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Ahead of a congressional hearing on sports betting, two members of Congress urge caution in introducing federal legislation to regulate the market.
Congresswoman Dina Titus from Nevada and Congressman Tom MacArthur representing New Jersey wrote to the House Subcommittee on Crime, Terrorism, Homeland Security, and Investigations to express concerns.
“As members from states that have already legalized, regulated, and opened the doors to sports betting, we have seen success of regulation at the state level and feel proposals for a federal framework should be approached with caution.”
Why mess with success?
In the letter, Titus and MacArthur outline the case for keeping sports betting regulations at the state level.
“Precedent for federal policy toward gambling has been to assist states in the enforcement of their own laws, prohibiting gaming activities only where it is illegal under state law, rather than preempt state law.”
One only has to look at Nevada and its nearly 70 years of experience regulating sports betting to see state regulation is effective and working.
Another benefit of a post-PASPA sports betting industry is the partnership agreements between some leagues and sports betting operators.
“The Supreme Court decision has also spurred discussions and commercial contracts between operators and professional leagues, which share economic and reputational interests in ensuring fair and honest competitions and wagers.”
Federal legislation would create problems it intends to prevent
The major sports leagues failed to convince several states, including New Jersey, to implement an integrity fee paid to the leagues to protect the game.
The leagues then moved on to lobby for integrity fees at the federal level. Soon after the PASPA ruling, Sen. Orrin Hatch from Utah went on the record in favor of federal sports betting legislation. As the author of PASPA, Hatch’s position surprised no one.
What was surprising was his ill-informed and biased op-ed on the Sports Illustrated website. Hatch opined that without federal oversight, expect the erosion of the integrity of the sports industry through fixed games and bribes.
Titus and MacArthur obviously disagree with Hatch’s position.
“Calls for integrity fees paid to the leagues would chip away at state revenues and already slim revenue margins for legal sportsbooks, hurting their ability to compete with offshore books and move more consumers into the regulated market.”
Monitoring the integrity of the game is not something new. In a multi-billion dollar industry, integrity is always front of mind.
The bottom line is federal legislation will likely create the problems it wants to prevent.
What to expect from the Congressional hearing
The hearing, titled “Post-PASPA: An Examination of Sports Betting in America,” will hear from several sports betting experts.
The witness list posted on the House of Representatives website includes:
- Jon Bruning, Counselor, Coalition to Stop Online Gambling
- Becky Harris, Chair, Nevada Gaming Control Board
- John Warren Kindt, Professor, University of Illinois
- Jocelyn Moore, Executive Vice President, Communications and Public Affairs, National Football League
- Sara Slane, Senior Vice President of Public Affairs, American Gaming Association
It is not surprising that the witness list includes experts from both sides of the argument. Integrity fees might dominate the headlines, but the hearing is to determine where sports betting oversight belongs.
So, where do sports betting regulations belong?
The Supreme Court ruling left the decision to legalize sports betting to the states. The decision also opened the door for federal regulation.
Several states have launched sports betting based on past precedent. It seems logical that federal involvement should be limited to enforcement support, much like it has in the past.
The AGA is also on record in support of keeping oversight at the state level.
“AGA strongly believes no additional federal engagement is needed at this time based on the significant, effective regulatory oversight already in place…Replacing an already proven regulatory regime with a non-existent and untested federal oversight apparatus would be out of step with 7 in 10 Americans who think this decision should be left to each state and tribe. “
Titus and MacArthur conclude by clearly stating what many industry experts believe:
“A heavy-handed federal framework could repress innovation and competition, sending more people back to the illegal market.”