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January 7, 2019

Will The Federal Government Take Back Control Of Legal US Sports Betting?

Barbara Nathan January 7, 2019
US congress

It took 26 years — more than a quarter of a century — for the US Supreme Court to finally declare the Professional and Amateur Sports Protection Act of 1992 (PASPA) unconstitutional and overturn it.

That historic ruling opened the door for each state to decide whether or not and to what extent legalizing sports betting is something it wants for its residents.

But those moves have also sparked concern from the federal government and sports leagues.

Where different states stand on legal sports betting now

States where legislation has already passed

New Jersey sports betting became official in June 2018. But several other states, including Delaware, West Virginia, Mississippi, Pennsylvania, and Rhode Island, have been quick to act, too.

In fact, full scale legalized sports betting on individual contests is now available in all of these states, along with Nevada, where it has already been operating legally for many years.

Joining them is Washington, D.C. Contingent on congressional approval, Washington, D.C. will be the first US jurisdiction without a single licensed casino to authorize sportsbooks. When these sportsbooks will open, where they will be located, and who will run them remains to be seen. Plus, there are still a few rumblings happening.

Meanwhile, the situation in New Mexico is also unique, but in another way. That state has not passed any sports betting legislation yet. However, a tribal gambling compact has enabled the Santa Ana Star Casino & Hotel to take sports bets legally since October.

States with sports betting bills in the process

Also, many other states have shown interest. However, the process of actually implementing legislation is taking longer.

Among them, both Arkansas and New York have legislation permitting sports betting already in place, but not the option itself.

In Arkansas, voters in the November election passed a referendum to allow sports betting at four casinos. In New York, a law passed in 2012 allows sports betting at four locations as well. However, regulations and details are not complete.

Here are the other states, where legal sports betting in the near or foreseeable future looks promising:

  • California
  • Connecticut
  • Illinois
  • Indiana
  • Iowa
  • Kansas
  • Kentucky
  • Louisiana
  • Maryland
  • Michigan
  • Minnesota
  • Missouri
  • Ohio
  • Oklahoma
  • South Carolina
  • Tennessee

Five states on this list — Kentucky, Missouri, Ohio, Tennessee, and Virginia — already have bills in place for early 2019 consideration.

States less likely to legalize sports betting

The remaining states have taken no known action on the matter at all and are unlikely to do so anytime soon.

That includes two of the four states that were exempt from PASPA, Oregon and Montana. Their exempt status enabled them to offer only limited sports betting. That hasn’t changed with the repeal of PASPA.

But just like all of the states where PASPA made all forms of sports betting illegal, Montana would need new legislation to expand their offerings to full-scale sports betting. Oregon may not need any such legislation, according to recent reports.

Protecting sports integrity

All of the available data points to the likelihood of sports betting becoming legal in most states. In fact, Eilers & Krejcik Gaming predicts 30 states will be moving in that direction this year.

As anticipated, there will be some holdouts. But even so, the spread of legal sports betting across America seems inevitable.

This expansion leaves many government officials, along with the pro sports leagues, concerned about the possible impact on sports integrity.

At the second annual US Sports Betting Summit held Nov. 15 in Washington, D.C., the speakers presented divergent opinions on some of the challenges that legal sports betting presents.

However, on one topic, an agreement was unanimous. The increased visibility and accessibility of sports betting calls for strong measures to ensure the continued protection of the integrity of the games.

Should the federal government be involved?

Several speakers, such as Naimia Stevenson, associate general counsel for the NCAA, were firmly in favor of involving Congress. Stevenson said she would like to see federal legislation requiring sports betting operators to work with the leagues.

She would also like federal sports betting regulations that would make it illegal for anyone younger than age 21 to bet on sports.

Clarence Nesbitt, general counsel for the NBA, wants to see federal regulations to ensure clearer rules on acceptable versus nonacceptable conduct and better protection of players’ rights.

Ohio State Sen. Bill Coley wants tighter regulations to keep out illegal operators and criminals.

Keith Whyte, executive director of the National Council on Problem Gambling, called for federal legislation mandating that 1 percent of sports betting be set aside for treatment programs for sports bettors with a gambling problem.

Sports Wagering Market Integrity Act

The likelihood that Congress and the federal government will indeed step in increased Dec. 19 with the introduction of the Sports Wagering Market Integrity Act.

Senators Charles Schumer, D-New York, and Orrin Hatch, R-Utah, put aside their political differences to jointly sponsor this new bill.

If passed, the new legislation will put a lot more control over sports betting back in the hands of the federal government.

Provisions of the Sports Wagering Market Integrity Act

According to reports from the Associated Press, the federal bill calls for all of the following:

  • The US Justice Department would set minimum standards with which all states offering legalized sports betting would have to comply.
  • Sportsbook operators would be required to use data provided or licensed by the leagues.
  • The states would not necessarily be required to give the sports leagues a cut of their gambling revenue. However, the option would still be permitted.
  • Federal funding would also have to be provided from taxes generated by sports betting for programs to provide treatment for those with a gambling problem.

It is plausible that at least one of these provisions could create some resistance: the requirement for sportsbook operators to use official data from the leagues.

Courts have already ruled that fantasy sports operators should not have to follow these requirements. Meanwhile, some of the leagues, notably the NBA and Major League Baseball (MLB), already have private agreements with certain casinos regarding the use of their data, particularly for wagers made on games in progress.

Reasons for the bill

Schumer expressed that the bill was necessary for Congress “to ensure that the integrity of the games we love was never compromised.”

He also believes that “the time is now to establish a strong national integrity standard for sports betting that will protect consumers and the games themselves from corruption.”

Hatch indicated ever since the Supreme Court struck down PASPA  in May, that he has been “working with stakeholders to ensure we were doing everything possible to protect the integrity of sports from corruption.”

According to Hatch, the bill was not a hastily drawn up document, but “the culmination of eight months of high-level meetings, discussions and negotiations.”

Although Hatch was about to retire, he felt it was important to show “bipartisan support for federal regulation.” He hopes that Congress will continue working toward that end.

Support from the sports leagues

The major sports leagues are apparently on board with the plan, too.

The NFL went on record on Dec. 19 with a letter to the two senators expressing support for the bill. Jocelyn Moore, an NFL executive, made the following statement:

“Without continued federal guidance and oversight, we are very concerned that sports leagues and state governments alone will not be able to fully protect the integrity of sporting contests.”

A statement from the MLB echoed a similar sentiment on the importance of protecting the integrity of baseball games:

“Legalized sports betting is rapidly spreading across the country, creating a clear need for a set of consistent, nationwide integrity standards to protect the sport that millions of Americans love.”

The PGA Tour also voiced support for the new bill and for establishing a national body to oversee the integrity of sports in this country.

Legal sports betting and the future

As of now, legal sports betting is still available in only a handful of states, but that is going to change.

Unfortunately, along with all of the good results that widespread sports betting can help make possible, there is also potential for some real problems.

It is admirable that politicians are recognizing the need now in this early stage of legal sports betting, rather than down the road when it may be too late, to work on making sure there are proper regulations in place to protect sports integrity.

The same applies to making sure the people with a gambling problem can get help they need before the addiction escalates. For the millions of people who love sports and can bet responsibly, legal sports betting is fun. However, many people will be tempted to bet on sports who should not be betting at all. I agree that more programs to help gambling addicts are a must-have in every state.

I also hope that the leagues and those responsible for the regulations don’t become so zealous as to go overboard in removing current betting options or give bettors a reason to feel an invasion of their privacy.

Of course, with a government shutdown entering its third week and no end in sight, when or if the proposed legislation moves forward is unknown.

Here on NJ gambling websites, we will continue to keep you informed of the latest developments as they happen with regard to possible federal government involvement in legalized sports betting.

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