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Butt Out, Feds

The lesson of PASPA

Butt Out, Feds

The saying goes “out of the mouth of babes….”

Well, my 17-year-old might object to that characterization, but it happened when we were having a discussion about the new evacuation plans from his high school in the event of a fire. The administration has imposed new procedures so now you have to wait in your classroom in the event of a fire alarm until school officials can confirm there is indeed a fire before you can leave the building.

Now, we all know in these times, this might be a wise policy given the shootings and other challenges facing our schools. But he didn’t believe it was an appropriate change, because what happens if there actually is a fire? We went back and forth with a variety of scenarios, and then I said I was sure they’ve done some studies and research to determine this was the correct course of action.

My son looked at me and just shook his head.

“Dad, it’s the government.”

And of course, he was right, reminding me of the axiom I’ve always witnessed throughout my lifetime. Anytime the government gets involved, things never improve and they generally get worse.

Let’s not forget that wonderful bill in 1992, the Professional and Amateur Sports Protection Act. This lofty sounding title did exactly the opposite of what was intended. Sports were not “protected” against gambling; it only spread gambling through illegal channels until the underground betting threatened the very viability and legitimacy of the games. Billions of dollars were funneled to crime syndicates that ran these illegal sports betting websites, and who knows what the profits were used for?

The Supreme Court decision in May to overturn PASPA was not based on the complete failure of the bill, however. The court ruling was overturned because PASPA left in place some state laws that permitted gambling on sports, most notably the effective and transparent sports betting industry in Nevada.

The suit that challenged PASPA contended it was unconstitutional for the federal government to treat one state differently than it treated another, and the court agreed.

We’re all very happy that PASPA was tossed out, but some seem to have missed the lesson of PASPA in the first place. It was a fatally flawed law right from the start, and the unintended consequences were wide-ranging and damaging to the country.

And now the feds are at it again. They want to double down on the failure of PASPA by passing a new federal law controlling sports betting in the United States.

First, Senator Orrin Hatch from Utah got up in the Senate to talk about a bill he intended to introduce that would inject the Congress into what the Supreme Court has already called a states’ rights issue—and what gambling law over decades has already established.

Now, Hatch has never been a friend of gaming, and that’s OK. He seems to be opposing sports betting on moral grounds, and that’s hard to argue.

But then, New York Senator Charles “Chuckie” Schumer got involved, and is insisting that Congress needs to pass a law to “protect” the sports leagues and collegiate athletics by forcing casinos and sports betting operators to pay an “integrity” fee for the right to bet on their games.

Now, we all know “integrity” is completely the opposite of what this would be. If the leagues get any kind of payment linked to the level of betting on their games, they are active participants in encouraging people to bet, and therefore have a vested interest in the outcome of these games. So “integrity” isn’t quite the word.

Coincidentally or not, most of the sports leagues are headquartered just down the street from Chuckie in New York City, so despite his insistence that the repeal of PASPA has created a regulatory vacuum, the opposite is of course true. Delaware, New Jersey, Mississippi and West Virginia immediately legalized sports betting and implemented it. Rhode Island and Pennsylvania plan to launch sports betting in 2019.

With those states off the table as far as supporting federal legislation, and many other states considering legalizing sports betting, the possibility of a federal bill to impose any controls of sports betting seems remote.

The American Gaming Association wrote a six-page letter to Schumer stressing that their goals are the same as his—but it can all be accomplished in the setting of states’ rights rather than interference by Congress. AGA VP Sara Slane explained why.

“The AGA strongly believes no additional federal engagement is needed at this time based on the significant, effective regulatory oversight already in place,” Slane wrote. “Replacing an already proven regulatory regime with a non-existent and untested federal oversight apparatus would be out of step with seven in 10 Americans who think this decision should be left to each state and tribe.”

Roger Gros is publisher of Global Gaming Business, the industry's leading gaming trade publication, and all its related publications. Prior to joining Global Gaming Business, Gros was president of Inlet Communications, an independent consulting firm. He was vice president of Casino Journal Publishing Group from 1984-2000, and held virtually every editorial title during his tenure. Gros was editor of Casino Journal, the National Gaming Summary and the Atlantic City Insider, and was the founding editor of Casino Player magazine. He was a co-founder of the American Gaming Summit and the Southern Gaming Summit conferences and trade shows. He is the author of the best-selling book, How to Win at Casino Gambling (Carlton Books, 1995), now in its fourth edition. Gros was named "Businessman of the Year" for 1998 by the Greater Atlantic City Chamber of Commerce, and received the Lifetime Achievement Award from the American Gaming Association in 2012.

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