SCOTUS ruling on NJ sports betting case could be days or months
Legal Sports Report

Odds, Integrity And Preparations For The Supreme Court To Rule On Sports Betting

Supreme Court sports betting March

With each anticipatory day we see another article or press release of a state government or casino making elaborate and ambitious plans to accommodate the arrival of legal sports betting throughout the US.

The optimistic ending to PASPA (the Professional and Amateur Sports Protection Act) would be a US Supreme Court ruling in favor of allowing New Jersey and other states outside of Nevada to offer legalized sports wagering.

There’s no doubt this would change everything. But before confidently predicting victory, has anyone spoken to a Supreme Court justice lately?

Inside and outside the odds

Outside of individual opinion, we can’t accurately predict the odds of a Supreme Court decision. In a world tied to handicappers, touts and expert sources, we really have no “inside connection” to the information and players that truly, solely count here. That is, the nine Supreme Court justices who will determine the outcome.

And unlike handicapping the Eagles-Patriots Super Bowl or the NCAA college basketball tournament, there is no real data available. Only hearsay and forward thinking among many predict a certain win.

If we wanted to present any “past performance” data, it could be potentially found in the earlier decisions in the NJ sports betting case in the US Third Circuit Court of Appeals over recent years. New Jersey suffered largely split decision defeats in the federal court system; after its most recent defeat in 2016, one might have set the odds of a New Jersey victory at 100 to 1.

The fact that the case, Christie v. National Collegiate Athletic Association (now called Murphy vs. NCAA) was accepted to be heard at all by the US Supreme Court in 2017 was a victory itself. It was quite a surprise and narrowed the odds significantly.

That’s the good news and why many are predictably lining up in the “winner’s circle” before the race has even been run. My larger concern in the interim months is how many have quickly and aggressively come forward with their ambitious business plans before the justices have even released their decision.

Protecting US sports integrity?

Surprisingly, the biggest media splash offering potential outside support of legal betting has come from one of the major US sports leagues.

The NBA is leading the way for other professional leagues to join in with a defined plan, but with a giant asterisk attached. The pro basketball league wants to levy a one percent “integrity fee” on all wagers (not revenue) to help uphold the honesty and integrity of their games to accommodate legalized sports wagering. It’s a tax they feel they deserve by staging entertainment on which the public can wager.

They say a large portion of the fee will be utilized to detect any possible dishonest effort within players, league officials, referees or the public to ensure the credibility of their wagers. Major League Baseball has come next in line joining the NBA to support this effort, with the NHL staying silent for now.

Of the four major US sports leagues, the National Football League remains the current holdout strictly opposed to legalized gambling expansion in the US. They’ve stuck to the idea that they will oppose legal wagering. (All four leagues are litigants in the NJ case alongside the NCAA.)

When explained to NBA Commissioner Adam Silver that a one percent integrity fee equates to a roughly 2o to 25 percent gross margin of profit for every wager, he indicated that he was at least willing to negotiate on this unmanageable figure.

We are even hearing this term now more being called a “royalty” vs. an integrity fee to avoid ambiguity and further controversy. That is understandable for a US sports league that was severely tainted by a wagering scandal back in 2007 when NBA referee Tim Donaghy was found guilty in a federal case involving games he called.  Should such an incident occur again in the future, I cannot imagine bettors receiving a legal refund from the NBA for their “integrity or royalty fees” within their wagers.

More concerning here is how these stories and business-planning models could peripherally impact the case. It seems unlikely that none of the Supreme Court justices are  unaware of this publicity, but could it impact the outcome? That’s probably unlikely.

Yes, it is seemingly helpful the NBA and MLB have offered an endorsement for legalized sports wagering. Some think they are due some financial share for supporting US legalized sports wagering. But asking for a cut of all wagers before a decision has even been made does create some poor optics for the NBA and MLB.

Several US states hungry for the pie

Many gaming industry insiders believe a US Supreme Court decision may indeed be favorable to repealing PASPA but with a very complicated ruling for New Jersey only as dictated by the parameters of the statute NJ enacted. Any other outside states seeking sports wagering immediately could be limited or restricted until further legislation happens, if New Jersey wins only narrowly in its appeal.

That hasn’t prevented many states trying to adopt their own bills for legalized sports wagering with specific taxes. Lots of bills have been floated, with some states taking into consideration the sports leagues’ portion, a monopoly for them over data rights, etc.

Another huge factor in the legal ruling within PASPA could involve online wagering, which didn’t really exist when PASPA came into being in 1992. With by far most of sports wagering occurring online in the illegal offshore market today, that is a major component being overlooked as a “slam dunk” if a winning appeal is rendered.

It is still possible that sports wagering may be restricted to certain designated land-based wagering facilities or at least temporarily. That would be a huge disadvantage and a giant win for illegal offshore sports wagering and of course, traditional street bookmaking. But so far, states like West Virginia and Pennsylvania have passed laws that allow mobile wagering.

Overall, it seems senseless to create rules, taxes and fees before first knowing how the game is going to be officially played. The Supreme Court justices are going to interpret a very complicated case with room for more than one outcome.

Even the date of judgment has rendered optimistic feelings, with many predicting it will come as early as this month. I’m betting on a ruling closer to or in June, in keeping with the past performances of the Third Circuit rulings that were delivered at the very end of their mandatory ruling cycle. I’m not being pessimistic, but there are many other issues facing the nation’s highest court and likely more important than legalized sports wagering. Hopefully, I will lose this bet.

I attended both of the Third Circuit hearings in Philadelphia. The testimony — as it was in Washington DC the past December — was brilliant and quite convincing on both sides. I can attest that no one at that time walked out feeling confident that we would enjoy legalized sports wagering outside of Nevada anytime soon. It was the type of emotion associated with betting any 100-1 longshot: most remained hopeful, but realistic. If it hits, we’ll celebrate, but don’t start planning to buy a yacht just yet.  

I would offer state legislators and the professional leagues the same advice: With much better odds now, invest in the best research about the largely unknown US sports wagering market and especially its customer base. In working with casino executives, they can create ways to work collaboratively first, instead of making plans to compete and cut up the money pie.  

Larry Gibbs
- Larry Gibbs is VP of US Gaming Services, a full-service consulting and marketing research organization with 15 years’ experience in US gaming, creating ROI behavior studies and analysis for government, lobbyist and casino industry clients. His focused opinion and outlook have appeared in several gaming industry magazines and newspapers.