The NBA formally set forth its “50-state solution” for sports betting regulation last week.
Describing Nevada as having a “small but long-standing regulated sports betting market,” the NBA lawyer who presented the league’s new policy stance to the New York Senate advocated for a national blueprint.
“[W]e support the passage of a comprehensive sports betting bill that would serve as a model for a 50-state solution—whether that happens in Congress or on a state-by-state basis,” wrote the NBA in a formal statement. The NBA’s statement was verbally read into the record by NBA attorney Dan Spillane, who appeared before the state’s Senate Committee on Racing, Gaming and Wagering on Jan. 24.
Left unsaid were the implications such an approach could have for Nevada.
And the potential implications — particularly if they come to fruition — conjure up memories of two other times within the past 20 years when possible intrusions into the Nevada sports betting regulatory apparatus were successfully repelled by Nevada. That includes one instance where the NBA sought to control the satellite feeds of games to licensed sportsbooks and a United States senator sent a letter to the NBA to help resolve the dispute.
What comprises the ‘50-state solution?’
As set forth last week, the NBA’s model includes “five key components.” Here they are briefly:
- Integrity line monitoring;
- A one percent fee off handle payable to individual sports leagues;
- The right to restrict certain wagering;
- Various consumer protection requirements; and
- Authorization for online betting platforms
Some of these suggested components are already implemented in Nevada. Others are not.
For example, current Nevada regulations allow a sports league to request that certain wagers be barred. But the ability to request such a restriction differs markedly from the NBA’s suggestion that leagues would possess the right to unilaterally “approve the types of wagering that are offered.” Nevada authorities decide whether to approve or reject such requests on a case-by-case basis.
Whether Nevada Gov. Brian Sandoval and other government officials support the NBA’s platform remains an open question. Neither Gov. Sandoval nor any Nevada regulators have publicly commented on the NBA’s model for sports betting legislation. It seems unlikely, however, that the state — and its licensed sportsbooks — would acquiesce to a one percent fee based on handle payable directly to the NBA and sports leagues.
Indeed, Nevada has successfully fended off NBA-led policy stances before.
A ‘reverse grandfather clause’ for Nevada?
The plain language of the NBA’s now-preferred policy position suggests that it would extend to all 50 states, including Nevada, the only jurisdiction in the country with full-blown legalized sports wagering. To get there, the NBA now appears open to a blended approach via Congress or through state-level lobbying. Or both.
This would result in a revealing irony.
The current federal sports betting law that was supported by the NBA and other sports leagues — the Professional and Amateur Sports Protection Act of 1992 (PASPA) — includes a grandfather clause that is decidedly favorable to Nevada.
In a 2011 interview, former NBA Commissioner David Stern described PASPA this way:
“[T]here’s a federal statute that gives [Nevada] a monopoly of types,” Stern told SI.com.
But the NBA’s new idea for sports betting legislation could be viewed, at least in part, as unfavorable to Nevada and its regulatory scheme refined over the course of decades.
In other words, any hybrid state-federal approach consistent with the NBA’s testimony last week would encroach on existing Nevada procedures and would effectively be the equivalent of a “reverse grandfather clause” — the exact opposite of PASPA’s carve-out to accommodate Nevada in 1992.
And if that happens, look for Nevada to invoke a constitutional argument that was raised 17 years ago in a similar context.
Sports gambling and the Takings Clause
Starting in 2000, Arizona Sen. John McCain furthered his “Amateur Sports Integrity Act,” a draft bill bent on amending PASPA and preventing Nevada from authorizing college sports betting moving forward.
In a May 2, 2001 letter, the NBA — along with the NHL, NFL and Major League Baseball — expressed their collective opinion on the bill.
“Our leagues support any reasonable effort to control sports betting,” wrote NBA lawyer Richard W. Buchanan, the lead signatory to the letter. “Nonetheless, we think that a college-only bill is flawed, and should be amended to prohibit gambling on professional sports as well.
“[W]e urge that any such legislation maintain parity of treatment between amateur and professional sports.”
After Congressional hearings, McCain’s bill was defeated. Part of the opposition came from the trio of Sens. John Ensign (R-NV), John Breaux (D-LA) and Barbara Boxer (D-CA), who explained why the “Takings Clause” in the Constitution’s Fifth Amendment was relevant.
According to the three lawmakers, the Takings Clause “prohibits the government from taking ‘private property for the public use without just compensation.’”
Ensign, Breaux, and Boxer — all of whom are no longer in Congress — then cited a 1984 Supreme Court case for the proposition that “the Takings Clause protects both tangible and intangible property rights, such as gambling infrastructure and gambling licenses, respectively.”
The three Senators concluded that Sen. McCain’s bill “violates the Takings Clause” through its “prohibition on state regulated college sports wagering without compensation.”
Nevada sportsbooks had a direct conflict with the NBA a few years earlier too.
Prior NBA-Nevada friction over TV feeds
In 1999, a dispute arose over whether Nevada sportsbooks could be prevented from buying certain satellite television feeds that included NBA games. At issue was the “NBA League Pass.”
“I understand the NBA reserves the right to revisit each year the ability of our gaming establishments to purchase NBA League Pass, and I appreciate hearing your expectation that they will continue to have access to this programming,” wrote Nevada Sen. Richard H. Bryan to NBA executive William S. Koenig in a Nov. 12, 1999 letter obtained during a review of archived public documents. “Based on our conversations and your representations, I have withdrawn my efforts to attach anti-discrimination provisions to pending satellite TV legislation.
“I believe it is in everyone’s best interest to continue to permit sports fans to view a myriad of NBA games similar to what they enjoy with other major league sports.”
Nevada-based establishments offering sports betting were, in turn, able to show NBA games via satellite feeds during the 1998-99 season.
Nevada’s status as the lone jurisdiction in the country with a fully-operational sports betting regulatory structure places the state in a unique position. Not only does Silver State provide a case study for other states considering sports wagering legalization, Nevada could potentially serve as a national hub connecting other like-minded states with an already-existing framework and decades of industry know-how.
With a US Supreme Court decision pending on the constitutionality of PASPA and a double-digit number of states consider sports betting legislation, the stakes are high for Nevada too.
Last week’s hearing before the New York State Senate closes on Feb. 2, the deadline for other interested parties to file a statement before the committee. Sandoval, as well as the Nevada Gaming Commission or Nevada Gaming Control Board, could opt to file a statement.
Other states — such as Utah — are free to posit on the wisdom of a “50-state solution” as well.