Fair Play Enforcement Act: Colleges Could Face Millions in Fines Under New Bill

Prompted by recent eligibility controversies at LSU, bipartisan federal legislation would levy massive tax penalties on colleges that field former professional athletes or student-athletes with gambling violations.

U.S. Representatives Adrian Smith (R-Neb.) and Brendan Boyle (D-Pa.) introduced the Fair Play Enforcement Act earlier this month. The lawmakers say the bill would hold colleges and universities accountable for fielding athletes who violate established standards of fair competition.

“College sports depend on honesty and fair play. Schools should not be fielding players who have bet on games or who have been on professional sports teams. Our commonsense legislation creates a financial consequence for schools that cross that line and helps protect the integrity of college athletics,” added Boyle. 

Tiered Excise Tax Structure

If passed into law, the Fair Play Enforcement Act would require college athletic departments to thoroughly vet incoming freshmen and transfer students before allowing them to compete.

The bill imposes a federal excise tax on any school that “knew or reasonably should have known” it fielded an athlete who previously bet on college sports or played professionally in that sport. Crucially, the restriction on professional play applies only to the specific sport in question—meaning a former NFL player could still play college baseball, but would be barred from college football.

Under the bill’s enforcement mechanism, first-time offenders would face a federal excise penalty equal to 5% of the school’s gross athletics receipts. That penalty escalates to 10% for a second violation and 20% for any subsequent offenses.

For a large sports school like Penn State, a first offense could cost almost $13 million. A second offense would be $25.5 million, and a third offense would be $51 million.

Speaking with News Channel Nebraska, Smith said he hasn’t yet spoken with officials at the University of Nebraska.

“I am proposing a tax be levied on a university that would be complicit with these athletes. We just introduced the bill. I am eager to hear from various universities,” Smith said.

Prediction Markets Leave Unanswered Questions

The legislation currently defines an excluded gambler as anyone “who has placed any wager (without regard to the manner in which placed) with respect to any intercollegiate athletic event or competition.”

However, the bill does not explicitly clarify whether trading college sports event contracts on financial prediction markets constitutes an excluded wager.

Representative Smith has separately pushed for tighter federal regulation around derivative trading. He is a chief co-sponsor of the PREDICT Act (Preventing Real-time Exploitation and Deceptive Insider Congressional Trading Act), which seeks to curb insider trading on prediction markets by federal government officials.