It’s been a pretty insane and exciting week in the sports betting world. In case you were napping for five days: the 1992 federal law PASPA, which banned full-fledged wagering outside Nevada is history. The Supreme Court ruled on Monday in Murphy v NCAA that the law is unconstitutional on 10th Amendment grounds.
We are entering a new era in sports betting in the United States, a quarter century after the law took hold with strong backing by the leagues. Not long after the ruling dropped, the NFL announced its support for a federal sports betting framework. The NCAA followed suit on Thursday.
In early January, Indiana began exploring legislation to legalize sports wagering, but pumped the brakes. Several other states were more ambitious. Many states — “red” and “blue” alike — held hearings about it. Several states are ready and eager to go, possibly as early as June. Those include New Jersey, of course, which fought the leagues in court for years, and Delaware, which had limited NFL parlay wagering “grandfathered” under PASPA (the Professional and Amateur Sports Protection Act). The developments have come so fast it’s been hard to keep up, so as this historic week draws to a close, we round up the various developments, and surely have missed a few.
The Dawn of a New Sports Betting Era: PASPA Sports Betting Developments in U.S.: Leagues’ Positions, States Make Moves, Operators Operating
But quickly first, let’s begin with the money quote from Justice Alito’s opinion for the majority: “Congress can regulate sports gambling directly, but if it elects not to do so, each State is free to act on its own. ”
In Alphabetical Order:
Arizona: “This ruling gives Arizona options that could benefit our citizens and our general fund,” said Governor Doug Ducey on Monday. Still plenty of work to do in a state that’s home to about 32 operational Native American gaming facilities. From Stephen Roe Lewis, chairman of the Gila River Indian Community: “We are looking forward to discussing with the state how we can go about working together on developing this opportunity, which could be a win-win for the state of Arizona and Arizona tribes.”
California: Assemblyman Adam Gray is ready to move, but as of yet it’s unclear if he has much support. Per the Daily Racing Form: “California sports betting bill unlikely for November ballot.”
Delaware: Announced it is “moving forward to implement full-scale sports gaming.” The First State, “grandfathered” to continue limited NFL parlay wagering under PASPA, may be first to market in the post-PASPA era.
Illinois: Lots of conversation here and bills on the table. The state is home to casinos owned by national players such as Caesars and Penn National Gaming, but they just don’t want to “screw it up” by acting too quickly. Maybe next year.
Indiana: The first state where we saw the leagues’ “model legislation” language appear in a bill in early January, didn’t pass anything before its regular session closed, but tasked a study committee this week during its special session to study wagering. Lawmakers will get plenty of input from the NCAA, which is headquartered in Indianapolis.
Louisiana: State senator Danny Martiny tried but failed last month to get a bill through committee. He wanted to re-introduce it during an upcoming special session next week, but Governor John Bel Edwards shot that down. “You do what you want,” Martiny told fellow senators, per the Times-Picayune. “I’m just telling you we’re the laughing stock of the country.”
Maryland: The House of Delegates passed a bill that would have put legalization up to a ballot referendum. The senate didn’t get around to it before the session closed. Could they possibly convene a special session to revisit? Some lawmakers are on board for that, but it appears Governor Larry Hogan isn’t going to make the call. “There was legislation proposed this year to do that, and it did not pass,” a spokesman for Hogan said this week. “We don’t anticipate a special session.”
Michigan: May be the next state to finalize and pass something before the legislature breaks for the summer. We have some insights into what’s happening there.
Mississippi: In 2017, the state made adjustments to the state constitution to allow sports wagering. All that’s left to do is finalize regulations, which already emerged this week.
New Jersey: Before this week is over, all legal sports betting proponents should pause to appreciate New Jersey’s creativity in exposing the state sovereignty flaw with PASPA, and for fighting against it at a $10 million legal expense. Monmouth Park wanted to book its first wager on Memorial Day, but Senate President Stephen Sweeney (D-Gloucester) has asked/forced it to wait a bit so the legislature could finalize the framework. “We just got the decision,” Sweeney told NJ.com on Wednesday. “We’re moving quickly with legislation. I’m hopeful we should be ready by early June. Everyone should respect the legislative process rather than jumping out.”
New York: Held hearings in January and has a Senate bill in the works to legalize, but the bill needs some fine tuning with discussions about the “integrity fee” and some other components. But Chairman of the Racing, Gaming and Wagering Committee, John Bonacic, appears sympathetic to the leagues’ request for a royalty, or fees, whatever you want to call it. From a Washington Post story by Adam Kilgore on Thursday:
He [Bonacic] supports legislation, set to be introduced Friday, that would pay leagues a quarter of 1 percent of money bet on sports. He believes the money would account for leagues upgrading technology and hiring personnel to track betting trends. He said he conservatively estimates the state would take in $30 million, while leagues would get between $4 million and $10 million in fees.
“Integrity monitoring goes to the heart of their industry, for sponsorship, for faith in the product, for fan interest,” Bonacic said. “I think it’s fair to do an integrity fee. Now that every state is rushing to pass laws in the state legislature, there’s going to be much more of a demand on professional leagues.”
That would be cause for celebration by the leagues, who appear to have lost the battle in West Virginia (more on that) but would net a much bigger fish up north. That said, New York’s session ends in late June, and they may not get something done by then, according to Senator Joseph Addabbo of Queens, who is a member of the Racing, Gaming and Wagering Committee. “It can be done administratively, but I think it will be mostly legislatively,” Addabbo said on Thursday. “We got the green light, but that doesn’t mean we should run into something.”
Oklahoma: Kicked it around this year, but ultimately a bill legalizing “dice and ball” casino games was passed — language to legalize sports betting, was stripped out. A headline from the Enid News & Eagle on Wednesday: “Legislation to legalize sports betting expected in 2019.” Oklahoma is home to about 60 tribal casinos.
Ohio: The state is surrounded on literally all sides by states that will begin licensing sports betting operators soon, or are likely to advance or pass legislation early in 2019. Will something happen? Who knows.
On practical matters, from Cleveland.com: “A spokesman for the Ohio Attorney General’s office initially said a constitutional amendment would be required to legalize sports wagering at the casinos, but revised that opinion a day later on Tuesday to say the legislature had the authority to enact sports wagering.”
Oregon: Situated similarly to Delaware. It operated a “Sports Action lottery” on NFL games from 1989 -2007 that was grandfathered under PASPA. So, they may not need new legislation, but officials will now consider how and if and when to roll out full-fledged sports betting.
“We wouldn’t move on anything until we had conversation with our stakeholders at the Capitol,” Oregon Lottery spokesman Chuck Baumann told the Statesman Journal on Monday. “We are not in any hurry to offer up other sports games.”
Pennsylvania: The state legalized it in 2017, but the operative bill imposes a whopping $10 million initial fee on would-be licensees, and a humongous 34 percent tax rate on revenue, which is triple or higher than active legislation or proposals in every other state. What’s to come?
Rhode Island: Quite a scene there on Wednesday, where league officials appeared for a hearing on a sports wagering bill that does not currently include any fee for the leagues. DraftKings wants in. Some emails are circulating about how the plan has developed, as Governor Gina Raimondo factored into the state budget a highly aspirational $23.5 million in revenue from sports betting during the new fiscal year that starts July 1. There were some great moments in the hearing, where NBA Vice President Dan Spillane got an earful from Senator William Conley.
“No logic and no fairness suggests that you are to get a piece of the action,” Conley said. “I’m not saying that this discussion is over, but I’m suggesting that your presentation this afternoon has fallen far short of a compelling argument.”
Fun day for Spillane:
A sports-loving RI senator just gave league lawyers his thoughts on integrity fees. "Gentlemen, those games do not belong to you. They belong to the fans." Reaction from NBA: pic.twitter.com/BYgHlBJJmt
— Eric Ramsey (@Eric_Ramsey) May 15, 2018
Leagues aside, there is some uncertainty as to whether there needs to be a new voter referendum concerning whether to allow wagers over the internet.
“We are hoping to look to get an advisory opinion so we can go forward and make a determination as to what we can do to enact internet sports betting,” Rhode Island Senate President Dominick Ruggerio said in a RIPR interview on Friday. “We are looking for a legal opinion on that. We have had some opinions from different groups… but we don’t really have a clear cut decision. That is something we will be looking into in near future.”
Tennessee:
I plan to move forward with legislation to allow sports betting in Tennessee. @WMCActionNews5 @kendall_downing https://t.co/VPdho0bFz6
— Brian Kelsey (@BrianKelsey) May 16, 2018
Texas:
Texas lawmaker working on draft bill to legalize sports betting. Legislature is not in session again until 2020, but I’ve been hearing that a bill may be introduced later this year. https://t.co/hWQNwUyPFR
— Daniel Wallach (@WALLACHLEGAL) May 18, 2018
West Virginia: One of the main lobbying battlegrounds between the leagues and the state, it now appears that Governor Jim Justice, who inserted himself directly into discussions and forced a closed-door meeting between stakeholders, will not pressure the issue onto the legislature’s special session agenda. Per Brad McElhinny of MetroNews: The ‘integrity fee’ matter “is not among the eight items that appear on a draft special session agenda.” The state lottery will move ahead with its plans to get up and running in about 60-90 days with its finished law legalizing sports wagering.
As for the Leagues’ Responses to the Ruling:
(Quotes below are taken from press releases issued by each league during the week)
MLB: “As each state considers whether to allow sports betting, we will continue to seek the proper protections for our sport, in partnership with other professional sports. Our most important priority is protecting the integrity of our games.”
NBA: “We remain in favor of a federal framework that would provide a uniform approach to sports gambling in states that choose to permit it,” NBA commissioner Adam Silver said in a statement on Monday. “Regardless of the particulars of any future sports betting law, the integrity of our game remains our highest priority.”
NCAA:
NCAA supports federal sports wagering regulation: https://t.co/gbyYM24EJ8
— NCAA (@NCAA) May 17, 2018
NFL: “The NFL’s long-standing and unwavering commitment to protecting the integrity of our game remains absolute. Congress has long recognized the potential harms posed by sports betting to the integrity of sporting contests and the public confidence in these events. Given that history, we intend to call on Congress again, this time to enact a core regulatory framework for legalized sports betting.”
NHL:
Gary Bettman on Sports Gambling: While the future is uncertain, I think there is a fair amount of opportunity if it’s done right. (h/t @Kramer_Katie) https://t.co/dc3csPopKg
— Jess Golden (@JGolden5) May 16, 2018
Colleges, themselves, are talking and thinking:
More colleges beginning to look at potential revenue streams from sports betting to help with any additional compliance costs. UConn, Missouri and Rutgers were among programs on a briefing call with Major League Baseball on Thursday to discuss options.
— David Payne Purdum (@DavidPurdum) May 18, 2018
Players Unions: Having conversations to determine how to get a slice of a pie, too.
The Battle Heads to Washington: Senator Orrin Hatch (R-Utah), a co-author of PASPA, announced only hours after SCOTUS ruled that he will be proposing legislation. “At stake here is the very integrity of sports,” said Hatch in a statement released by his office Monday. “That’s why I plan to introduce legislation in the coming weeks to help protect honesty and principle in the athletic arena.”
Other Developments on the Operational Side.
Paddy Power Betfair: This major U.K.-based sportsbook operator is in talks to acquire FanDuel, which is planing to pivot to sports betting.
Churchill Downs: Moved rapidly on Wednesday to enter the realm of national sports wagering with its announcement that it has joined with Golden Nugget Atlantic City to offer legal sports betting and online gaming markets.
“We are looking forward to offering integrated iGaming and sports betting products in New Jersey,” said Bill Carstanjen, CEO of Churchill Downs. “We have the unique opportunity to leverage our knowledge and experience operating the largest legal online horse racing wagering business in the U.S. as we enter the iGaming and sports betting markets.”
Changes in Sports Media Ahead? One perspective: “You betcha much more gambling coverage is coming.”
Quite a Week, Folks. If you have about 20 minutes, listen to Dr. Ryan Rodenberg discuss all the moving parts and states here, and the legal implications, on the “Bet the Process” podcast with Rufus Peabody and Jeff Ma:
Much more to come next week and in the months ahead. Thanks for reading and please give our Facebook page and Twitter @sports_handle a follow a look for the latest, or subscribe to our once-a-week newsletter using the form at the bottom of the page. Maybe one out of three?
