New Federal Sports Betting Bill Surfaces, Empowering Attorney General and Mandating Purchase of Data

A draft of a federal sports betting bill that surfaced Tuesday would force states to obtain approval from the U.S. Attorney General’s office for their sports betting legalization plans – while also mandating that operators purchase official statistical data from sports leagues at least through 2022.

The bill would amend The Wire Act and The Sports Bribery Act, with the former changes allowing for dissemination of sports betting information across state lines. Also new: establishment of a “National Sports Wagering Clearinghouse,” intended to collect anonymized data in real-time to detect suspicious transactions.

The sweeping change in how sports betting would be overseen in the U.S. was met with some skepticism from the American Gaming Association.

“Since the Supreme Court’s ruling in May, the American Gaming Association has consistently maintained that federal legislation regarding sports betting is not necessary,” said Chris Cylke, AGA’s vice president of government relations. “That underlying position remains unchanged. At the same time, we remain committed to maintaining an open and constructive dialogue with policymakers considering sports betting legislation at any level of government.”

The parsing of this 37-page bill will take days – if not weeks – to decipher. For instance, it’s not clear how the federal government would address the eight states – and counting – that have already licensed operators to offer full-fledged sports betting. All but Nevada, which had a 70-year head start, have gotten into the game in the wake of the U.S. Supreme Court’s ruling in May that a 26-year-old federal law unconstitutionally “commandeered” states into doing Congress’s bidding on maintaining a ban on sports betting.

Marc Edelman, a law professor at Baruch College in New York, tweeted Tuesday that while he had not yet read the bill’s specific language, “giving the federal government power to approve or disapprove states’ sports gambling laws could give rise to the exact same commandeering problem” as the original Professional and Amateur Sports Protection Act of 1992 (PASPA) that was voided six months ago.

According to ESPN’s David Purdum, the bill comes from the office of retiring Senator Orrin Hatch of Utah, one of the co-sponsors of PASPA.

There is an acknowledgement in the draft of the bill that “All forms of gaming have historically been regulated at the State level, and legal sports wagering markets are and should be established and regulated principally by the States, but sports wagering affects interstate commerce more than most other forms of gaming.”

Still, why the bill?

“While each State may decide whether to permit sports wagering and how to regulate sports wagering, there is an important role for Congress in setting minimum standards for sports wagering that affects interstate commerce and providing law enforcement with additional authority to target the illegal sports wagering market and bad actors in the growing legal sports wagering market,” the bill states in the section on “findings.”

Under the bill, states would submit their sports wagering program to the U.S. Attorney General, whose office will provide a three-year approval – or deny the application – within 180 days. The bill identifies certain criteria a state’s program must meet, such as restricting in-person sports wagering to only licensed gaming facilities. Any “material change” to a state’s sporting betting law also would require approval by the office.

From the bill’s enactment through 2022, operators would have to use data supplied by the sports organizations or its approved partners to determine the outcome of bets. Starting in 2023, operators can opt to partner with data companies found to provide “data of substantially similar speed, accuracy, and consistency” compared to the league’s data. But such partners would have to be “expressly authorized to provide such data to sports wagering operators.”

No state law currently mandates that sportsbooks purchase data in connection with sports wagers from any particular provider.

According the the draft bill, states and Indian tribes would be permitted to enter into interstate sports betting compacts, again subject to federal approval, with a slight change in the language of The Wire Act.

The “clearinghouse” would be a non-profit organization charged with operating a national repository of anonymous data that would have to be provided by sports betting operators. The goal? To provide further safeguards against illegal activity by monitoring any suspicious betting patterns.

Other items of note:

• The bill would also empower the Attorney General to bring an action against “a registrant of a nondomestic domain name used by an internet site dedicated to unlicensed sports wagering” or “an owner or operator of an internet site dedicated to unlicensed sports wagering accessed through a non-domestic domain name.”
• Anyone found to have made an illegal wager is subject to a civil penalty of “not more than the greater of $10,000 or 3 times the amount of the applicable sports wager.”
• Much of the bill is filled with requirements that sports betting states already maintain, such as prohibiting athletes and others closely involved with the sporting events from betting as well as the establishment of “self-exclusion lists” for problem gamblers who are trying to quit.
• Operators will be denied licensing if, “on or after October 13, 2006” the company took an illegal internet wager. What’s so significant about that date? That’s the day President George W. Bush signed into law the Unlawful Internet Gambling Enforcement Act (UIGEA), rocking the online poker world in the U.S. to its core – PokerStars in particular.
• The Bribery Act would have “extortion and blackmail” added to its language.
• The federal excise tax on legal sports betting that now goes to the general budget would instead be dedicated to enforcement of sports betting laws and to gambling addiction treatment programs.