Rolling the Dice: The Impact of the Repeal of PASPA on NFL Player Salaries

Abstract

In 1992, the United States passed the Professional and Amateur Sports Protection Act (PASPA) essentially banning states from legalizing sports betting. However, in 2018, the Supreme Court repealed PASPA, opening the door for states to legalize as they wished. Following the repeal of PASPA, 38 states and Washington D.C. have all legalized sports betting, bringing unprecedented change in the NFL. NFL revenue has increased by billions of dollars in the years following and are expected to continue to increase. With this increased revenue with the NFL, is it possible that the players are feeling the impact of any of this in their contracts? I hypothesize that the increase in revenue will serve as an exogenous shift in the aggregate demand in the labor market of the NFL, leaving the players with higher salaries as a result of sports betting legislation. This thesis uses a difference-in-difference model to estimate the impacts of sports betting legislation on both NFL rookie and non-rookie total contract values, and total real guaranteed money included in those contracts, finding that while there is no average effect, the top 90th percentile of players are earning less as a result of sports betting, while the bottom 10th percentile of NFL earners are earning more. This stands for rookies and non-rookies. Additionally, sports betting allowed the highest paid and lowest paid player in the league each year to earn more in their total contract value and total guaranteed money included in the contract as well.