What’s the current state of sports betting in the US?
- Yellow states have sports betting laws grandfathered in under PASPA
- Green state enacted sports betting laws that went into effect after PASPA was overturned
- Blue states introduced sports betting legislation in 2017 or 2018
There was a federal ban on sports betting in the United States from 1992 to 2018 under the Professional and Amateur Sports Protection Act (PASPA). The 1992 law granted immunity to four states that had previously allowed sports betting inside their borders. Those states are Nevada, Delaware, Oregon, and Montana.
The state of New Jersey challenged the legality of PASPA. The Supreme Court heard oral arguments in late 2017. On May 14, SCOTUS issued a decision reversing the ban, striking down PASPA in full by a vote of 6-3. Thanks to the decision, the following states can now offer legal sports betting, once they create and approve regulations, that is:
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.
Once wagering is up and running in the four new states, they will likely look fairly similar to Nevada’s market, with both in-casino sports books and mobile wagering.
Delaware allows only parlay wagering on National Football League (NFL) games through the state lottery. However, the state is in the works of expanding to offer full sports betting.
Oregon offered 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
In 1992, PASPA essentially made Nevada the only state allowed to offer legal sports betting. The law marked 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 infamous example is the 1919 Chicago White Sox World Series scandal.
PASPA ostensibly came about to prevent the proliferation of such scandals, as well as maintain the integrity of sports in the country.
Now, with PASPA deemed unconstitutional, states can decide whether they want to offer sports wagering. Additionally, Congress now has the option to draft and pass a law legalizing sports betting at the federal level.
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. The following states introduced sports betting legislation in either 2017 or 2018 but have not yet passed it into law:
- South Carolina
- 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 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.
Again, on May 14, 2018, SCOTUS ruled PASPA’s sports betting ban unconstitutional.
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?
States are now lining up to introduce sports betting legislation. While only four passed such legislation, another 15 are considering a bill. With nearly half the states passing or considering new laws and a favorable SCOTUS decision, 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 leagues’ stances 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.
Other leagues are echoing the NBA’s sentiments in the wake of the Supreme Court decision. They are lobbying for a federal sports betting bill with a cut for the leagues to help finance measures to preserve the integrity of their games.
The American Gaming Association campaign
The AGA has long maintained illegal sports betting is a rapidly growing market in America. It also puts forward that 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 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 US.