A coalition of sports betting industry stakeholders is planning a formal lobbying effort on Capitol Hill, potentially in early 2017, that will push for the expansion of legalized wagering. That was the biggest news from the American Gaming Association at a conference for media members on Thursday.
The AGA is leading the effort to shape the coalition and has made sports betting its signature initiative in recent months. On Thursday, the AGA cited the NHL’s decision to locate a franchise in Las Vegas as a major step in the evolution of American sports betting.
AGA senior VP of public affairs Sara Rayme said the association expects to build on what it sees as significant momentum for the expansion of legal sports wagering, and achieve that result in three to five years.
Even with sizable momentum, such a timetable is ambitious and could face an extensive, diverse set of hurdles, from the legislative to the litigious.
Possible hurdles for sports betting legalization
A central hurdle to the expansion of sports betting in America is the Professional and Amateur Sports Protection Act, a 1992 federal law that prevents all but four states from offering some form of sports wagering.
A partial repeal or alteration of PASPA is likely the most direct way to expand sports betting. Gaming attorney Daniel Wallach, a shareholder with Becker & Poliakoff, characterized the federal law Thursday as, “hanging by a thread and waiting for a knockout blow.”
But amending PASPA could prove difficult. Congress is notoriously slow to act in general, let alone at altering existing law. But as a recent daily fantasy sports hearing on Capitol Hill illustrated, there’s a sizable education gap between stakeholders and legislators when it comes to even understanding the speed and technology of 21st century sports gambling.
Nevada sports betting apps for mobile phones, could account for as much as 50 percent of that figure by the year 2020, according to Eilers & Krejcik Gaming, and the Nevada Gaming Commission is likely to approve regulations making it possible for bettors to setup and fund their mobile betting accounts from outside Nevada.
Genius Sports CEO Mark Locke noted at Thursday’s conference that sportsbooks are offering bettors as many as 200,000 opportunities a year for live, in-play wagering on their phone. Bettors can wager on an evolving menu of second-by-second options pertaining to almost any aspect of a game.
The courts and the leagues
New Jersey is awaiting a ruling in a federal court case that could determine whether it will be allowed to partially repeal its ban on sports wagering. So far, New Jersey has challenged PASPA largely on its own. Other states deciding to mount similar challenges could help those efforts, although none have yet done so.
Sports betting enthusiasts also run the risk of the leagues’ “evolution” (NFL Commissioner Roger Goodell used the word earlier this year) on sports gambling not really being that evolved after all.
The NHL has the ability to ask Nevada not to allow wagering on the Las Vegas franchise. It has not elected to do this at this time, but it is formally opposing sports wagering legislation in Canada. It, and the three other major sports leagues, are plaintiffs in the New Jersey sports betting lawsuit.
The NFL, meanwhile, continues to confound with its policies toward gambling and DFS. The league does not have a formal partnership with either of the big two daily fantasy sports operators, DraftKings or FanDuel, but 28 of its teams have sponsorship agreements with an operator and two of its franchise owners are investors in an operator.
The NFL has allegedly forced the cancellation of multiple Las Vegas-based events featuring current players, but does not appear opposed to the Oakland Raiders franchise relocating there.
Signs of Progress
Despite the challenges awaiting any formalized legalization effort, those at the conference Thursday noted several reasons to be cautiously optimistic about sports wagering’s future in the U.S.
Recent signs have hinted at a broadening acceptance by some of the professional sports leagues toward betting. Until now, Las Vegas has never had a franchise from one of the four major sports leagues due in part to the leagues’ long-standing opposition to gambling.
NBA commissioner Adam Silver has repeatedly sparked a conversation about the need for a framework for legal, regulated sports gambling, although few others have picked up the baton and converted Silver’s rhetoric to action.
Just Thursday, the Pennsylvania House of Representatives passed a resolution urging Congress to repeal PASPA and then “allow states that authorize, license and regulate casino gaming, including the Commonwealth of Pennsylvania, to legalize sports betting through its licensed facilities.” Legislatures in Pennsylvania, Delaware and New York, have introduced sports betting legislation this year.
But it’s unclear how much these words have, or will, translate to significant legislative movement.
Daily fantasy sports, however, is something that has already forced action on behalf of both the leagues and legislators.
DFS’ role in sports betting
Rayme credited the recent rise in popularity of DFS, and its industry’s subsequent 2016 legislative blitz, for making more people aware of the issue of sports betting in America.
“DFS is the gift that keeps on giving. It’s mainstreamed our business,” Rayme said, noting that it forced the hands of several professional leagues into taking a stand on some form of gaming, regardless of whether DFS is legally defined as sports betting.
Part of that awareness has funneled a broader awareness of illegal gambling in America.
The AGA estimates Americans wagered $149 billion in 2015. $4.2 billion—the same amount wagered both legally and illegally on the Super Bowl alone — made up the entirety of America’s legal sports wagering handle in 2015, according to Nevada Gaming Control, putting estimates of the illegal American gaming handle that year at approximately $145 billion.
This illegal market constitutes a “huge liability, a huge vulnerability,” for the leagues, and helps fund illegal criminal activity, according to Rayme.
She said the AGA’s push for legalization is grounded in exterminating those illegal activities, and not the leagues’ traditional fear of a player taking a bribe to throw a game.
What would legal sports betting look like?
While it’s not clear if or when sports betting will be more broadly legalized, it’s clear the industry is continually evolving, both in handle size and in technological capacity.
Locke handicapped the size of a 50-state, legal betting market as being “hundreds of billions dollars” larger than the measly potential $5 billion handle some project for 2016.
Jimmy Vaccaro, who directs the sportsbook at the South Point, attributed the rise in prop bets (his book featured 300 of them for Super Bowl 50) and non-sports bets (the South Point offered +160 odds earlier this month that Hillary Clinton would be indicted) to the increasing entertainment value that modern sportsbooks are expected to provide for casino-goers.
Boyd Gaming’s Bob Scucci noted the benefit of the NGC’s decision last year to approve Olympic wagering in advance of August’s games in Rio De Janiero, and said that more sports had the potential to be added to provide an expanded wagering menu for bettors. The Commission is expected to take up esports betting regulations later in 2016.
The leagues and the gaming industry would also likely continue to work together to identify and monitor suspicious activity. Former NGC commissioner Mark Lipparelli characterized the relationship between the two as mutually beneficial.
And if PASPA is altered to allow other states to authorize wagering, public sentiment could drive the sports betting industry to a fragmentation similar to that of the DFS industry. A poll of Super Bowl bettors conducted earlier this year by The Mellman Group found that 66 percent wanted states, not the federal government, to decide whether or not sports betting should be legal.
‘No action’ for time being
Earlier this month, AGA President and CEO Geoff Freeman said it was still premature to be lobbying on Capitol Hill for legalized sports betting. It is unlikely any formal efforts would get underway before the presidential election on Nov. 8, and potentially not until next year.
The formation of a formal lobbying effort, though, could signal that there’s action lying in wait beyond the recent rhetoric calling for a change to America’s sports gambling policy.