A Step Toward Repealing PASPA? Sports Betting Gets Spotlight At U.S. Capitol

Posted on April 20, 2016

Sports betting in the United States got its day in the Capitol, as the American Gaming Association hosted a morning of panels regarding an industry that flourishes in the U.S. despite being generally illegal under federal law.

The event was designed to be informational and educational in nature for those in attendance. Panels touched on the current law and environment for sports betting in the U.S. and lessons and insight from the regulated European sports betting market.

But the session was not necessarily about the content — not much unknown or totally new ground was broken in contemplating U.S. sports betting and the black market for offshore sports wagering. More important was where it was held (steps away the U.S. House and Senate), when (shortly before an important Congressional hearing addressing sports betting) and who was in attendance (Congressional staffers, among others).

Why a sports betting panel in D.C.?

The event was designed to point out the inefficacy of current law in the U.S. in actually prohibiting sports betting — namely the federal Professional and Amateur Sports Protection Act of 1992. The event was also used to point out the benefits of a regulated sports betting market, which exists in the UK and other jurisdictions.

The AGA — which represents the gaming industry in the U.S. — has been actively lobbying and educating people on the amount of illegal sports wagering that is going on in the U.S. in the current environment. It is advocating for the repeal of PASPA, which allows sports betting in Nevada, and limited wagering in Montana, Delaware and Oregon.

The event brought together a wide range of people — Congressional staffers, state regulators, the media, lawyers, interests from sports leagues and teams and others — with more than 100 people attending the standing-room-only event.

The first group — the people who have access to members of Congress — was perhaps the most important group in the room, as they have the opportunity and wherewithal to influence policy decisions with their respective lawmakers.

In an ideal world, the process of repealing PASPA would be a quick, easy and painless process designed to give the ability back to the states as to whether they want to allow and regulate sports betting. In reality, the process is likely to be a long and drawn-out, and education of the various stakeholders  — at events like this one — is a crucial step to take.

The event comes a few weeks before Congress will tackle the issues of sports betting and daily fantasy sports in May — another chance for lawmakers to learn more about the past, present and future of U.S. sports betting.

AGA sets the stage for U.S. and sports betting

AGA CEO Geoff Freeman was one of the opening speakers, setting the stage for the panels that would follow. The emphasis from him and for much of the day was protection the integrity of sports (and the hashtag #sportsintegrity on Twitter) — a common refrain as advocacy efforts from the AGA and others have ramped up. The idea is that if you regulate sports betting and shine a light on it, it’s much easier to ensure the games are being played outside of the influence of match-fixing.

Freeman lauded co-sponsor of the event — Genius Sports, a company that Major League Baseball recently did a deal with — on this front:

“Companies like Genius Sports are harnessing the power of data analytics to track patterns in wagering and providing leagues, law enforcement and betting companies with powerful insights about potentially illegal activity and to ensure that the integrity of sporting events is protected,” Freeman said.

Freeman would be the first of many to dismantle PASPA as a poor law during the course of the day, saying, in no uncertain terms, that it doesn’t do what it originally intended to do.

“The 25-year-old ban in this country has failed,” Freeman said “Instead of curbing sports betting, it has driven it underground, with trillions of dollars estimated to be wagered illegally over the lifespan of the law.”

That “trillions” figure, while spread out over more than two decades, is likely the kind of number that grabbed the attention of people in the room.

What’s going on in U.S. sports betting now?

The first panel encapsulated the current environment for sports betting in the U.S.

The impacts of illegal sports wagering

Dr. Jay Albanese, a professor and criminologist at Virginia Commonwealth University, detailed the presence of and harms from illegal sports betting in the U.S.

Albanese detailed one particularly nefarious story as a cautionary tale. A person who was eventually convicted on charges of running an illegal gambling operation would send people from his website to offshore sportsbooks. He would give poor betting advice on his website, and then was paid by the sportsbooks when the players he referred lost money on their bets. The moral of the story is this is not something that would happen in a regulated environment.

Echoing some of Freeman’s earlier sentiments, he detailed why people in the room should care about illegal sports betting:

  • Customers are being cheated out of payouts.
  • The U.S. government is being cheated out of taxes that should be paid on the sportsbooks’ profits.
  • The profits from illegal sports betting are, in turn, being used to fund other illegal activities.

The law enforcement angle on illegal sports betting

J.B. Van Hollen, the former Attorney General of Wisconsin and president of the National Association of Attorneys General, spoke about the law as it currently stands, and where it should be headed in the eyes of law enforcement.

He said that law enforcement has had some success in confronting illegal sports betting and gambling operations, but that that it’s “not a battle that can be won” in the long-term. Said more simply, you might be able to shut down illegal operations, but you can’t stop new ones from cropping up.

Van Hollen said he believed that PASPA was a well-intentioned law back in the early 1990s, but with the advent of the internet, it’s been rendered a bad piece of law and an ineffective prohibition on sports betting.

“The purpose of a law is to protect the consumer,” Van Hollen said. “The law as it sits right now, due to the changing of the landscape, perhaps does more to harm the consumer than it actually does to help, by driving the gaming underground, instead of keeping it out front and center.”

Van Hollen made a couple of other points that might have been surprising to some in the room: The idea that unregulated sites make it very easy for minors to gamble and bet on sports, and the idea that you could easily place a sports bet on your phone while sitting in the middle of the Capitol.

Public sentiment about sports betting

Mark Mellman, president and CEO of The Mellman Group, detailed a poll his company did about the perceptions of sports betting. He gave the results of polling that showed about two-thirds of Americans were in favor of doing away with the federal law that prohibits sports betting throughout much of the U.S.

The data from the poll also showed that support for a repeal of PASPA was bipartisan in nature, with little difference in opinion among Democratic and Republican respondents.

What’s going on in Europe, and lessons for the U.S.

The second panel of the day focused on regulated sports betting in the Europe, particularly the UK.

The sentiment from the UK panelists — including Rick Parry (Chair of the UK Sports Integrity Commission and former CEO of Liverpool FC) and Gerry Sutcliffe (former UK Sports Minister) stressed that regulation is a net win over the alternative of an unregulated black market.

Parry, for instance, painted the current environment as untenable for the U.S.

“I think I would have underestimated the current size of the illegal U.S. market,” Parry said after listening to the earlier speakers. “It’s not a case of it’s inevitable. It is. It’s here. So if it’s here, you’ve actually got to do something about it — you have an obligation to protect the integrity of sports. … And what needs to be done is you need to do is get all the relevant agencies together, and sports (leagues) have a huge role to play.”

Beyond that, panelists noted that regulation generates revenue, provides consumer protection and protects the integrity of the games. On the final point, regulation and having access to more data on betting patterns allows leagues, regulators and sportsbooks to identify possible red flags regarding possible match-fixing, panelists noted.

And while match-fixing might be less likely at the top levels of professional sport — where athletes make millions of dollars — it’s more likely in lower pro leagues and amateur athletics.

“Basic economics tells you where you have a problem is when there is a big gap between the liquidity of the market, and the earnings of the participants,” Parry said.

Genius Sports CEO Mark Locke went so far as to say it’s “pretty much guaranteed” that NCAA athletes are taking money to influence the outcome of college events. 

Parry also noted he didn’t believe the state-by-state sports betting regulation approach that would result if PASPA is repealed would prove to be a poor model, saying it needs some sort of overarching oversight, ideally from the federal level.

 

 

Photo by Dustin Gouker

Dustin Gouker Avatar
Written by
Dustin Gouker

Dustin Gouker has been a sports journalist for more than 15 years, working as a reporter, editor and designer -- including stops at The Washington Post and the D.C. Examiner.

View all posts by Dustin Gouker
Privacy Policy