A House Judiciary subcommittee hearing titled “Post-PASPA: An Examination of Sports Betting in America” proceeded on Thursday under the shadow of a more high-profile hearing in the Senate.
Little new ground was covered during the one-and-a-half hour session that largely afforded the five witnesses an opportunity to reiterate their main positions underscored in the written statements submitted prior to the session.
Chairman of the House Judiciary Committee’s Subcommittee on Crime, Terrorism, Homeland Security and Investigations, Jim Sensenbrenner (R-WI), began by noting “This is just the beginning of the conversation,” and concluded by opining that “one thing all of you agree on is that for Congress to do nothing is the worst possible alternative.” What follows is a synopsis of highlights and lowlights.
House Judiciary Hearing on Sports Betting Begins, but Doesn’t Advance the Conversation Much About Possible Federal Regulation of Sports Betting
The five witnesses each gave five-minute opening remarks in the following order. Their main points are summarized:
Jocelyn Moore, Executive Vice President, Communications and Public Affairs National Football League:
The NFL wants sportsbooks mandated to purchase “official league data” — from leagues — when grading wagers for any bet not determined by the game’s final outcome. She made this clear.
Moore said “The NFL is not advocating for a sweeping expansion of federal law. We are asking for core standards” for states. Right now, she posits, there’s “a regulatory race to the bottom” in states that have already legalized sports wagering, creating risk to NFL and other games.
Sara Slane, Senior Vice President of Public Affairs American Gaming Association (AGA):
.@SaraSlaneAGA at today’s @HouseJudiciary hearing on #sportsbetting: Transforming the illegal, underground sports betting market into an open, legal market under state and tribal regulatory oversight will accomplish critical public policy goals:
— American Gaming Assn (@AmerGamingAssn) September 27, 2018
“[The NFL’s] push to have a regulatory framework is completely unwarranted,” Slane told Sports Handle after the hearing. “I don’t see any state or the federal government having the appetite to get in the middle of what can be done in a commercial negotiation. Nevada and other states and sportsbooks already purchase data. There’s no need to statutorily require it and give the leagues a monopoly on that.”
Les Bernal of Stop Predatory Gambling: Bernal opposes every form of gambling you can possibly conceive. States that have sportsbooks are predatory and they “know more about you than Google” he said.
Jon Bruning, Counselor for Coalition to Stop Online Gambling: Bruning veered into existing federal law, believes the Wire Act needs to be modernized. He obviously opposes gambling that occurs online but didn’t clearly articulate why state-regulated sports betting wouldn’t be beneficial to curbing unmonitored, widely existing betting in the black market. He wants the feds to do more, basically.
Becky Harris, Chairwoman of the Nevada Gaming Control Board: Hurriedly went through points, among the main ones being that Nevada has successfully and effectively regulated sports wagering for decades and doesn’t need intervention from the federal government:
Last up is Becky Harris of NV GCB. NV has a "robust and seasoned" regulatory sports oversight/enforcement.
NV has "considerable consumer protection processes."
Points to NV's role in flagging/identifying the major scandals. Largely a reiteration of written testimony as well.
— Sports Handle (@sports_handle) September 27, 2018
Lawmakers’ Questions and the Most Interesting/Puzzling Suggestion of the Day
The subcommittee members who took the opportunity to question the witnesses remained at the surface level.
Representative Jerry Nadler (D-NY) said “You really can’t stop illegal gambling. So how do you balance” states’ interest in licensing and regulating sportsbooks with what the NFL and leagues are demanding? The witnesses obviously have different ideas here, with Harris and Slane reiterating that no federal legislation is needed at all.
Fellow New Yorker Hakeem Jeffries (D-NY) went in another direction, wondering if referees and coaches may now be at grave risk from disgruntled sports bettors if they make a questionable call or the ball doesn’t bounce their way. He also noted an NFL position that certain wagers such as prop bets are more susceptible to being manipulated by those inclined to engage in illegal activity. Moore agreed that this is a risk, a point refuted by Harris.
The most interesting or perhaps bizarre question/comment came from Chairman Sensenbrenner, who actually made the case that a legal, regulated market probably can never successfully compete with the black market, saying that since black market sportsbooks don’t face significant taxes and fees, offshore and illegal operators can offer better prices and more attractive betting options. This he suggested will always make the black market the most attractive option to U.S.-based bettors.
Slane rebuffed this by noting AGA research finding that bettors stateside would prefer to be engaged with legal, state-licensed operators.
.@SaraSlaneAGA cites recent @AmerGamingAssn research finding 71% of bettors using illegal market are willing to switch some or all of their bets to the legal, regulated market. Full study here: https://t.co/bt40KkZGzC
— Caroline Ponseti (@ceponseti) September 27, 2018
When the New Jersey September revenue numbers are released, Sensenbrenner’s eyes should open to the reality that there is a huge clientele excited for legal sports betting options. In August with largely retail and just the DraftKings Sportsbook operating online most of the month, the handle in New Jersey reached nearly $100 million when only preseason NFL games and one weekend of college football was available for wagering.
Looking Ahead, Where Is This Really Going?
With midterm elections so close and no legislation on the table, Congress is almost certainly not doing anything this session. While the NFL wants federal legislation “immediately” per Moore, Sensenbrenner indicated this was the beginning of the conversation.
Come 2019, per FiveThirtyEight.com, there’s an 80 percent chance that Democrats will take control of the House of Representatives. Respected New Jersey Representative Frank Pallone’s (NJ-6) home state fought PASPA and won and he will do everything in his power to see that the federal government does not intervene at all or at least in such a way that state regulators cannot countenance. New Jersey’s legislature has acted, regulators are experienced and the state is moving right ahead with a rapidly expanding market. Meanwhile Chairman of the Judiciary Committee Bob Goodlatte (R-VA), of the non-gaming state Virginia, who believes that existing laws concerning sports betting need strengthening, is retiring after 13 terms in Congress. A new Democratic majority would have priorities that do no include regulating sports betting, one of which rhymes with schmimpeachment.
By the second quarter of 2019, there may be up to a dozen states to legalize sports betting — state-regulated betting and through Tribes — including Kentucky, Iowa, Connecticut, Michigan, Indiana, New York, Oklahoma and others, in no particular order. And zero of these states will want the federal government telling them how to do business, nor requiring their licensed operators to pay leagues fees — for data or “integrity” or otherwise.
By then more deals will be made between leagues and gaming entities – like the MGM-NBA deal that Harris flagged in her written testimony. Members of Congress should (should!) see that leagues and operators can successfully partner and advance mutual interests without being told how to do so.
Following the hearing, Congresswoman Dina Titus (D-NV) released the following statement:
“It is clear members have a long way to go in understanding legal, regulated sports betting in the United States, and I am glad Nevada Gaming Control Board Chair Becky Harris was there to provide some specifics about the system in Nevada that serves to protect consumers and keep the illegal market at bay. I look forward to working with my colleagues to ensure that facts, not anti-gambling fear-mongering talking points, are driving this conversation, and I welcome members to come to Nevada to see how a system successfully regulated by a state operates.”
Overall, the environment will favor a greater likelihood that Congress does nothing, or nothing much as we explore here.
We also argued that the AGA and the leagues have more in common than it appears. The main battle ground is over “official league data.” But put simply, there is no legal precedent for the leagues to establish universal control over data, so they want lawmakers to codify a requirement that sportsbook buy it.
Consider these pieces of written testimony. From Moore, echoing the NBA, MLB and PGA Tour positions on “official data” and the possibility of people betting on “ghost games”:
That’s the main battle ground to watch as things move forward.
If things move forward.