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Update On Legalizing Sports Gambling

For this month’s blog posts, we will be discussing some of the most recent Supreme Court cases that have been decided this year.  Specifically, we will address cases that are likely to have an impact on internet, e-commerce, technology, business, and cybersecurity laws.  We will start with a discussion of Murphy vs. NCAA.

Murphy vs. NCAA was decided on May 14, 2018, and generally was the Supreme Court ruling in favor of states’ ability to legalize sports betting.  The Supreme Court overturned the Professional and Amateur Sports Protection Act (PASPA), which previously prohibited all but a few states from legalizing sports gambling.  In Murphy, the Supreme Court held that PASPA violated states’ rights to make their own decisions regarding the legality of sports gambling.  The Court explained that Congress cannot commandeer states to enact or enforce a federal regulatory program, which was essentially what PASPA (as a federal act) was doing towards the states.

Many states, such as New Jersey, are thrilled with this decision.  They view it as an opportunity to generate revenue, prevent black market gambling, and help their economy.  The Court’s decision in Murphy empowers states with the ability to legalize and regulate an estimated $150 billion sports betting industry that was previously illegal.  New York, Connecticut, West Virginia, and New Jersey are among the 20 or so states already introducing legalizing legislation.

Industry experts say that sports betting will likely take place on phones, websites, and mobile applications, as well as in casinos.  An estimated 15 million Americans participate in illegal sports betting each year, generating sums of $2.5 to $3 billion for offshore bookmakers.  In 2017, the American Sports Betting Coalition estimated that $58 billion was illegally bet on NFL and college football games.  These numbers, when transferred over to American businesses and states, will likely help the economy, as well as lowering the amount of illegal gambling and bookkeeping, which is usually done by criminal organizations.

Geoff Freeman, president of the American Gaming Association, believes that “Through smart, efficient regulation, this new market will protect consumers, preserve the integrity of the games we love, empower law enforcement to fight illegal gambling, and generate new revenue for states, sporting bodies, broadcasters, and many others.”  He envisions an open, transparent, and responsible market for sports betting.

This case could have a major impact on internet gambling.  Because most sports betting will be conducted online, legislation addressing the e-commerce side of sports betting will likely be a significant part of all states’ legalization plans.

In the past, sports leagues such as the NFL, MLB, and NCAA have been opposed to the legalization of sports gambling.  They believe that sports betting could affect the integrity of the games and players.  In recent years, however, the NBA and MLB have reluctantly softened their stance, while still lobbying state lawmakers and legislatures for protective legislation.  The leagues are asking for a 1% “integrity fee” to be imposed on all sports betting transactions.  As such, gambling and gaming industry representatives are opposed to such a fee.  However, as legislation progresses, we are likely to see significant changes in the future.

Justice Alito noted in his opinion that: “Congress can regulate sports gambling directly, but if it elects not to do so, each state is free to act on its own.”  He continued to explain each side’s arguments: “Supporters argue that legalization will produce revenue for the states and critically weaken illegal sports betting operations, which are often run by organized crime.  Opponents contend that legalizing sports gambling will hook the young on gambling, encourage people of modest means to squander their savings and earnings, and corrupt professional and college sports.”

While it is possible that Congress could pass legislation regulating sports gambling, they have not done so yet.  Professional sports leagues are currently lobbying for such legislation, hoping for national gambling laws and regulations, rather than individual state laws.  As the ruling is fairly new, we’ll hope to keep you updated with any significant legal changes resulting from this case.

At our law firm, we assist clients with legal issues related to internet, technology, business, and e-commerce.  Please contact us to set up an initial consultation.