The Long Road To Legalized Sports Betting In America

When Nevada legalized gambling in 1931 The City of Las Vegas immediately saw an influx to its economy. Casinos started popping up everywhere and within 20 years the Las Vegas strip became the center for American gambling and entertainment. In the early 1960’s Senator Robert F Kennedy was on a mission to shut down organized crime in America with the full support of his brother John F Kennedy. In 1961 Senator Kennedy succeeded in getting The Federal Wire Act signed into law as a way to take a direct shot at the major mafia families stranglehold on illegal gambling and sports betting. The first paragraph of the act proved to be a roadblock to modern day online betting, it read

Whoever being engaged in the business of betting or wagering knowingly uses a wire communication facility for the transmission in interstate or foreign commerce of bets or wagers or information assisting in the placing of bets or wagers on any sporting event or contest, or for the transmission of a wire communication which entitles the recipient to receive money or credit as a result of bets or wagers, or for information assisting in the placing of bets or wagers, shall be fined under this title or imprisoned not more than two years, or both.

This law had nothing to do with casual sports bettors. It was a direct attack at a major source of income for organized crime syndicates. Albeit unintended, it is still one of the two laws on the books that make sports betting illegal to this day. Many say the wire act was intended to help solve organized crime gambling rings while also helping the average sports bettor get a fair shake. Others argue that it was intended to make all sports betting illegal. The gray area in the Federal Wire Act have had almost 60 years of ramifications on the gambling industry that even Kennedy couldn’t have foreseen.

Fast forward to the late 1980’s. Casinos started popping up across the country. New Jersey Senator and former NBA player Bill Bradley (who for some reason loathed the thought of games he played being bet on), wanted to make sure legalized betting on American sports did not become mainstream. Bradley feared that legal sports gambling would lead to widespread match fixing and erode public trust in sporting events. With the backing of the four commissioners of the professional sports leagues led by NBA commissioner at the time Daniel Stern, Bradley helped introduce The Professionally and Amateur Sports Protection Act of 1992 or “PASPA”. This bill made it illegal to bet on sports in the US for all states with the exception of Nevada, Delaware, Montana, and Oregon. Those four states had betting laws in place prior to 1992 and were “grandfathered in” meaning the new law did not affect them (It also included wording that would allow Bradley’s adopted state of New Jersey to be included if they could pass a law within the next calendar year but they failed to get it done in time) 25 years later all forms of sports betting continue in Nevada and the Delaware lottery still offers football parlays of 3 teams or more. Oregon stopped allowing sports betting in 2007 after essentially being blackmailed by the NCAA over future basketball tournament games being awarded to the state. Montana still allows “Football Squares”

Even with those two laws in place, any American with a credit card can go online and bet on any sporting event they wish. The truly strange part is even though it’s technically illegal to do so, no one believes anyone has ever been prosecuted for it. American gambling laws were in place before the internet existed and the federal and state governments only go after domestic sportsbooks operating illegally on American soil. A person making bets online should be more worried about an IRS audit if they are winning huge sums from offshore books. If you have 30 thousand dollars in your bank account won by betting online that you didn’t pay taxes on, that will definitely be a problem but still may not lead to jail time. The fact remains that illegal sports betting in the US, whether online or with domestic bookies is big business. How big exactly is always up for debate depending on who you ask. Most “experts” say it’s somewhere between $150 to $250 Billion dollars a year. In 2014 NBA commissioner Adam Silver did an op-ed piece for the NY Times in which he claimed that number could be as high as $400 Billion dollars. Commissioner Silver’s piece was eye-opening as he was the first really powerful man in sports to publicly say we need to change these archaic laws. He wrote how betting has become an acceptable form of entertainment around the World. He used the example of in England a fan can place a bet at a kiosk at the sporting event in which they are attending. Silver went on to say this

“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. These requirements would include: mandatory monitoring and reporting of unusual betting-line movements; a licensing protocol to ensure betting operators are legitimate; minimum-age verification measures; geo-blocking technology to ensure betting is available only where it is legal; mechanisms to identify and exclude people with gambling problems; and education about responsible gaming”.

Silver isn’t alone anymore. One of the loudest critics of legalized sports betting and major supporter of the Bradley Act, Daniel Stern has even come around. In 2009 after the Tim Donaghy scandal Stern hinted that the NBA would be open to dialogue pertaining to legal betting on NBA games. In 2016 he was fully convinced. As reported by David Purdum of ESPN While speaking at the American Gaming Association’s Global Gaming Expo Stern stated he believes it is time to amend PASPA and allow legalized sports gambling so it can be regulated, taxed and some of the profits can go to worthy causes instead of in the pockets of what he called “unsavory causes.” Stern went on to say

“Let’s not talk about the ‘evils’ of gambling when it comes to sports, The industry has come to accept that a properly run gaming association will be protective of sports.”

It’s not just the NBA that is softening its stance, listen to what MLB commissioner Rob Manfried had to say in an interview with Yahoo Sports

“There is this buzz out there in terms of people feeling that there may be an opportunity here for additional legalized sports betting,” Manfred said. “We are reexamining our stance on gambling. It’s a conversation that’s ongoing with the owners.” When fans bet on games, Manfred continued, “it can be a form of fan engagement, it can fuel the popularity of a sport. We all understand that.”

After the Supreme Court ruled they would hear the case, Manfred said that if sports betting becomes legal, Major League Baseball wants a say on the issue and to be involved on the new regulatory scheme. NFL commissioner Roger Goodell and NHL boss Gary Bettman most recent statements are their leagues are still opposed to legal sports betting. This despite the fact that The Oakland Raiders will be the Las Vegas Raiders in 2020 and The Las Vegas Golden Knights hockey team will debut this fall. The PGA and Major League Soccer also seems ready to embrace legalized betting on its tournaments and matches.

When the New Jersey State Assembly inexplicably couldn’t pass a sports betting law within the one year time period congress awarded to them in 1992, it seemed that state legislators didn’t believe it was a big deal at the time. Atlantic City was still thriving as the East Coast version of Vegas. By the turn of the century things started to shift. Due to many factors including Vegas casinos opening resorts in neighboring Northeastern States, and the rising popularity of Native American casinos, Atlantic City’s stranglehold on East Coast gambling was all but gone. By 2009 the writing was on the wall. New Jersey and especially Atlantic City needed the legalization of sports betting to save its casinos and gaming revenue. It was time to act. Here is a timeline of what followed

  • March 2009 – State Senator Raymond Lesniak files a lawsuit challenging PASPA as unconstitutional.
  • November 2011 – New Jersey puts sports betting to a vote and by an overwhelming margin of 2-1 its citizens vote to legalize sports betting in the state. The next day Senator Lesniak introduces a bill to legalize sports betting in Atlantic City casinos and horse racing tracks.
  • December 2011 – The NY Times reports that the United States Justice Department reversed its opposition on internet gambling, going against their long-standing support of the 1961 Wire Act. Their opinion dealt more with allowing states to sell lottery tickets online but it gave the movement to legalize betting a major boost.
  • August 2012 – The four major American sports leagues, the NFL, NBA, MLB, NHL along with the NCAA bands together and files a lawsuit to block legalized betting in New Jersey.
  • March 2013 – New Jersey Circuit Court Judge Michael Shipp rules against the state’s case to legalize sports betting.
  • September 2013 – The case goes to the 3rd U.S. Circuit Court of Appeals in Philadelphia where it loses by a vote of 2-1. The Federal Court of Appeals later decides not to hear the case.
  • 2014 – As four Atlantic City casinos shutter their doors, New Jersey submits their case to the Supreme Court for review.
  • January 2017 – The week of President Donald Trump’s Inauguration, The Supreme Court delays announcing if it would hear the case stating it would like to hear what the President Elect’s views were on the matter.
  • May 2017 – President Trumps Solicitor General Jeffrey Wall urges the justices to not hear the case.
  • June 27th – Despite the fact that the Supreme Court usually follows recommendations from the Solicitor General and Department of Justice, The United States Supreme Court announces that it will indeed give New Jersey its day in court and vote if PASPA is unconstitutional. If it rules in New Jersey’s favor it would allow sports betting to become legal in the state and open the door for other states to follow.

So the question now is what happens next? The Supreme Court did not give a reason why they decided to hear the case, which is not uncommon. The earliest this legislation can be presented is in October when the court’s next term begins. In May Congressman Frank Pallone, D-New Jersey unveiled a draft of the bill known as The Gaming Accountability and Modernization Enhancement Act or “The Game Act’. The Game Act was a year in the making and Pallone garnered the help from gambling experts all over the US and England to help draw up the bill. The Game Acts primary assertion is that PASPA is unconstitutional for allowing betting in four states while making it illegal in the other 46 states. The act will also contend that PASPA has been a massive failure in its mission to curtail sports betting as it has grown in popularity every year since 1992 as the World Wide Web became mainstream. If the bill passes and is signed into law, it will allow individual states to decide for themselves if they want to allow sports betting at authorized betting facilities or online (including fantasy sports). The actual bill that will be presented to the Supreme Court has not been released. Here are some of the major points of emphasis of the draft submitted by Congressman Pallone. (View the full 26 page draft)

  1. Take the power out of the Federal Government’s hands and give authority to the states, under guidance of the Federal Trade Commission (whose mission is consumer protection and prevention of fraudulent, deceptive and unfair business practices)
  2. Licensing and Certification guidelines for all gaming facilities accepting wagers.
  3. Reporting Requirements to ensure gaming facilities are operating in a fair and transparent manner
  4. Safeguards to deal with underage gambling
  5. Mandatory collection and reporting of taxes by the bettor and gaming facilities
  6. Safeguards against financial crimes pertaining to wagering.
  7. Privacy and data security safeguards as well as ensuring the integrity of sporting events.

Congressman Pallone is the ranking member of the United States House Committee on Energy and Commerce, which is one of the oldest and most respected committees in the House of Representatives. Pallone has the backing of the committee, The American Gaming Association, and casinos all over the country (including many Vegas casinos whose corporations own gaming resorts outside of Nevada) This case will be watched closely by other states who will have to quickly decide if they want to draft their own legislation for legal sports betting on the state level. At least eight states have already introduced bills to legalize sports betting- Connecticut, Hawaii, Maryland, Michigan, New York, Pennsylvania, South Carolina and West Virginia. Those eight are just the tip of the iceberg. If the 1992 PASPA law is repealed, other states are sure to follow knowing the kind of tax revenue it will entail. Donald Trump’s Solicitor’s recommendation that the Supreme court not hear the case doesn’t necessarily mean he is opposed to it. He has in the past been in support of legal sports betting. As a former casino owner who had 2 resorts in Atlantic City close, he knows more than most the plight of New Jersey and other states who need the tax money that accompanies sports betting. It is widely believed he would sign a sports betting bill if it came across his desk.

One of the biggest roadblocks in past attempts to overturn PASPA were the lawsuits from the pro sports leagues blocking legalization. In the past as soon as any legislation was drawn up the leagues joined forces to release statements to the media of how legalized betting would damage the integrity of their respective sports. As stated earlier The NBA and MLB seem to be on board. The only holdouts among the four pro leagues seem to be the NFL and NHL who have both thus far have had no comment to the upcoming Supreme Court hearing. With their past history of publicly challenging everything, their silence is deafening. We believe the two leagues are unwilling to contest this bill due as brazenly as in the past due to their own greed. In 2015 the two biggest Daily Fantasy sites DraftKings and FanDuel went on a media blitz combining to spend close to a billion dollars on ads and marketing. The four major sports leagues were quick to take that money without any talk of integrity of the games or gambling addiction. The NFL, NBA, MLB and NHL all signed partnership deals with the two companies for millions of dollars. The NCAA, without the vocal support of all the pro leagues have yet to comment as well

There are many laws in place in the US that are antiquated and need to be changed. The PASPA law has only succeeded in making otherwise law-abiding citizens break the law for the sake of spending their hard-earned money on harmless entertainment. We fully understand that some people with compulsive behaviors will abuse sports betting. Alcoholism is a way bigger problem than gambling addiction yet you can’t watch a game on TV or go to a game without beer ads thrown in your face. People 40 and over probably remember the wildly popular Bud Bowl commercials that aired during Super Bowls from 1989 to 1997 that featured real football announcers and NFL Hall of Famers as coaches. The hypocrisy of not allowing Americans to bet on sports is outrageous when you think of what is legal to bet on in this country. Betting on horse racing is a time honored tradition in America. Yet If you go to a horse track and a horse breaks his leg a tarp is used to shield the horse from spectators as the animal is euthanized right on the track. After they remove the horse the next race goes on as if nothing happened. Horse activist Patrick Battuello who follows on track related horse deaths reported in a story by the Washington Post that 953 horses died while racing in 2015. Dog Races are currently held in 6 states. According to The American Society for the Cruelty of Animals, between 2008 and 2015 over 11,000 Greyhounds have been injured racing and over 900 racing deaths (that doesn’t include the amount killed when they can no longer race) Yet we still allow people to go to the track and bet on these “sports”. According to CNN Money Americans spend on average over 70 billion dollars playing the lottery annually. That’s more than is spent on sporting events, music, movie tickets, video games and books COMBINED. The lottery is definitely not a game of skill and is all about chance and luck. We constantly hear all the reports about how much lottery money goes towards education and infrastructure. The lottery’s dirty little secret is the poorest Americans are spending the most. What is never reported is it’s estimated that over half of that $70 Billion is spent by the poorest 3rd of the country. The poorest of Americans are spending the few entertainment dollars they have in desperate hopes of escaping poverty, purchasing scratch off tickets that promises riches like New York State’s “Win For Life” or California’s none too subtle “Instant Fast Cash”

Americans will never stop betting on the sports they love. Many people only tune into sporting events because they have action on the game. If the Supreme Court upholds PASPA the bets will not stop and the money will keep going to shady offshore websites and underground bookies. How laughable is PASPA in today’s America? Former President of The United States Barack Obama appeared on Stephen Colbert’s Super Bowl after show in 2016. Obama told Colbert “After every Super Bowl I call the winning team to congratulate them, and sometimes I call the losing team, especially if I bet on them.” when reminded by Colbert that betting is illegal, Obama laughed and said “I’m The President, I hereby pardon myself” Nothing more was said between the two as the crowd laughed because nothing more needed to be said. Even the former President of The United States knows this law is a joke.