A draft of a federal sports betting bill has appeared in Congress in which the federal government would have to approve state laws legalizing sports gambling.
Here’s a copy of the draft bill:Sports Betting Discussion Draft
The draft is being circulated by the office of Sen. Orrin Hatch.
After promises from more than one senator to move forward on sports betting and a recent subcommittee hearing in the House of Representatives, the draft surfaced. It comes about six months after the US Supreme Court struck down the federal ban outside of Nevada.
A quick look at the bill
Here’s what the bill would do from a bird’s eye view:
- Appears to give veto power to the federal government on state sports betting laws, if the laws don’t meet minimum standards.
- Bans states from authorizing betting on amateur events but allows for college sports betting.
- Amends and clarifies the federal Wire Act to allow for some amount of sports betting information to flow across state lines.
- Mandates use of official league data by sports betting operators from sports leagues (or their proxies) through 2022.
- Creates a “national sports wagering clearinghouse” that operators provide wagering data “in real time” or close to it.
- Allows for interstate sports wagering compacts to be entered into between different states and tribes (also subject to AG approval).
- Says that the federal excise tax of 0.25 percent of handle will now be placed in a “wagering trust fund” for deployment on sports betting matters.
- Sets up minimum standards for dealing with problem gambling for operators and related to advertising.
States need fed approval
The bill creates a mechanism in which states cannot unilaterally pass laws. Instead, they need to take the law to the Department of Justice for approval. From the bill:
To request approval to administer a State sports wagering program, a State shall submit an application to the Attorney General at such time, in such manner, and accompanied by such information as the Attorney General may require.
The bill then goes into certain minimum standards that any state sports betting law must have to receive federal approval. The AG would then have 180 days to approve the law. If it finds any problems with the law under the federal guidelines set forth in this bill, then there are steps that can be taken to get into conformity with those guidelines.
It’s not entirely clear, on an initial reading of the bill, how it interacts with legal sports betting that already goes on in eight states in the US. Of course, even more states will likely pass sports betting laws before Congress might take action on this bill, which is not officially introduced yet.
Official data for sports betting
The bill gets into the issue of “official data” provided by leagues, a hot topic in state legislatures across the country this year:
With respect to any sports wager accepted on or before December 31, 2022, provide that a sports wagering operator shall determine the result of a sports wager only with data that is licensed and provided by
(I) the applicable sports organization; or
(II) an entity expressly authorized by the applicable sports organization to provide such information.
The second entity would appear to be companies like Sportradar and Genius Sports, which act as middlemen for data between sports leagues and sportsbooks.
Money from the sports betting excise tax
The bill also addresses the existing federal excise tax on sports wagering, which taxes handle — not revenue — at a rate of 0.25 percent.
That tax has created a fairly minimal amount of money from Nevada sports betting. But that amount is about to skyrocket as more and more states legalizing. That money, which is not earmarked for anything currently, is deployed for sports betting matters under the draft bill.
The bill creates and funds both a National Sports Wagering Commission and a “national sports wagering clearinghouse” with this money that work to help coordinate efforts at the national level and between states on sports betting.