What the NCAA Settlement Means for Colleges and State Legislatures

What the NCAA Settlement Means for Colleges and State Legislatures

Landmark deal allows colleges to compensate student-athletes for their name, image and likeness.

NCAA headquarters in Indianapolis. The class-action settlement will allow schools to share NIL revenue with athletes for the first time, provide $2.8 billion in back payments to some former NCAA athletes and set roster limits on each sport. (jetcityimage/Getty Images)

A recently approved antitrust settlement has the potential to transform college athletics.

The landmark deal, known as the "House settlement," goes into effect on July 1 and will allow for college athletics programs to directly compensate student-athletes for their name, image and likeness, or NIL. The settlement will also provide nearly $3 billion in damage claims to former athletes.

The settlement resolves three antitrust cases involving the NCAA, with "House" referring to the plaintiff in one of the cases. The deal faces an uncertain future, however, as college athletics continues to grapple with its details and the reality of the new era of student-athlete compensation. The settlement may conflict with existing state NIL laws and will likely spark new litigation against the NCAA. Against this backdrop, Congress is discussing legislation that will clear these obstacles by preempting state NIL laws and granting an antitrust exemption to the NCAA.

With major change on the way, and the possibility of more to come, here's how the settlement could affect college athletics and state legislatures.

What changes will the settlement bring to college athletics?

The House settlement permits the NCAA to allow schools to share revenue directly with student-athletes up to an annual cap of $20.5 million in 2025-26. The cap is expected to increase by around 4%-about $1 million-each year, ending at an estimated $32.9 million in 2034-35. Full cost-of-attendance scholarships and other benefits currently permitted by the NCAA would generally be excluded from the revenue-sharing cap.

Since the initial settlement was announced in October, many athletics programs have developed revenue-sharing models and created strategies to raise revenues to compensate student-athletes. Reports suggest that the bulk of compensation, up to 90%, will go toward the major revenue-generating programs such as football and men's basketball.

The settlement allows student-athletes to continue to sign NIL deals with third parties, but permits the NCAA and conferences to enforce standards and limitations on those deals to prevent schools from circumventing the salary cap. All third-party deals must be for a "valid business purpose" at "fair market value." Any deals above $600 must be reported to the school and a third-party clearinghouse. The NCAA has contracted with Deloitte to oversee the NIL clearinghouse, known as "NIL Go," and determine whether the deals are within a "reasonable range of compensation based on multiple factors." A new non-NCAA enforcement authority, the College Sports Commission, will monitor and enforce the rules of the settlement.

The settlement provides $2.85 billion in damage claims to athletes who participated in collegiate athletics between 2016 and 2024. Claim amounts are to be awarded by a formula that provides greater payouts to men's football and men's and women's basketball players. Estimates suggest that football players will receive 75% of the claims, with 20% for men's and women's basketball players, and 5% for other athletes.

The settlement also replaces scholarship limits with roster limits, many of which are lower than the current roster restrictions for college teams. In response to concern from the presiding judge, the settlement allows schools to grandfather in current athletes, including those who have been cut already, or recruits who have been promised a spot. While schools are permitted to offer new scholarships up to the roster limit, many schools have cut or will cut thousands of roster spots across their athletics programs.

The proposed settlement does not address the issue of student-athlete employment status and collective bargaining.

How are states legislatures shaping the NIL landscape?

Nearly 25 states have considered legislation this year to amend or modify NIL statutes, with many bills in direct response to the House settlement. At least 35 states have passed legislation to address student-athlete compensation since 2019.

Many state NIL laws and policies may conflict with the terms of the settlement. In particular, some laws appear to prohibit any restrictions or limitations on a student-athlete's ability to benefit from their NIL. Additionally, some state NIL laws prohibit the NCAA or college athletic conferences from enforcing sanctions related to NIL activity. During the final hearings for the House settlement, representatives from the NCAA alluded to conflict with state NIL laws, to which the judge suggested the NCAA "kick out" any schools that would not abide by its regulations.

Conference officials have reportedly circulated a draft contract among school administrators that asks universities to waive any protections under state NIL law and that would exempt the new College Sports Commission from lawsuits over enforcement decision.

As of June 9, 10 states have enacted modifications to their NIL statutes in 2025. These laws all include provisions that allow universities to pay athletes directly for their NIL rights. Colorado's law includes provisions that exempt athlete payments from state open records laws. Utah's law adds language (which previously existed in a half dozen states) specifying that student-athletes are not employees of the institution. Tennessee passed a law that prohibits all limits on compensation unless they are part of a federal law or court order. The measure also protects Tennessee colleges from potential lawsuits.

What should states watch for during the implementation of the settlement?

Many questions remain about the viability of the new revenue-sharing models and third-party NIL regulations ushered in through the House settlement.

Some observers have expressed doubts that the NIL Go entity can fairly assess any student-athlete's true NIL value and may ultimately suppress their earning capacity. According to reports, NIL GO officials estimate that 70% of current NIL deals would be denied under the new rules. Lawsuits could follow from student-athletes, collectives or states that object to deal evaluations and enforcement decisions.

Other observers expect major athletics programs will find ways to circumvent the revenue cap. Athletics programs and collectives have reportedly front-loaded NIL deals with prospective student-athletes this year to provide greater compensation than will be allowed when the revenue caps and third-party NIL deal assessments go into effect. Some athletic departments, especially those without football programs, may be able to gain an advantage by offering a higher share of compensation under the revenue cap for certain sports. This could pressure NIL collectives affiliated with major athletics departments to provide substantial additional compensation beyond revenue caps, which could further raise the stakes on NIL deal enforcement.

Questions remain about whether student-athletes could be considered employees under a revenue-sharing model. While the employment status of student-athletes was not addressed in the settlement, the revenue-sharing model was partly based on similar structures in professional sports established through collective bargaining.

The applicability of federal Title IX law under revenue-sharing is another arena for regulation or litigation. In February, the Trump administration rescinded January 2025 guidance on Title IX from the Biden administration that would have required schools to share NIL revenue with male and female athletes on an equal basis.

Why is Congress considering national legislation on NIL?

Congress continues to debate a federal role in college athletics and faces pressure from the NCAA and leaders across the college athletics landscape to enact legislation. The NCAA has asked Congress for legislation that would grant it an antitrust exemption, preempt all state laws related to NIL, and restrict student-athletes from being considered as employees.

The NCAA has expressed a clear preference for federal legislation with state preemption and antitrust exemptions to resolve potential conflicts with state laws and the possibility of ongoing litigation as it implements the antitrust settlement. "If Congress does not act, the progress reached through the settlement could be significantly mitigated by state laws and continued litigation," the NCAA warned in a statement.

U.S. Senator Ted Cruz of Texas is reportedly leading a bipartisan working group to develop legislation that would address these three items, which were reflected in a previously released discussion draft. The NCAA, conference commissioners and leading athletics program recently lobbied Congress in support of these potential federal policies.

Austin Reid is a federal affairs advisor in NCSL's State-Federal Affairs Division; Andrew Smalley is a senior policy specialist in NCSL's Education Program.