BETTOR UP!
Supreme Court clears way for sports gambling across nation, but plenty of issues still to decide
In a historic ruling that clears the way for states to legalize sports betting, the U.S. Supreme Court has declared the Professional and Amateur Sports Protection Act (PASPA) unconstitutional. The controversial federal law, enacted in 1992, had prohibited states from authorizing or licensing sports betting, and has led to a flourishing illegal market estimated to be in excess of $150 billion annually.
The Supreme Court’s divided ruling (6-3 in favor of New Jersey) is expected to open up the floodgates for legalized sports betting nationally. As an immediate result of Monday’s ruling, New Jersey (which had been prevented from implementing its sports betting law because of a lower federal court injunction) can now proceed with its plans to allow single-game sports betting in the Garden State.
It is expected Monmouth Park Racetrack in Oceanport, will be one of the first New Jersey gambling venues to offer sports betting, perhaps as soon as two weeks from now, according to Monmouth Park executive Dennis Drazin. Several years ago, Monmouth Park inked a deal with sports betting conglomerate William Hill U.S. to operate a sports book at the historic New Jersey track. With Monmouth Park’s racing season already underway, there is a good chance it will be taking sports bets during the current meet.
But New Jersey is not the only state that will benefit from the landmark decision. Three other states — Mississippi, Pennsylvania and West Virginia — recently passed laws that would allow sports betting contingent on the Supreme Court invalidating PASPA. With that outcome now having been achieved, those three states could be in a position to implement their sports gambling laws within the next 60 to 90 days.
Additionally, some 15 other states — including New York and Illinois — have introduced bills to legalize and regulate sports betting tied to the Supreme Court outcome. With the favorable decision, look for those states (and perhaps a few others, such as Massachusetts and Rhode Island) to quickly advance sports betting legislation so that they can potentially be in a position to join New Jersey, Mississippi, Pennsylvania and West Virginia in allowing sports betting this summer.
Although New Jersey had been on the losing side in six consecutive lower federal court decisions, it finally found a receptive audience in the conservativeleaning Supreme Court. The majority opinion, authored by Justice Samuel Alito, concluded that PASPA violates the Tenth Amendment of the U.S. Constitution, which basically says that any power that is not given to the federal government is reserved to the states.
PASPA’s fatal constitutional flaw, according to the Supreme Court, was that it dictated how states are to regulate their own citizens without setting forth any federal regulatory or deregulatory scheme. As Alito wrote, “Congress can regulate sports gambling directly, but if it elects not to do so, each State is free to act on its own.” Because Congress did not regulate sports gambling, but simply prohibited states from doing so, it violated the Tenth Amendment, Alito concluded.
The Supreme Court’s decision in Murphy v. National Collegiate Athletic Ass’n (named after New Jersey Gov. Phil Murphy, who inherited the lawsuit from his predecessor, Chris Christie) will not end the debate on sports betting legalization, however. The five major U.S. sports leagues that had filed the lawsuit against New Jersey — the NFL, NBA, NHL, MLB, and NCAA — and were on the losing side, will likely turn their attention to state legislatures and ramp up their lobbying efforts. The NBA and MLB (joined by the PGA) have led efforts to ensure that any state sports betting laws provide appropriate safeguards to protect the integrity of their contests, including barring players or referees from betting and requiring data sharing and coordination between casinos and the leagues to better spot irregularities or attempts at manipulation, which will be crucial to ensuring public conf idence in the betting markets. They also want to ensure that betting is mobile, as without legal mobile products, black market betting will remain widespread.
Additionally, the NBA and MLB are seeking a fee tied to the total amount of all legal wagering on their games. The leagues believe a fee is appropriate because the casinos will be profiting off of their product, to account for the risks and potential damage to the reputation of sports if a scandal emerged and to compensate the leagues for the costs of increased integrity monitoring under a new era of widespread, public betting.
The leagues are also advocating for state statutory provisions that would require sports betting operators use the leagues’ “official data” to settle all bets and wagers. The leagues also want to be given the power to restrict wagers on their own games, because they believe certain types of bets are more susceptible to manipulation than others, like minor league games or bets on who commits the first foul in a game.
While the U.S. gambling industry overwhelmingly supports expanded legal sports betting, the industry opposes the leagues’ requests. The gaming industry — led by the American Gaming Association trade group — maintains that the leagues’ proposals will make sports betting operations less profitable (or perhaps even unprof itable) and place them at a competitive disadvantage to illegal off-shore sports books, which might be able to offer better odds and prices on wagers, thereby undermining the goal of eradicating the black market for sports betting.
With these two key stakeholders failing to find common ground on the ideal framework, there will likely be a stalemate in a number of state legislatures, resulting in fewer bills passing during the current legislative sessions. New York is shaping up to be a key battleground, with the current senate bill on sports betting containing many of the features supported by the NBA, MLB and PGA, while early reports on the assembly version of the bill (due out later this month) suggest that some lawmakers have reservations about giving the leagues any fees or exclusive data rights. How New York plays out could serve as a bellwether for the rest of the nation.
Looking further ahead, the leagues will also likely pursue new federal legislation to replace PASPA as part of an effort to create a uniform sports betting law that would apply equally to all states. The prospects of such a federal law passing in a crucial mid-term election year are not particularly promising, however.
But, at least for now, sports betting will be legal in any state that wants to have it, and as many as six to 10 states are expected to legalize sports betting in time for the beginning of the 2018 NFL regular season.
Daniel Wallach is a leading sports and gaming law attorney who has closely followed the New Jersey case and is one of the foremost national authorities on sports gambling law. He is a partner at the Becker law firm and a contributing writer for Forbes. He can also be found on Twitter at @WALLACHLEGAL.
Bettor up! The Supreme Court opened the floodgates to legalized sports betting across the country Monday in a ruling that could shower states, including New York, with huge tax windfalls.
In a 6-3 decision, the high court sided with New Jersey and overturned the Professional and Amateur Sports Protection Act of 1992 as unconstitutional.
“The legalization of sports gambling requires an important policy choice, but the choice is not ours to make,” Justice Samuel Alito wrote for the majority. “Congress can regulate sports gambling directly, but if it elects not to do so, each state is free to act on its own.”
Under the PASPA, only four states met a 1991 deadline to legalize sports betting, with Nevada authorizing wagers on football, basketball and other athletic contests. The other three — Delaware, Montana and Oregon — chose instead to create sportsbased lottery games.
Monday’s decision permits gambling on individual sporting events nationwide and would let cash-strapped states tax the bets to boost their budgets.
Research firm Eilers & Krejcik Gaming predicted last year that 32 states, including New York, would offer sports betting within five years of getting permission.
New Jersey Gov. Phil Murphy — who in January replaced ex-Gov. Chris Christie as the lead plaintiff in the Supreme Court case — hailed Monday’s ruling and said he would work with lawmakers to authorize and regulate sports bet- ting “in the very near future.”
“I am thrilled to see the Supreme Court finally side with New Jersey and strike down the arbitrary ban on sports betting imposed by Congress decades ago,” Murphy said.
The American Gaming Association, which filed a brief with the Supreme Court in favor of legal sport betting, estimates that US residents place about $150 billion in illegal bets on games each year.
Famed oddsmaker Danny Sheridan said his four decades in the gambling industry suggest the figure is even higher, with football alone generating $150 billion in annual wagers and the Super Bowl responsible for $12 billion.
“There is enough money bet in the Garment District in New York City every weekend to finance a major revolution in a South American country,” he told The Post.
Sheridan recalled meeting a Big Apple bookie who in 1980 was raking in $250,000 a year just from “parlay cards,” which offer big payouts on multi-bet wagers.
“That was 40 years ago. Now I can’t even calculate how much money can be made,” he added.
Boston-based DraftKings, which takes online wagers on daily fantasy-sports games, said it was preparing to launch a reallife, sports-betting operation and expected to get permission from several states before the start of football season in September.
One potential legalization hurdle involves the “integrity fees” being sought by sports leagues in exchange for endorsing gambling on their match-ups.
The NBA and MLB have suggested a 1 percent fee on any legal wagers on their games, said New York state Assemblyman Gary Pretlow (D-Westchester).
Pretlow, chair of the Assembly’s Committee on Racing and Wagering, called the ask “a little high.”
“I’d call it a royalty fee, not an integrity fee,” he said.
A sports-betting bill introduced last month by New York state Sen. John Bonacic (R-Orange County) includes a more modest integrity fee of 0.25 percent.
Dallas Mavericks owner Mark Cuban said that franchise owners were poised to hit the jackpot with legalized sports betting.
“I think everybody who owns a top-four professional sports team just saw the value of their team double,” the billionaire investor and “Shark Tank” star told CNBC.
The NFL said it wanted Congress “to enact a core regulatory framework” for sports betting.
“Congress has long recognized the potential harms posed by sports betting to the integrity of sporting contests and the public confidence in these events,” the league said.
In a dissenting opinion Monday, Justice Ruth Bader Ginsburg criticized the high court’s majority for wielding “an ax to cut down [the law] instead of using a scalpel to trim the statute.”
Justices Sonia Sotomayor and Stephen Breyer also dissented.
Critics warned that legal sports betting would lead to a surge in gambling addiction, with the New York State Catholic Conference saying it would hurt families and the poor.
“We have concerns when government looks to get money from people through vice,” said conference spokesman Dennis Poust.
While City Hall won’t have much say on sports gambling in the state, Mayor de Blasio said he wasn’t thrilled by the ruling.
“Gambling always makes me queasy because I think, for a lot of people, it’s an addiction,” he said in his weekly appearance on NY1. “It’s hard to get entirely excited about it.”
I am thrillled to see the Supreme Court finally side with New Jersey. — Gov. Phil Murphy of New Jersey, wherew Monmouth Park is already preparing to offer sports wagers