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Will Individual States Ever Allow People To Legally Bet On Sporting Events?

May 15, 2017
In the parlance of sports wagering, the most interesting "prop bet" on that very subject is this: How long will it be before there's a change in the federal law that essentially prohibits individual states from letting folks legally bet on games?

One of the more educated opinions on that over-under comes from American Gaming Association president and CEO Geoff Freeman. The AGA is the major trade and lobbying association that represents the casino industry.

"It won't be 10 years. I don't think it will be five years," Freeman said. "But it won't be five months either."

At issue is the Professional and Amateur Sports Protection Act, simply known as PASPA. The watershed law celebrates its 25th anniversary this year and limits broad sports wagering to Nevada and allows extremely limited sports betting in Delaware, Montana and Oregon (all had variants of sports wagering prior to PASPA).

Of course, things have changed a lot during the last 25 years regarding gambling. In the early 1990s, only a handful of states had casinos. Now, about 40 states have gambling halls of some sort and there's considerable momentum to end the federal embargo on sports gambling. Getting there remains tricky.

New Jersey has led the charge with a number of legal challenges to PASPA and has an appeal that may be headed to the U.S. Supreme Court. Regardless of the outcome in court, Freeman insists there's only one sure track.

"And that track runs through Congress," Freeman said. 

The national gaming organization has made it a priority to have PASPA amended or repealed so states can make the call.

"It comes down to making sure that Congress understands the damage that it's done with PASPA and repair it," he said.

Criticisms of PASPA are reminiscent of problems engendered by other prohibition-type laws -- that it really doesn't dissuade people from doing the things that are being prohibited and the law actually fuels a black market that spawns further ills.

Still, if the road runs through Capitol Hill, as Freeman points out, there is the question of overcoming Congress' now legendary inertia.

"Whenever Congress acts," Freeman said, "it's usually about fixing a problem. In this case, the problem is PASPA, and it's a problem that's only grown over the last 25 years -- and now it's time to fix it."

In making its argument, the AGA and sports betting proponents cite estimates of the sports betting black market that is dominated by off-shore gambling operators who are outside the reach of U.S. regulation and taxation. The oft-cited, low-end figure for global illegal sports betting is a mind-boggling, $150 billion a year (the high-end guess is $500 billion). In contrast, Nevada's sports betting handling in 2016 was $4.5 billion.

So clearly, PASPA hasn't caused the public to slow down on its sports gambling; it's just being done mainly on the black market.

The AGA's approach to Congress has been to point out empirical evidence of other countries, such as the United Kingdom and Australia, successfully legalizing sports gambling and since 1992, when PASPA was passed, states have increasingly demonstrated themselves quite capable of regulating gambling from lotteries to casinos.

Also important for the AGA will be to present what Freeman called a "single voice" of stakeholders, including law enforcement, broadcasters and even sports leagues.

However, that's where the gaming group faces its biggest challenge, namely the NFL.

Although NBA commissioner Adam Silver and MLB commissioner Rob Manfred have been encouraging about legalized sports gambling, the NFL's Roger Goodell continues to be a persistent skeptic.

"We are not changing our position as it relates to legalized sports gambling," Goodell said in late March before the Oakland Raiders' move to Las Vegas was approved by league owners. "We still don't think it is a positive thing."

Freeman knows that before he persuades members of Congress, he must first convince the sports world's top dog.

"This doesn't get done without the NFL," Freeman said bluntly.

Asked if the gaming group has been engaging the NFL, Freeman said any such conversations need to remain confidential.

"Look, Goodell is worried about anything that threatens the integrity of the games, and we share that," Freeman said.

However, it is the transparency legalized sports wagering provides that is the best defense against match-fixing and also helps protect the interest of the wagering public, proponents argue.

Freeman notes advancements in sports statistics analysis have led to new-age companies, such as Genius Sports and Sportsradar, that not only formulate and distribute new sports stats but also help ensure event integrity.

"Using the power of data that wasn't available in 1992, these companies can track every bet, and with their algorithms, they can detect anything untoward," Freeman said.

Genius Sports and Sportsradar have provided event integrity services overseas, particularly in big-time soccer as well as other sports. The NFL has a business relationship with Sportsradar (to provide stats) and the NBA works with Genius Sports.

"These companies are already working with leagues and team owners and can illustrate the opportunity and risk of legal and illegal sports betting," Freeman said.

So, who in Congress might advance the ball on sports wagering?

New Jersey U.S. Representatives, Frank Pallone (Democrat) and Frank LoBiondo (Republican), have both introduced versions of sports betting-friendly legislation and offer a rare united front of bipartisanship.

And to show that PASPA wasn't without doubters even when it was passed, consider Iowa's Republican U.S. Sen. Chuck Grassley, the current chairman of the Senate Judiciary Committee, was an early critic of the law based on its arguable infringement on state's rights (which happens to be the gist of New Jersey's current appeal to the U.S. Supreme Court).

In the end, the battle to amend or repeal PASPA will be accomplished like most lawmaking -- through incremental persuasion in private conversations.

"My advice is, ‘Let's be patient,'" Freeman said. "Let's not go up to Capitol Hill until all the work has been done off Capitol Hill."

Issue 233: May 2017