Thanks to a recent NCAA interim policy change and a new state law, student-athletes in Kentucky can now be paid for use of their name, image, and likeness (NIL). This opens up new opportunities for students involved in collegiate sports to earn money.
What is the state law?
Thanks to an executive order signed by Governor Andy Beshear, which became effective on July 1, 2021, student-athletes in the state of Kentucky are now allowed to be compensated for the use of their NIL. Kentucky, like many other states that enacted NIL legislation, has placed certain restrictions on which sectors student-athletes can and cannot endorse. Rather than following what many other states enacted by banning athletes from signing deals with certain industries, the governor allowed for each individual university to decide. Each university may create reasonable limitations that prevent endorsement contracts which are deemed “incompatible or detrimental” to the school’s image, including the promotion of:
- Tobacco products
- Sexually oriented activities
Although student-athletes may be prohibited from endorsing the above-mentioned areas of business, Kentucky legislation is silent on two main sectors which are prohibited in many other states, Gambling and Steroids. However, the executive order specifically states that the listed prohibitions are merely examples and should not be read as being limited to only those listed. Each individual institution can opt to include additional activities that are prohibited for being incompatible or detrimental to the image, purpose or mission of the university.
In some areas, Kentucky’s NIL laws are more relaxed than other states. Specifically, student-athletes are not required to disclose their agreements to their university. Rather it is up to the institution to decide whether disclosure is required. Additionally, colleges are not required to provide courses relating to NIL, like financial literacy or social media and brand management. Other states, like Florida and Texas, require student-athlete to disclose NIL agreements, and colleges to provide financial literacy and other courses relating to NIL. Although the executive order does not mandate these provisions, colleges and universities may still require them in their personal NIL guidelines.
What has happened so far?
The University of Kentucky (UK) is an NCAA mens basketball powerhouse, so it is no surprise that their student-athletes are already involved in NIL agreements. The first UK student-athlete to enter into an NIL agreement was Dontaie Allen. Allen wasted no time capitalizing on his brand as he signed a deal with Players Trunk on July 1, 2021 at 12:34am. Players Trunk is a website founded by former college athletes and team managers, which allows athletes to sell their own branded merchandise and autographs. Through Players Trunk, Allen will be selling personalized merchandise, creating customized video messages, and even hopping on Zoom calls for compensation.
Allen’s teammate, UK guard Kellan Grady is also getting early exposure to the NIL world, as he signed a footwear endorsement deal with ISlide, a flip flop company. Both Allen and Grady’s deals were inked less than 24 hours after Kentucky and UK released their final NIL policies. Additionally, as seen with student-athletes in Alabama, men’s and women’s basketball players from UK have teamed up with Cameo to create personalized messages for compensation.
What’s the difference between the University of Kentucky’s policies and the state law?
The University of Kentucky has taken a more narrow and strict view to NIL, which is not necessarily shared by the state legislature. Although Kentucky law does not require disclosure of endorsement deals, UK’s policy does. Under UK’s NIL policy, student-athletes are required to disclose their NIL contracts through the INFLCR verified software program, where these deals will then be approved or denied by the compliance department at least seven days before the proposed activities set forth by the agreement are to occur.
Regarding the endorsement of gambling and betting companies, the University of Kentucky decided to follow many other states and draft its policy in contrast of the Kentucky lawmakers. Under UK’s NIL policy, student-athletes are explicitly prohibited from promoting and/or endorsing lotteries, casinos, sports wagering facilities, or online equivalents. The University of Kentucky has also made clear the repercussions if a student-athlete violates the university policy. Penalties include, “loss of eligibility, including suspension from team activities or competition, and/or additional NIL education or training.”
While the prohibition is standard across many states and universities, it runs counter to the promotional strategies of these companies. Many gambling companies endorse athletes since they provide an easy link to the intended audience. New gambling laws across the country are being passed providing increased access to legal wagering. The continued rise of such laws, coupled with an abundance of new gambling platforms, would have provided a huge opportunity for these companies to enter the NIL space. For now, gambling companies will have to stick to professional athletes and watch from the sidelines as non-prohibited businesses will get the first opportunity to capitalize on NIL.
In general, Kentucky lawmakers have seemed to take a more relaxed and loose approach to these new NIL laws, whereas the University of Kentucky preferred a narrower approach to the changes. No matter the approach, student-athletes in the state of Kentucky are now able to capitalize and be compensated off their NIL. If you need assistance developing an appropriate policy to comply with the state law or you are an athlete, school, or business looking for guidance on complying with NCAA rules and state law, contact our attorneys.
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