PASPA And Selective Enforcement: Leagues Allow A Lot Of Sports Betting To Occur

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Selective PASPA enforcement

This is the third and final installment in a series of articles taking a closer look at the federal law that bans sports betting in most of the US.

Part 1: PASPA’s Problem With Selective Enforcement For US Sports Betting Could Be Larger Than First Thought

Part 2: The Scope Of PASPA: Parsing The Intent Of The Federal US Sports Betting Law

From parts one and two of this series, it’s clear that the legislative and judicial branches of the federal government intended and believe that the Professional and Amateur Sports Protection Act limits the expansion of US sports betting.

Here’s the quandary, though. If PASPA intended to prohibit any new schemes (regardless of sport or wagering type) from being conducted after 1992, it’s unclear why a variety of new sports betting schemes, and a variety of new wagering sports, have been offered both inside and outside Nevada since then.

The professional sports leagues in the US (MLB, NBA, NFL, NFL) are only challenging the legality of certain types of sports betting under PASPA. This realization greatly expands the scope of sports betting proponents’ selective enforcement argument

The leagues have challenged with expediency Delaware and New Jersey’s single-game sports betting efforts. However, they have not challenged any of the new forms of sports betting listed below.

That discrepancy indicates a repeated pattern of selective enforcement by the sports leagues.

Daily fantasy sports

The most commonly acknowledged example of selective enforcement is the leagues’ look-the-other-way attitude toward daily fantasy sports.

Eight states have passed laws or consumer protection regulations in 2016 affirmatively legalizing and regulating DFS. This could be construed as the act of authorizing a sports betting scheme after 1992, that was not conducted between 1976 and 1990. (DFS did not exist until the mid-2000s).

The leagues, though, have not sought an injunction against these states. One supposed reason for this is that the leagues and various owners have some financial investment or interest in DFS companies succeeding.

Another reason for this could be the semantic defense built in to each of the 2016 state DFS laws that specifically exempt the game from the state’s definition of gambling. Therefore, the leagues could argue that since DFS is legislatively defined as not gambling, it is not a “sports betting scheme.”

Whether the Third Circuit or other courts would accept such a purely semantic rationale for the conducting of a new sports gaming scheme is unknown. That logic especially falls apart with the backstory that the Third Circuit spent so long hammering home the importance of the intent of a gaming law or enterprise.

Furthermore, DFS occurs in dozens of jurisdictions with no state law in place explicitly legalizing it or defining it as outside the scope of gambling.

Live betting

Live betting, or in-play betting, first came to Nevada in 2011 when Leroy’s Sportsbook launched the country’s first mobile sports betting app.

Leroy’s was purchased by William Hill, which rebranded and relaunched the app in 2012. Scores of other sportsbooks have since followed, introducing apps of their own.

Live betting allows for bettors to bet on the literal outcome of a single-play of a game, over and over, in real-time.

Las Vegas casinos did not take these types of bets between 1976 and 1990, in part because the technology to facilitate them did not exist at the time.

Prop bets

Prop bets give bettors the chance to wager on one aspect of an event that is not centrally related to the final score or outcome of that event.

Admittedly, there are recorded examples of sports prop bets in the 1980s, including on whether William ‘Refrigerator’ Perry would score a touchdown in Super Bowl XX. There’s also the famous example of one of the earliest Vegas prop bets centering about a TV show, asking bettors to wager on who shot the character J.R. on Dallas.

But now, hundreds of silly prop bets accentuate the Super Bowl betting experience in Las Vegas. They have nothing to do with players on the field or game results.

These now include:

Even though there are examples of sports and non-sports related prop bets between 1976 and 1990, it’s unclear whether new prop bets constitute new forms of wagering.

It’s also unclear if non-sports related prop bets would be violative of PASPA, since they might be classified as an “event” based proposition and not a sports proposition.

Esports betting

On Nov. 16, the Nevada Gaming Policy Committee met for a second time to discuss the future of esports in Nevada, and the attendant wagering that could come with it.

The NGPC is expected to finalize regulations governing sportsbook-style betting on esports matches, as well as head-to-head wagering. William Hill books already accepted bets on a recent League Of Legends event.

Certain forms of esports betting, such as tournament wagering, are already legally conducted pursuant to existing state regulations. But approving these new forms means Nevada would amend or pass new, post-1992 regulations governing new forms of betting that didn’t exist between 1976 and 1990.

As competitive professional esports themselves are a phenomenon of the 21st century, no betting on esports of any kind was ever conducted in Nevada or elsewhere at any time even remotely approaching 1990. 

Nevada’s determination of whether esports constitute a “sport” or an “event” could prove to be a key distinction.

In 2016, New Jersey adopted temporary regulations to govern esports betting. The state contends the regulations are legal because they authorize skill-based gaming.

But if Nevada classifies esports as a “sport,” some might see this as the introduction of new sports wagering.

The 1991 report notes that PASPA applies to sports betting schemes regardless of whether the scheme is based on chance or skill.

Entity wagering

Nevada recently became the first US state to allow entity wagering. 

This form of sports betting involves Nevada-based bettors pooling together money sent from people anywhere in the US. That money is wagered (or “invested”) on the outcome of sports events, with the eventual hope of offering investors returns.

The construct is similar to, albeit distinct from, a traditional stock market-based mutual fund.

Nevada legalized entity wagering with a post-1992 bill, SB 443, which the government passed and signed in 2015. That is obviously not during the 1976 to 1990 window.

Other examples

New Jersey presents case as 10th amendment issue

Interestingly, New Jersey’s counsel has mentioned little in regards to the idea of selective enforcement, or PASPA unconstitutionally vesting Congressional power to private entities.

Instead, throughout the four years of the New Jersey sports betting case, the state has framed its effort around a separate constitutional issue. It contends that PASPA unconstitutionally commandeers states to leave prohibitions of sports betting on the books that it does not want.

Regardless, the selective enforcement of PASPA by professional and amateur leagues is clearly a point of contention as the argument for legal sports betting moves forward.