athletes would have less

of a propensity to be sucked into gambling and sports agents if

they were given enough to make ends meet.

[The prepared statement of Ramogi D. Huma follows:]

PREPARED STATEMENT OF RAMOGI D. HUMA, CHAIRMAN OF THE COLLEGIATE

ATHLETES COALITION 1

INTRODUCTION

Largely made possible by commercialization, Division I football and basketball

players generate approximately $3.5 billion dollars each year in NCAA sports. However, not enough of these resources are directed to provide student-athletes basic

protections.

In looking back to 1905, extremely violent techniques in football like the flying

wedge critically injured and killed a number of college football players. At the reVerDate 11-MAY-2000 09:34 Apr 23, 2002 Jkt 000000 PO 00000 Frm 00047 Fmt 6633 Sfmt 6621 77989.TXT HCOM1 PsN: HCOM1
44

quest of President Theodore Roosevelt, the NCAA was commissioned in 1906 to reform college football to reduce the number of injuries and deaths. In short, the

NCAA was founded for the sole purpose of addressing the very heart of student-athlete welfare.

In more recent years, the NCAA has proven to be a powerful force in enforcing

regulations on its member institutions. It goes to great lengths to ensure that

schools and student-athletes comply with numerous rules regarding issues such as

recruiting and money. It is now time for the NCAA to make the same commitment

to protecting its student-athletes.

If this committee can initiate the process of securing basic protections for studentathletes who participate in NCAA sports, today’s student-athletes and generations

of student-athletes to come will be forever grateful. Once such protections are secured, student-athletes will have a more equitable place in the highly commercialized atmosphere of Division I sports.

SHOULD STUDENT-ATHLETES COMPLAIN?

Many of today’s student-athletes who receive financial aid have a great opportunity to earn a degree from an institution of higher education while competing in

a sport that they enjoy. Many refer to this arrangement as a ‘‘free ride’’ through

college. These athletes are very grateful for their scholarships and for their opportunity to earn a degree. However, it should be stated that this opportunity is

earned—nothing is free for these young men and women. As a condition of their

scholarships, these students put themselves through school with their own sweat

and blood. They partake in year-round strength and conditioning workouts, countless hours per week of mandatory and voluntary participation in a sport, many sustain injuries and surgeries throughout their careers, and all risk permanent physical disability and death. Division I football and basketball players generate a ton

a money for the NCAA and their institutions all the while. The opportunities afforded to these student-athletes are definitely earned. Nothing is free. Hard work

and high risks are necessary to successfully compete in games.

COMMERCIALIZATION AND BENEFICIARIES

It is the games student-athletes participate in that draw huge crowds that, in

turn, draw high levels of commercialization. In NCAA sports, Division I football and

basketball players generate an estimated $3.5 billion each year. This revenue is generated primarily from commercialization. Many are familiar with the $6 billion that

CBS is going to give the NCAA for the rights to broadcast the Division I basketball

play-offs and championship games alone. In turn, CBS will turn a healthy profit by

selling commercial slots to companies who want to show their product to the millions of people who watch these student-athletes play. These companies will reap

great rewards because of the exposure that their products receive during these

games. Commercialization is deeply rooted in Division I sports today; and the degree

to which organizations and employees associated with this commercialization benefit

is seemingly without limits.

COMMERCIALIZATION, THE NCAA, AND STUDENT-ATHLETES

Somewhere in the midst of these billions of dollars are the student-athletes whose

talents capture this revenue and NCAA rules that leave them without many basic

protections. It should be made clear that student-athletes do not necessarily oppose

others benefiting from their talents. However, while making it possible for all to

capitalize off the talents of student-athletes, the NCAA imposes restrictions on student-athletes that leave student-athletes and their families at financial and physical

risk.

STUDENT-ATHLETES BELOW THE POVERTY LINE

Below the poverty line is where you will find many student-athletes living across

the nation. Take a look at how a full scholarship athlete at UCLA functions financially:

A student-athlete living off-campus is given a monthly stipend during the school

year that is supposed to cover housing and food. This athlete receives $873 monthly

stipend from October to June.

Total: $7857

Poverty line: $8,590

(U.S. Department of Health and Human Services figure for a single person household in the

year 2000 http://aspe.hhs.gov/poverty/01poverty.htm)

45

Each institution sets a budget for its students otherwise known as the cost of attendance. The cost of attendance is a dollar amount that each school deems necessary for any student to survive.

The NCAA full grant in aid is set at a dollar amount that is below the cost of

attendance. A full grant in aid scholarship as determined by the NCAA is set at

an amount equal to fees and tuition, books, and room and board at each university.

Universities, however, recognize other expenses and factor them into the budget. Total Athletic Scholarship at UCLA: $12,156 ; UCLA Cost of Attendance: $16,020

At UCLA, transportation and personal expenses are included in the total cost of

attendance. At UCLA, the NCAA’s formula leaves student-athletes about $3864

short of what it actually costs to live as an undergraduate student at UCLA.

This situation is not unique to student-athletes at UCLA. Student-athletes across

the nation face similar circumstances.

On-campus...

NCAA rules prohibit many institutions from giving student-athletes any cash

while they are living in the residence halls. At UCLA, this means that players must

find a way to deal with almost $3900 per year in additional living expenses having

absolutely no cash to begin with. Employment restrictions enforced by the NCAA

make this difference impossible to make up through part-time work.

UCLA’s student-athletes do not face these financial hardships alone. Athletes

across the nation face similar predicaments.

NCAA CAPS EARNINGS AND RESTRICTS EMPLOYMENT OPPORTUNITIES

Being full-time students and full-time athletes year-round leaves little time and

energy to hold a job. However, many student-athletes feel like they have no choice

but to work in order to make up the difference between their scholarships and the

actual cost of attendance. These student-athletes soon find that the NCAA actively

restricts them from seeking many opportunities for employment while capping the

amount they can earn through part-time work in the academic off-season at $2000.

At UCLA, this cap prevents student-athletes from making up this difference. These

student-athletes are faced with either trying to live on almost $2000 less than what

it actually costs to live or breaking NCAA rules and putting their scholarships in

jeopardy. In addition, the NCAA restricts student-athletes from securing many

types of employment. In general, student-athletes may not hold jobs that are related

to their athletic talent.

This committee should consider the financial and time management difficulties

that these restrictions foster when investigating the graduation rates of student-athletes.

SAFETY, INJURIES, DEATH, AND SO-CALLED ‘‘VOLUNTARY WORKOUTS’’

The absence of protections for student-athletes peaks in the summer during socalled ‘‘voluntary’’ workouts. These workouts are designed and facilitated by athletic

programs. The workouts are usually conducted by coaches and take place on university facilities. Although they are labeled ‘‘voluntary’’, the truth is that there is tremendous pressure on student-athletes to attend these summer workouts. These

workouts are effectively mandatory.

NCAA rules prohibit schools from paying for the medical expenses of student-athletes who are injured during these workouts. Also, if a student-athlete dies during

or as a result of a summer workout, the NCAA may not extend its $10,000 death

benefit to the grieving families. In addition, the NCAA does not enforce critical safety guidelines to help prevent workout-related deaths. During the 2001 off-season,

three college football players died as a result of their workouts. Devaughn Darling

from Florida State University, Eraste Autin from the University of Florida, and

Rashidi Wheeler from Northwestern University all died in their pursuit of higher

education and in the name of NCAA sports. Two of the three grieving families did

not receive the NCAA’s death benefit because they happened to die during summer

workouts. In addition, disturbing questions surfaced over whether or not each of

these deaths could have been prevented. After investigating these tragedies, the

CAC found that the NCAA does not play a role in making sure institutions provide

safe environments for their student-athletes to workout.

REFORM

The CAC is urging the NCAA to provide basic protections for its student-athletes

by taking the following actions:

• Increase full grant in aid scholarships to an amount that is equal to the cost of

attendance at each school

46

• Eliminate employment restrictions

• Allow institutions to pay for medical expenses associated with sports-related injuries for so-called ‘‘voluntary’’ workouts

• Allow families access to the NCAA death benefit if their child is either a current

or prospective student-athlete who dies as a result of a university-facilitated

workout

• Identify and enforce critical safety guidelines to prevent workout-related deaths

THE NCAA HAS DEMONSTRATED LITTLE WILLINGNESS TO MAKE CHANGES

The NCAA has recently cancelled a meeting with the CAC. At the CAC’s request,

this meeting was to focus solely on preventing workout-related deaths and extended

eligibility for health coverage for workout-related injuries and the NCAA’s death

benefit.

Hundreds of thousands of student-athletes will benefit if improvements are made

in these areas. Unfortunately, it is too late to help Devaughn Darling, Eraste Autin,

and Rashidi Wheeler. But much can be done to help the student-athletes that remain vulnerable.

SUMMARY: A ROLE FOR THIS SUBCOMMITTEE IN REFORMING THE NCAA

Although student-athletes have generated tremendous amounts of revenues in

NCAA sports for some time, the NCAA continues to leave these young men and

women without basic protections. The NCAA is quick to admit many of these shortcomings and frequently states that necessary changes are coming. However, generations of student-athletes have come and gone with the NCAA remaining static.

Promises of change are no longer enough. The NCAA has been in existence for almost a century and hardworking student-athletes still lack fundamental protections.

Student-athletes feel that NCAA reform should begin immediately. If this subcommittee can help initiate this process, it has the full support of student-athletes

across the nation.

Mr. STEARNS. I thank the gentleman.

Mr. Aguirre, I’m sorry, I didn’t see your name tag.

STATEMENT OF MICHAEL AGUIRRE

Mr. AGUIRRE. Thank you, Mr. Chairman, members of the subcommittee. On behalf of the National Collegiate Athletic Association’s Division 1, Student Athlete Advisory Committee, I’m pleased

to have the opportunity to provide the subcommittee with information about the group I represent and how the voice of the student

athlete is heard in the governance of intercollegiate athletics.

I also hope to provide you with some sense of the issues that are

important to student athletes today.

I’m one of 31 members of the committee, each of us representing

athletic conferences within the NCAA membership. I represent the

Pac-10 Conference. The structure of the National Division 1 Student Athletic Advisory Committee mirrors the governance structure

of the NCAA Division 1 itself. Each athletics conference appoints

representatives to serve on the various entities within the governance structure. As co-chair of the Division 1 SAAC, I’m one of two

student athletes who sit on the Division 1 Management Council

which debates and votes on NCAA by-laws. Student athletes also

serve and vote on many committees and cabinets within the Division 1 governance where most by-law proposals originate.

It is my honor and privilege to represent more than 120,000 men

and women participating in college sports at the Division 1 collegiate level. My colleagues in Division II and III—nearly 80 of us

all together—represent more than 360,000 student athletes who

compete annually in 22 sports.

As you can imagine, I take my role as their voice very seriously.

47

The first NCAA Student Advisory Committee was created in

1989. It represented all three divisions of student athletes. Today,

NCAA by-laws mandate a student athlete advisory committee on

each campus and in each athletics conference. Many are extraordinarily effective in debating NCAA by-law proposals at the local

level and providing feedback to us on the national SAC. It is a

point of pride for me to know that when I speak on behalf of student athletes in the PAC-10 Conference, I represent the majority

opinion.

There’s an old saying in politics that there are two things you

never want to watch being made, sausage and laws. The process

of governing and regulating is often one of tedium and compromise.

‘‘We’re doing the right thing’’ can be overwhelmed by self-interest,

and ‘‘we’re doing no harm’’ sometimes take precedent over doing

good.

So it is with the governance of inter-collegiate athletics. Those

have been important lessons for the 80 or so student athletes on

the three SACs. We’ve had to learn patience with the process that

tries to be fair to all sports, those that generate revenue and those

that don’t, on campuses large and small, public and private, urban

and rural, religious and secular. We’ve learned the art of compromise and the importance of small victories over no victories.

For more than a decade now, the NCAA student athletic advisory

committees have played an important and necessary role in the

governance of college sports. We have helped mandate the creation

of campus and conference SACs, assured the student athletes on

full scholarship can work during the school year, help define recruiting practices that are less intrusive on prospects, engage in

discussion on financial aid by-laws, stop legislation that would

have increased time demands on student athletes, help define the

difference between voluntary and mandatory practices and help

write by-law proposals that permit Division 1 student athletes to

accept Olympic prize money.

My predecessors and current colleagues on the committee have

done all this within a system that works hard at balancing the

myriad of factors that make up intercollegiate athletics. I’m extraordinarily proud of the work we’ve done.

There are a number of issues important to student athletes that

I hear from in the Pac-10 and across the country. We are concerned

about time demands on students. Our coaches place increasing demands on our physical ability and we put additional demands on

ourselves to be the best we can be. We have a 20-hour rule that

is supposed to protect us from demanding coaches and from ourselves. The problem and solution will probably have to come at the

campus level. We are concerned about insurance coverage. In April,

we’re going to get our first report on a feasibility study that the

NCAA national office is doing to provide 24 hour, 7 days a week

coverage for all student athletes. I’m anxious to see that report and

help shepherd a significant new insurance coverage policy through

the governance structure.

We are concerned about the increased instances of death during

off-season workouts. A committee of medical and sports science experts has turned its attention to this issue and the possible effects

of dietary supplements increasingly used by athletes in a regimen

48

that otherwise has changed little over the last several years. We

are concerned about stories of student athletes who can’t make

ends meet financially. At the same time, I recognize that student

athletes and especially football and basketball student athletes on

full grants and aid are considerably better off than many students

on campus. I am pleased that some within the NCAA Board of Directors are pushing for an increase in the grant and aid from full

cost of education to full cost of attendance. The Division I governance structure is also exploring ways to permit other forms of financial aid without impacting team limits on allowable aid.

The good news is that the NCAA student athletic advisory committees are in a position to do something about these and other

issues. We’re part of the structure that sets national policy as fairly

and equitably as possible. We deal with the facts as they are and

the outcomes as we would like them to be. Our voices are loud and

clear, even if our work is performed without much fanfare. Over

the last 6 years, I’ve been a student, a student athlete and a student athlete voice. These are experiences I would not trade for anything. They’ve helped me live my dream. They’ve helped me understand that I can make a difference.

Thank you again for your time this morning.

[The prepared statement of Michael Aguirre follows:]

PREPARED STATEMENT OF MICHAEL AGUIRRE, CO-CHAIR, NCAA DIVISION I STUDENTATHLETE ADVISORY COMMITTEE

On behalf of the National Collegiate Athletic Association’s (NCAA) Division I Student-Athlete Advisory Committee (SAAC), I am pleased to have the opportunity to

provide the subcommittee with information about the group I represent and how the

voice of the student-athlete is heard in the governance of intercollegiate athletics.

I hope also to provide you with some sense of the issues that are important to student-athletes today.

COMMITTEE STRUCTURE

I am now a former football student-athlete at Arizona State University, and because I continue there as a graduate student, I continue to serve on the Division

I SAAC. I am one of 31 members of the committee, each of us representing athletics

conferences within the NCAA membership. I represent the Pacific-10 Conference, a

conference which includes the University of Southern California, Stanford University, and The University of Washington, among others. In addition to the national

Division I SAAC, there is a SAAC structure at the campus and conference levels

as well. I have served on the campus SAAC at Arizona State and helped create the

Pacific-10 Conference committee.

The structure of the national Division I Student-Athlete Advisory Committee mirrors the governance structure of NCAA Division I itself. Each athletics conference

within Division I appoints representatives to serve on the various entities within the

governance structure. As co-chair of the Division I SAAC, I am one of two studentathletes who sit on the Division I Management Council, which is the body of faculty

and athletics administrators who debate and vote on NCAA bylaws before passing

them on to the presidential-led Board of Directors. Student-athletes also serve and

vote on many committees and cabinets within the Division I governance where most

bylaw proposals originate.

If this sounds complicated, I assure you it is no more so than the governance

structure of the United States; and just as the Congress, the Senate and the presidency legislate for the nation, the process for regulating intercollegiate athletics is

a democratic one. It is my honor and privilege to represent more than 120,000 men

and women participating in college sports at the Division I collegiate level. My colleagues in Divisions II and III—nearly 80 of us all together—represent more than

360,000 student-athletes who compete annually in 22 sports. As you can imagine,

I take my role as their voice seriously.

49

COMMITTEE HISTORY

The first NCAA Student-Athlete Advisory Committee was created in 1989. It represented all three divisions of student-athletes; met twice annually; attended the annual NCAA Convention where national policy was debated and voted; and like most

fledgling groups, it was more experiment than effective representation. It wasn’t

long, however, until the student-athletes made their voices heard. In 1997, three

committees were created at the national level to better serve the thousands of student-athletes who compete in each division.

Today, NCAA bylaws mandate a student-athlete advisory committee on each campus and in each athletics conference. Like any other quasi-governance group of individuals, the effectiveness of these committees varies from campus to campus and

conference to conference. Most are extraordinarily effective in debating NCAA bylaw

proposals at the local level and providing feedback to us on the national SAAC. In

fact, as with you and your constituents, we hear often and with great passion on

issues important to our constituents -- student-athletes. It is a point of pride for me

to know that when I speak on behalf of student-athletes in the Pac-10 conference,

I represent the majority opinion.

COMMITTEE EFFECTIVENESS

There is an old saying in politics that there are two things you never want to

watch being made: sausage and laws. The process of governing and regulating is

often one of tedium and compromise where doing the right thing can be overwhelmed by self-interest and where doing no harm sometimes take precedent over

doing good. So it is with the governance of intercollegiate athletics. The NCAA is

a private, not-for-profit association of 977 institutions of higher education and more

than 100 athletics conferences. The diversity of the members, and therefore the need

for common policy, is both the reason the Association exists and its greatest challenge.

Those have been important lessons for the 80 or so student-athletes on the three

SAACs. We have had to learn patience with a process that tries to be fair to all

sports, those that generate revenue and those than don’t, on campuses large and

small, public and private, urban and rural, religious and secular. We have learned

that the student-athletes who participate on those campuses are just as diverse and

deserve the same balance of fairness NCAA governance tries to bring to programs.

We have learned the art of compromise and the importance of small victories over

no victories.

For more than a decade now, the NCAA Student-Athlete Advisory Committees

have played an important and necessary role in the governance of college sports.

Much is often made of the fact that we don’t have a vote at the Management Council level. The reason is political. Our votes would create an imbalance in a voting

structure that is representative of conference affiliation. It would be good to have

a vote. Who in a democracy would not want one? But, frankly, I sometimes fear that

in getting a vote, we might lose the power our voice has today. With a vote, ours

would be only one of many. Today, our voice is powerful precisely because we don’t

have a vote. And I am convinced that our effectiveness has been diminished not one

whit by not being able to say ‘‘yea’’ or ‘‘nay.’’’

Over the last decade, the Division I Student-Athlete Advisory Committee has

helped mandate the creation of campus and conference SAACs, assured that student-athletes on full scholarship could work during the school year, helped define

recruiting practices that are less intrusive on prospects, engaged in discussion on

financial aid bylaws, stopped legislation that would have increased demands on student-athlete time, helped define the difference between voluntary and mandatory

practices, and helped write bylaw proposals that permit Division I student-athletes

to accept Olympic prize money. My predecessors and current colleagues on the committee have done all this within a system that works hard at balancing the myriad

of factors that make up intercollegiate athletics. I am extraordinarily proud of the

work we have done.

STUDENT-ATHLETE ISSUES

There are a number of issues important to the student-athletes I hear from in the

Pac-10 and across the country. We are concerned about the time demands on student-athletes. At Division I, the expectations for practice, weights, conditioning, and

competition are high. We are competing against the best, and we have to be among

the best. Our coaches place increasing demands on our physical ability and we put

additional demands on ourselves to be the best we can be. We have a 20-hour rule

50

that is supposed to protect us from demanding coaches and from ourselves. The

problem—and solution—probably will have to come at the campus level.

We are concerned about insurance coverage. In April, we’re going to get our first

report on a feasibility study the NCAA national office is doing to provide 24-hour,

seven-days-a-week coverage for all student-athletes. I’m anxious to see that report

and help shepherd a significant new insurance coverage policy through the governance structure.

We are concerned about the increased instances of death during off-season workouts. A committee of medical and sports science experts has turned its attention to

this issue and the possible effect of dietary supplements increasingly used by athletics in a regimen that otherwise has changed little over the last several years.

We are concerned about stories of student-athletes who can’t make ends meet financially. At the same time, I recognize that student-athletes—and especially football and basketball student-athletes on full grants-in-aid—are considerably better

off than most students on campus who do not get tuition and fees, room and board,

and course-related books paid for. There is no question that intercollegiate athletics

has made colleges and universities available to hundreds of men and women who

otherwise would not be able to attend. I am pleased that some within the NCAA

Board of Directors are pushing for an increase in the grant-in-aid from full cost of

education to full cost of attendance. The Division I governance structure is also exploring ways to permit other forms of financial aid without impacting team limits

on allowable aid.

The good news is that the NCAA Student-Athlete Advisory Committees are in a

position to do something about these and other issues. We’re part of the structure

that receives a wealth of research data; considers issues that affect local, regional

and national practices; hears the input from student-athletes across sports ranging

from football and basketball to field hockey and rowing; and finally sets national

policy as fairly and equitably as possible. We deal with the facts as they are and

outcomes as we would like them to be. We are idealistic with our hopes and pragmatic with our solutions. Our voices are loud and clear even if our work is performed without much fanfare.

Over the last six years, I’ve been a student, a student-athlete and a student-athlete voice. These are experiences I wouldn’t trade for anything. They have helped

me live my dream. They have helped me understand that I can make a difference.

Mr. STEARNS. I thank the gentleman.

Here we are on Wednesday a little after noon and just listening

to all of you sort of highlights the whole idea of our hearing about

the challenges facing amateur athletics. And it’s a little overwhelming. Mr. McMillen has poignantly indicated a destroying of

the fabric of our education by what’s happening here and I think

we could probably have many more hearings on this and obviously

there would be a lot of proactive Members of Congress who’d like

to offer legislation. But the seriousness of what some of the points

have been made have not gone unheeded here and I think whether

it’s from gambling or whether it’s from dealing with athletes that

are not graduating and given the promise and families kiss them

goodbye at the door as they leave high school and they go off to

these colleges and then they not only don’t graduate, but they don’t

get the service or attention and in some of them are put in precarious situations in training practice and things like this. So there

are a host of challenges facing amateur athletics. And we had the

difficult decision when we had this hearing as to how to bring

about the more things that Mr. Huma talked about and Mr.

Aguirre has talked about versus Mr. Fahrenkopf and Mr. Saum because of the gambling and what impact that has. Coach Osborne

pointed out that he felt it had extremely strong effect and Mr.

Fahrenkopf does not agree. NCAA, under Shelley Berkley, the Congress Lady from Las Vegas, has a very strong opinion against the

NCAA. And I was not quite aware of the strong feelings that you

various groups have on these issues and I can see that it would

take a great deal of hard consensus to come together with someVerDate 11-MAY-2000 09:34 Apr 23, 2002 Jkt 000000 PO 00000 Frm 00054 Fmt 6633 Sfmt 6602 77989.TXT HCOM1 PsN: HCOM1
51

thing legislative where we’re going to solve that. But not withstanding that challenge, I appreciate all of you bringing this to our

attention and I appreciate Mr. Towns who has made a great effort

to have this hearing to follow up on his legislation with Mr.

McMillen.

Mr. Saum, the question I have for you, Mr. Towns indicated that

Las Vegas is not the only one. If I understand from the legislation

of past Congress, Nevada is the only State that’s been grandfathered in that has this legalized gambling. The other States, be

that as it may, do not do it. Is that correct? Can you just verify

that for us, because we want to know if Nevada is the only State

in the Union that has legalized gambling?

Mr. SAUM. That is correct, yes sir.

Mr. STEARNS. Do other States, could they do it if they wanted?

Mr. SAUM. The other States have chosen not to.

Mr. STEARNS. Okay, so that still goes back to Congressman

Osborne’s point is why have one State have it and not the others.

Listening to this objectively, it appears to me that there does not

necessarily seem that because one State has it, it’s been that detrimental. Coach Osborne’s point is well taken. Why give somebody

a grandfather, when not everybody else has it. Why are 49 States

not doing it and Nevada doing it? Mr. Fahrenkopf has made an eloquent point that actually instead of hurting, it’s helped in bringing

the problems to the forefront.

But do you agree with him? What would you disagree in what

he said in terms of your role with the NCAA?

Mr. SAUM. Mr. Chairman and members of the committee, we—— Mr. STEARNS. Because you’re agreeing with Coach Osborne,

aren’t you?

Mr. SAUM. Certainly, certainly.

Mr. STEARNS. You agree completely.

Mr. SAUM. We are opposed to legal sports wagering. We

believe—— Mr. STEARNS. Period.

Mr. SAUM. Period, yes. Our message is fairly simple and fairly

clear. The reason is for a number of reasons. We believe it’s inappropriate to bet on young people. We believe it is inappropriate to

wager on college athletics. We want individuals, fans, we want people to go to the games to enjoy the spontaneous action and reaction

of the game, the behavior of the officials, the behavior of the athletes, the coaching strategies and not worry about whether you win

by 10, 11 or 12.

Mr. STEARNS. But Ms. Berkley made the comment that you’re not

policing as well as you should. How do you react to what she said?

Mr. SAUM. Well, I’d like to first make sure that the facts are correct. I run a staff of 7 people, not 1. I run—my staff has a budget

of $450,000. We then educate the institutions across the United

States so we have Ambassadors, we have a grass roots effort. We

teach all of our compliance folks about gambling.

I was just at a meeting yesterday with 30 Assistant Commissioners from every conference in America and we talked about

sports wagering. My assistant is at Florida State University today

where they have the—the president of the institution created a

committee of high administrators.

52

Mr. STEARNS. Congress Lady, the gentle lady from Las Vegas

made a lot of charges against you in her opening statement and

she was quite strong about her feelings and so to get this proper,

you’d have to take this hearing when it’s all over and sit in a room

and read that hearing and take each of your testimony and think

about it and reflect and Mr. Towns and I and work with our colleagues to do something.

Mr. McMillen, I mean you—if you were a Member of Congress

again, you served with distinction and if you were me, what kind

of bill would you drop to help solve the challenges facing amateur

athletics? You have the unique perspective being a former Member

of Congress and also serving in the professional sports. I mean

you’ve probably, just like Mr. Osborne, have the unique perspective. So you’ve heard also the testimony earlier about gambling.

What kind of legislation would you do?

Mr. MCMILLEN. Well, I’m going to speak personally and not as

a representative of the Knight Commission. I introduced legislation

in 1991 in response to what ‘‘Whizzer’’ White, the Supreme Court

Justice ‘‘Whizzer’’ White reacted in his minority dissent in 1984

when the Supreme Court overturned really the monopolization of

the NCAA’s television monies and we’ve seen a fractionization of

television so you’ve got the SEC conference and all this. Even with

all the money that the NCAA, it isn’t in control of it. There are so

many other conferences, schools, Notre Dame can go sign their own

contract. So what ‘‘Whizzer’’ White said was there’d be an arms

war and that’s exactly what we’ve seen. And so what I did, in my

bill, I proposed over giving an antitrust exemption, putting an all

powerful NCAA back in place, putting it tightly in control by the

presidents and then having a revenue distribution formula that

spreads the money around for gender equity, for academic values,

for the diversity and breadth of your programs on campuses, not

for winning and losing.

And in that same legislation you can bring about a reduction in

coaches’ salaries to be in line with prevailing norms on college campuses and you end up putting this whole thing back into the model

of academics. The money will not be less, in fact, it will probably

be more. The kids will play just as hard. The entertainment value

won’t go away. And you’ll end up in a model that will be more in

line with the values of higher education. I never thought it had a

chance at all to pass. I still believe that this institution is going to

have to step in some day and deal with these intractable issues.

Realize that if you win a game in the NCAA post tournament, you

get another three quarters of a million dollars. Those are the wrong

values. The values should be about college values, not commercial

values. And so that was my answer. I proposed it 11 years ago. I

still think that some day it will be brought out of the dust shed

and you’ll look at it and say you know, ‘‘Whizzer’’ White was probably right in 1984 when he said this was going to happen and he

predicted it back then.

Mr. STEARNS. My time has expired. I obviously will give everybody an opportunity to comment on either some of my questions or

others.

Mr. Towns?

53

Mr. TOWNS. Thank you very much, Mr. Chairman. Let me begin

with you, Mr. Aguirre. First of all, how did you get your position?

Were you elected or were you appointed or by a committee or did

you appoint yourself?

Mr. AGUIRRE. Basically, I became involved with the student advisory committee on the campus at Arizona State University and was

selected by the administrators at Arizona State University and by

our student athletic committee to represent ASU at the Pacific

Tank Conference, a body of that same organization. Once I was at

that level, there is also the structure of the NCAA, Division 1 SAC

which has one representative from each conference and when that

position was open for the Pac-10 representative, my name was forwarded by the Pac-10 with a number of other people and I was selected at that time.

Mr. TOWNS. The name was forwarded by?

Mr. AGUIRRE. I was forwarded by officials from the PAC-10 to

the body that selects committee members for the NCAA and my

name was chosen and forwarded at that time.

It’s a selection process through your involvement in the student

athlete advisory committees at the various levels that have been

instituted.

Mr. TOWNS. So then the NCAA made the final selection?

Mr. AGUIRRE. I believe so.

Mr. TOWNS. The reason I raise the question is that see if you

were selected by the NCAA, you know I’m not sure as to how big

an advocate you can be, because after all, they put you there.

Mr. AGUIRRE. They did put me there and with all due respect I

believe that student athletes will represent student athletes to the

best of their ability. I have been in the same shoes as every student

athlete, not literally, but I have had those same experiences,

shared the same sweat and blood on the field as all student athletes and when I put on my hat as student athlete representative

from the Pac-10 conference, I’m going into that with the full knowledge that I’m representing all student athletes and I’m looking out

for their best interests. So although while I was put into this process by the NCAA, I don’t ever forget that I’m a student athlete first

and representing their view and welfare on that committee.

Mr. TOWNS. Thank you very much. Let me just move to you,

Tom, good to see you.

Mr. MCMILLEN. Good to see you.

Mr. TOWNS. I’m happy to know there’s life after this place. You

indicated that you do not believe that the NCAA can reform itself.

Why do you believe that?

Mr. MCMILLEN. Because there are intractable issues. It’s about

the have and have not. If you have a lot of money, I mean as

Coach, Congressman Osborne said, there’s 40 schools that have big

time programs. There’s a whole slew that don’t. It’s a game to keep

up with the Joneses. And it’s failing. Schools are losing money. So

I don’t think you can come to a revenue distribution formula that

promotes academic values. Point No. 1.

Point No. 2 is that the players have a right to demand recompense when the coaches are making, there’s 30 or 40 coaches

making millions of dollars of salary. I mean it’s just logical. So how

do you stop all these trends? You’ve got to put it back, you’ve got

54

to put the genie back into the educational bottle and that’s why I

don’t think the NCAA—and they’ve done a lot of good things. I’m

not here to bash on the NCAA. They’ve done a lot of good things.

I just think that in the long run, it’s going to be difficult for them

to self-reform these big issues. Just impossible to do.

Mr. TOWNS. Now I hear from time to time that people say that

well, Congress should stay out of it. They should not get involved

in it at all. They have no business being involved in athletics. This

is NCAA’s business and what do they have to do with it?

Mr. MCMILLEN. Because Congress is very involved in our secondary education and our higher education in this country. Look at

the amount of money we are spending as a Nation and yet in many

respects have a tail wagging the dog. I think it’s a very important

issue because we are compromising our institutions of learning in

this country. I am all for sports. I’m all for college sports. I think

the Maryland and Dukes of the world will play just as hard regardless of whether they’re getting more money for winning than they

do right now. The systems, the incentives are skewed wrong and

I don’t think the product of college sports would suffer if it was materially changed.

Mr. TOWNS. Thank you very much. Let me raise this question

with you, Mr. Huma. Has there been any kind of interference by

the NCAA or anybody in reference to your organization moving forward?

Mr. HUMA. Well, not to my knowledge. I don’t think the NCAA

has actively tried to oppose what we’re doing. I think that sometimes administrators on the campus level, from what I’ve heard,

some of them get in the ears of some of the players who are members of our organization, so I have heard a few comments, but not

from the NCAA. I haven’t heard anything from the NCAA, about

the NCAA trying to block this.

Mr. TOWNS. So it’s actually the administrative staff of some universities that have actually interfered with you being able to move

forward.

Mr. HUMA. Right, just a few. By and large, we haven’t faced any

interference.

Mr. TOWNS. Mr. Saum, why do you feel that we should not be

involved, Congress? As was pointed out, we invest a tremendous

amount of money in these colleges and universities. Why should we

not have some kind of say, especially when we know the situation

is broken and it should be fixed?

Mr. SAUM. Mr. Towns, if I can defer that question to my colleague, Mr. Lennon. He’s our Vice President of Membership Services and my area of expertise is gambling and agents.

Mr. TOWNS. Fine, thank you.

Mr. LENNON. Thank you, Bill. First of all, I appreciate the recognition from Mr. McMillen that he shared with his colleagues on

the Knight Commission that there has been significant progress

over the last 10 years and we’re very proud of that progress. Having said that, the challenges that we’ve clearly highlighted today

exist. There’s no denying that and as the Chairman Stearns indicated, we’ve got to figure out those solutions.

I would suggest to you, and Mr. McMillen again pointed out that

his was a personal opinion, that those who served on the Knight

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Commission are leaders within higher education. Bill Friday, Father Hesburgh, the Board of Directors of the NCAA which are comprised of our university presidents, presidents of those campuses

who are your constituents who serve in your Districts are absolutely in the best position to solve these problems.

We have a new group, a task force of the Board of Directors that

is spearheading significant academic reform, taking on the challenges of the cost issues that we have talked about today and it’s

our believe that again, higher education and the leaders in higher

education are absolutely in the best position to solve these problems. The track record has been building. There has been success

over the last decade and I would encourage you to continue to hold

us accountable because we want to be held accountable. There’s no

doubt about that. But how we go about making that change ought

to be done within the higher education community.

Mr. TOWNS. Let me say that, and I know my time has expired,

but let me just make this comment, Mr. Chairman. You know,

when we were doing the legislation on the Student Athletes Right

to Know, I remember the same kind of comments being made, you

know, by presidents and some of them I was really shocked that

I received phone calls from to say that you should not interfere

with this and we are only asking for information to be given out.

And finally, of course, we move forward and it’s now law and of

course, I’m convinced that a lot of youngsters and family members

have benefited from this law, but at the same time there was great

opposition from the NCAA and from the administrators across this

country. They basically made the same statement that you just

made, but now today, I’m listening to comments here and they’re

saying that hey, it makes sense. So maybe we need to do some

other things that make sense and by moving forward, after we

have hearings, collect information and then bring legislation. I’m

not interested in legislating with dollars, having hearings and getting facts and talking to a lot of people before moving forward. But

I do believe that there are some things that need to be fixed. When

I hear the stories coming from athletes as I listen to the story given

to us by Congressman Gordon in reference to the student from Tennessee where the student had talked to an agent and then decided

after talking to the agent and of course, spending $1300 on a plane

ticket and getting dinner and decided to give the money back to the

agent that the agent spent on him because he now wanted to return to school and then for the school, the NCAA to say that he

can’t come back. To me, that’s just crazy stuff, if we’re concerned

about education. So I think we’ve seen enough of that to say that

something needs to be done. As to exactly what I think we need

to talk to some more people, but I don’t think that as Members of

Congress that we can sit back and allow this kind of thing to continue to happen without us taking some kind of action.

Mr. Chairman, I know my time has expired.

Mr. STEARNS. I thank the gentleman. Mr. Terry, you are recognized.

Mr. TERRY. Thank you, Mr. Chairman. Just as a statement before I ask my specific questions. As a college football fan or as my

wife says, fanatic, that I’m just obsessed with that, that is my one

hobby. I love college sports. I love amateur sports. And as a fan,

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share frustration with the NCAA that they do stifle the student

athletes that they don’t recognize the realities on campus per se,

but in their defense, I always say that I think some of the rules,

as tough as they may be, and do stifle the athlete, the intention

of why they implemented a rule or regulation is probably, was necessary to keep the purity of the sport which attracts me as a fan.

So how do you balance that?

And I do share sympathy or have sympathy for the student athlete. I’ve met several student athletes and certainly sympathize

with you, although certainly as a guy who paid for my own college

and worked 20 or 30 hours a week, I see people that get scholarships and don’t think that certainly it’s not—you’re getting some

advantage out of the system that a lot of us students didn’t have

the opportunity to get. I didn’t score high enough on SATs to be

able to get scholarship money, so I worked for it. But you worked

for it too and I’m kind of—what I’m trying to work through here

is the students’ voice. So I’m going to ask you, Mr. Huma, why is

it necessary that there be a separate student organization, the CAC

that you’ve developed? Why should there be a separate student

voice than the one Mr. Aguirre sits on? And there has been some

concerns about your organization and you mentioned it in your

speech with the tie in to the U.S. Steelworkers. I’m not sure what

that really is or what that has to do with anything, so if you’d explain what you’re doing. And some of the accusations or thoughts

are that your organization is trying to quote unquote unionize players and as a fan I’ll tell you that scares the heck out of me because

that’s all I want to do is have a great ticket to the Nebraska-Notre

Dame game and then the players go on strike the day before because you didn’t get your living allowance. So you know, explain

why it’s necessary there’s a separate student entity, explain the

connection to the Steelworkers and the unionization issues.

And then I’m going to ask you is your student organization connected to the NCAA an effective student voice?

Mr. HUMA. Thank you. The Collegiate Athletes Coalition is a student group. We started at UCLA as an official student group and

we do plan on forming a players association through a network of

student groups, somewhat similar to a fraternity. We are not

unionizing——

Mr. TERRY. Or union.

Mr. HUMA. It’s similar to a union, but we can’t unionize because

we’re not considered employees. There’s no way we can do it, so an

accurate description of our group is an advocacy group. And we’re

getting players together to try to form a strong power base to voice

our concerns and influence the rules. And I know that the Student

Athletic Advisory Committee system exists and I think that it is

necessary for student athletes to have an independent voice.

In my written testimony, Supplemental Sheet A, goes down the

list of why the student athletic advisory system is really limited in

its potential. And it’s not for lack of effort by the athletes on these

student athletic advisory committees, but the NCAA has designed

the system and it’s designed the system in a way to where it can’t

be effective. Me, as a student athlete, I didn’t even know about the

student athlete advisory committees until I was done playing football. I mean these student athletes, by and large across the camVerDate 11-MAY-2000 09:34 Apr 23, 2002 Jkt 000000 PO 00000 Frm 00060 Fmt 6633 Sfmt 6602 77989.TXT HCOM1 PsN: HCOM1
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puses, they don’t know about the student athlete advisory committees. Even the representatives on the committees, there’s no mandate to orient them to how NCAA rules are passed, the whole process. So as representatives, as our representatives, the student athlete advisory committees, again, there’s many more potential student athletes. There’s no system, no comprehensive system to collect the opinions of student athletes so that the representatives on

these committees can effectively voice our concerns. So I think that

these are symptoms of a bigger problem. Some of the things we

talked about in student athlete welfare issues and I think part of

it is that student athletes don’t have any power at all in NCAA

sports and as you can see, the student athlete advisory committees,

they were established in 1989, and here it is 2002, and we’re still

fighting for fundamental protections.

Mr. TERRY. Is there an association with the U.S. Steelworkers?

Mr. HUMA. Oh yes, we’re affiliated with the United Steelworkers

of America. When we first started organizing, we realized that it

was similar to a unionizing effort and that we didn’t have the expertise to organize the Nation of student athletes, so—— Mr. TERRY. Mr. Aguirre, is your voice not independent?

Mr. AGUIRRE. Make no mistake about it, my participation on the

Student Athlete Advisory Committee comes as a student athlete

first. While it has been created by the NCAA with the purpose of

engaging student athletes in discussions, my allegiance lies to my

teammates, my fellow Sun Devils, the 120,000 other student athletes that participate in Division 1 across the country.

When we go into discussions about what is in the best interest

of student athletes, we do that with or without the support of what

the NCAA or our athletic directors or our—we do it with what we

think is in the best interest of student athletes and that’s independent. If you ask if our voice is independent, our voice is our

voice and we represent student athletes. We feel that there is an

appropriate and important role for the student athlete advisory

committees to play on campuses, in conferences and at the national

level. We have the ear of the administrators on the management

council who ultimately make the decisions. We sit in those meetings. We give our voice and we give our opinion, when necessary.

And they do listen. We have numerous instances when we have

changed the minds of administrators and have influenced legislation so that has either been defeated or passed.

We would like to participate in an opportunity or have the opportunity engage more student athletes in those discussions, whether

that be through an outside—not through an outside community,

but through a panel or subcommittee of student athletes participating on a certain sport to engage their expert opinion on what

is in the best interest of 1A football players. However that looks,

we are in the business of getting student athletes involved in that

experience and the difficult part of that is that on many levels, particularly on the campus, it is up to the administrators and the student athletes on that particular campus to mobilize and to create

opportunities for themselves for student voice. Because if the student athletes don’t take ownership in their experience, it’s difficult

for anybody as a student athlete to complain if they’re not trying

to make the change at their own level.

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Mr. TERRY. Thank you.

Mr. STEARNS. The gentleman’s time has expired. The gentleman

from Tennessee is recognized.

Mr. GORDON. Thank you, Mr. Chairman, I want to add my welcome to the Panel, potentates and nonpotentates.

Mr. Saum, I was shocked to hear your testimony in apparent

favor of Federal legislation, uniform Federal legislation in banning

gambling. Did I hear that correct?

Mr. SAUM. You did hear that correct, yes sir.

Mr. GORDON. Are you afraid that old camel is going to get his

nose under there and do some harm?

Mr. SAUM. No, Mr. Gordon, I was looking forward to our exchange. I think there’s been some misunderstanding, on possibly

both of our parts. The NCAA is incredibly interested in legislation

to encourage sports agents to honor the welfare of our student athletes. We presently work with the Uniform State Law Commission

to attempt to pass this at the State level. We passed it in 12 States

last year. We think we’ll have about 10 more this year. We’re not

against Federal legislation by any means regarding sports agents.

Mr. GORDON. But you told me or your organization told me a

number of times, I’ve talked with the staff. I talked with some fellow over in Maryland who I think was the president at the time.

Mr. SAUM. What our interest is is not just the legislation. It’s the

enforcement of the legislation and it’s been my experience and we

talk a lot about the problems with illegal sports wagering, we

aren’t the cops. We need help from law enforcement. We need help

from law enforcement.

Mr. GORDON. Right, that’s why my legislation would get you that

help.

Mr. SAUM. If you can convince us that the FBI will help us,

that’s great, but I want to tell you the agent issue and this illegal

sports wagering issue, especially in all due respect in the recent

months has fallen even further down the ‘‘to do’’ list. And that’s the

challenge. So we think at the State level, and let’s just take Ohio,

for example——

Mr. GORDON. If I could, so I don’t use my time up, what has happened, yes, there is a uniform statute, yet, basically you’re having

the same States that already had statutes past that. So there

aren’t any more, I don’t think, any more States. There’s only 26

States.

Mr. SAUM. I think we’ve passed the—I think there are laws in

approximately 32 States at this time.

Mr. GORDON. Well, there are still a lot that don’t have them.

Mr. SAUM. I agree.

Mr. GORDON. And even those that do are uniform, so I guess, did

I understand you to say that you don’t think that this agent problem, with all the other problems you have, this is not important

enough yet for you to discuss?

Mr. SAUM. Oh no. It’s a terribly significant problem. It’s actually

in my title.

Mr. GORDON. I thought you said there were some other things

more important and you didn’t even want to think about this one

now.

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Mr. SAUM. No, no. What I’m saying is we need help from law enforcement and we think we can get more help from State law enforcement officials than Federal, because we think the agent issue

falls down the ‘‘to do’’ list when it comes to enforcing problems.

Mr. GORDON. Well, part of the legislation would empower the

States to do something there too.

Mr. SAUM. I think frankly we’re allies. You may not feel that way

at this time, but I think we’re allies and I think the more that we

meet on this, the more we can move the ball.

Mr. GORDON. You are the sole, you in terms of NCAA, is the sole

reason this legislation has not passed, even though I have a number of letters from coaches all across the country. It was always

your opposition and the reason that I was always given was the

nose of the camel is going to lead to further legislation which is

somewhat ironic in that, as I understand the way the NCAA was

created, was back when football was so rough that Teddy Roosevelt, who was certainly no shrinking violet, said if you don’t get

something together, we’re going to have some Federal legislation.

So that’s the way it was created in the first place. It was really by

the force of the government that created you. If we had waited for

you to do something about integration, would we still be waiting?

In Title IX, I’m sure is something that people can disagree with,

whether they should have it or not, but certainly no one can disagree that the calibre of women’s sports and looking at the Olympics right now has been dramatically increased. As the father of a

little daughter, you know, I was talking to the University of Tennessee athletic director some time ago and she said that as they

were trying to get women involved or families involved in their

women’s athletics that it was really young families bringing their

daughters, not really sportsmen, but they were bringing their

daughters to see those kind of role models. Now if we had waited

for the NCAA to do something, we’d still be waiting. So I respect

your comment that you want to talk about this some, but again I

want to remind you, you are the reason that nothing has been

done. And so we’re going to move forward and with the permission

of the chairman, I’m going to submit some questions that I would

like for you to respond to or your organization to respond to. They’ll

be made a part of the record and hopefully we can find a way to

find some accommodations here.

Mr. SAUM. I look forward to that discussion.

Mr. SHIMKUS [presiding]. The gentleman’s time has expired.

Thank you, Mr. Gordon. And I will recognize myself for 5 minutes.

And first of all, it’s an honor to have Mr. McMillen here. I’m on

the afternoon basketball court and your name is always thrown

around as the people that help break noses and throw bodies

around, so you’re welcome to come down this afternoon.

Mr. MCMILLEN. Thank you.

Mr. SHIMKUS. Although we may have trouble today with all the

votes we got scheduled.

I want to go to a couple issues, first of all, Mr. Fahrenkopf. You

state that only 1 to 3 percent of all sports betting is done in Nevada and the rest is illegal. Is that correct?

Mr. FAHRENKOPF. That’s correct, Mr. Chairman.

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Mr. SHIMKUS. Can you tell us where the majority of sports betting is conducted today, small communities, internationally, of

course, in our Telecommunications Subcommittee we’ve always

been concerned about the off-shore betting and how you get a handle around that.

Mr. FAHRENKOPF. I think the recent Super Bowl maybe gives us

some instruction. There was legally bet in Nevada, we don’t have

the final numbers, but the guestimation was about $70 million,

somewhere between $65 and $70 million legally bet on the Super

Bowl. The estimates, if you talk to law enforcement and other experts, will tell you that somewhere between $5 and $6 billion was

illegally bet on the Super Bowl game. Of that amount, a much larger proportion in the recent past has been bet on the internet. There

are by most estimates of experts, somewhere between 1,500 and

2,000 websites, all off-shore. There’s no domestic websites, where

not only college students, but anybody who wants to place a bet,

I mean you’re taking a chance that you’re going to collect if you

win, where you can, in fact, place a bet, how much of it, it’s debatable. Some experts will say maybe 25 to 30 percent is now bet on

the internet, the rest is with illegal bookies, student and otherwise.

Mr. SHIMKUS. Thank you. And for the record, I’m not one of those

who placed an illegal bet on the Super Bowl. Do you believe that

gambling is an addictive behavior?

Mr. FAHRENKOPF. Absolutely. For 1 percent of the population,

the Commission spent a great deal of time and effort in looking at

gambling and what the impact is on people who can’t control themselves. Harvard’s Medical School, School of Addiction, the National

Research Council, the National Academy of Sciences, everyone now,

even the opponents of gambling, say that about 1 percent of the

adult population are pathological gamblers, otherwise can’t control

their behavior.

Mr. SHIMKUS. And I think States are trying to get a handle on

this as gambling has come to Missouri. I’m from Illinois and in Illinois the State legislatures have tried to address how do you help

those people—— Mr. FAHRENKOPF. That’s exactly right, Congressman. In fact, in

many States, a portion of either the tax that’s paid by the industry

or as you know in some riverboat States, Illinois being one, you

have to pay to go on a boat, a certain portion of that is earmarked

to go to counseling organizations and for treatment facilities.

Mr. SHIMKUS. Let me go to a different line of questioning and for

you, Mr. McMillen, some observers say that we know that the National Football League has salary cap. Some people say that’s

where baseball has to go to have a salary cap, just so they can stop

themselves from spending and getting involved in the student athlete debate that I sat in for a few minutes.

Isn’t this the same kind of problem that the colleges and universities have in that aspect or could have?

Mr. MCMILLEN. As I said before, a major issue is revenue distribution, how you circulate the money around. I’m not sure that

the NCAA and they are trying, will come with a formula that really

fits in line with educational values and that was the point I made

all along when I expressed this earlier, but as I said, earlier people

said what’s the Federal role in these issues? Well, there’s been a

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Federal role in sports forever. I mean the Amateur Sports Act established the United States Olympic Committee. I mean these are

big issues and for people to say that the Federal Government

shouldn’t be involved in this, I think our educational institutions,

our athletic sports programs need to be reviewed appropriately.

Mr. SHIMKUS. And I think you’d have a lot of agreement. My colleague, Mr. Gordon, just brought up a lot of the historical aspects.

It’s always good to remember. And with the Winter Olympics going

on right now and understanding the change from these—from allowing professional athletes now and it’s almost into the student

debate, and the revenues generated by big time collegiate athletics

and the compensation in vogue. And I’m getting short on time, so

I can’t go into that as much as I would like, but let me ask for Mr.

Huma and Mr. Aguirre, do student athletes believe their scholarships and aid are worth the commitment to represent their school

in a sport they presumably enjoy?

I’ll let Mr. Huma go first and then—— Mr. HUMA. I think the evidence that they’re there doing it right

now, they’re agreeing to the system, I think that that’s evidence

that yes, they do think it’s worth it, but I think that there are

gains that they wish to make to leave them less vulnerable to physical and financial hardships.

Mr. AGUIRRE. I most definitely think it’s worth it. I think if you

look at strictly the dollar amount from their monthly stipend that

it may be misleading in terms of what exactly they are putting or

getting out of their athletics participation. When you consider that

in some instances they may be receiving a $25,000 education for

their services on their field or on the court or in the pool, that’s

a pretty good investment in your future, not unlike what you do

when you do a medical internship, to make an investment toward

your future. You also take into account that student athletes will

receive doctor’s visits for free, you know, you get a cold, you go to

the doctor, you get that. I think there are different things that

don’t come into that, don’t fit into that set dollar amount that’s tied

up into their stipend that really adds to what the student athlete

is getting out of it. I think there needs to be additional strides

taken to make sure student athletes can receive a little bit more,

have the opportunity to, but it’s definitely worth it, based on what

they receive now.

Mr. SHIMKUS. And I’ll let you finish and then I’ll go to my colleague from Chicago. But I would—I’ll let Mr. Huma, you mentioned a comment. I know that anyone who played high school athletics at any level wished they had been able to be competitive

enough to get some type of help to play the sport they love and continue their education. Of course, that pyramid keeps narrowing

down. Not everybody who is high speed, collegiate athletes are able

to make it to the next level which is the professional sports level.

Mr. Huma, you want to comment?

Mr. HUMA. Yes, thanks. The idea that our scholarships are the

payoff for going to school, for us, as student athletes, we’re told

that the payoff is the degree and right now between football and

basketball players, less than half graduate, so I think—if you ask

many of the people who don’t graduate, was it worth it, they might

say no, I didn’t get my degree.

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Mr. SHIMKUS. And that addresses a whole different debate that

we should ask questions about that.

My time is expired. I’d like to recognize my friend and colleague

from Chicago, Mr. Rush, for 5 minutes.

Mr. RUSH. Thank you, Mr. Chairman. Mr. Chairman, you know

how our schedule is and it took a lot for me to get here, but I certainly wanted to be here and I wanted to commend you and the

overall Chairman of the subcommittee for this hearing. It’s a very,

very important hearing in my estimation. I’ve followed student athletes over a number of years and have been very, very cognizant

of some of the issues that they are confronted with.

I want to begin by asking Mr. Saum a question. Mr. Huma noted

that some of the fatalities that resulted during this summer’s training programs, this last summer’s training program and he noted

that only $10,000 in death benefits were provided and no health insurance was provided to athletes. And are you doing anything to

compensate for that? Are you doing anything to provide better,

more comprehensive health benefits and death benefits in the

event of a tragedy for these athletes?

Mr. SAUM. If I may, I’d like to defer that question to my colleague, Mr. Lennon, at the end of the table.

Mr. LENNON. Thank you and I do appreciate the opportunity to

clarify for the record what I think have been some

mischaracterizations of the insurance coverage in general. First

and foremost, the key thing is to make sure we protect our student

athletes and prevent injuries and we have a Competitive Safeguards Committee that is very diligent, made up of medical experts, sports scientists, etcetera to do all we can to make sure that

we prevent accidents from happening, injuries from happening and

that’s, I think, important to keep in mind.

When an injury does occur, as a result of participation in athletics, whether it’s in your season or out of your season, regular

football season or spring football, yes, the institution is allowed to

provide you with the insurance coverage necessary.

I want to clarify as well that during the summer when you’re——

Mr. RUSH. Wait now, insurance coverage that’s necessary. Can

you specify—are you speaking in terms of health insurance, comprehensive health insurance and what about death benefits?

Mr. LENNON. Yes, we’ll get to the death benefits. We’ll make sure

that we can do all we can to make sure the student is able to get

back to class and get back to being able to participate.

We also have catastrophic insurance in those instances where

there is a significant disability that would run to about $20 million.

Again, that’s from the NCAA coverage. In the event of a tragic

death of a student, in this instance we’re talking about a student

athlete. Yes, there is a death benefit that is provided by the NCAA.

That is intended to be a supplemental benefit. Institutions on their

own often have a death benefit——

Mr. RUSH. Supplemental to what?

Mr. LENNON. To an institution’s policy which may provide some

expenses, to the family’s coverage which very much may provide

expenses and in instances where that safety net fails, yes, the

NCAA’s in a position to provide a death benefit.

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I do want to note right now and this is important, the NCAA is

examining the gaps and I think that’s what I’m hearing from the

testimony today, our concerns about the gaps in coverage. We are

gathering all that information from our institutions to find out

where those gaps are and to try to meet those particular needs

once we gather that information.

Mr. RUSH. I’m glad you’re answering these questions. Let me ask

you this. A family from the west side of Chicago and Northwestern

student, a university where there was a death occurred over this

last year. The family wasn’t from the west side of Chicago, let’s just

take a family from the west side of Chicago, an impoverished community, may or may not have life insurance, but they have some

students who are superb athletes and one of your schools recruit,

say one of these students. And unfortunately, one of these students

suffers a death while practicing or playing. You’re saying that your

insurance policy is to complement the insurance policies of that

family, but you limited it to $20,000? Is that what you’re telling

me?

Mr. LENNON. Actually, the first source if the family is unable to

provide would be the institution’s own policy of which they may or

may not have a policy. In the event, again, that there’s a safety net

that does not exist, the institution does not, the family does not,

our current benefits, I believe, are at $10,000. I want to clarify,

that’s what we’re looking into. That’s why we’re getting the data

right now from our schools to find out what type of needs aren’t

being met through our current policies. And once we get a handle

on the number of institutions that have policies, and get a sense

again of family commitment, that’s when the NCAA’s in a position

to best address those particular needs.

Mr. RUSH. Mr. Saum, would you have a national playoff system

instead of a bowl game system to—what’s your thoughts about it

in terms of reducing gambling in college games, rather than have

a bowl system, having a playoff system?

Mr. SAUM. The style of the tournament, whether it’s a bowl game

organized event or whether it’s a tournament event would not necessarily in our view impact the level of sports wagering. The level

of sports wagering is impacted by the ability to place bets and the

interest in the game.

Mr. RUSH. Mr. Huma or Mr. Aguirre, both of you mentioned the

fact that you thought there was additional compensation that student athletes should be provided. Have you got any idea what kind

of additional compensation or additional benefits are you looking

at, are you considering, either one of you?

Mr. HUMA. Sure. What we’re looking at doing is getting stipends,

our scholarship stipends increased to the actual cost to attendance.

Each university puts out a figure called the cost of attendance and

this is the amount of money needed for any student to survive at

that school. Right now, our scholarships are below that and on average it’s about $2,000 to $3,000 a year. So we’d like a pretty moderate increase just so student athletes can get by and make ends

meet.

Mr. AGUIRRE. If I may, we, the Student Athletic Advisory Committee also completely agree. We liked to see that scholarship

amount increased. We’d also like to see some limits on the types

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of scholarships that student athletes can receive lifted, the restrictions on those and some of the work-related restrictions, the Student Athletic Advisory Committee is looking into making recommendations on how we can make that a little bit better for student athletes. But one of the issues is in a financial situation like

we have in this country right now, we realize that institutions and

athletic departments have a finite amount of money that they have

in their budgets and many of them are running deficits. So we really want to as a Student Athletic Advisory Committee make sure

that when we are thinking of things from the student athlete welfare standpoint we need to be aware of all of the issues that are

implicated in that and not just the issues that affect football and

basketball. Primarily speaking, football and basketball are funded

fully by their institutions. Well, when we start talking about increasing money, that’s got to come from somewhere in an institution’s budget and in many cases on some of the smaller campuses,

a lot of the Olympic sports scholarship programs aren’t funded

fully. So are we talking about pulling money away from some of

those students who already don’t have the right funding for student athletes who currently do, so we just want to make sure that

before we really ask for any action for student athletes, we’re looking at all the implications that come with putting more money in

one place.

Mr. RUSH. Mr. Chairman, if I could have an additional minute

and a half?

Mr. STEARNS. Sure.

Mr. RUSH. I have one other question. I’m also concerned about

the disparities between women athletics in colleges and men athletics in colleges as it relates to scholarship compensation and also

health care benefits. Mr. Saum, are there any research or there

any policies or is there anything where you’re considering what

some of the disparities are in terms of women athletes at the college level?

Mr. SAUM. Congressman, that is not my area. I don’t know if

Kevin wants to help. I know that we certainly abide by Title IX in

our institutions. We have Title IX seminars. Kevin, I’m sure, can

assist me here.

Mr. LENNON. The data will clearly show that we have increased

opportunities for women, in part, as a result of the actions——

Mr. RUSH. I understand about opportunities. I know the Title IX.

I know the standards. But what I’m saying is okay, women have

different health needs requirements than men.

Mr. LENNON. I would not see any distinction that is being drawn

in our current legislation between the benefits, health benefits that

a woman or a man would receive. It’s appropriate for what their

needs are. And again, as we talked about the insurance coverage

will relate to injuries and illness that may be different for a man

or a woman, but that would be covered within the policies.

Mr. RUSH. Thank you, Mr. Chairman.

Mr. STEARNS. I thank the gentleman and the colleague for his

participation and I appreciate him coming down.

I think we’ll go another quick round of questions and I’ll start

out.

65

Mr. Saum, the handout that the American Gaming Association hands out, shows this money pyramid of $6 billion, 11-year television contract and you’d mentioned that you allocate about $400,000 for sports agent and gambling activities and I guess that

includes education and enforcement. So my question is the gaming

commission says you only spend $229,000, you say $400,000. Just

an obvious question is, with that kind of budget, $6 billion, why

wouldn’t you be spending more for gambling activities, that’s the

gist of the question.

Mr. SAUM. Mr. Chair, first of all, their number is correct a year

ago. My number is correct this year with our new budget year.

Mr. STEARNS. But you know, $400,000 is less than 1 percent of

your budget.

Mr. SAUM. I think we can do a lot with numbers, as much as we

do with athletics every day with statistics. I’m not so sure it’s actually the amount of money that we spend. What we have to evaluate

is are we impacting our student athletics, both educationally

through our various medium and then from an enforcement standpoint and we’ve increased our staff to 7. Now certainly we all share

responsibilities in the issue of—— Mr. STEARNS. I’m here to help you increase your staff more than 7 on a budget of $6 billion.

Mr. SAUM. It’s not a spin answer on our part. We truly engage

individuals on our campus.

Mr. STEARNS. I know, but if money is where your heart is, then

this would show that your heart’s not into this.

Mr. SAUM. We could expand the discussion just for a moment.

We return, and again, Mr. Lennon might be able to assist me more

here, but 94 cents out of every dollar that the NCAA receives from

our television contract is returned to our schools in various fashions.

Mr. STEARNS. So $6 billion is not really yours?

Mr. LENNON. None of the $6 billion is ours. Our schools tell us

how to spend it.

Mr. STEARNS. Okay. Mr. Fahrenkopf, what about the argument

that because sports betting is legal in Las Vegas and Nevada that

this has a proportional effect in communities to create illegal gambling activities because it’s much like if you have a State that’s

going to legalize drugs, and the rest of the States don’t, it sort of

moves the whole culture down and everybody says well, if Nevada

is legal, why are we going to be so concerned. It’s only going to go

to local high schools and colleagues and communities and this

thing is going to permeate down because it’s legal in Nevada. So

that’s the argument.

Mr. FAHRENKOPF. That’s a very good question. Clearly, in the

four or five hearings that have held so far, no evidence has been

offered that that is the case, but assuming there was a possibility

that there was and that is why in the chart over here, in the analysis of—— Mr. STEARNS. That’s a comparison of the two bills.

Mr. FAHRENKOPF. Of the two bills. If you look at 641 and what’s

up there, the NCAA has had a change of heart on their whole attitude since the National Gambling Impact Study Commission

report——

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Mr. STEARNS. Just answer the question.

Mr. FAHRENKOPF. What I’m suggesting is that one of the things

they suggested, we supported and the National Gambling Impact

Study Commission approved was there ought to be a study, a study

done by the Justice Department and law enforcement people to see

whether or not there is anything to that charge.

Mr. STEARNS. Now if Mr. Lindsay added that to his bill would

you support it?

Mr. FAHRENKOPF. If Mr. Lindsay added what?

Mr. STEARNS. That study.

Mr. FAHRENKOPF. Not if it’s going to close it down first. We’re

ready to roll the dice. I’ve said this before, no pun intended. If law

enforcement and the recommendation comes back and said Nevada’s part of the problem here, Nevada is causing this difficulty.

I’ll tell you what, our industry and our State has got to stand up

and take it on the chin.

Mr. STEARNS. What does that mean?

Mr. FAHRENKOPF. I said that before.

Mr. STEARNS. What does that mean ‘‘take it on the chin?’’

Mr. FAHRENKOPF. We’d have to go along with what the recommendation of this Congress might be.

Mr. STEARNS. So if the recommendation came out that you would

actually support?

Mr. FAHRENKOPF. If, in fact, law enforcement and the studies

that are laid out here say that Nevada is part of the problem, is

a contribution to the difficulty that’s going on on college campuses,

you’re right, we’d have to swallow real hard and consider very seriously supporting legislation that would solve that problem. But

what we’re saying is that there’s no evidence right now.

Mr. STEARNS. But you want to see the study?

Mr. FAHRENKOPF. That’s exactly right.

Mr. STEARNS. That’s a good point. That’s a good point. I think

that’s a major statement on your part in this hearing. I’ve never

heard you quite say that that way.

Mr. FAHRENKOPF. I said it before in Congress.

Mr. STEARNS. Okay, Mr. Lennon, I appreciate you being here.

You see so much of Nike and other sporting companies now coming

down to high school and giving athletic equipment and this whole

idea of allowing companies to provide sports equipment to high

school team, doesn’t that go to the possibility that these high school

students will be influenced and be moved by these gifts of this high

school equipment from these major manufacturers of tennis shoes

and clothes and basketballs and things? Is that something we

should worry about?

Mr. LENNON. Well, perhaps the thing to worry about is the funding in secondary school education that requires them to take those

type of benefits to support their programs. That’s probably first and

foremost. The issue of influence that it may have on a young person is something that I think we have continued to see. There are

Nike high schools, there are Addidas high schools that are

affiliated——

Mr. STEARNS. Just yes or no. Is there an influence we should be

concerned about?

67

Mr. LENNON. Yes, there is, whether it rises high on your priority

list would be your discussion.

Mr. STEARNS. And is there any really scandalous situations or

anything you could point to that would further confirm what you

say?

Mr. LENNON. I probably wouldn’t be the one to speak to that.

Mr. STEARNS. Okay. I think my time has expired. The ranking

member, Mr. Towns.

Mr. TOWNS. Thank you very much. Mr. Lennon, how do you respond to the fact that the Student Right to Know Act is not being

complied with by many universities?

And what is NCAA doing to punishing those who are not complying? Is there any action taken? I’ve not read anywhere where

any school that did not report that any action has been taken and

this is the law.

Mr. LENNON. It is the law and it’s one that, as you know, cooperatively the NCAA in 1990, as your bill was being introduced,

mandated that will publish graduation rates and we’ve worked cooperatively for the last 11 years to do that. This, Congressman, is

the first time that I have really heard of the systemic problem that

you have noted regarding our institutions not providing that information to prospects. Our numbers quite candidly don’t bear that

out. We have not had many self-reports or reports from parents

and prospects that they don’t have the information. Every year, at

the NCAA we send out to every high school that look, we’re going

to put this on our website. You can see the graduation rate by team

of all of our institutions. That’s available and we tell the high

schools they can go get it. We require our schools in early in the

recruiting process to provide that information to prospects and in

no event can do they do that later than the letter of intent signing

date. So we have legislation that clearly addresses your concern.

Are there some breakdowns locally? Perhaps with those coaches

that may exist. Our numbers, quite candidly, don’t show that it’s

nearly as systemic as you’re talking about. In fact, on a more regular basis, I do think we’re having young people who are making

evaluations based on the success of those teams, academically, as

well as athletically. That’s always going to be the case. But I think

we have people paying attention to the graduation rates and if you

have specific evidence that would come forward that says I know

of schools who have not provided this to a prospect, I can tell you

the NCAA would be very interested in hearing that.

Mr. TOWNS. We will provide it. I read recently in the news that

the University of Alabama was given 5 years’ probation and scholarship losses for paying high school coach $115,000 for his star defensive tackle to attend this school. What infraction constitutes the

‘‘death penalty’’ for a program? Because what people are saying the

NCAA is unwilling to punish the revenue-generating schools such

as Alabama which generates a tremendous amount of revenue. I

think it’s in the SEC Conference, but is that true? Because this is

the general feeling that you get from people that if you have university that generates a tremendous amount of money, the NCAA

will be reluctant to take action because after all, this school brings

in X amount of dollars.

Mr. SAUM. Mr. Towns, I can help you with that answer.

68

Mr. TOWNS. Sure.

Mr. SAUM. If an institution commits what is identified as a major

infraction, much like you just described, they go on what we call

a 5-year clock and if there is another major infraction within that

5-year clock, 5-year period, that institution then is at risk to have

the ‘‘death penalty’’. I think it’s important to note for this committee, that the NCAA, the 340 of us in Indianapolis have nothing

to do with that penalty. We do investigate those institutions, but

we prepare our findings and make a presentation to a committee

on infractions and the people that sit on the committee on infractions are those individuals from our schools. They’re athletic directors, lawyers, faculty athletic reps. So it is that group that decides

when to issue the ‘‘death penalty’’ or not to issue the ‘‘death penalty.’’ Mr. TOWNS. All right. I think my real concern here is what hap- pens to that student who had nothing to do with the $115,000 or

the $25,000, but he’s a victim. What happens to that person?

Mr. SAUM. Well, certainly, if that institution goes on probation

or has some sort of scholarship reduction or is removed from the

bowl game, the entire team is affected. Those are the penalties that

our schools have voted on, agree with and want to be implemented.

Certainly, there is always the discussion of how the student that

is left behind that may be affected, but that is part of the process.

We’ve improved our rules and penalties. We actually will follow the

coach if the coach leaves. That used to be a criticism. But the coach

is now followed with penalties if he or she goes to another school.

Mr. TOWNS. I’m concerned about that athlete who really had

nothing to do with that and all of a sudden he finds himself a victim.

Mr. SAUM. That athlete, if the eligibility remaining of that athlete is less than or equal to the removal from the bowl game or the

tournament can leave that institution and be immediately eligible

at the next institution. So that athlete’s welfare I think is taken

into consideration there, sir.

Mr. TOWNS. Thank you very much. Let me ask this question, just

1 minute?

Mr. STEARNS. Sure.

Mr. TOWNS. You know, we have on college campus all the time

where we name a building after someone who has contributed a

tremendous amount of money, it’s generally not because they provided great educational leadership, it’s generally the dollars that

they’ve contributed would determine the name of the building. You

can just do research on that and you’ll find that that’s generally

what happens throughout the Nation. How do you feel about corporations coming in and bidding on athletic centers in terms of to

be able to have it named after them and I’m talking about corporations like Nike and whoever would come in and say well, we will

contribute X amount of dollars to the university you will name your

athletic center after Nike. I’d like to get your views on that very

quickly, starting with you, Tom.

Mr. MCMILLEN. That doesn’t bother me as much as again, how

the money is used. I mean I’m all for universities with a good taste,

enhancing their revenue base, but how the money used is really

the issue. Is it used to promote educational values?

69

Mr. TOWNS. Any other comments of others? I’d like to get yours,

Mr. Lennon. I’m going to call your name, but anybody else—— Mr. AGUIRRE. I would just like to say that I think as a student

athlete, we would be less concerned about—I mean we would be

concerned in some instances about where the money comes from,

but if someone in the community is willing to donate money to enhance the experience, the services for student athletes, then that’s

really a good thing for student athletes, as long as that money is

legitimate, I guess you could say.

Mr. TOWNS. Okay.

Mr. LENNON. Your question notes that athletics is not really any

different than the rest of higher education, whether it’s an arts

building that’s being named or a stadium and I think we need to

keep that in mind. I just agree with what both the other gentlemen

have said. It’s the influence of the money that we need to be the

guardians of. It’s not the money itself.

Mr. TOWNS. Right. Any other comments on that? Thank you very

much. Thank you, Mr. Chairman.

Mr. STEARNS. Thank you. I thank my colleague. I want to thank

all the panelists for your time and patience while we voted. I think

this committee having jurisdiction over sports, in general, has incumbent responsibility to continue this discussion. I think all of

you have given us a lot to think about and I know many of us will

be comparing notes. So again, I want to thank you very much and

the subcommittee is adjourned.

[Whereupon, at 1:08 p.m., the subcommittee was adjourned.]

[Additional material submitted for the record follows:]

PREPARED STATEMENT OF KEVIN LENNON, VICE-PRESIDENT FOR MEMBERSHIP

SERVICES, NATIONAL COLLEGIATE ATHLETIC ASSOCIATION

On behalf of the National Collegiate Athletic Association (NCAA), I am pleased

to have the opportunity to provide the committee with background on the methodology and distribution of graduation rates as required under the Student Right to

Know Act and the accompanying requirements of the NCAA and its member institutions. I will also provide an overview of our student-athlete benefits. The NCAA is

a tax-exempt, unincorporated association of approximately 1,260 colleges, universities, athletics conferences and related organizations devoted to providing athletics

opportunities for and supporting the educational goals of male and female studentathletes.

Graduation Rates

The NCAA membership passed legislation in January 1990, mandating the collection and reporting of graduation rates data. In November of the same year, the Congress passed the Student Right-to-Know Act and the NCAA altered its own legislation to meet the strictures of the Act. The NCAA began collecting and reporting institutional graduation rates for students and student-athletes in 1991, and to date,

has released 11 annual reports containing graduation-rate data.

For the first seven years of the data collection process, the NCAA gathered information using its own collection form based on federal law. Beginning in 1998, the

U.S. Department of Education began collecting the data as part of the annual Integrated Postsecondary Education Data System (IPEDS) data collection process, and

the NCAA arranged for the IPEDS data to be transferred to the NCAA data base

so the Association could prepare and distribute the actual reports for our member

institutions. The NCAA has maintained that cooperative relationship with the Department for the last four years.

Current NCAA and federal legislation mandates that institutional reports be provided to prospective student-athletes, their parents, coaches and guidance counselors. The NCAA assists its member institutions in notifying the high school coaches and guidance counselors by posting the data on our Website and notifying by

mail all high schools in the country that the data are available. This system of notification has met with the approval of the U.S. Department of Education. The transVerDate 11-MAY-2000 09:34 Apr 23, 2002 Jkt 000000 PO 00000 Frm 00073 Fmt 6633 Sfmt 6621 77989.TXT HCOM1 PsN: HCOM1
70

mission of the data to the prospects and their parents remains the responsibility of

each member institution.

NCAA Bylaw 13.3.1.2 proscribes that member institutions will provide the information to the prospects and to the prospects’ parents at the earliest opportunity

after the institution’s first arranged in-person encounter with the prospect or upon

request. However, in no event can an institution provide the information later than

the day prior to a prospect’s signed acceptance of the National Letter of Intent or

signed acceptance of the institution’s written offer of admission and/or financial aid.

Historical perspective on the graduation rates

Data have been collected for entering freshman classes from 1984 to 1994. The

overall graduation rate for student-athletes at Division I institutions has been higher than the student body rate at those same institutions in every year since the

NCAA adopted higher initial-eligibility standards for athletes in 1986. The most recent data show that Division I student-athletes graduated at a 58 percent rate,

while the general student body graduated at a rate of 56 percent. In fact, the graduation rate of student-athletes other than those participating in football and men’s basketball is above 60 percent.

Unfortunately, the rates for men’s basketball and football are lower than the overall student body rates. For the entering freshman class of 1994, Division I-A football

players graduated at a 51 percent rate and Division I men’s basketball players graduated at a 40 percent rate. While these numbers are unacceptably low, it is important to note that when they are disaggregated by ethnicity, both African-American

and white student-athletes in those sports perform better than the same ethnic and

gender groups within the overall student body (except for white male basketball

players).

For example, African-Americans in Division I-A football graduated at a 45 percent

rate while all African-American males at the same schools showed a graduation rate

of 37 percent. Likewise, white football players at the Division I-A level graduated

at 60 percent compared to a 59 percent rate among white males in the student body.

In Division I basketball, African-American males who entered college in 1994 graduated at a 35 percent rate and their counterparts in the student bodies at Division

I institutions graduated at a 31 percent rate. The exception to this trend is among

white males in the sport of basketball who graduated at a 52 percent rate while

white males in the student body graduated at a 57 percent rate.

Even with the comparative success of many of our student-athletes, the NCAA Division I membership has determined that more efforts must be made to improve

academic performance of student-athletes. To that end, the Division I Board of Directors is currently contemplating significant increases in the progress-toward-graduation requirements that dictate the level of academic performance that studentathletes must achieve to maintain eligibility for athletics competition. In addition,

the Board will be reviewing suggestions regarding institutional penalties for unacceptable academic performance among athletics teams. The Board of Directors has

set academics as a top priority, and the NCAA governance structure is pursuing

these rules changes with great vigor. Guiding the Association’s discussion of appropriate standards is a remarkable data set from the last decade of implementing current requirements, and we believe that we have a plan that will lead to much better

academic performance among student-athletes.

Enforcement of Bylaw 13.3.1.2

The violations that were reported were isolated to only a few prospective studentathletes, and resulted from an oversight on the part of a coach or other athletics

department staff member. Only a few of the reported cases appeared to involve systemic deficiencies in meeting the requirements of the Bylaw. Institutions that have

violated the bylaw typically have been required to review their procedures for providing the required information, and have been required to implement additional

procedures or processes to ensure that the appropriate information is provided to

prospective student-athletes in a timely manner. In addition, the involved staff

members may be required to undergo NCAA rules education sessions or reviews to

ensure that those involved understand the requirements of the Bylaw and the institution’s obligation to provide the information within the specified time period. Finally, in some instances, the involved coaching or other staff members have been

reprimanded, admonished or cautioned regarding their failure to abide by NCAA

legislation.

Sources of Financial Aid/Benefits Available to Division I Student-Athletes

The NCAA takes the highest interest in the overall welfare of student-athletes

and provides specific legislative guidance and special programs to ensure the student-athlete’s financial aid opportunities meet the student-athlete’s need. Although

71

a student-athlete typically is eligible to receive financial aid up to the value of a

full grant-in-aid, which is defined as tuition and fees, room and board, and required

course-related books; in many situations, NCAA regulations permit student-athletes

to receive funds from additional sources that, in combination with institutional financial aid and other outside sources of aid, exceed the value of a full grant.

These outside sources are numerous and include specified government grants for

educational purposes, other scholarships, and grants and legitimate loans. Also included is outside employment during the school term after a full academic year of

residence and academic eligibility. The student-athlete is then able to earn up to

$2000 annually. (There are no restrictions on the amount a student-athlete can earn

during vacation periods.)

The Division I membership is examining financial aid models that would expand

current opportunities for student-athletes with unmet need to receive institutional

financial assistance unrelated to athletics ability up to the cost of attendance. We

anticipate that proposals will be developed for consideration by the Division I membership in the fall of 2002. It should be noted that, under current legislation, NCAA

member institutions provide over $1 billion annually in financial aid assistance to

student-athletes.

Special benefits programs also currently exist to help the student-athlete. One example is the Special Assistance Fund from which a student-athlete with special

needs (Pell qualified) may request additional financial aid with no obligation to

repay such aid. (For example, a student-athlete can buy clothing, plane tickets home

or pay for other personal emergencies from this fund.)

A new Student-Athlete Opportunity Fund has been established to enhance educational and developmental opportunities and to provide direct benefits for studentathletes. The fund will start at $17 million for the 2002-03 academic year with 13

percent increases thereafter during the term of the NCAA basketball television contract. The funds are to be allocated to the conference offices (beginning August 2003)

through the broad based formula (based on grants-in-aid offered and the number of

sports the institution sponsors on the varsity level). Maximum flexibility will be provided to use the funds for educational and developmental opportunities for and direct benefits to student-athletes. Some examples of permissible uses include; summer matching grants for men’s and women’s basketball prospects to attend summer

school; incidental incentive funds for improving graduation rates; degree-completion

programs and payment of premiums for disability insurance for potential professional prospects.

Additionally, an Academic Enhancement Fund of $50,000 per institution is distributed through conference offices. Institutions are encouraged to use these funds,

within specific guidelines provided, to enhance the student-athletes’ academic experience. The fund is scheduled to increase by 4.25 percent each year during the

course of the CBS contract beginning in the fiscal year 2002-03. In total, nearly

three-quarters of a billion dollars over the 11-year term of the new CBS contract

will be earmarked specifically for Division I student-athletes.

Under current NCAA regulations, institutions are permitted to provide studentathletes with athletics medical insurance to cover expenses related to injuries or illnesses that are a direct result of participation in intercollegiate athletics. The NCAA

membership is currently considering legislative proposals that expand medical coverage related to student-athlete’s injuries or illnesses to include any illnesses or injuries during the academic year regardless of whether such injury or illness is athletically related. The proposal would also include coverage during the summer vacation period while participating in voluntary physical activities (supervised or unsupervised) that will prepare the student-athlete for competition.

The NCAA’s basic purpose is to maintain intercollegiate athletics as an integral

part of the educational program. The benefits of participation are designed to enhance the student-athlete’s overall educational experience and provide necessary

support for the student-athlete to successfully complete his or her educational career

in a timely manner. Numerous benefits incidental to a student-athlete’s participation in athletics are available to ensure the safety and welfare of the student-athlete

while participating in intercollegiate athletics. Finally, available sources of financial

aid allow student-athletes (particularly student-athletes with unmet need) to receive

financial assistance over and above the student-athlete’s full grant-in-aid, and in

many cases, above the student-athlete’s total cost of attendance.

72

MAJOR LEAGUE BASEBALL, NATIONAL BASKETBALL ASSOCIATION,

NATIONAL FOOTBALL LEAGUE, NATIONAL HOCKEY LEAGUE,

February 11, 2002

The Honorable CLIFF STEARNS

Chairman

House Subcommittee on Commerce, Trade and Consumer Protection

2125 Rayburn House Office Building

Washington, D.C. 20515

The Honorable EDOLPHUS TOWNS

United States House of Representatives

2232 Rayburn House Office Building

Washington, D.C. 20515

DEAR CHAIRMAN STEARNS AND REPRESENTATIVE TOWNS: Your Committee plans to

hold a hearing that will address the issue of gambling on college athletic contests.

Legislation is currently pending in both Houses that would end legalized gambling

on amateur sports. Currently, under the Professional and Amateur Sports Protection Act of 1992 (PASPA), gambling on both professional and amateur sporting

events is illegal in virtually every jurisdiction, with the exception of a sports book

in Nevada and a sports lottery on NFL games in Oregon. Pending legislation would

partially close one of these loopholes, by eliminating the Nevada sports book on

amateur games only.

Our leagues support any reasonable effort to control sports betting. Nonetheless,

we think that a college-only bill is flawed, and should be amended to prohibit gambling on professional sports as well.

On at least three prior occasions, Congress has addressed the subject of sports

gambling, but has never before distinguished between betting on amateur games

and betting on professional games. In 1961, Congress maintained parity between

amateur and professional sports when it made fixing athletic contests a federal

crime and banned interstate sports wagering over the telephone. The same approach

was applied in 1974 when Congress amended the federal lottery laws to allow states

to conduct lotteries, but expressly prohibited sports lotteries.

In 1988, the professional sports leagues, in conjunction with the NCAA, sought

an extension of the sports lottery ban to all forms of sports gambling. The legislative

effort lasted for three years, culminating in the 1992 PASPA law. PASPA made no

distinction between professional and amateur athletics, and, indeed, was supported

by definitive Congressional findings regarding the pernicious effects of gambling on

both professional and amateur sports.

Although the movement for PASPA came from the professional leagues, and the

Oregon lottery never included college games, the NCAA was an active partner in

the effort to enact the 1992 law. On sports gambling, both then and subsequently,

the professional leagues and the NCAA have been united.

As we understand it, there are two primary rationales underlying the pending legislation, both of which are grounded in the report of the National Gambling Impact

Study Commission. The first relates to fixing athletic contests and the second to the

attraction of sports betting as a gambling gateway for college students.

With respect to the first issue, we understand and concur with the view that student-athletes may be exposed to economic temptation, but do not believe it is reasonable to conclude that these forces are only at work in college athletics. Indeed,

all of the professional leagues take seriously the effect that gambling can have on

the integrity of our games. All have adopted—and vigorously enforce—strict antigambling policies that are intended to insulate professional athletics from the corrosive impact of sports betting.

As to the attraction of sports betting to students, there is no reasonable basis to

conclude that collegians are merely betting on college teams. If Congress wants to

address fully gateway sports gambling, it cannot ignore the attraction to students

of high-profile professional games. Indeed, that attraction will only increase if an

amateur-only bill is passed and betting on professional sports contests becomes the

only lawful form of sports wagering in Nevada.

We do not agree that the legislation must be limited to college games in order

to implement a recommendation from the Gambling Commission. Indeed, the mere

introduction of the pending bill already breaks with the Commission, which recommended that the Nevada legislature, not Congress, end legalized gambling on

amateur sports. Further, the Commission made a specific finding that sports betting

is a gateway form of gambling for young people, a conclusion that merits federal

intervention. Amending such legislation to include professional sports would be entirely consistent with—and would in no way contravene—the report of the Gambling

Commission.

73

We doubt that Congress intends to suggest that gambling on college games is

harmful and undesirable, but that gambling on professional games is benign and

tolerable. Nor do we believe that Congress seeks to instigate more gambling on professional contests, a result that is certain to occur if legislation extends only to gambling on amateur games. A college-only bill, though well-intentioned, only imperfectly solves problems at the college level, while creating new and substantial problems for professional sports.

If Congress intends to re-open federal sports gambling law, we urge that any such

legislation maintain parity of treatment between amateur and professional sports.

Any departure from this approach to which Congress has consistently adhered, will

result in a highly regrettable precedent that is needlessly damaging to professional

sports.

We ask that this correspondence be made a part of the official hearing record.

Thank you for your consideration of our views. We look forward to working with you

on this legislation.

Respectfully submitted,

THOMAS J. OSTERTAG

Senior Vice President and General Counsel

Office of the Commissioner of Baseball

RICHARD W. BUCHANAN

Senior Vice President and General Counsel

National Basketball Association

JEFFREY PASH

Executive Vice President

National Football League

WILLIAM L. DALY

Executive Vice President and Chief Legal Officer

National Hockey League