Here's What You Need to Know about Legalized Sports Betting

Some states, like New Jersey, New York, and Pennsylvania could have legalized gambling as early as the football season.

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May 14 2018, 6:42pm

Photo via Wikimedia Commons/ Flickr user ghoseb

The federal prohibition against sports betting is now dead.

In a monumental 7-2 ruling today, the United States Supreme Court declared that the Professional and Amateur Sports Protection Act (PASPA) is unconstitutional in Murphy v. NCAA.

Justice Samuel Alito, who authored the majority opinion (embedded below) in which Chief Justice Roberts, Kennedy, Thomas, Kagan, and Gorsuch joined (with a seventh justice, Breyer, joining in part), minced no words in striking down PASPA in its entirety. Justice Alito held:

“The legalization of sports gambling requires an important policy choice, but the choice is not ours to make. Congress can regulate sports gambling directly, but if it elects not to do so, each State is free to act on its own. Our job is to interpret the law Congress has enacted and decide whether it is consistent with the Constitution. PASPA is not. PASPA “regulate[s] state governments’ regulation” of their citizens, New York, 505 U. S., at 166. The Constitution gives Congress no such power.”

Thus, after more than six years of litigation, including three lower court losses, New Jersey finally defeated the NCAA, NFL, MLB, NBA, and NHL as it fights to legalize sports betting just like Nevada.

But today’s victory is not absolute. It left the door open for Congress to go back and ban sports betting entirely by implementing a law that is directed toward individuals that the federal government would enforce. The problem with PASPA is that it forced the states to prohibit sports betting when Congress could have just done it directly.

Of course, getting Congress to agree on anything these days is nearly impossible, so a sports betting ban Version 2.0 is highly unlikely.

More importantly, is that today’s decision is not limited to New Jersey. By declaring PASPA unconstitutional in its entirety, the Supreme Court removed the federal roadblock that prevented any state from hopping on the sports betting wagon. States can now decide for themselves if they want to allow sports gambling and figure out the manner in which to make it possible.

Currently, 21 states have already started the legislative effort to launch legal sports betting. Some, however, can strike faster than others. Most likely, New Jersey, New York, Pennsylvania, Delaware, West Virginia, and Mississippi will be up and running in time for the start of football season, but certainly no later than the next Super Bowl.

Exactly what form that takes has yet to be determined. In the early stages, sports betting outside of Nevada will likely be limited to physically placing bets at a sports book at a casino or race track. Within the next few years, mobile wagering and betting at remote kiosks will probably become the norm, as it is in many parts of Europe.

In the wake of today’s ruling, state legislators in gambling-friendly states will no doubt look to seize on this new tax revenue potential. But so will the leagues.

Despite spending millions of dollars litigating to block the spread of legal sports betting, the leagues actually stand to profit immensely from their loss at the Supreme Court.

While awaiting the Supreme Court’s decision, the sports leagues’ lobbying efforts went into overdrive in the past few months to make sure they were not left out of the sports betting windfall. Currently, the NBA and MLB have led the lobbying efforts to gain 1 percent of every dollar wagered in the form of a royalty or “integrity” fee.

For context, in 2017, Nevada’s sportsbooks took in $4.8 billion in wagers and won $248.7 million. If the leagues had received a 1 percent integrity fee of the total amount wagered they would have netted $48 million. And that is from just a single state. Imagine the new revenue if ten, 20, or 30 states legalize sports betting. With that kind of money potentially at stake, look for the anti-gambling puritans like Roger Goodell and Mark Emmert to suddenly change their attitudes.

But today’s decision also has huge implications for states’ rights in general. Justice Alito loudly smacked down what the conservative justices predictably deemed an overreach by the federal government to control states in violation of the 10th Amendment. He explained:

The PASPA provision at issue here — prohibiting state authorization of sports gambling—violates the anticommandeering rule. That provision unequivocally dictates what a state legislature may and may not do. And this is true under either our interpretation or that advocated by respondents and the United States. In either event, state legislatures are put under the direct control of Congress. It is as if federal officers were installed in state legislative chambers and were armed with the authority to stop legislators from voting on any offending proposals. A more direct affront to state sovereignty is not easy to imagine.

So while sports fans cheer the newfound ability to legally wager on games, advocates for legalized marijuana and sanctuary cities might see a pathway to blocking federal authority in contravention of states’ rights. The sports betting case could prove to be a litmus test for just how far the conservative majority on the Supreme Court will allow federal authority to reach.

While the wide-ranging implications of this decision play out, the large takeaway is that legal sports betting is coming and many different entities stand to reap significant rewards.

So while you might have to wait a bit before your state acts, it might be a good time to start figuring out how to dump your bookie gently.

Steve Silver is a former sports reporter for the Las Vegas Sun and is now a lawyer in Portland, Maine. He is teaching a class on the law of sports betting at the University of Maine School of Law in the Fall. You can reach him at steve@thelegalblitz.com or on Twitter @thelegalblitz .

This post originally noted the official decision as 6-3, however it has been updated to reflect Justice Breyer's concurrence in part will count as a vote in favor and thus a 7-2 ruling.