Congressional Committee To Tackle US Sports Betting: What It Means And What’s Next

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A new effort to eliminate or amend the federal sports betting prohibition in the United States is underway in earnest, according to a report from ESPN.

Here’s the lowdown from ESPN’s David Purdum:

A congressional committee is reviewing federal gambling laws, including the 24-year-old prohibition on sports betting, and plans to introduce comprehensive legislation that also will address daily fantasy sports and other forms of gaming.

The effort is being spearheaded by Rep. Frank Pallone (D-New Jersey), according to the ESPN report. The effort would try to “harmonize” three federal laws on gambling:

What does today’s news mean, and what’s next for the effort to allow sports betting in the US?

The backstory for Congress, New Jersey and sports betting

PASPA is a 1992 law passed by Congress that outlaws sports wagering of any kind in most states; single-sport wagering is allowed in Nevada, but nowhere else. Three states — Delaware, Montana and Oregon — can offer limited forms of sports wagering, under the law.

Despite that prohibition, the American Gaming Association has estimated that hundreds of billions of dollars are being wagered illegally on sports in the US each year.

This is not the first time bills regarding sports betting have surfaced in Congress:

Neither of those bills went anywhere, however.

Sports betting has been one of the major issues for Pallone in particular and the New Jersey delegation in general. For years there have been attempts to legalize New Jersey sports betting via new laws at the state level, in an effort to help the casinos and racetracks in Atlantic City.

So far, those laws have been struck down in federal court; New Jersey is appealing its latest defeat to the Supreme Court.

The rise of the daily fantasy sports industry has provided a new entry point for the sports betting discussion in Congress, and there are at least some questions of the applicability of PASPA to DFS. Congress held a hearing on DFS earlier this year in what functioned more as a table-setter for later discussions and this new legislative effort.

What the bill might do, if enacted

Right now, what the bill will contain is a guessing game.

The most likely outcome: amending PASPA so that states can legalize sports betting if their legislatures and governors decide to do so. This would not be unlike what currently exists for online gambling around the country, as states can basically “opt in” under the provisions of UIGEA. To date, only New Jersey, Nevada and Delaware have legalized iGaming.

What Pallone or Congress might do with the Wire Act or the UIGEA is not at all clear. However, taking the Wire Act off the books would certainly make a lot of sense for the future of a legalized environment for sports betting.

A federal framework regulating sports betting directly, recently suggested by former NBA Commissioner David Stern, would seem like a longshot.

This is a very preliminary step for US sports betting

While news that a congressional committee is looking into gambling laws and the sports betting prohibition is welcomed by gambling proponents, some of the enthusiasm should be tempered a bit, at least in the short term.

Work on the issue by a congressional committee is certainly better than no action whatsoever, and it is better than a single lawmaker in Congress freelancing and introducing a bill.

But Pallone is the ranking Democrat in the House Energy and Commerce Committee; therefore, he has the political capital and pull to at least get the gears of Congress and that committee moving. How much support Pallone’s yet-to-be-introduced bill will garner is a variable with no real answer, yet.

Without a pressing need for a bill to be passed, almost nothing happens quickly in Congress. The introduction of a bill regarding sports betting is an important first step, but it’s not likely to reach the finish line in 2017 unless everything breaks 100 percent correctly. Hearings will have to be held, and some sort of momentum needs to be generated in the Senate as well.

Long story short: Even in an ideal scenario, we’re likely looking at a window of years for the Pallone effort to be enacted into law. But, that’s the long game that needs to be played in order to change a law that has been on the books for decades.

Dems taking over House would be a very good development for sports betting

The upcoming November elections could have a major impact on how things go on sports betting legislation moving forward.

Democrats right now are favored to take control of the US Senate, according to forecasts. Only recently has the possibility of Democrats taking control of the House of Representatives become a realistic outcome.

If that happens, Democrats would be in a much better position to advance their policies, when coupled with a Hillary Clinton victory in the presidential race. Pallone would be in line to chair the Energy and Commerce Committee if Dems control the House.

Republicans remaining in charge of the House wouldn’t be a non-starter, but the prospects of Pallone’s efforts on sports betting immediately improve if his party is in charge.

What will the leagues do on sports betting?

The ESPN report says that “communication with stakeholders is underway,” which presumably means the major North American professional sports leagues, at some level. (That includes the NFL, NBA, NHL and Major League Baseball.) All four are plaintiffs in the ongoing NJ sports betting case, attempting to prevent the state from moving forward on sports betting.

Conventional wisdom says the leagues will have to be on board with whatever Congress does, or at least step aside to allow it to happen, as legal sports betting directly affects them. They may not need to lobby for changes to PASPA directly, but it’s unlikely much gets done if they are protesting such an effort behind the scenes.

To date, the NBA and Commissioner Adam Silver have been the only one of the four leagues to publicly say they support the legalization of sports betting in the US.

The rest of the leagues have ranged from more tepid on sports betting to publicly opposed. Just this week, NFL Commissioner Roger Goodell said the league remains “very much opposed to gambling on sports.” 

Of course, the leagues appear to be at least slightly more comfortable with sports betting, as the NHL will have a franchise in Las Vegas next year. The NFL, by potentially moving the Oakland Raiders, could be joining them in Vegas.

The NCAA is also a variable, and will likely oppose an expansion of sports betting.

Lobbying effort becomes key

With the revelation that legislation is being worked on, advocacy on the issue of sports betting takes center stage.

The American Gaming Association has made sports betting its signature issue and has said lobbying efforts will start as soon as early 2017.

With a legislative vehicle on its way, how much momentum the AGA can drum up for lawmakers outside of New Jersey could be key to the success of the long-term effort.

Until now, Congressional action on sports betting has been a hypothetical — something to be dealt with in the future. Now, the rubber meet the road, and how much traction the idea of legal sports betting in the US is going to start to be answered.