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Google Survives Second Breakup Attempt & LA Clippers Unprecedented Fine · Bloomberg Law

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  Speaker 1: This is Bloomberg Law with June Grosso from Bloomberg Radio.
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  Speaker 2: The federal government won its second antitrust case against Google.
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  Speaker 2: But once again, Google has escaped without having to pay
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  Speaker 2: the penalty the government asked for, a forced breakup. In
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  Speaker 2: April of 2025, Judge Leonie Brinkema found that Google illegally
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  Speaker 2: monopolized two advertising technology markets. But last week, Judge Brinkema
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  Speaker 2: decided against a forced sale of Google's ad exchange. instead
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  Speaker 2: ordering proposed behavioral changes to Google's business. It's the second
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  Speaker 2: time in a year that a court has denied the
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  Speaker 2: government's attempt to break up the company, even though it
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  Speaker 2: was found liable for engaging in illegal monopoly tactics. Last September,
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  Speaker 2: Judge Amit Mehta, after finding that Google's tactics for dominating
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  Speaker 2: online search were illegal, ruled that Google didn't have to
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  Speaker 2: sell off its popular Chrome web browser. Why did both
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  Speaker 2: judges refuse to order a breakup? Joining me to answer
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  Speaker 2: that question is antitrust law expert Harry First, a professor
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  Speaker 2: at NYU Law School. Harry, why order behavioral remedies instead
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  Speaker 2: of a breakup? That would solve the problem.
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  Speaker 3: Well, two parts. We don't know what the behavioral remedies
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  Speaker 3: are exactly. She said she took, quote, most of what
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  Speaker 3: the parties asked for. I think they were pretty close
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  Speaker 3: on that. So most of is not all of. So
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  Speaker 3: we just don't know exactly what it is. But no
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  Speaker 3: doubt it will include some sort of a monitor and
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  Speaker 3: it's continuing. And, you know, the question is how long.
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  Speaker 3: And that is a problem with behavioral remedies is that
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  Speaker 3: you have to continue to behave and you need a
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  Speaker 3: parent to watch out and hit them when they don't.
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  Speaker 3: So there's that. And then She said she's not ordering
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  Speaker 3: the structural remedies that the Justice Department and the state
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  Speaker 3: plaintiffs asked for, but she didn't say why, because that's
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  Speaker 3: presumably in her opinion, which she gave the parties 14
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  Speaker 3: days to take a look at to make sure there's
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  Speaker 3: no confidential information in there that they would like redacted.
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  Speaker 1: So we're in the.
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  Speaker 3: Waiting game now, and so... If we could judge by
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  Speaker 3: what was reported from the hearing on remedies or hearings
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  Speaker 3: on remedies, I think she's a pretty practical judge and
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  Speaker 3: not a pushover judge for anybody. And I think she
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  Speaker 3: was skeptical, as one might be, about how this was
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  Speaker 3: going to happen. You're sitting there, you're a judge in
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  Speaker 3: the Eastern District of Virginia, and now you've got this
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  Speaker 3: high-tech thing that you're You know, you have to oversee and,
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  Speaker 3: you know, you don't want to be blamed if it
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  Speaker 3: goes haywire and how's it going to happen. And the
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  Speaker 3: Justice Department didn't come in with a buyer or with
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  Speaker 3: anyone having apparently expressed interest in acquiring the exchange, the
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  Speaker 3: advertising exchange. So she was concerned about how it would
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  Speaker 3: happen and over what time.
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  Speaker 2: So you also had Judge Mehta finding that Google ran
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  Speaker 2: an illegal monopoly in search and not ordering a breakup
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  Speaker 2: there either. I mean, both respected federal judges. What does
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  Speaker 2: it take to get a judge to say, Google, you
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  Speaker 2: committed anti-competitive acts. We need to break you up.
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  Speaker 3: Trying to think of what metaphor to reach for. So
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  Speaker 3: I'm not going to reach for any of them. The
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  Speaker 3: first thing I would say is the divestiture, the breakup
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  Speaker 3: that the plaintiffs sought in the search case was actually
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  Speaker 3: not so central in some sense to the case they presented.
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  Speaker 3: So they wanted Chrome divested. They didn't make how Google
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  Speaker 3: used Chrome to help to make Google search a monopoly
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  Speaker 3: or to maintain the monopoly. The focus, I mean, that
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  Speaker 3: was a part, but it wasn't the focus. And the
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  Speaker 3: government didn't say that they'd actually done anything illegal with Chrome.
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  Speaker 3: So the legal case for divesting Chrome was probably weaker
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  Speaker 3: than it should have been if they had actually built
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  Speaker 3: that case when they were trying the liability case for,
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  Speaker 3: you know, what did you do wrong? So on remedy,
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  Speaker 3: the first thing the judge says, okay, we found here's
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  Speaker 3: what parties did wrong. Now what's the remedy for what
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  Speaker 3: they did wrong? I mean, I'm not, you know, an engineer.
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  Speaker 3: You know, I'm not an entrepreneur. I got a case
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  Speaker 3: in front of me. And that's what I'm remedying. So
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  Speaker 3: although it would have made sense to divest Chrome, and
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  Speaker 3: in fact, there was a buyer for Chrome that had surfaced.
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  Speaker 3: There was an offer for Chrome, you know, that was
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  Speaker 3: pretty substantial. It was on the table from an AI
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  Speaker 3: search firm. So Judge Mehta was also concerned about how
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  Speaker 3: this was going to work. because Chrome is an international platform.
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  Speaker 3: You know, exactly how is it going to work? So
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  Speaker 3: in some sense, the cases are distinguishable. The divestiture that
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  Speaker 3: the plaintiffs sought in the ad tech case is actually
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  Speaker 3: central to the theory of liability. You know, their control
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  Speaker 3: of the exchange, which is what the plaintiffs wanted divested,
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  Speaker 3: was critical for Google's control of this whole market and
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  Speaker 3: for Google managing to squeeze more money out of the
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  Speaker 3: parties than they otherwise would have the publishers in particular
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  Speaker 3: and the judge found that so it was really central
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  Speaker 3: to the case so in that sense legally it's more
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  Speaker 3: important they don't have a buyer and so that cuts
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  Speaker 3: the other way and judges are judges i mean they're
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  Speaker 3: generally conservative with a little city you know they recognize
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  Speaker 3: their judges they're not business people and um they're concerned
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  Speaker 3: about doing this so in a way It's not surprising
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  Speaker 3: they're cautious, but it's in some ways a little more
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  Speaker 3: disappointing in the ad tech case because control of that
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  Speaker 3: exchange between both sides is really critical to Google being
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  Speaker 3: able to squeeze monopoly profits out of this market.
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  Speaker 2: Google's ad tech stack sits between publishers selling display space
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  Speaker 2: and advertisers bidding on it giving the company this powerful
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  Speaker 2: position in how prices are set and which ads appear.
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  Speaker 2: Do you think behavioral remedies can actually cure anything?
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  Speaker 3: Behavioral remedies do something. And if they're well designed, you know,
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  Speaker 3: they can do something. They maybe can prevent Google from
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  Speaker 3: preferencing things. I don't know exactly. It's complicated how these
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  Speaker 3: auctions run. And Google, in fact, changed the auction rules
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  Speaker 3: on an ongoing basis.
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  Speaker 1: I mean, so.
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  Speaker 3: Something will change. But, you know, the fundamental insight from
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  Speaker 3: economics is follow your incentives. You know, people act in
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  Speaker 3: their incentives. So if Google still owns the platform in between,
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  Speaker 3: you know, the buyers and the sellers, both sides, they
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  Speaker 3: have certain incentives that an independent buyer doesn't have. So,
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  Speaker 3: you know, as a general matter, putting that in someone
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  Speaker 3: else's hands, their incentive then is to run that marketplace
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  Speaker 3: as efficiently as they can. So I would rather that.
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  Speaker 2: The government would rather that too. Do you think Judge
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  Speaker 2: Brinkema had some valid reasons for being cautious for this
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  Speaker 2: more restrained approach?
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  Speaker 3: I can understand why she's cautious. But I think this
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  Speaker 3: really was the relief that you needed to get competition
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  Speaker 3: going in this market. And I mean, in some ways,
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  Speaker 3: it's not as critical. Messing around with search is one thing.
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  Speaker 3: There's a lot more money involved there. You know, here
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  Speaker 3: it's only six or seven billion. But it was central
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  Speaker 3: to the case, and it seemed to me there was
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  Speaker 3: a good case for it. I wish, although I know
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  Speaker 3: how hard this is, I wish the government plaintiffs had
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  Speaker 3: something more concrete when they presented the case working on
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  Speaker 3: the remedy to the judge. I think there's a natural
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  Speaker 3: tendency to, you know, spend a lot of time on
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  Speaker 3: the liability, you know, because then you never get to
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  Speaker 3: the remedy if you don't get through liability. but maybe
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  Speaker 3: not as much time working on the remedy itself. I
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  Speaker 3: can't say whether they did or didn't hear, but not
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  Speaker 3: having some idea of who the buyers might be or
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  Speaker 3: some indication that there might be interest. It must have
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  Speaker 3: been tough to stand up in court when the judge
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  Speaker 3: asked and they said, oh, don't worry about it. Actually,
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  Speaker 3: the lawyer for the Justice Department said it would be
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  Speaker 3: inappropriate now to have a buyer before you. So it
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  Speaker 3: is a little disappointing, but I'm waiting to see what
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  Speaker 3: she writes in her opinion, and then to see what
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  Speaker 3: happens with the appeal, whether the Justice Department, you know,
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  Speaker 3: whether the lawyers who really made a strong case for
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  Speaker 3: this can convince the higher-ups in the Justice Department that
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  Speaker 3: they should appeal it, and whether, you know, you have
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  Speaker 3: very strong state plaintiffs' offices, you know, representing the states,
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  Speaker 3: and they could very well take.
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  Speaker 2: This up on their own well we've seen the states
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  Speaker 2: be more aggressive than the federal.
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  Speaker 3: Yes and successful so um there are three offices involved
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  Speaker 3: among others but that are particularly strong colorado california new
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  Speaker 3: york and uh i could see a world in which
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  Speaker 3: they do appeal it's not over until it's over someone
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  Speaker 3: once said right Yes, that.
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  Speaker 2: Someone was in the baseball space, I believe, and not
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  Speaker 2: the ad tech space. Harry Stanley Woodward, the number three
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  Speaker 2: official currently overseeing antitrust enforcement at the Justice Department, said,
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  Speaker 2: The timing of the court's order reflects the tradeoffs between
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  Speaker 2: immediate relief and remedies obtained through years of litigation. What
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  Speaker 2: does he mean by that?
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  Speaker 3: We done here. The chances are that the Justice Department
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  Speaker 3: will not appeal. That would be your bet. That's how
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  Speaker 3: I read that. You know, years of litigation. Oh, my God,
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  Speaker 3: we might have. Now, they are appealing the Google search remedy.
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  Speaker 3: So years of litigation didn't seem to. And Woodward, he hasn't,
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  Speaker 3: you know, moved his office yet. to a different floor
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  Speaker 3: of the Justice Department. He's still there. The antitrust division
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  Speaker 3: still has no permanent head. I mean, things haven't changed
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  Speaker 3: in that sense. If I recall correctly, I think he
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  Speaker 3: signed the briefs in the Court of Appeals. So, you know,
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  Speaker 3: he is willing to appeal Google search. So, you know,
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  Speaker 3: that's a we're done here sort of statement to me. But,
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  Speaker 3: you know, the Justice Department is not the only plaintiff.
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  Speaker 3: You know, as there were in Google search, there are
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  Speaker 3: state plaintiffs here, and they certainly could appeal. They filed
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  Speaker 3: independent appeals in the search case as well, although their
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  Speaker 3: positions were pretty much the same. And in the Google
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  Speaker 3: search case, both the Justice Department and the states objected
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  Speaker 3: to part of Judge Mehta's order, not to the failure
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  Speaker 3: to divest Chrome. No one's actually objecting to that. but
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  Speaker 3: to the failure to stop these conditional payments that Google
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  Speaker 3: has used to stay dominant in search. So both the
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  Speaker 3: states and the federal government appealed in Google search. Now,
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  Speaker 3: whether the states, if the federal government chooses not to
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  Speaker 3: appeal in this case, whether the states would appeal anyway,
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  Speaker 3: they're all going to be filing briefs because Google's going
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  Speaker 3: to appeal anyway. the liability decision. So, you know, it's
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  Speaker 3: not like the Justice Department says, oh, thank God we
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  Speaker 3: can move our lawyers, you know, into immigration cases or
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  Speaker 3: whatever else they do in the Justice Department. No, they
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  Speaker 3: still have to defend Judge Brinkham's decision on liability unless
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  Speaker 3: someone above Woodward says, I'm done with these cases, man.
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  Speaker 3: Just throw in the towel. But they haven't done that yet.
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  Speaker 3: So they're still chugging along.
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  Speaker 2: Why would Google appeal this is a win, isn't it?
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  Speaker 2: What more can they hope for? To get the judge's
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  Speaker 2: decision overturned? That seems unlikely.
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  Speaker 3: Well, yeah, it seems unlikely. But, you know, unlikely doesn't
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  Speaker 3: seem to dissuade any litigants these days. But, you know,
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  Speaker 3: so more time and not having an adverse decision on
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  Speaker 3: the books, you know, has its own utility for any monopolist,
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  Speaker 3: you know, to be able to wipe that out. So,
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  Speaker 3: They have said they're going to appeal her liability decision,
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  Speaker 3: and I have no reason to think otherwise.
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  Speaker 2: So what about European regulators?
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  Speaker 3: Oh, they're having fun kicking Google, yeah. I mean, in
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  Speaker 3: the search case, they imposed a very large fine, which
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  Speaker 3: at one point had triggered the president to suggest that
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  Speaker 3: he was going to retaliate with tariffs. We haven't heard that,
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  Speaker 3: but we never hear the end of anything, so who
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  Speaker 3: knows what will happen. So there was a very lengthy
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  Speaker 3: opinion in Google search. I haven't seen a decision in
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  Speaker 3: ad tech, I don't think. But I mean, Europeans have
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  Speaker 3: preserved the option of ordering a divestiture restructuring, but they
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  Speaker 3: haven't used it. And they're particularly unlikely to use it,
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  Speaker 3: I think, against an American tech firm. It's really be
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  Speaker 3: pushing things, maybe legally, but certainly politically. So They're actually
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  Speaker 3: not as concerned about structure as we've been in the U.S. So,
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  Speaker 3: you know, they're a little more comfortable with regulating monopolies,
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  Speaker 3: and that's the way they've gone with the Digital Markets Act.
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  Speaker 3: They're not trying to break up the major tech companies,
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  Speaker 3: but trying to control their behavior.
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  Speaker 2: Is the Microsoft case the only time that a court
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  Speaker 2: has ordered a breakup of a tech company, at least
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  Speaker 2: at the trial level?
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  Speaker 3: There have been other briefings. breakups. Yes, I mean, the
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  Speaker 3: one people turned to is Standard Oil, American Tobacco, back
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  Speaker 3: at the beginning of antitrust. And the other one that
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  Speaker 3: people often point to, which was done by consent, but
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  Speaker 3: sort of under the gun of federal legislation and also litigation,
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  Speaker 3: was the breakup of the AT & T system, which
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  Speaker 3: really was a, you know, quite a historic event. So,
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  Speaker 3: It's been pretty rare and used sometimes when it's easy
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  Speaker 3: in a sense, when the illegal act has been acquiring
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  Speaker 3: a company and you can still just sort of, you know,
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  Speaker 3: break it apart that way. But these companies, the tech companies,
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  Speaker 3: it happens not to be the case with some of them,
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  Speaker 3: but some of them just have grown sort of organically,
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  Speaker 3: so not so much through acquisition, although there's been a
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  Speaker 3: lot of acquisitions. You're talking Facebook? Facebook, right.
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  Speaker 1: I mean, Meta.
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  Speaker 3: Right, but also... Google AdTech, I mean, the tool, the
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  Speaker 3: platform for publishers, you know, stems from an acquisition of DoubleClick,
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  Speaker 3: which the Federal Trade Commission allowed in 2007, I believe.
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  Speaker 3: And the district court found was not a violation of
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  Speaker 3: any trust laws, but, you know, it did stem from
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  Speaker 3: acquiring DoubleClick. And it's still called DFP, DoubleClick for publishers.
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  Speaker 2: So we'll hear more about this latest decision from Judge
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  Speaker 2: Brinkema later in the month. And then the inevitable appeals.
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  Speaker 2: Never-ending litigation. Thanks as always, Harry. That's Professor Harry First
• 16:12
  Speaker 2: of NYU Law School. For the past year, the Los
• 16:17
  Speaker 2: Angeles Clippers have been under investigation by the NBA for
• 16:22
  Speaker 2: circumventing the salary cap. The Clippers were accused of using
• 16:26
  Speaker 2: endorsement deals to pay star player Cowie Leonard. Last Wednesday,
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  Speaker 2: the NBA imposed one of the toughest penalties in its history,
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  Speaker 2: citing deals it says were designed to circumvent the salary cap.
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  Speaker 2: The league stripped the Clippers of five first-round draft picks,
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  Speaker 2: fined the team $ 30 million, suspended owner Steve Ballmer and
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  Speaker 2: two executives, and ordered Leonard to pay $ 700, 000. In response,
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  Speaker 2: the Clippers say they vehemently reject the NBA's findings and
• 16:59
  Speaker 2: will challenge them. The team has good reasons to fight.
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  Speaker 2: While the $ 30 million fine is a trifle to a
• 17:06
  Speaker 2: franchise owned by one of the world's wealthiest people, draft
• 17:10
  Speaker 2: picks are different. Joining me is Martin Edel, co-chair of
• 17:14
  Speaker 2: the sports practice group at Galston Stores. So tell us
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  Speaker 2: what happened, Marty.
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  Speaker 1: Okay, so the Clip Day had put out a press
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  Speaker 1: statement saying they didn't do this, but there's a detailed
• 17:26
  Speaker 1: investigative report by a well-known law firm, Wachtell Lipton, which
• 17:32
  Speaker 1: concluded that for a number of years, Steve Ballmer, the
• 17:38
  Speaker 1: principal owner of the Clippers, assisted Cowie Leonard through his
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  Speaker 1: uncle and agent, Uncle Dennis, he calls him, Dennis Robertson,
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  Speaker 1: in putting together what seemed to be sham deals, sponsorship deals. Leonard,
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  Speaker 1: for instance, got $ 28 million over four years to deal
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  Speaker 1: with Aspiration Parks. What did he do for that? I
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  Speaker 1: think the legal term is bupkis. He did nothing. He
• 18:08
  Speaker 1: had deals with Boingo. He had deals with Daktronics. He
• 18:12
  Speaker 1: had deals with Lockton. Again, did nothing, was paid millions
• 18:17
  Speaker 1: of dollars in consulting fees, even though these companies, according
• 18:21
  Speaker 1: to the Wachtell-Lipton report, had no consulting arrangements with anyone.
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  Speaker 2: So they were using that to get around the salary cap.
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  Speaker 1: Correct. You know, again, a player of Cowley Leonard's stature
• 18:36
  Speaker 1: was being paid tens of millions of dollars per year.
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  Speaker 1: But Uncle Dennis and supposedly Leonard thought that wasn't enough.
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  Speaker 1: So they wanted sponsorship deals, which didn't require him to
• 18:50
  Speaker 1: do anything. And Ballmer, according to the Wachtell-Lipton report, along
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  Speaker 1: with his executive vice president for basketball operations and some
• 19:00
  Speaker 1: other executives, facilitated deals with these companies.
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  Speaker 2: And what's your take on the punishment that was imposed here?
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  Speaker 1: The Clippers lost. Each of their first-round draft picks for
• 19:14
  Speaker 1: a five-year period starting in 2029, that's an enormous penalty.
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  Speaker 1: Is there precedent for it? Let me start with that.
• 19:24
  Speaker 1: The answer is there's precedent for forfeiting first-round draft picks.
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  Speaker 1: That happened with Joe Smith. a first-round draft pick back
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  Speaker 1: in the 1990s who had two contracts, one of which
• 19:38
  Speaker 1: was presented to the league and the other of which
• 19:41
  Speaker 1: was hidden. And when the league found the hidden contract, why?
• 19:45
  Speaker 1: Because Joe Smith fired his agent who negotiated that deal.
• 19:50
  Speaker 1: and the agent turned over this hidden contract. Anyway, Smith
• 19:54
  Speaker 1: was not permitted to invoke the Larry Bird rule, which
• 19:58
  Speaker 1: is a rule dealing with how much a player could
• 20:00
  Speaker 1: pay and how much the team would charge under the
• 20:02
  Speaker 1: salary cap. His contract was voided, and I think it
• 20:06
  Speaker 1: was the Minnesota Timberwolves was also deemed to forfeit a
• 20:11
  Speaker 1: number of draft picks. So that's where we get that number.
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  Speaker 1: The $ 30 million, I'm not sure where we get. I
• 20:18
  Speaker 1: just haven't had the time to do all the research
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  Speaker 1: on that. But I'm sure there's some compensatory aspect to it.
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  Speaker 1: and maybe some punitive aspect as well. Throwing executives out
• 20:30
  Speaker 1: of basketball for a period of time, and both without pay. That,
• 20:34
  Speaker 1: I think, presents a bit of a problem, how they
• 20:37
  Speaker 1: can be suspended without pay. Robertson was thrown out of
• 20:42
  Speaker 1: basketball for five years. This is the Uncle Dennis character.
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  Speaker 1: And yes, Cowley Leonard was fined $ 700, 000, which is supposedly
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  Speaker 1: the amount he actually pocketed. Not entirely clear to me
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  Speaker 1: why he would pocket so little.
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  Speaker 2: Now, the Clippers sent a letter to the NBA commissioner,
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  Speaker 2: Adam Silver, promising to explore... every legal remedy to address
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  Speaker 2: this gross injustice. Do they have legal remedies here?
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  Speaker 1: So the answer there is yes. Everybody always has a
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  Speaker 1: legal remedy. The question is, what is the likelihood of
• 21:21
  Speaker 1: success or even them bringing a legal action? They have
• 21:26
  Speaker 1: to tell a court that that they're undermining the very
• 21:31
  Speaker 1: agreements they signed, the owner's agreement, the league agreement with
• 21:35
  Speaker 1: the team, which gives the commissioner the unbridled authority to
• 21:40
  Speaker 1: investigate and punish people who violate what goes on there.
• 21:48
  Speaker 1: That is a right which is non-arbitrable and not legal.
• 21:54
  Speaker 1: under the agreement. So they're saying that notwithstanding their agreement
• 21:58
  Speaker 1: to that, they never thought that would happen to them,
• 22:00
  Speaker 1: so therefore they should be relieved of it. Not a
• 22:03
  Speaker 1: very good argument. You know, I think the one thing
• 22:05
  Speaker 1: to keep in mind is what the NBA did here
• 22:09
  Speaker 1: was it investigated before it acted. That's sometimes better than
• 22:14
  Speaker 1: other professional leagues, which seem to have a more knee-jerk reaction. Here,
• 22:19
  Speaker 1: they hired a well-known firm. The firm, according to its report,
• 22:23
  Speaker 1: conducted 73 interviews, reviewed over 200,000 pages, made each of
• 22:30
  Speaker 1: their findings or proposed findings available to Leonard's attorney, to
• 22:38
  Speaker 1: Balmer and the Clippers' attorney, so they could challenge or
• 22:42
  Speaker 1: give more information. That's at least the rudiments of fundamental
• 22:47
  Speaker 1: due process. I mean, it's a civil action. Due process
• 22:51
  Speaker 1: doesn't apply to private leagues, but they've given them the
• 22:55
  Speaker 1: rudiments of due process, which makes the challenge even more difficult.
• 22:59
  Speaker 2: So we'll have to see where that goes. Let's turn
• 23:02
  Speaker 2: now to a Louisiana judge on Friday issued a preliminary
• 23:07
  Speaker 2: injunction against the NCAA in a high-profile eligibility case. the
• 23:13
  Speaker 2: judge's ruling clears the way for LSU to list some
• 23:17
  Speaker 2: former NFL players on its roster. So is this about
• 23:22
  Speaker 2: whether former NFL players can return and play college football?
• 23:27
  Speaker 1: Okay, so it's a little broader than that. The NCAA
• 23:33
  Speaker 1: said as a one-time matter that players who graduated, I
• 23:38
  Speaker 1: forget the year, 2021 or 2022, are now entitled as
• 23:43
  Speaker 1: a one-shot deal to be eligible for five years to
• 23:47
  Speaker 1: play college ball. 42 players filed the lawsuit in Louisiana
• 23:54
  Speaker 1: State Court. Those players were from different sports. Some were
• 23:58
  Speaker 1: from football, some from baseball, some from soccer, and they
• 24:02
  Speaker 1: claimed they had the right to play the fifth year.
• 24:05
  Speaker 1: Included among that group were certain professional players who claimed
• 24:10
  Speaker 1: that they were making less money as professionals than they
• 24:13
  Speaker 1: would as college players. And therefore, they should be entitled
• 24:18
  Speaker 1: to receive their fifth year of eligibility and play again.
• 24:23
  Speaker 1: Some of these professional football players had played for Kiffin
• 24:27
  Speaker 1: at Ole Miss, so he was sort of happy to
• 24:29
  Speaker 1: take them back. Others had not, but LSU could promise
• 24:34
  Speaker 1: them significantly more dollars than they were getting as pros
• 24:37
  Speaker 1: to play that fifth year. That's what the case was about.
• 24:41
  Speaker 2: I mean, let me ask a silly question. How many
• 24:44
  Speaker 2: years are these players in school? College is supposed to
• 24:48
  Speaker 2: be about four years, right?
• 24:50
  Speaker 1: Yeah, well, you know, you went through it in four years.
• 24:53
  Speaker 1: Sometimes players go in four years, sometimes five years. There
• 24:57
  Speaker 1: were a couple of examples last season of some players
• 25:00
  Speaker 1: seeking a ninth year of eligibility. The line between being
• 25:05
  Speaker 1: a college student and being a professional employee at the
• 25:11
  Speaker 1: college is rapidly evaporating. So we mentioned before they were
• 25:17
  Speaker 1: being paid less as pros than they would, which seems counterintuitive.
• 25:22
  Speaker 1: But as a college player, they can get name, image,
• 25:26
  Speaker 1: and likeness dollars now paid by the school. That could
• 25:29
  Speaker 1: amount to several million for a well-regarded player. There's something
• 25:35
  Speaker 1: called the House case, which was a settlement for media
• 25:38
  Speaker 1: revenues to be paid to college athletes, where the athletes
• 25:43
  Speaker 1: now are entitled to, I think this is right, 22%
• 25:48
  Speaker 1: of the media revenues that the school gets. And so
• 25:53
  Speaker 1: that's an increasing number every year. The school decides which
• 25:57
  Speaker 1: players will be eligible for that amount. I told my son,
• 26:02
  Speaker 1: for example... that as a crew racer, he would probably
• 26:06
  Speaker 1: get nothing. If he were a football quarterback, he might get, again,
• 26:11
  Speaker 1: several millions of dollars from that settlement. That's more than
• 26:16
  Speaker 1: they'll get.
• 26:16
  Speaker 2: I mean, it's completely changed college sports. I don't follow it,
• 26:20
  Speaker 2: but they used to be amateurs, right?
• 26:23
  Speaker 1: Yes, which gets us to that debate or college athletes,
• 26:28
  Speaker 1: college students or employees. And that's one that you and
• 26:31
  Speaker 1: I have talked about in the past. And unfortunately, we'll
• 26:35
  Speaker 1: keep recurring because there's no hard and fast answer right now.
• 26:40
  Speaker 2: And explain the ruling by the Louisiana judge.
• 26:43
  Speaker 1: A judge who supposedly has some ties to LSU, but
• 26:47
  Speaker 1: at least sits in Louisiana, ruled in favor of Louisianans.
• 26:51
  Speaker 1: The decision is not public. It hasn't been put out yet,
• 26:55
  Speaker 1: but he granted an injunction to the 42 players to
• 27:00
  Speaker 1: allow them to play the fifth year and for no
• 27:03
  Speaker 1: school or the NCAA to take retaliatory action against any
• 27:09
  Speaker 1: of these players. Since that time, since you want to
• 27:12
  Speaker 1: bring it down to the present, the following things have occurred.
• 27:16
  Speaker 1: First is Lane Kiffin has announced that he will not
• 27:19
  Speaker 1: Sign those five players yet. So they're not on his roster.
• 27:26
  Speaker 1: They weren't on his roster this past week where LSU
• 27:29
  Speaker 1: clobbered its opponent. I think it was 51 to 10,
• 27:32
  Speaker 1: but he's reserving that right. In the meantime, the SEC,
• 27:36
  Speaker 1: the conference in which LSU plays, has filed a lawsuit
• 27:41
  Speaker 1: against LSU because on August 25th, the SEC adopted a
• 27:45
  Speaker 1: rule that no player who signed a notice of intent
• 27:49
  Speaker 1: to play professional sports would be eligible for to play
• 27:55
  Speaker 1: college sports. This may be the anti-Lane Kiffin rule. And
• 27:59
  Speaker 1: they have opposed and said they're going to appeal the decision.
• 28:03
  Speaker 1: That hasn't occurred yet, to my knowledge. The SEC has
• 28:08
  Speaker 1: also filed a separate action against Louisiana State and Lane
• 28:13
  Speaker 1: Kiffin to stop them from doing what they're doing, which
• 28:17
  Speaker 1: they amended today to claim that they may, if LSU
• 28:23
  Speaker 1: does not renounce what it has said it intends to do.
• 28:27
  Speaker 1: They can take a vote to toss LSU out of
• 28:30
  Speaker 1: the SEC. And that supposedly will occur Thursday.
• 28:33
  Speaker 2: And before I let you go, Marty, I just want
• 28:35
  Speaker 2: to talk a little bit about the investigation and prosecution
• 28:40
  Speaker 2: of some former NBA players involved in gambling. I think
• 28:45
  Speaker 2: the latest former professional basketball players to be accused of
• 28:50
  Speaker 2: changing their game performance to profit off illegal bets were
• 28:57
  Speaker 2: Malik Beasley and Ed Davis. Are these the same kind
• 29:01
  Speaker 2: of charges as were leveled against Terry Rozier, who's facing
• 29:06
  Speaker 2: trial next year?
• 29:08
  Speaker 1: Well, it's a different investigation, but it all stems from
• 29:13
  Speaker 1: gambling by players, which is an enormous problem right now.
• 29:18
  Speaker 1: not only for the professional leagues, but also for college sports.
• 29:22
  Speaker 2: These are charges for things that happened years ago. This
• 29:25
  Speaker 2: kind of thing is still going on. So prosecutions haven't
• 29:29
  Speaker 2: helped to stem it.
• 29:31
  Speaker 1: Unfortunately, I think the answer is it decided yes. Can
• 29:35
  Speaker 1: I take you back just for a moment? Yes. 2018
• 29:39
  Speaker 1: was a watershed year. Why? Because the Supreme Court announced
• 29:43
  Speaker 1: in Murphy against NCAA that the federal government could not
• 29:48
  Speaker 1: tell the states they could not permit gambling. In the
• 29:51
  Speaker 1: wake of that, 39 states, the District of Columbia and
• 29:55
  Speaker 1: Puerto Rico, all enacted gambling laws to permit gambling. They
• 30:00
  Speaker 1: wanted a piece of the revenues. States were hurting at
• 30:03
  Speaker 1: the time. Leagues needed the money. Teams needed the money.
• 30:07
  Speaker 1: So they all jumped on the bandwagon then. One entity
• 30:11
  Speaker 1: was left off the bandwagon, players. Now, you might say, okay,
• 30:17
  Speaker 1: but a player in the NBA who's a super max
• 30:21
  Speaker 1: player is going to be making $ 60 million a year.
• 30:24
  Speaker 1: Why does that player need more money? And the answer
• 30:27
  Speaker 1: is because he wants more money. So you have players
• 30:32
  Speaker 1: now thinking they can get in on the action as
• 30:35
  Speaker 1: gambling expanded from 2018 through today. So we had originally
• 30:40
  Speaker 1: you bet on the outcome. That's the traditional form of gambling.
• 30:44
  Speaker 1: As FanDuel and DraftKings expanded their platforms, you suddenly had
• 30:48
  Speaker 1: what we call prop betting. You could bet on any
• 30:53
  Speaker 1: statistic of any player. You want to bet the player
• 30:56
  Speaker 1: will miss a shot? Go for it. You want to
• 30:59
  Speaker 1: bet that a baseball player is going to get a
• 31:02
  Speaker 1: strike on the next pitch? you can bet on that.
• 31:05
  Speaker 1: This is all part of prop betting. I've not been
• 31:08
  Speaker 1: getting into prediction platforms, which is a whole other conversation.
• 31:11
  Speaker 1: So with all of this, the players wanted a piece
• 31:15
  Speaker 1: of the action or their friends and family wanted to
• 31:18
  Speaker 1: get in on the action through them. And so you
• 31:20
  Speaker 1: have them participating sometimes through the mob, as we saw
• 31:25
  Speaker 1: with Terry Rozier and his games. sometimes just illegally because
• 31:31
  Speaker 1: each of the leagues prohibits its players from betting on
• 31:35
  Speaker 1: that sport's contests, outcomes, statistics.
• 31:41
  Speaker 2: And so much money involved in sports gambling. Thanks so
• 31:44
  Speaker 2: much for joining me today, Marty. That's Martin Edel, co-chair
• 31:48
  Speaker 2: of the sports practice at Galston Stores. And that's it
• 31:52
  Speaker 2: for this edition of the Bloomberg Law Show. Remember, you
• 31:55
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• 31:57
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• 32:01
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• 32:07
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• 32:11
  Speaker 2: Wall Street time. I'm June Grosso, and you're listening to Bloomberg.