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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.
Here’s what the bill would do from a bird’s eye view:
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.
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.
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.