Opinion: Where does sports betting in the US go from here?

Christopher L. Soriano, partner at law firm Duane Morris, examines the legal options for regulated sports betting

Christopher L. Soriano is a partner in the Cherry Hill, N.J. office of Duane Morris. He concentrates his practice in gaming law, where he represents casino operators, gaming equipment manufacturers, egaming companies, financial institutions, and other participants in the gaming industry in all aspects of their operations.

As a result of a federal law from the early 1990s, legal sports betting in the US is prohibited with few exceptions – full sports betting in Nevada and football parlays in Delaware.  In the early 1990s, at the time that the federal law, known as PASPA, was enacted, internet wagering was not remotely on the horizon.  The development of the internet, coupled with an increase in desires to bet on sporting events, has led to what some have estimated today to be a $6bn illegal sports betting market in the US.

Seeking to seize on that market, and to support its weakened casino and racing industries, New Jersey has been battling with the professional sports leagues and the US government in the courts to find a way around PASPA.  But those efforts have, to date, been unsuccessful – the federal courts have been unwilling to strike PASPA as unconstitutional, and have been unwilling to approve New Jersey’s most recent effort to partially repeal its prohibitions on sports betting, holding that PASPA prohibits that, too.

Although New Jersey might be able to seek review in the Supreme Court, it is unlikely that the Court will accept the case.  Some have suggested that other states might also seek to challenge the constitutionality of PASPA or otherwise challenge it, in the hopes of receiving a different decision from the federal Court of Appeals in their circuit, thus substantially increasing the odds of Supreme Court review.  But that, too, is an unlikely prospect in light of the fact that litigation costs significant money and the fact that at least one federal court has already rejected challenges to PASPA.

Divided opinion

It is time for a reexamination of the policies underlying PASPA to see whether those policies are still valid in a world where internet wagering is a reality and where transactions can be so easily tracked.  PASPA was based on the professional sports leagues’ concerns that betting on professional sports undermined the perception and integrity of the games.

PASPA does nothing to stem the tide of illegal sports betting on the internet (or in person); instead, it prohibits states from licensing or authorizing sports betting by law.  Thus, from a policy perspective, if $6bn is being wagered on black markets that are unregulated and untaxed, is that black market leading to the perception that games might be undermined?

And, similarly, if that betting were taking place under the strict control of state gaming regulatory authorities, might those regulatory authorities be able to police the wagering and ensure that, first, only those entities (such as casinos) who demonstrate their suitability are able to offer sports betting and, second, track and alert authorities to suspicious activities such as the potential for match fixing?

Certainly, there is a valid argument that sports betting conducted under the auspices of a gaming regulator presents less of a threat of integrity concerns than a booming, unregulated black market.

There has been some indication from at least the NBA of a willingness to reexamine sports betting on a national perspective in the US.  The issue, of course, is that it is always difficult to secure legislative change in Congress, particularly when a federal statute has been on the books for so long. It remains the case that there is a wide divergence of views in Congress on gaming generally, with some who are opposed to gaming in all forms.

Forging a consensus, and making sports betting a priority in the legislative arena, is a massive challenge for those who support the expansion of sports betting.  Absent significant consensus and hard lobbying efforts, however, legislative inertia could lead to the status quo being preserved for quite some time.

Disclaimer: This article is prepared and published for informational purposes only and should not be construed as legal advice. The views expressed in this article are those of the author and do not necessarily reflect the views of the author’s law firm or its individual partners.