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Sports Betting Momentum

What is driving the current move to legalize the wager in the U.S.?

Sports Betting Momentum

Watching the ongoing developments regarding attempts to expand sports betting in the U.S. has been interesting. Given the ferocity of the sports leagues on this issue in the past, I was pretty sure we would never see it in my lifetime. But, times have changed, as well as the publicly stated opinions of at least a few of the leagues.

There has been a bevy of legal challenges to the Professional and Amateur Sports Protection Act (PASPA) which we won’t regurgitate here. The latest New Jersey legal maneuver is expected to have a decision imminently following oral arguments in March.

But now, for the first time, there may be some momentum building for an actual federal legislative discussion.

On April 16 in Las Vegas, Senator John McCain spoke to the participants of the iGaming North America conference, addressing gaming industry folks for the first time on this issue. He acknowledged that, since the passage of PASPA in 1992, the popularity of “sports gaming” has expanded greatly. And while he pointed to the lawsuits filed by Delaware and New Jersey in recent years, he was quick to point out that Congress would play a role in this expansion discussion.

McCain anticipates that Congress will, indeed, hold hearings on this topic in the future. And he encouraged industry leaders to join with Congress and the administration to discuss this topic. He pointed to the myriad of issues which will certainly arise as this discussion ensues. He specifically mentioned the concerns about potential corruption of sports as one which will need to be addressed.

He was clear that oversight of such expansion would need to be fully debated and that a framework would have to be developed to curb any potential abuses.

This attitude was echoed in recent times by National Basketball Association (NBA) Commissioner Adam Silver. In a New York Times op-ed, Silver stated, “I believe that sports betting should be brought out of the underground and into the sunlight where it can be appropriately monitored and regulated.”

Interestingly enough, Silver went on to use some of the same language that McCain did in talking about how these discussions should proceed.

He wrote, “In light of these domestic and global trends, the laws on sports betting should be changed. Congress should adopt a federal framework that allows states to authorize betting on professional sports, subject to strict regulatory requirements and technological safeguards.”

The pendulum is swinging with other sports organizations. In March, at the MIT Sloan Sports Analytics Conference, Major League Baseball Commissioner Rob Manfred sided with the NBA’s Silver. “I give Adam Silver a lot of credit for starting the debate,” Manfred said. “Without embracing everything he said, certainly the idea of having a federal system to govern gambling—whatever that system is—uniformly at a federal level seems like a pretty good idea to me.”

So if, as it appears, there is some will to actually open up the debate on PASPA, two questions remain:

• What would a fix to PASPA look like?

• Who would provide the leadership in the gaming industry to get this done?

On the “how,” personally, I feel that attempting to repeal PASPA would be a true long shot. However, I’ve heard an amendment discussed which might actually have a chance.

The original PASPA specified that a state needed to take advantage of this window at that one point in time in 1992. Few did. The fix I’ve heard suggested opened up that provision in the law and suggested that states (under certain criteria) would have the right to take advantage of that opening again. For example, what if the definition was if a state that had legal, regulated gaming in their state for five years (pick a number), they could now legalize it by vote of the legislation, vote of the people, etc.?

That’s just one example of a concrete approach to amending the existing law to allow for states’ rights.

The question of leadership is more problematic. One would think that the American Gaming Association would be the primary backer of such a coordinated effort. They could do a “think tank” with those sports leagues open to the idea, commercial gaming interests and state policymakers/regulators (via organizations like the National Council on Legislators from Gaming States and North American Gaming Regulators Association).

The intent would be to come up with a regulatory framework that meets the needs of the leagues and the states as well as the gaming interests. It could be done.

And, in fact, checking in with the AGA, sports betting is now on their radar. Sara Rayme, senior vice president of public affairs for AGA, told me that at a recent board meeting, it was decided that the AGA should study the issue.

She expected some review, analysis and a recommended course of action on this issue to be submitted at the November meeting of their board. With any luck, they’ll see fit to join the fray and provide the necessary leadership to move this issue forward.

One thing is certain. If and when the industry decides to get involved, it won’t be hard to activate the players. The consumers are voting with their wallets via daily fantasy sports, their local bookies and offshore operators. In fact, the AGA itself estimates that the amount bet illegally in the U.S. is 38 times what is bet legally. The players will need to be a big part of the strategy if this is to move forward.

Sue Schneider is one of the pioneers of iGaming. She is the founder of the iGaming North America conference and is also editor of Gaming Law Review and Economics.

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