Is it Legal to Bet on Sports?

Posted by: Russell Hebets       24-May-2018       (0) Comments        Back to Main Blog

The Supreme Court recently overturned a long standing sport betting act called PASPA (Professional and Amateur Sports Protection Act) which was originally enacted in 1992 by President Bush. This act essentially banned betting on sports at the federal level.

However the repeal of this act does not necessarily legalize sports betting across the country. What it does do is return the regulation of sports betting back to the states, creating a host of issues for sport organizations which now have to navigate varied state regulations.

Why was PASPA Repealed?

PASPA was repealed in a 6-3 vote. The justices found that the act violated the anti-commandeering clause of the Tenth Amendment. The Tenth Amendment determines what can be federally regulated and what can be regulated by the states. It dictates that powers not explicitly given to the federal government and/or barred from the states are powers that are reserved for the states. In other words, the federal government cannot commandeer, or make the states enforce federal regulations that are really the state’s responsibility and right to manage.

The History of PASPA

When PASPA was passed, 4 states (Delaware, Montana, Nevada, and Oregon) were grandfathered in because they already had sports betting regulations. Another state, New Jersey, was able to preserve the right to handle their own sport betting as long as their state set up their regulations on the matter within a year of this act passing.

New Jersey never took advantage of the one year allowance to develop a sport betting system. However, they did pursue it years later in 2010; by 2012 the people of New Jersey had voted to allow sports betting to bolster the state economy.

In response, the NCAA and the four major sport leagues, the NBA, NFL, NHL and MLB, all challenged this new law in federal court. The state countered with arguments that PASPA was unconstitutional and commandeered the states to enforce a federal law. But this argument was rejected because the states were not made to do anything; they were just barred from betting on sports.

So in 2014 New Jersey rewrote the legislation, this time reframing the law by not explicitly legalizing betting but by removing many of the prohibitions to betting. It was again challenged and the Third Circuit court saw through this approach and acknowledged it still had the effect of allowing sports betting in the state; but this time, the Supreme Court itself agreed to review the case in light of the Tenth Amendment issue at play. The Supreme Court ruled to repeal this act, thereby allowing New Jersey’s new legislation to stand.

Consequences

The results of this ruling do not make sports betting legal, they just return the power to regulate it to the states. But with each state making its own rules about betting including issues like how to license gambling operators, who can bet, where one can bet, online betting, tax rates, and managing age restrictions, you can see where regulating gambling will become complicated. Interstate betting will not be an issue at this point because of the 1961 Wire Act that the Department of Justice in 2011 used to ban payment processing for sports bets across state lines. But again here, with state by state regulation and monitoring there is concern interstate betting can become more difficult to monitor.

Furthermore, the sports leagues themselves have a hand in monitoring suspicious betting activity and a lack of uniform regulations across the country increases the difficulty of this monitoring and perhaps their ability to uncover corruption. So the head of the leagues are petitioning congress to consider a federal set of rules on betting to keep things consistent across the states.

In the meantime, while leagues push for federal guidelines, 14 states are expected to have sports betting going in the next two years and an additional 18 more have five year plans to enact sports betting in their states.


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