Looking deeper into repeal of PASPA

Looking deeper into repeal of PASPA

July 04, 2017 3:11 AM
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Optimism over the Supreme Court potentially overturning PASPA (Professional and Amateur Sports Protection Act) is making legal sportsbook operators absolutely salivate at the prospects of seeing offerings go nationwide, and rightly so.

It is not often any industry segment has the prospect of growing a hundred fold in a matter of a few short years and that is the prospect that has book operators starting to chill the Champagne in hopes the Supreme Court does determine PASPA is unconstitutional this fall. But what are the real chances of that happening and if overturned what would the next few years look like?

The Supreme Court has had opportunities before to hear the prior pleas of New Jersey and chose not to, so what changed? Why now?

It might be as simple as the realization that gaming is a reserved right to the states and not under the preview of the federal government, or simply the notion that New Jersey has the right to change their own state laws and the federal government has no say in that aspect and completely ignore any arguments around PASPA.

We would like to think the Supreme Court would make their decisions like a referee examining a replay, strictly by the rules and strictly by the facts. However Supreme Court Justices are human, each has their own perspective of right and wrong, their own belief structure about what is good for the country and each are smart enough to weave a constitutional argument to support their opinion in any direction they so decide.

Even if the Supreme Court fails to overturn PASPA there is enough national demand for sports wagering as well as need for the tax revenues that it is inevitable Congress will repeal it. Whether by way of the Supreme Court or by way of Congress, when PASPA finally becomes extinct what happens then will be up to each state.

Other than perhaps in New Jersey, the day after PASPA is repealed will not see wholesale nationwide sports betting, but probably the start of a number of states looking to change their laws to accommodate it.

As each state then considers sports wagering, there will be significant policy decisions to be made: Will sports betting be run by the casinos or the states’ lottery organizations? Will the states require the sportsbooks to be in “stick and brick” facilities or will they go straight to online/mobile phone account based sports wagering? Will states confine the pooling of wagers to within the state or allow pooling across state lines – for example such as allowing Las Vegas based sportsbooks to pool wagers/risk and set lines for, say, books in California?

Given the quest for tax revenues and the inherent popularity of sports wagering, my bet would be on most states that decide to allow sports wagering will be up for pooling across multi-state lines and going straight to online/mobile phone account based wagering.

For Nevada the benefits in the eventual expansion of sports wagering will be through the service providers (companies that design and support the software running the books), the linemakers, those book operators that serve as the hub for multi-state book operations, companies that hold key technology and encryption patents and, of course, sports information service providers.

Information will be King; every insight that could translate into a winning wager will be highly prized and willingly paid for. Even professional bettors will benefit as with the increased number of betting lines to choose from their arbitrage opportunities will be significant.

It is this writer’s opinion there are enough constitutional purists and enough state’s rights leaning members of the Supreme Court that if PASPA becomes the primary or relatively major consideration in the case to be heard, it will bite the dust. Even if they do not directly overturn PASPA they may strike enough portions such that Congress would need to accelerate a re-visit to the law to fix it. And if it is on the table, given the mood and needs of the country it could well be excised all together.

In the mean time, sports betting companies like CG Technology, which has been on the market, has book operations, their own bookmaking software, line-making operations and unique patents, probably just added a zero to their asking price just for the speculation value of PASPA being overturned.

In that same vein, between now and the time of the final Supreme Court ruling it will be interesting to see which Nevada sportsbook operators, sportsbook service providers, linemakers and information providers get strategically merged, bought or partnered with under the huge prospect of legalized nationwide sports betting.