What’s the current state of sports betting in the US?
There is a federal ban on sports betting in the United States. However, the 1992 law that created the federal sports betting prohibition granted immunity to four states which had previously allowed sports betting inside their borders. Those states are Nevada, Delaware, Oregon, and Montana.
Currently, the state of New Jersey is challenging the legality of the Professional and Amateur Sports Protection Act (PASPA). This is the law that bans sports betting in the other states. The Supreme Court heard oral arguments in late 2017. They should have a decision by summer of 2018.
If the Supreme Court rules in New Jersey’s favor, several states already passed legislation enabling them to begin accepting bets as soon as the federal law changes. Those states are as follows:
Where can you bet on sports?
Nevada allows wagering on a variety of approved sports at land-based sportsbooks. Plus, sports betting is authorized on the internet through mobile apps connected to those sportsbooks.
Delaware allows only parlay wagering on National Football League (NFL) games through the state lottery.
Oregon did offer parlay sports betting through its state lottery as well. However, the state made this illegal in 2007 under pressure from the National Collegiate Athletic Association (NCAA). The NCAA refused to let the state host championship basketball games.
Legal sports betting in Montana has always been limited to a sports pool law permitting licensed taverns and bars to create betting squares contests. All of the money wagered on the contests must be returned to players.
Key wagering laws
The federal government passed the Professional and Amateur Sports Protection Act (PASPA) in 1992. This essentially made Nevada the only state allowed to offer legal sports betting. It also grandfathered in existing state lottery parlay sports betting in Delaware and Oregon. Betting squares contests at bars and taverns in Montana carried over as well. Oregon has since made state lottery parlay sports betting illegal.
Passage of PASPA was an effort by the federal government to end gambling-related corruption in sports. American gangsters found some notable success coercing pro athletes to shave points or fix games so they could profit gambling on them. One example is the 1919 Chicago White Sox World Series scandal. PASPA came about to prevent the proliferation of such scandals, as well as maintain the integrity of sports in the country.
The American Gaming Association (AGA) has since called for the law to be repealed. It claims Americans bet more than $150 billion on sports annually, regardless of the law. The AGA also claims most of this money is bet through illegal bookies and offshore online gambling operations.
The Interstate Wire Act of 1961
The Interstate Wire Act of 1961 is often referred to as the Federal Wire Act. This law essentially prohibits the operation of a number of betting businesses across the country, particularly those using the transmission of a wire communication to place bets. The law passed as a part of then US Attorney General Robert F. Kennedy‘s effort to suppress organized crime activity across the country.
Kennedy believed gambling operations run by organized crime groups were so completely intertwined with communications systems that going after their use would cripple the operations.
In December 2011, the United States Department of Justice released a legal opinion on the act. The decision concluded anything outside of sporting events falls outside the act’s reach. The opinion was meant to clarify whether states could sell lottery tickets on the internet. However, Delaware, Nevada, and New Jersey all enacted online gambling legislation based on it. The decision did clarify the act was a part of the federal ban on sports betting.
Efforts by states to get sports betting
A number of states have either considered or passed laws seeking to legalize sports betting and challenge federal law. The following states introduced sports betting legislation in either 2017 or 2018, but have not yet passed it into law:
- West Virginia
- South Carolina
- New York
- Rhode Island
The New Jersey challenge
The idea of legal sports betting in New Jersey passed through a public referendum in 2012. A bill permitting the state’s racetracks and Atlantic City casinos to offer sports betting similar to that in Nevada became law in 2013. However, a number of pro and amateur sports leagues fought the law in court. They successfully struck it down. The state appealed to the Third Circuit Court, and the decision was affirmed.
The state passed another sports betting law in 2014 and lost again in district court. The Third Circuit Court of Appeals affirmed that decision as well. The state appealed that decision and lost that appeal too. The case is moved on to the US Supreme Court. The Solicitor General recommended the court pass on hearing the case, but the court took it up and heard oral arguments in December 2017. It should have a decision by summer 2018.
The Michigan effort
A Michigan lawmaker reintroduced a bill to legalize sports betting in 2017. State Rep. Robert Kosowski said he was willing to challenge the federal government ban on sports betting. He reintroduced the same bill that had a committee hearing in 2015 but failed to gain traction.
Kosowski believes sports betting is already a billion-dollar industry in Michigan. He is seeking to tax and regulate it, rather than allow illegal bookmaking to continue.
The bill got a hearing in front of the House Regulatory Reform Committee in 2017, but no vote.
Are attitudes changing about sports betting?
With the Supreme Court taking on the case, states are now lining up to introduce sports betting legislation should the law change. While only four states passed such legislation, another 15 are considering a bill. With nearly half the states passing or considering new laws, it is fair to say the tides are shifting.
Sports betting is a multi-billion dollar market in the United States, and the current operators are illegal bookies and offshore gambling websites. Cash-strapped states looking for innovative new revenue sources are starting to see the sports betting market as a realistic way to generate money. This is similar to the change in attitude towards land-based casino operations and online gambling.
Position of sports leagues
When New Jersey passed sports betting legislation, major pro sports leagues, including the NFL, NHL, NBA, and MLB were the ones who took them to court to oppose it. Many of the same sports leagues stood in opposition when Delaware looked to expand its lottery parlay wagering beyond football.
However, the league’s stance on sports betting may be softening. In fact, NBA Commissioner Adam Silver wrote an op-ed in the New York Times in 2014 calling for the repeal of PASPA. He claimed the popularity of gambling across the United States as a reason why.
Silver called for Congress to adopt a federal framework allowing states to authorize betting on professional sports. Of course, he also said it should be subject to regulatory requirements and safeguards. As new bills rolled out, it became clear Silver and other leagues also expect a cut of the sports betting revenue–a move drawing extensive criticism from the gambling industry.
The NFL remains against any form of legalized sports betting. However, with the Oakland Raiders moving to Las Vegas, that may soon change. MLB seems to be accepting that the landscape is changing as well. The NHL wants to look more deeply into the issue, but given the smashing success of the Las Vegas Golden Knights, it is difficult to ignore how both industries can work together to mutual benefit.
The American Gaming Association campaign
The AGA has long maintained illegal sports betting is a rapidly growing market in America. They also believe laws against it only serve to push it all further underground. The AGA says sports betting has only grown more prevalent since PASPA passed in 1992. It claims Americans now bet in excess of $150 billion annually, almost all illegal wagers.
The AGA sends out press releases surrounding major sports events like the Super Bowl and March Madness estimating how much money Americans will bet on the events. The organization also calls for the repeal of PASPA.
The message is clear: The AGA feels PASPA is a failed law and Washington should lift the federal prohibition on sports betting that helps to create and serve the illegal betting market. The organization maintains a legal and regulated marketplace would generate tax revenue and jobs. They also say it will protect consumers while continuing to strengthen the integrity of major sports across the United States.
Frank Pallone and the GAME Act
In May of 2017, New Jersey Congressman Frank Pallone, Jr. released a discussion draft of a comprehensive gaming bill, the Gaming Accountability and Modernization Enhancement Act, or GAME Act. The act would essentially allow states to legalize sports betting and online gambling, assuming appropriate consumer protections were also put in place.
The GAME Act would repeal PASPA and, although it would not set up the framework for sports betting and online gambling, it would allow states that choose to legalize and regulate sports betting or online gambling to do so on solid ground.
Pallone maintains Americans are betting hundreds of billions of dollars on sporting events annually, despite the federal gaming laws. He also says the laws are outdated and federal obstacles to legalized gambling at the state level need to be removed.