December 24, 2017 by

Legalization of Sports Betting in the United States

Gambling laws in the United States are complicated. The laws differ from state to state and even from one location in a state to another. The situation is even more complicated when it comes to sports betting which has been limited for over 20 years thanks to the PASPA Act. PASPA, the Professional and Amateur Sports Protection Act,  was passed by Congress in 1992. It prohibits states, except for Nevada, from legalizing and regulating sports wagering.


The State of New Jersey decided to confront the law and, for the past five years, has been agitating to legalize sports betting at New Jersey horse tracks and casino sites. Lower courts have repeatedly upheld PASPA but now, it seems that the United States Supreme Court is ready to rule on the constitutionality of PASPA.

PASPA

In 1991 Congress invoked the Commerce Clause to enact Bill 474. This bill, known as PASPA (or the Bradley Bill) effectively outlawed sports betting nationwide, excluding sports lotteries in Delaware, Oregon and Montanta. Also exempted were sports gambling activities in states which operated licensed casinos for the previous ten-year period.

The clause that exempted states which operated licensed casinos previously was intended to ensure that New Jersey would be able to continue sports betting opportunities through their casino sites. However, New Jersey didn’t respond to the new law at the time and lost their window of opportunity to challenge its validity.

Challenges

There are many governmental bodies and private entrepreneurs who are advocating that PASPA be repealed.  They say that, as written, the law is unconstitutional, since the U.S. Constitution explicitly grants all rights that the Constitution does not clearly grant to the Federal government. This includes, the repeal-advocates say, gambling regulation.

In March 2009 Raymond Lesniak, New Jersey State Senator, filed the first of numerous lawsuits, claiming that PASPA unconstitutionally discriminates among the states by disallowing sports betting in 46 states and allowing four states to offer sports wagering.

PASPA has been upheld in multiple District Court and Appeals Court hearings, most recently in 2013. As of December 2017 however, the constitutionality of PASPA is again in question, thanks to a signal from the United States Supreme court that indicates that they are prepared to hear arguments promoting striking down the bill as unconstitutional.

New Case

If it wins, New Jersey will be able to offer legalized sports gambling at its casinos and elsewhere. The state faces stiff opposition from all four major professional sports leagues. These leagues, including the National Collegiate Athletes Association, the NBA, the NHL and NFL who contend that the federal ban is necessary to protect the integrity of their games (some observers translate this into the leagues’ worry that, if sports betting were to become widespread, it would tempt players into throwing games in order to reap the rewards of a bettor or wagering benefactor).

New Jersey is supported by 18 other states who would, it seems, be open to allowing sports betting in their own states. New Jersey’s argument doesn’t address the question of whether sports betting should be legal. Instead, it rests on the 10th Amendment which limits Federal control over states who wish to take certain actions on its behalf. They claim that PASPA violates this doctrine by prohibiting  states from changing their own laws while forcing the states to enact and enforce a policy on behalf of Congress.

Now the argument revolves around the amount of control the Federal Government can exert over states. Some Court observers think that this is “perhaps the most important federalism case the Supreme Court has heard in years.”

States’ Stakes

The states that are promoting the repeal of PASPA are looking at the economic benefits that they’ll enjoy if they’re allowed to legalize sports betting. (PASPA does not make sports betting illegal – it prevents states from legalizing the practice.)

These states want to reap the tax benefits that would come from breathing new life into their troubled casinos and racetracks through authorized sports betting at the facilities.

Upcoming Case

Some Court observers see the court’s agreement to hear the case as a positive sign for New Jersey. Legal experts expected the support of states’ rights advocates, such as Justice Clarence Thomas, but noted that liberal justices, who often support Federalism, were also interested in hearing the case.

Geoff Freeman, CEO and president of the American Gaming Association, said:

“Today is a positive day for the millions of Americans seeking to legally wager on sporting events. While we can’t predict the intentions of Supreme Court Justices, we can accurately predict the demise of the Professional and Amateur Sports Protection of 1992.”