Love college basketball and can’t wait for the next March Madness? Or maybe you’re an NFL fan who wants to bet his or her favorite team to beat a rival or win the Super Bowl. Either way, since the Supreme Court struck down the Professional and Amateur Sports Protection Act (PASPA,) on May 14, 2018, the options for sports betting across the U.S. have bloomed.
When Congress’s 1992 PASPA was “good law,” your only option to bet legally in the U.S. was to hop a plane to Nevada. Of course you could also wager illegally with a local bookie or at sportsbooks offshore, but other laws (like UIGEA) complicate matters (such as funding an account), while dozens of offshore sportsbooks accept wagers illegally from patrons in the U.S.
But the Supreme Court of the United States ruled in favor of the state of New Jersey in Murphy vs. NCAA, and that changed everything. That ruling overturned PASPA and cleared the way for individual states to determine whether and how to legalize sports betting.
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In the first full year after the law fell, Delaware, New Jersey, Mississippi, West Virginia, Pennsylvania, Rhode Island, New York, and Arkansas all launched some form of legal sports betting. Delaware was the first to launch, a month after PASPA was overturned, with New Jersey opening for sports betting shortly after.
Numerous other states including Illinois, Indiana, Michigan, Tennessee and Virginia, have all legalized sports betting both online and in-person. Some have since accepted their first legal sportsbooks, others have not. Check out our betting law tracker here for the latest across the country.
What Was PASPA, the Federal Ban on Sports Betting, All About?
Put simply, PASPA banned sports betting across the U.S., except in Nevada. When the law was passed in 1992, it did grant New Jersey the opportunity to legalize sports betting one year after the law passed, but the state failed to do so.
Three other states, Delaware, Montana and Oregon, had certain quasi-sports betting games grandfathered in, meaning they could continue them. Under PASPA, Delaware bettors could make three-plus team NFL parlays (only); in Montana, it was sports pools, fantasy sports leagues and sports tab betting are legal, and Oregon was permitted to allow parlay betting until it outlawed it in 2007 to appease the NCAA. Delaware immediately took advantage of the new landscape, Montana lawmakers legalized sports betting via the lottery and kiosks around the state in the summer of 2019, and the Oregon lottery is planning its own sports betting game in the fall of 2019. Before the Supreme Court ruling, only Nevada was able to license and regulate sports bets of all kinds: single-game wagers, teasers, futures and prop bets, among others.
PASPA was a short and succinct law. It was broken down into the four sections:
- Section 1: Defined terms used in the law;
- Section 2: Made it unlawful for a state to to operate or license sports betting, or gambling on professional or collegiate sporting events.
- Section 3: Allowed the U.S. attorney general or an athletic league to go to federal court to stop any state or entity suspected of violating the law.
The last section exempted other gambling such as lotteries and horse racing that was already taking place.
Why Did Congress Pass PASPA?
By all accounts, the PASPA came into existence as a way to stem the tide of legalized sports betting. Paradoxically, it was sponsored by Democratic Senator Bill Bradley of New Jersey – the very state that has vigorously battled the professional sports leagues in courts trying to overturn the law. (Bradley played college basketball at Princeton before playing 10 years professionally with the New York Knicks.) The sports leagues pushed for PASPA citing the “integrity of the game,” and then-NFL Commissioner Paul Tagliabue testified to its necessity.
The idea behind PASPA was to stamp out sports betting before more states passed laws making it legal and began creating or licensing sportsbooks. Historically, leagues have argued that sports betting bribery scandals called into question the integrity of sporting events. Remember the Black Sox Scandal, the 1951 college point-shaving scandal or the 1985 Tulane cash-and-cocaine college ball scandals?
But The Leagues Recognized That PASPA Had Failed
In 2014, professional sports leagues have began to (publicly) acknowledge that that PASPA failed in its goal of stopping sports wagering or helping to maintain or bolster the integrity of and public faith in games.
NBA commissioner Adam Silver wrote in Nov. 2014 in a New York Times op-ed, after stating that “I believe we need a different approach” to sports betting:
Despite legal restrictions, sports betting is widespread. It is a thriving underground business that operates free from regulation or oversight. Because there are few legal options available, those who wish to bet resort to illicit bookmaking operations and shady offshore websites. There is no solid data on the volume of illegal sports betting activity in the United States, but some estimate that nearly $400 billion is illegally wagered on sports each year.
Times have changed since Paspa was enacted. Gambling has increasingly become a popular and accepted form of entertainment in the United States. Most states offer lotteries. Over half of them have legal casinos. Three have approved some form of Internet gambling, with others poised to follow.
In other words, scandals are more likely to occur in a completely unregulated, under-the-radar, unmonitored environment — as in the case of former NBA referee Tim Donaghy, who was busted by the FBI in 2007 for rigging games in connection with the mob.
The leagues also have a monetary interest in legal, regulated sports betting. Sports betting makes their games more popular and more profitable, and since PASPA was struck down, all four major professional American sports leagues have partnered with sports betting operators. But as state after state legalizes, the professional leagues are also lobbying for new revenue through an “integrity fee,” which is essentially a royalty, or through a mandate to purchase official data from the leagues. In essence, the leagues have done a 180-degree turn from opposing sports betting to embracing the revenue stream it will create.
Why PASPA Fell
In the end, the Supreme Court didn’t strike PASPA because it embraces sports betting. It did so because PASPA was a violation of the 10th Amendment of the U.S. Constitution — the law told sovereign states what they could and could not do, how to regulate their citizenries, and forced states to carry out federal policy at their own expense.
At the state level, many lawmakers believe that licensing and taxing sports betting will benefit the states, give patrons better consumer protections, and have other ancillary benefits for their economies.