It didn’t take long for news of a sports betting shake-up to make its way through Congress today.
This morning, the US Supreme Court issued its opinion in Murphy vs. NCAA, the so-called “New Jersey sports betting case.” By a 6-3 vote, the court repealed the federal ban which prevented states from regulating sports gambling within their borders. New Jersey and other states will now be allowed to set their own rules for the activity, as they do for other forms of gambling.
This afternoon, US Sen. Orrin Hatch (R-Utah) announced his intentions to submit federal legislation designed to provide superseding regulations. According to Hatch, a state-based industry would create a “patchwork race to the regulatory bottom.”
The Senate President pro tempore is a tenured lawmaker who is retiring from office after the current session.
Eyeing federal oversight for sports betting
Hatch didn’t give any indications on what his sports betting bill might look like, but we can make some inferences.
In a statement issued today, Hatch says the problems posed by sports betting are much the same as they were 25 years ago. That was about the last time Congress addressed the topic, passing the Professional and Amateur Sports Protection Act (PASPA) as a prohibition in 1992. The senator notes, though, that the “rapid rise of the Internet” has made sports betting as convenient as ever.
Today’s SCOTUS ruling made it clear that Congress can regulate the industry if it chooses to do so, and Hatch suggests his colleagues “seize this opportunity.”
We cannot allow this practice to proliferate amid uneven enforcement and a patchwork race to the regulatory bottom. At stake here is the very integrity of sports. That’s why I plan to introduce legislation in the coming weeks to help protect honesty and principle in the athletic arena.
Hatch was one of the four authors of PASPA, the statute the court struck down today.
Interestingly, the NFL for the first time voiced its desire to see federal regulation today. Other sports leagues, including the NBA, have publicly advocated for a similar solution throughout the recent past.
States will do it if Congress doesn’t
Part of the court’s basis for repealing PASPA is that there is no federal sports betting law on the books. The activity is governed under association with other statutes, including the interstate wagering provisions of the 1961 Wire Act. And prior to today, PASPA simply prevented states from determining their own stance. SCOTUS views that sort of commandeering as a violation of the Tenth Amendment.
Congress has made some of its own recent efforts to address sports betting. Last year, Rep. Frank Pallone and Rep. Frank LoBiondo each introduced House bills that would have given control back to the states. That sort of measure is mostly unneeded now, as the court has removed the roadblock of PASPA. The baton is in each state’s hands individually, and about 20 of them are seriously considering moving forward at this point.
The resolution isn’t the end of the federal effort, though. While the US government can’t “commandeer” states to enforce laws they don’t want, it can regulate sports betting, if it chooses to do so. That would be the goal of Hatch’s bill, which is seeking to regain control and establish overarching federal legislation. Given the tone of his comments, expect his proposal to cast the industry in a negative light.
Incidentally, although there is no federal control over sports betting, operators still pay an excise tax amounting to 0.25 percent of the total amount wagered. A call to repeal that “handle tax” is also on the table in Congress.
Which is better for the leagues?
After today’s news broke, Twitter debated whether the professional sports leagues would prefer state-based or federal control over sports betting.
Apparently preparing for this day to come, Major League Baseball and the NBA have been lobbying lawmakers across the country for the adoption of their model legislation. Among the things included are provisions for the league governing bodies to have control over data sources used to settle bets, and the collection of an integrity fee from operators.
I’d have to think the leagues would still prefer a federal solution, as they’ve maintained to date. While it is both more costly and more time-consuming to lobby Congress, those chambers are the seat of the nation’s highest legislative authority. Rather than needing to travel to dozens of states to convince lawmakers, they’ll have representatives from all 50 in the same room.
Efforts on a state-by-state basis haven’t gone especially well so far, after all. Of the five states with recently passed sports betting bills, zero of them follow the leagues’ blueprint. Their lobbying effort came too late for all but one of those states, but West Virginia lawmakers recently showed no interest in accommodating the leagues. Even if some states do going forward, that still wouldn’t yield the comprehensive adoption they’re seeking.
That can only come at the federal level, and Hatch is poised to offer up a framework. Whether or not he’s aligned with league interests should become apparent once his bill is filed.