NBA and others head to US Supreme Court to face NJ sports betting law next week
Legal Sports Report

NBA Pivots On ‘Opt-Outs’ In Future Federal Sports Betting Regulation

NBA pivot sports betting

The issue of whether an individual sports league or a single state should be able to “opt out” of potential sports betting regulation has reached the halls of Congress.  

Again.

Any federal legislation should “not impose sports betting on anyone,” said NBA lawyer Dan Spillane at a conference last week at the Russell Senate office building in Washington, DC. Spillane’s comments were first reported by Gambling Compliance (paywall).

The NBA’s current position represents a reversal on such opt-outs from ten years ago, according to documents obtained by Legal Sports Report.

The idea of opting out of federal regulation

NBA executives have been floating the notion of a “federal framework” for sports betting regulatory efforts since 2014.

“[T]he laws on sports betting should be changed,” wrote NBA commissioner Adam Silver in his much-discussed November 2014 New York Times op-ed. “Congress should adopt a federal framework that allows states to authorize betting on professional sports, subject to strict regulatory requirements and technological safeguards.”

The new comments by Spillane — an in-house NBA attorney who has worked for the league during the entire duration of the New Jersey sports betting legal case — provide more detail on Silver’s concept.

In last week’s panel presentation, Spillane said opt-out provisions could extend to specific sports leagues and individual states that may be opposed to legalized sports wagering.

What the NBA and other leagues said in 2007

The NBA — along with the NFL, NHL, NCAA, and Major League Baseball — took a diametrically opposite approach to possible sports betting opt-outs a decade ago.

“[T]he opt-outs are subject to challenge in U.S. courts on the grounds that Congress has unconstitutionally delegated its lawmaking power (to ban Internet gambling) to private parties (commissioners of various sports leagues and conferences),” wrote NBA lawyer Rick Buchanan and attorneys for the other four leagues in a May 31, 2007 letter obtained by LSR via a search of Congressional archives.

The opt-out issue arose when Massachusetts Congressman Barney Frank introduced legislation to roll back certain elements of the Unlawful Internet Gambling Enforcement Act (UIGEA). Included in the draft legislation (H 2046) were opt-outs “that permit individual leagues to prohibit gambling on their sports” according to the 2007 letter.

Beyond the leagues’ argument that such opt-outs were unconstitutional, the letter also described the opt-outs as “illusory because, if exercised, they might very well be struck down by the [World Trade Organization] as discriminating against foreign providers of gambling services.”

Congressman Frank’s bill never became law.

Early efforts to tweak PASPA

When the quasi-federal sports betting ban — the Professional and Amateur Sports Protection Act (PASPA) — was being debated in the Senate in 1992, the lone voice in public opposition was Iowa Sen. Chuck Grassley.

Sen. Grassley introduced an amendment to the then-draft version of PASPA that would have allowed any state to opt in to PASPA’s grandfathering scheme during a two-year period after enactment. PASPA exempts sports wagering in Nevada and a small number of other states, such as Delaware, Oregon and Montana.

“This bill purports to restrict gambling on sporting events by prohibiting certain States from conducting sports lotteries, and it does so by discriminating against many States,” said Senator Grassley in explaining the motivation for his amendment. “[M]y amendment is intended to correct this deficiency.”

Sen. Orrin Hatch of Utah opposed Grassley’s amendment and cited the position of the same five sports leagues who have twice sued New Jersey Gov. Chris Christie.

“A vote for the Grassley amendment is a vote to gut this bill,” said Hatch. “The National Football League, the National Hockey League, the National Basketball Association, [M]ajor [L]eague [B]aseball, and the NCAA all oppose the Grassley amendment.”

Grassley’s amendment was defeated and PASPA’s vote in the Senate was 88-5 in favor of the bill.  Grassley is the only remaining active senator who voted against PASPA twenty-five years ago.

Oral argument next week

The topic of legislative opt-outs is unlikely to be discussed during US Supreme Court oral arguments in the New Jersey sports betting case on Dec. 4.  

But with the NBA already acknowledging that it will pursue Congressional lobbying regardless of how the Supreme Court rules, the future regulatory outlook for sports betting casts a shadow over the esoteric legal arguments — anti-commandeering, equal sovereignty, statutory severability, non-party preclusion, and standing among them — that will be addressed by the nation’s highest court.

Whether sports betting opt-outs for leagues or states become part of any federal policy remains an open issue. To date, only the NBA has publicly expressed support for the legislative device that was previously opposed by all five leagues involved in the current litigation.  

The topic of opt-outs is just one example, however, of how sports leagues have reversed themselves on sports gambling policy, a practice that will likely continue irrespective of how the Supreme Court ultimately decides the pending case.

A ruling in the New Jersey sports betting case is expected no later than June 2018.

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Various members of our writing staff contributed to this article.