```

[House Hearing, 107 Congress]
[From the U.S. Government Publishing Office]

 
                  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
                               __________

                        U.S. GOVERNMENT PRINTING OFFICE
                                WASHINGTON : 2002
_____________________________________________________________________________
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                    COMMITTEE ON ENERGY AND COMMERCE

               W.J. ``BILLY'' TAUZIN, Louisiana, Chairman

MICHAEL BILIRAKIS, Florida           JOHN D. DINGELL, Michigan
JOE BARTON, Texas                    HENRY A. WAXMAN, California
FRED UPTON, Michigan                 EDWARD J. MARKEY, Massachusetts
CLIFF STEARNS, Florida               RALPH M. HALL, Texas
PAUL E. GILLMOR, Ohio                RICK BOUCHER, Virginia
JAMES C. GREENWOOD, Pennsylvania     EDOLPHUS TOWNS, New York
CHRISTOPHER COX, California          FRANK PALLONE, Jr., New Jersey
NATHAN DEAL, Georgia                 SHERROD BROWN, Ohio
STEVE LARGENT, Oklahoma              BART GORDON, Tennessee
RICHARD BURR, North Carolina         PETER DEUTSCH, Florida
ED WHITFIELD, Kentucky               BOBBY L. RUSH, Illinois
GREG GANSKE, Iowa                    ANNA G. ESHOO, California
CHARLIE NORWOOD, Georgia             BART STUPAK, Michigan
BARBARA CUBIN, Wyoming               ELIOT L. ENGEL, New York
JOHN SHIMKUS, Illinois               TOM SAWYER, Ohio
HEATHER WILSON, New Mexico           ALBERT R. WYNN, Maryland
JOHN B. SHADEGG, Arizona             GENE GREEN, Texas
CHARLES ``CHIP'' PICKERING,          KAREN McCARTHY, Missouri
Mississippi                          TED STRICKLAND, Ohio
VITO FOSSELLA, New York              DIANA DeGETTE, Colorado
ROY BLUNT, Missouri                  THOMAS M. BARRETT, Wisconsin
TOM DAVIS, Virginia                  BILL LUTHER, Minnesota
ED BRYANT, Tennessee                 LOIS CAPPS, California
ROBERT L. EHRLICH, Jr., Maryland     MICHAEL F. DOYLE, Pennsylvania
STEVE BUYER, Indiana                 CHRISTOPHER JOHN, Louisiana
GEORGE RADANOVICH, California        JANE HARMAN, California
CHARLES F. BASS, New Hampshire
JOSEPH R. PITTS, Pennsylvania
MARY BONO, California
GREG WALDEN, Oregon
LEE TERRY, Nebraska

                  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                 EDOLPHUS TOWNS, New York
  Vice Chairman                      DIANA DeGETTE, Colorado
ED WHITFIELD, Kentucky               LOIS CAPPS, California
BARBARA CUBIN, Wyoming               MICHAEL F. DOYLE, Pennsylvania
JOHN SHIMKUS, Illinois               CHRISTOPHER JOHN, Louisiana
JOHN B. SHADEGG, Arizona             JANE HARMAN, California
ED BRYANT, Tennessee                 HENRY A. WAXMAN, California
STEVE BUYER, Indiana                 EDWARD J. MARKEY, Massachusetts
GEORGE RADANOVICH, California        BART GORDON, Tennessee
CHARLES F. BASS, New Hampshire       PETER DEUTSCH, Florida
JOSEPH R. PITTS, Pennsylvania        BOBBY L. RUSH, Illinois
GREG WALDEN, Oregon                  ANNA G. ESHOO, California
LEE TERRY, Nebraska                  JOHN D. DINGELL, Michigan,
W.J. ``BILLY'' TAUZIN, Louisiana       (Ex Officio)
  (Ex Officio)

                                  (ii)

                            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)

  

                  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 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 ill-prepared 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 
amateur 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 ill-
prepared 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 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 3\1/2\ 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 
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 better 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 student-athlete 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.

    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?
    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 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/
100\th 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 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.
    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 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 intercollegiate 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 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 second- and 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 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 tourist-based 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.
    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 playing 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 off-season 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 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 \1/100\th 
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 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 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 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.
    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 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.
    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. 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 billion 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----
    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.
    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 3\1/2\ 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 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.

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 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:]
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 student-athletes. 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 student-athletes 
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 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 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 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.
    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 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 Nevada, 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 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 co-sponsor 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 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 Nation 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.
    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 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\
---------------------------------------------------------------------------
    \1\ The 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.
---------------------------------------------------------------------------
                              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 request 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 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.
                   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)

    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 so-called ``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
 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.
    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 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 
                   Student-Athlete 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 student-athletes 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.
                           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 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 something 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.
    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?
    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 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 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, 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 campuses, 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.
    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.
    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.
    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 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.
    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.
    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 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.
    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----
    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?
    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.
    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 
happens 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?
    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 student-athletes.
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 transmission 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 student-athletes 
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 student-athletes, 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 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 student-athletes. 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 student-athletes 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.
                                 ______
                                 
        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 anti-
gambling 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.
    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
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