What happens if PASPA is overturned?
December 12, 2017 3:00 AM
by The Analyst
Last week the Supreme Court of the United States (SCOTUS) heard oral arguments over New Jersey’s continued pursuit to permit legalized sports wagering. While the consensus is that the majority of the court has no opposition to sports wagering the real issue is the question of the constitutionality of the Professional and Amateur Sports Protection Act of 1992 (PASPA) that went into effect back in 1993.
While many argue gambling should be the exclusive purview under the sovereignty of each state, Congress used its Commerce Clause powers to effectuate the law. Under the Commerce Clause Congress has the right to enact laws that affect interstate commerce, and since sports wagering is a form of commerce Congress has the ability to legislate as it so desires subject to other Constitutional qualifications.
It is those other Constitutional qualifiers that are coming into play in this case.
PASPA is a short but convoluted law that basically says, unless the State was already in the business of sports wagering during a certain window of time (such as Nevada, Delaware, Oregon and Montana) they can not permit sports wagering after the effective date of the law.
However, PASPA was not made a criminal law and the essential enforcement of it comes by way of allowing a civil injunction to be sought by either the U.S. Attorney General (USAG) or by the professional or amateur sports organizations that were the subject of the sports wagers. In short, if New Jersey took a bet on college basketball either the USAG or the NCAA could go to Federal Court and sue for an injunction to stop them.
A unique twist here and seemingly why SCOTUS was willing to hear the case, is that through PASPA Congress put the burden on the State and essentially conscripted the State to enforce a singularly Federal desire. In general the way it is supposed to work, if the Federal Government enacts a law, they are the body that should regulate and enforce the law and they can not compel the State to enforce a federal law.
So if SCOTUS agrees PASPA requires the States to do something Congress has no right to force on them, then PASPA could be struck as unconstitutional.
SCOTUS could also leave the law intact with qualifiers so it does not establish a precedent but most of the money is on PASPA being struck down.
While it is clear a lot of states would jump on the opportunity to permit sports wagering, the wild card that needs to be considered is what will one or more of the sports leagues or amateur sports organizations do. Will they combine resources and rush off to Congress and seek corrections to the language in PASPA? Will they try and use their very substantial influence in various states to try and clone Delaware’s benign and rather boring sports betting regulations? Or will they get clever and expand their existing fantasy wagering businesses into legal sports wagering and seek state and federal exemptions to make their entry an immediate dominant force and success?
As each league and governing sports organization has vastly different needs and motivations, it is unlikely they would go to Congress with a united voice, but it does not challenge credibility that they would join enough to get their economic desires fulfilled.
But think about the notion of the leagues getting into the betting business. Baseball is in the best position to expand their fantasy betting platform and network into traditional sports betting and the man at the top of that part of the MLB Empire is a former Nevada gaming licensee (Robert Bowman).
The new contract for the NFL’s high commissioner Roger Goodell, if he hits revenue targets, stands to be worth as much as a half billion dollars to him. That contract may just be the stimulus to flip his longstanding anti-gaming position to help hit his magic numbers.
Then of course the Commissioners for both the NBA and NHL have already shown interest in legal sports wagering, but have yet to come up with a road map of what and how they would want to get involved, though they could easily take lessons from the MLB if not join in with them as junior partners.
It has been and remains easy to assume PASPA will get struck down, Nevada style sports wagering will simply proliferate to the states so inclined to permit it, and Nevada’s biggest sportbook operators will rule the business. However, it would be extremely naïve to think, if PASPA does get struck down, that the various leagues and governing organizations are going to just rollover without trying to influence their fates or get a slice of the sports betting pie.
No matter what, exciting times are coming for the U.S. sports betting industry.