BillTrack50 put on a webinar with Michael O’Brien from MOB Advocacy and Laura Briggs from Fantini Research diving into what the recent sports betting decision by SCOTUS could mean. To view the webinar (brief 35 min of information and 10 min of q&a) go here. Below I’ll discuss the history of sports betting, what lead to the Supreme Court taking this case and some key takeaways from the webinar.
A Brief History of Sports Betting
Betting on sports is one of the oldest, most popular forms of gambling in the world. In ancient Rome, people wagered on fights, chariot races, and contests between gladiators. Romans brought sports and gambling to Britain. During the 18th-century, horse races and boxing matches were the popular spectator and betting sports, but as time went on sports became more team-oriented and organized events (think rugby, soccer, and cricket). As team sports grew in popularity, so did betting on them.
The history of sports betting in the United States is complicated. Colonists brought sports betting with them and for a while, it was very common throughout the country. The American Revolutionary War was funded in part through taxes on lotteries in the original colonies. Moral issues around activities like alcohol and gambling and how they fit into American society caused the popularity of sports betting to decrease throughout the 19th and 20th centuries.
By 1910 almost all forms of gambling were illegal; but like most of the activities barred at this time, organized crime sprung into action to support demand. Scandals like the 1919 Black Sox Scandal, where eight members of the Chicago White Sox were accused of intentionally throwing the World Series against the Cincinnati Reds in exchange for bribes of $10,000, further contributed to the downfall of legal wagering. In 1931, Nevada legalized gambling and permitted sports betting. Throughout the next two decades, point-shaving scandals in college basketball and the exposure of the industry’s organized crime, or “underworld”, connections led to one of the first big crackdowns and need for regulation in the 1950s.
The Beginning of Sports Betting Regulation
Throughout the 1960s and 70s, many different pieces of legislation were passed in an attempt to crack down on organized crime’s hold on gambling and sports betting markets. In 1961, three acts were passed: the Federal Wire Act (prohibiting the operation of certain types of betting businesses in the United States), the Travel Act (prohibiting the use of mail or a facility in interstate commerce to distribute proceeds of unlawful activity) and the Interstate Transportation of Paraphernalia Act (targeting physical tools and materials associated with gambling). The Sports Bribery Act, which prohibits gambling-related corruption, was passed in 1964. Legal sports gambling returned to Nevada in 1975, tightly licensed and regulated.
In 1992, Congress came down hard on sports betting with the Professional and Amateur Sports Protection Act (PASPA). PASPA effectively bans states or governmental entities from legalizing sports betting and began the series of actions which lead to this Supreme Court case. In 2006, Congress passed the Unlawful Internet Gambling Enforcement Act (UIGEA), another major crackdown. UIGEA made it unlawful for a “person engaged in the business of betting or wagering” to accept funds via credit, EFT transfer, a money transmitting business or other methods.
The Supreme Court Case
In 2011, New Jersey’s almost eight-year fight against PASPA and its constitutionality under the tenth amendment (federalism and state’s rights) started gaining real traction. New Jersey Public Question 1 was approved and amended the state constitution to allow the legislature to legalize betting on the results of professional, college and amateur sporting events. Their argument was that although they did violate PASPA, PASPA was unconstitutional under the Tenth Amendment anti-commandeering doctrine because effectively it prevented New Jersey from repealing its own state-law gambling prohibitions. They lost this fight, but soon brought a new law to the court. In 2014, New Jersey passed S2460. Known as “Christie II”, rather than affirmatively authorizing sports gambling—it repealed several longstanding state prohibitions on sports gambling, effectively allowing sports betting without explicitly saying so. The Third Circuit noted “clever drafting” in the proposal, but ultimately sided against them which lead to the Supreme Court hearing the case.
After looking at the case, the Supreme Court decided PASPA does indeed violate the 10th Amendment, and that Congress has the right to regulate sports betting. If Congress chooses not to regulate it, then each state does indeed have the right to create their own sport betting laws.
What is Happening in the States Already?
The states that are still in session have jumped on the opportunity to create their own new laws. In the webinar, Michael says he believes states are going to move as fast as they can to get laws on the books as soon as possible. States want to establish control over the new regime instead of ceding that control to Congress. Otherwise, states may get some laws they may like and others they may not.
Directly after the decision Delaware said they already had everything in place for sports betting through their state lottery. Following fast on their heels Mississippi issued some proposed rules, Pennsylvania issued some temporary regulations, West Virginia is working to get necessary agreements in place, and Rhode Island has already held some hearings. New Jersey passed A4111 which “Allows wagering at casinos and racetracks on certain professional and collegiate sports or athletic events” on June 7th; it was signed on June 11th.
Anticipating the Supreme Court’s decision, states have been very active this year proposing legislation having to do with sports betting. Unfortunately for them, many of these states went out of session before the decision was handed down. These states have said they plan to propose similar legislation to this year’s bills in their next session.
State Legislation
Here is a map of all recent and current legislation having to do with “sports betting” (updated daily):
All the following bills did not pass. In January 2018 Illinois introduced the Sports Betting Consumer Protection Act, which would authorize sports betting or electronic sports betting by an electronic sports betting patron or sports betting facility patron. Indiana proposed a bill that would have allocated a 1 percent “integrity fee” to specific sports leagues based on handle. Integrity fees are basically taxes on legal sports betting paid to the major sports leagues, in theory, to help the leagues fight corruption of the game. The NBA and Major League Baseball have been talking about integrity fees for a while as they look to find a way to profit from the proliferation of sports betting in the US. The fee would transfer money from sportsbooks to sports governing bodies. These fees will be one of the biggest items surrounding this decision to monitor as you can hear Laura discuss in the webinar.
Kansas proposed a bill that would expand the purview of the Kansas lottery to sports betting involving “one or more competitive games in which amateur or professional athletes participate, or are intended to participate, or on one or more performances of such athletes in such games.” In 2017, Maryland proposed HB989 calling for the establishment of a task force to “study the implementation of sports gaming in the state.” It will be interesting to see where states go in the next few years with sports betting. What trends will catch on with states that choose to legalize and how well states that don’t want sports betting will resist the tide will be interesting to watch play out over the next few years.
Photo by Clem Onojeghuo on Unsplash
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For more complete and in-depth information about what sports betting could mean for the future, watch the webinar: