Supreme Court To Examine Federal Sports Betting Prohibition

Maryland might potentially get to authorize – and tax – wagering on sporting events in the near future. Last week the U.S. Supreme Court announced that it will hear a New Jersey case challenging the constitutionality of a federal statute preempting most states from authorizing sports betting.

Last session Maryland joined at least six other states in considering legislation on sports betting, according to Route FiftyDelegate Jason Buckel sponsored House Bill 989, Gaming – Wagering on Sporting Events – Study and Implementation, which would have created the Task Force to Study the Implementation of Sports Gaming, and under certain terms, allowed the State Lottery and Gaming Control Commission (SLGCC) to issue sports gaming licenses.

Other states considering similar legislation this year include Connecticut, Michigan, New York, Pennsylvania, South Carolina and West Virginia. The State of New Jersey actually passed laws in 2012 and 2014 meant to allow sports betting at state casinos and racetracks.

The problem is that sports betting is prohibited in most states under the federal Professional Amateur Sports Protection Act (PASPA), passed in 1992. From the House Bill 989 Fiscal Note:

The federal PASPA prohibits a government entity from sponsoring, operating, advertising, promoting, licensing, or authorizing a lottery, sweepstakes, or other betting, gambling, or wagering scheme based on one or more competitive games in which amateur or professional athletes participate. Likewise, a person may not sponsor, operate, advertise, or promote a lottery, sweepstakes, or other betting, gambling, or wagering scheme based on one or more competitive games in which amateur or professional athletes participate. States that had sports gambling before PASPA or authorized sports gambling within a year after PASPA became effective may continue to have sports gambling. Thus, Delaware, Montana, Nevada, and Oregon may offer gambling on sporting events, but only Delaware and Nevada currently authorize sports gambling.

Nevada generated $219.2 million, or 1.95% of gaming revenues, from sports betting in 2016. Delaware generated $37.9 million, or 6.3% of gaming revenues, from sports lotteries in fiscal 2015.

Major sports leagues NCAA, NFL, NBA, NHL and MLB have twice sued the State of New Jersey for authorizing sports betting notwithstanding PASPA, and thus far have won every step of the way. According to coverage by ESPN, it was considered unlikely that the Supreme Court would take up the case, given a recommendation otherwise by Solicitor General Jeffrey Wall.

From ESPN’s coverage:

[The Supreme Court] could hear the case as early as this fall, but experts believe a more likely timetable is sometime this winter, with a decision in late spring or early summer. …

The sports betting landscape in the U.S. has shifted significantly over the past five years as the New Jersey case has played out. The NBA has pivoted its position on sports betting, and the NFL and NHL have elected to place franchises in Las Vegas. MLB has begun to align itself with the NBA on the issue, along with other professional sports leagues such as MLS and the PGA.

The NCAA and NFL remain opposed to expanding legal sports betting, and the NHL has mostly remained quiet on the prospect in recent years.

State and local governments hoping for an opportunity to “get in on the game” of sports betting have allies in gaming companies and states rights advocates. From  Route Fifty:

Gaming companies mostly oppose the law and this month they joined with states rights advocates to form the American Sports Betting Coalition to push the high court to take up New Jersey’s appeal.

The American Gaming Association estimates that Americans wagered $4.1 billion on this year’s Super Bowl, that they will bet $90 billion on professional and college football this season, and that 98 percent of all of those bets will be made on the black market.

The association says current law translates to vast sums in lost tax revenue. The group filed an amicus brief to the Supreme Court last year laying out its arguments. ….

“When presented with a safe, legal market or an illicit alternative, consumers will almost always choose the former,” the authors of the brief wrote.