State legislatures have what is called “police power,” i.e. they have general authority (limited by constitutions and federal law) to pass laws for the benefit of public welfare, safety, or whatever else they perceive as good.
Cool. I think those are the answers: A) Yes, it’s illegal to fix sports, and B) There’s no way a start-up “sports entertainment” football, baseball, whatever organization could compete with the already established real competitions. If there was any money to be made in it, someone would be doing it (other than in movies).
As you suggest, the XFL is a great example. While the outcomes weren’t predetermined, McMahon’s premise was to make it more entertainment than sport. The universal response was “yawn”.
The whole appeal of sports is that the outcome is not predetermined, which is what makes it different from entertainment. It’s the actual competition that people find engrossing. Mandelbaum’s book “The Meaning of Sports” from a few years ago covers this subject pretty well. You wrote:
…but I don’t think this is true. Sports movies generally fare poorly for precisely that reason. There is no tension about the outcome.