Us Supreme Court Gambling Decision
In a decision that promises profound lifestyle changes for million of Americans, the Supreme Court on Monday ruled that the national ban on sports betting is unconstitutional. Ruling 7-to-2, the Co. The Supreme Court gave temporary victories to a Colorado church and New Jersey religious leaders that challenged their respective states coronavirus restrictions on the number of people allowed at.
The recent Supreme Court decision legalizing sports betting kept analysts busy analyzing, writers frantically writing, and bettors eager to bet.
The opinion was a win for states rights. And while the overturning Professional and Amateur Sports Protection Act (PASPA) was specific to sports betting, the challenge was really about whether Congress can legislate how states act.
In its ruling, the Supreme Court opened the door for federal legislation addressing sports wagering. That doesn’t mean the government will legislate sports betting. It merely says they can and if they do it will likely be constitutional.
For now, though the Supreme Court opened the door for legalized sports betting throughout the United States. And while that is great news for sports enthusiasts, it is still not a free and open market.
Here are five things the Supreme Court decision didn’t do.
1. It did NOT legalize nationwide sports betting
While the decision opens the door for legalized sports betting, it does not change the legality of sports wagering. The Supreme Court gave the power to the states.
Us Supreme Court Sports Betting Decision
It’s been one week since the decision and no legal sports bets have been wagered outside of Nevada, where sports betting was allowed under PASPA.
Ahead of the decision, a few states moved forward and passed laws to address sports betting. Since the ruling, more states have taken up the topic.
For instance, New Jersey, the state that challenged PASPA, has an unregulated sports betting law on the books. Officials are introducing legislation to regulate the activity and includes a bad actor clause for any entity that accepts a bet before the legislation is complete. Key officials are pushing for a June 7 vote.
And while New Jersey is moving fast, Delaware might be the first state to accept a legal sports bet outside of Nevada. Delaware confirmed that existing laws put the state in a position to accept sports wagers almost immediately.
The team at Legal Sports Report are keeping track of the national sports betting landscape. To find out what is happening in a specific state, visit the Sports Betting Bill Tracker.
2. It did NOT legalize sports betting across state lines
The Interstate Wire Act of 1961 prohibits bets and the transfer of gaming information between states.
It brings into question how officials will interpret the Wire Act post-PASPA. The Wire Act exempts the transmission of information that supports the placing of wagers in states where sports betting is legal. It does not, however, exempt the bet.
As a side note, poker is different than sports betting. The combination of poker player pools between Nevada, New Jersey, and Delaware falls outside of the scope of the Wire Act.
New York sought clarification in 2011 and the Department of Justice responded:
“Interstate transmissions of wire communications that do not relate to a ‘sporting event or contest’ fall outside the reach of the Wire Act.”
The Wire Act was enacted to help support the gambling laws in each state. It seems likely at some point in the future that the Wire Act will be challenged to allow multi-state sports betting between states that legalized the activity. For now, the Wire Act is in play.
Us Supreme Court Gambling Decisions
3. It did NOT permit for anyone to open a sportsbook
States have the ultimate say of what sports betting activity takes place within its borders. That includes authoring legislation that discusses licensing and regulations. Even New Jersey is rushing to regulate the market to counter the unregulated sports betting law that is in effect.
As the first wave of legislation passes, it is unlikely that any state will create a free market. Likely states will be looking to Nevada and other early adopters as a model to create its legislation.
Any entity that wants to open a sports book must follow the regulations outlined by the state they wish to operate in.
4. It did NOT legalize sports bets to offshore accounts.
The Unlawful Internet Gambling Enforcement Act (UIGEA) prohibits payments from financial institutions to gambling sites. Specifically, it says:
“The Act prohibits gambling businesses from knowingly accepting payments in connection with the participation of another person in a bet or wager that involves the use of the Internet and that is unlawful under any federal or state law.”
The legalization of sports betting is now in the hands of individual states. The bet must originate and stay within a state where sports betting is legal.
The law focuses on the organizations accepting bets originating in the U.S. in violation of existing laws. The law does not mention individuals. An arrest of an American placing a bet with an offshore sportsbook is unlikely.
The risk to Americans is if enforcement of the laws forces the offshore sportsbook to shut down. Any money on with the offending entity is in jeopardy.
5. It does NOT address daily fantasy sports
Sports betting is a game of chance while daily fantasy sports (DFS) has been deemed a game of skill by the courts. Because of this designation, daily fantasy sports betting is legal.
Some experts believed PASPA applied to DFS, but it was never challenged. Some states prohibit DFS due to existing laws in those states. State legislation addressing sports betting will apply to daily fantasy sports only if specifically addressed.
The bottom line is it all comes down to how each state decides to regulate sports betting. The Supreme Court may have opened the door, but that doesn’t give everyone the freedom to walk in.
As federal laws go, the Professional and Amateur Sports Protection Act (PASPA) never really hit the jackpot. Passed by Congress in 1992 to combat the supposed scourge of sports gambling, it effectively banned this vice in just about every state, while giving Nevada–the only one that sanctioned full sports gambling–a perpetual monopoly. During the nearly 26 years of the law’s existence, legal sports gambling in Nevada rose 172%, from $1.8 billion per year to $4.9 billion, according to the UNLV Center for Gaming Research. Meanwhile, the American Gaming Association estimates that the national illegal sports gambling market grew from $80 billion in 1999 to $150 billion currently.
And so if you bet that PASPA would fail miserably, collect your winnings at the window–especially now, since it’s no longer on the books. On May 14, the Supreme Court struck down the relic of the pre-Internet days, before fantasy sports helped normalize the act of wagering on athletic outcomes for millions of Americans. In a 6-3 decision, the Justices determined that PASPA was an unconstitutional infringement on states’ rights. “A more direct affront to state sovereignty,” wrote Justice Samuel Alito for the majority, “is not easy to imagine.”
The decision creates a path for states across the country to legalize sports gambling. Many appear eager to do so. Since 2017, four of them–Mississippi, West Virginia, Pennsylvania and Connecticut–have passed pro-sports-gambling legislation, in anticipation of PASPA being overturned. New Jersey, which filed the original legal challenges to the law, plans to move quickly; Monmouth Park race track, which already contracted with a sports-book operator to open up betting at the facility, is targeting Memorial Day, May 28, to start collecting wagers. The West Virginia Lottery, which will regulate sports gambling in that state, anticipates taking bets by late August, in time for the kickoff to the football season. Eilers & Krejcik Gaming, an industry research firm, predicts that PASPA’s repeal will spur 32 states to enact sports-gambling legislation by the end of 2023.
This outcome counts as a victory for states, consumers and sports stakeholders. The billions bet in underground markets prove that there’s robust demand. A regulated market lets states take a slice of that pie. “We have about 10 million adults within 90 minutes of one of our casinos,” says Danielle Boyd, managing general counsel for the West Virginia Lottery. “This is an opportunity for them to offer sports books as an amenity and drive traffic back into West Virginia.” Licensed operators can also offer in-state mobile sports gambling. West Virginia will collect 10% of the profits and funnel the first $15 million per year into the state lottery fund, which finances school construction, senior-citizen services and tourism promotion.
States can also get creative. Tom Farrey, executive director of the Aspen Institute’s Sports & Society Program, recommends that lawmakers look as far afield as Norway for inspiration. There, sports-gambling revenues fund community athletic facilities for kids. Not coincidentally, Norway perennially thrives in national health rankings. “There are fundamental problems in the provision of sports and recreation opportunities in our country,” says Farrey. “This is a huge chance to get our system right.”
And lest we forget: legalized betting will boost the professional sports business. “We see this as a new opportunity to engage an audience that we currently don’t reach,” says Andy Levinson, senior VP of tournament administration for the PGA Tour, which came out in favor of regulated sports gambling in April. Watching golf won’t be a drag to anyone taking the over on Jordan Spieth’s next tee-shot distance. You could get hooked.
Gambling’s downsides can’t be ignored. The Supreme Court decision will spur “the largest expansion of gambling in our nation’s history,” says Keith Whyte, executive director of the National Council on Problem Gambling. “Few of the stakeholders have taken active steps to mitigate the negative impact.” But it’s far from too late.
The Supreme Court has given America’s leaders a rare chance to write smart public policy from scratch. Policy that fills public coffers, while allowing millions to have some (legal) fun. Policy that helps people who take things too far. The gamble’s worth it.
This appears in the May 28, 2018 issue of TIME.
