Yesterday we looked at a number of key portions of the federal sports betting draft bill circulating in Congress.
It is a discussion draft format that will likely be revised and redrafted numerous times before it ever gets passed, if it ever passes. Both the Wire Act and the Unlawful Internet Gambling Enforcement Act took years before they passed.
The following are some of the key portions and points I think are likely to be important as the discussion over the federal government’s role is discussed moving forward. Here is Part 2 of my insight:
Section 104 — Anti-Money Laundering Provisions
This section largely incorporates existing federal laws relevant to sports betting and establishes clearly that sports betting operators have obligations under state legislation, such as the Bank Secrecy Act.
This is an important clarification, but something books in casinos and most reputable shops were already aware of.
Section 105 — Interstate Sports Wagering Compacts
The proposal in this section is to establish interstate agreements that would allow for multi-state wagering, in what appears to be a structure similar to that used in horse racing.
My interpretation is that a person in a state that is part of a compact that has been approved by the Attorney General could wager at an out-of-state bookmaker, provided that both states were parties to an interstate wagering compact.
This might well be a big victory for mid-sized sportsbook operators and citizens of smaller states.
Section 106 – National Sports Wagering Clearinghouse
The National Sports Wagering Clearinghouse is a nonprofit organization, independent of any other entity and is tasked with:
- Operating a national center for sports wagering integrity;
- Coordinating public and private programs regarding sports betting integrity;
- Disseminating research about best practices;
- Managing the national database of anonymized sports wagering data;
- Receiving suspicious transaction reports;
- Maintaining the national self-exclusion list and a variety of other important functions.
The organization would also provide assistance to federal and state authorities relating to sports integrity violations. This is a meaningful improvement over the existing integrity monitoring entities that lack any real investigative authority and appear beholden to their funders.
Title II — Wagering Trust Fund
The wagering trust fund would tax the revenue from the current federal sports wagering excise tax of .25 percent and dedicate it to the enforcement of federal law relating to sports wagering and programs for treatment.
These are two things that most agree need to happen. The wagering trust fund would also fund the National Sports Wagering Commission and monitor national trends related to gambling addiction.
Title III — Wire Act and Sports Bribery Act Amendments
The comprehensive sports wagering bill also adds some clarity to one of the questions regarding the Wire Act.
It clarifies issues regarding whether intermediate routing would violate the statute, stating:
“the intermediate routing of electronic data shall not determine the location or locations in which a bet or wager, or information assisting in the placing of a bet or wager, is initiated, received, or otherwise made.”
The statute would also add language specifically referencing layoff bets. The Wire Act would also be expanded to enable states greater power under the statute and grant states the ability to bring civil actions.
Section 302 — Sports Bribery Act Improvements
The proposed bill would also provide a significant modernization of the Sports Bribery Act. The statute would be amended to incorporate extortion and blackmail, and establish bans on the use of non-public information.
The statute also creates whistleblower protections, changing the incentives to come forward with information about match fixing. This would be a tremendous victory and appears to be largely based on recommendations from a 2015 law review article.
Title IV – Gambling Addiction Prevention and Treatment
This section of the proposed legislation would establish an advisory committee, under the Secretary of Health and Human Services, to oversee a gambling addiction research committee and track gambling addiction.
This is an important step forward; indeed this suggestion is not new. Professor Marc Edelman, as well as others, has articulated the need for increased monitoring of problem gambling at various hearings relating to daily fantasy sports and gambling.
Quick takeaways
This bill is not likely to make any group happy. In many ways that is probably a good thing.
The bill has some very noticeable issues; the mandate of official data is problematic even with a seemingly arbitrary sunset clause. The odds of a federal bill passing are low and this bill will certainly be marked up many times before it ever gets a vote, if it gets a vote, but this bill does have some positives.
The big winners with this bill are those who would like to see increased federal engagement and those who want to see more federal action on problem gambling.
