Live Blog: Congress Tackles Sports Betting In House Subcommittee Hearing

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Congress and sports betting hearing

A House subcommittee is tackling the subject of sports betting in a hearing on Thursday morning for the first time since the federal ban was struck down this spring.

Legal Sports Report live-blogged the hearing, which started at 10 a.m. Eastern.

What you need to know about Congress and sports betting

Here’s an FAQ about the hearing, which took place in the House Subcommittee on Crime, Terrorism, Homeland Security, and Investigation

Here’s the list of those scheduled to testify:

You can watch the replay of the live stream here:

Chairman Sensenbrenner opens the hearing

10:02: Just a shade late, Chairman Jim Sensenbrenner (D-WI) calls the subcommittee to order. You’ll forgive the delay, as it’s an especially busy day for lawmakers on Capitol Hill.

Referencing the confirmation hearings of Judge Brett Kavanaugh, Sensenbrenner calls both proceedings “probably just as important” as each other to the future of American society. He notes that the press table in the room is mostly empty.

“This subcommittee will examine the state of sports gambling in America,” he begins reading from his written remarks.

“This subject is extremely important and complex, and development in the last year means it may soon affect the lives of millions of Americans.

Sports in America are tightly woven into our lives. They are our past time, our passion. They bring us together, they divide us — hopefully in good sportsmanship — and they serve as an escape.”

The chairman says he watches his home-state Packers and Brewers when he needs to relax his mind.

10:06: Sensenbrenner lays out a brief backstory of legalized sports betting and the US Supreme Court ruling in May. He cites the majority opinion of Justice Samuel Alito: “The legalization of sports gambling requires an important policy choice.”

“This is one that we will be making here some time in the future,” the chairman says.

10:10: Sensenbrenner cites his two primary goals for exploring federal sports betting legislation: “Protecting our children and the games we love. A solution crafted by Congress must address these two principles.”

Tick off “our children” if you had it on your bingo card.

About ten minutes in, the chairman yields the microphone to the committee and the gentleman from Virginia.

Rep. Bob Goodlatte (R-VA) has plenty to say

10:11: The chairman of the overarching House Judiciary Committee appears after Sensenbrenner.

Goodlatte begins by talking about the Unlawful Internet Gambling Enforcement Act (UIGEA), which he played a big role in enacting in 2016. He says he believes that online gambling is more dangerous than brick-and-mortar gambling for is potential societal impact.

Goodlatte also says he believe states regulations are difficult to enforce for online gambling, something that has not been borne out by the successful New Jersey online casino and poker market, which has existed for five years.

He also asserts that the federal government has not done a good job of enforcing UIGEA, which makes it illegal for businesses to facilitate payments related to illegal online gambling.

“That could be a key issue for Congress to consider — what role the federal government should have in this. The answer to that question underlies this entire issue.”

Certainly, one way in which Congress could positively impact legal sports wagering would be to target offshore sportsbook operators as legal sports betting and online gambling sites proliferate at the state level.

Goodlatte says the actions of the committee will “affect generations to come.”

Rep. Jerry Nadler (D-NY) keeps it short

10:16: In brief comments, Rep. Jerry Nadler cites the size of the current sports betting industry, regardless of legality. He says “sports gambling has long been a part of our culture.”

“In fact, betting actually serves to generate a substantial amount of interest in the sports themselves. We can not simply prevent sports betting by enacting laws to prohibit it and pretend it won’t go away.”

Nadler, however, says that doesn’t mean Congress shouldn’t explore a federal framework for the industry.

10:19: Chariman Sensenbrenner swears in the five witnesses and introduces them in seating order.

Jocelyn Moore (NFL) challenges state oversight

10:21: The NFL’s Moore summarizes her written testimony, warning about a “regulatory race to the bottom” from states who legalize wagering without federal oversight.

“While we respect the Court’s ruling, it has ushered in a new reality. The absence of clear sports betting standards threatens the integrity of our nation’s sporting contests — something Congress has sought to protect for nearly 60 years.”

She says “sports betting issues cannot be confined within state lines.”

The NFL, of course, was one of the litigants in the case against New Jersey, trying to uphold the federal ban. The league would have been better served, in retrospect, asking for federal regulation years ago.

Moore also cites NFL policies related to protecting athletes from gambling impropriety.

“Yet,” she says, “we are very concerned leagues and states alone can not fully guard against the harms Congress has long associated with sports betting.”

10:24: Following along with her written testimony, Moore lays out the key pillars of the NFL’s proposed federal framework, including the use of official league data.

She once again stresses the need for action at the national level.

“While state regulators clearly have an important role post-PASPA, the federal government has primary authority regarding interstate commerce, interstate law enforcement, and international sanctions against corruption and money laundering.”

Read her full testimony here.

Les Bernal (Stop Predatory Gambling) just ‘wants to improve lives’

10:30: Bernal speaks passionately about trying to stop gambling from proliferating in the US, saying that the American people “are on a collision course” to lose $1 trillion in wealth over the next eight years.

The framing here is the question. Certainly people will probably lose that much money in gambling over a long enough timeframe, but is that “wealth” being lost? People spend money on lots of things, including gambling for entertainment.

Bernal also says that legal operators are in many ways worse than illegal operators, which is a strange take.

Certainly, people are losing plenty of money to offshore sportsbooks and casinos — with no recourse from regulations, little or no problem gambling protocols and with a number of other problems. And despite his assertion that illegal operators aren’t marketing to Americans as aggressively as legal gaming operations, that’s not a statement based in reality.

10:31: Bernal minces no words when it comes to what he sees as ineptitude among state lawmakers and regulators.

“When it comes to gambling policy here in America, states are laboratories of fraud, exploitation, and budgetary shell games.”

He certainly believes in his cause, but the genie is not going back in the bottle for either gambling — which is widely legal across the US — or sports betting in particular.

Read his full testimony here.

Sara Slane (AGA) lays out the facts of state regulation

10:32: Slane opens her remarks as anticipated, arguing that states are best-equipped to regulate gambling. Again as expected, she cites Nevada sports betting as a case study for the industry.

The AGA views this hearing as an opportunity to educate federal lawmakers, and Slane works to do just that.

She covers the low margins under which sportsbooks operate, the mechanics of regulation, and the private commercial partnerships that can emerge under a favorable, state-regulated framework.

“AGA does not believe an additional layer of federal regulatory oversight is needed at this time. Just as Congress has refrained from regulating lotteries, slot machines, table games and other gambling products, it should leave sports betting oversight to the states and tribes that are closest to the market.”

According to Slane, the current system “is already working.”

Read her full testimony here.

Jon Bruning (CSIG) reasonable in his opposition

10:36: Bruning, representing the Coalition to Stop Internet Gambling, is a former Nebraska attorney general, and says he brings a law enforcement perspective to the discussion.

Interestingly, the CSIG — bankrolled by casino magnate Sheldon Adelson — appears to only be against illegal online gambling, as he does not advocate a complete ban on online sports betting. Bruning mostly rails against the existence of illegal offshore operators, agreeing with Goodlatte that the UIGEA has not been adequately enforced.

He says that the Wire Act needs to be fixed, and he’s certainly not wrong there. It creates a lot of uncertainty for how sports betting will roll out in the US. How it should be “fixed” is the question. Bruning wants it restored.

Previously, the CSIG and Adelson have asked for a complete ban on all forms of online gambling at the federal level. They now appear to favor a carveout for online sports betting, but the fact that Congress would do well to revisit the Wire Act is a worthy point.

Bruning also correctly points out that sports betting is a low-margin venture, and that illegal bookies have no taxes to pay or compliance costs to deal with.

Read his full testimony here.

Becky Harris (NGCB) offers her state as a model

10:41: Harris is arguably the most knowledgeable voice in the country on sports betting, having overseen the Nevada industry for many years.

She spends some time discussing the protections in place, both those for consumers and those that ensure the legality of financial transactions.

“Integrity in gaming is absolutely critical. Sports betting scandals are more likely to occur in illegal markets where there is no regulatory responsibility, where monitoring betting patterns is of no concern, and where line movements may not matter.”

Harris testifies that her agency has been responsible for detecting cases of betting impropriety in the past. Nevada sportsbooks closely monitor betting activity for signs of impropriety.

Like Slane, Harris argues that states are best equipped to regulate sports betting, and federal oversight would only complicate the matter. Nevada, she says, has spent decades refining its industry.

Read her full background and testimony here.

Questions and answers open up the dialogue

10:47: Chairman Sensenbrenner asks Slane to discuss the offerings available in the offshore market. He seems to understand that the black market holds several advantages over regulated operations at the moment.

“If I were running around with a fistful of money that I wanted to bet, where would I go when the illegal sportsbook is offering all of these other goodies that a legal sportsbook can not?”

Slane says the chairman “hit the nail on the head.” People want to move from illegal to legal operators, she says, and it’s up to lawmakers to create an environment where it’s possible for legal operators to compete.

10:50: Turning his attention to Bruning, Sensenbrenner inquires about aggressive gambling advertising targeting youths in other markets.

That line of conversation is music to Bruning’s ears, offering the hypothetical case of Betfair marketing to 15-year-olds in the chairman’s home state of Wisconsin. He cites potential issues like this as justification for federal oversight.

10:52: Rep. Nadler is next to ask questions, and he begins with Bernal. Nadler sees both sides of the issue, both the potential dangers and the freedoms which citizens should enjoy. He’s concerned about problem gambling, though.

“Gambling, at its core, is a con,” Bernal says.

Slane chimes in to testify that appropriate controls are in place at the state level to protect consumers, including problem gamblers. That is, after all, one of the key selling points of regulation.

Bruning counters that online gambling is “a whole different animal” than casino gambling. “Kids grab dad’s credit card,” he says, and pretend to be older than they are in order to gamble online.

Harris rebuts that claim, arguing that state regulations that impose high standards on operators are the perfect tool to combat such activities. “I would would take issue with the notion that there’s some kind of race to the bottom,” she said.

11:00: Although Rep. Goodlatte isn’t a fan of gambling in general, he believes states should have discretion over legalization and regulation.

That’s in-person gambling only, though. Like Bruning, he calls online gambling a “different beast.”

“Completely different,” he says. He asks Harris how operators offering online gambling can verify a customer’s age. She runs through the way it works in Nevada, including the in-person requirement for sports betting account registration.

“You don’t think it would be a good idea to modernize the Wire Act…?” Goodlatte asks. He’s very clearly interested in keeping US citizens from gambling through illegal, offshore websites.

Harris says she feels there would be some jurisdictional concerns about updating the 1961 federal law.

Both Bruning and Bernal again argue that Congress must get involved to hep curtail illegal online gambling.

11:06: Rep. Cedric Richmond focuses on gambling on credit versus using funds available on a debit card. He takes issue with credit as an available option for gamblers.

Bernal is happy to take the lead on that one. “That’s the business model for commercial gambling,”  he says. “It’s to try to get you into debt.”

Harris testifies that credit card companies are reluctant to process transactions related to gambling.

11:15: Rep. Hakeem Jeffries introduces testimony from a players’ alliance into the record. He’s concerned about the effects of expanded sports betting on the safety of athletes and officials.

“Is it fair to say steps will need to be taken that address not only the safety during games,” he asks, but also in parking lots, training facilities, and other private areas?

Moore testifies that this is a key motivation for the NFL’s pursuit of federal guidelines. “We have to be sure that protection extends beyond the games, and that applies to all league personnel,” she says.

A discussion about integrity fees arises in the middle of that questioning, but the broadcast suffers enough disruption to make transcription impossible.

11:21: Rep. Martha Roby is focused on protecting student-athletes amid expanded sports betting, especially online. She asks for input from all five witnesses.

Moore testifies that the NFL has been working closely with the NCAA on the issue. She says the league does not believe the standards of sports integrity are currently being protected.

“More and more, betting is moving to more granular details in-game,” she says. Contradicting previous testimony from Harris, Moore argues that certain types of bets do impact the integrity of sports more than others.

Bernal: “Unequivocally, you can not protect college student-athletes in this country from gambling interests. They’re already not paid for what they do.”

Slane agrees, although she reframes it to suit the AGA’s messaging. She argues that the current illegal gambling market makes it impossible to know if there are any lingering issues within college athletics.

Bruning says that “the internet doesn’t have borders,” and that a state-regulated online gambling industry essentially creates 50 chances to “make a mistake.”

Harris contends that the NCAA is partially responsible for bolstering its efforts to protect its own athletes, too.

Closing remarks from the chairman

11:27: Just less than 90 minutes after the hearing began, the chairman offers closing remarks:

“Let me thank all five of the witnesses for providing a lot of very useful information about the consequences of the Murphy decision of the US Supreme Court.

I think the one thing that all of you agree on, is that for Congress to do nothing is the worst possible alternative.

So this means we have some work to do. And I’m looking forward to working with you to try to come up with something both short-term and something more permanent to deal with this issue. Because I’m afraid if we don’t, there are going to be some people that get hurt — and hurt very badly.”

With a bang of his gavel, Chairman Sensenbernner adjourns the hearing.

Dustin Gouker contributed to this story.