On Monday, May 14th, the United States Supreme Court struck down the Professional and Amateur Sports Protection Act (PASPA) of 1992. The law prohibited sports betting except as conducted by the lottery in Oregon, Delaware, Montana and in casinos in Nevada. New Jersey had sued, claiming the law violated the tenth amendment state’s rights clause: “The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.” The court agreed with New Jersey. In writing for the majority, Justice Alito stated:
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. The judgment of the Third Circuit is reversed.”
The entire gaming industry had been eagerly awaiting the decision for weeks. The court heard oral arguments in December and from the questioning, most observers believed a repeal of PASPA was a foregone conclusion. In anticipation of a favorable decision, twenty states have already proposed or passed legislation to regulate sports betting; and Ladbrokes, Paddy Power, William Hill, DraftKings and FanDuel have been preparing to enter the market. The court’s ruling was good news for the industry as a whole and for all of the states looking for new sources of taxation. I don’t think it was good news for Nevada casinos. Some people supporting the court’s decision have said that legal sports betting in other states would have no impact on Nevada, I respectfully disagree. I remember clearly all of the casino executives in Atlantic City opining that slot machines in Pennsylvania would have no impact on Atlantic City. “Bah, those won’t be real casinos and people will still come here for the real thing.” Well, we know how that worked out. In the 1950s, a ground-breaking study concluded that shoppers do not drive past one store to drive farther to another unless that store has some product or service the closer one lacks. Nothing that has happened in the last 60 years in gaming refutes that conclusion.
However, the unfettering of wagering on athletic contests cannot be put in the same category as any other in the history of gaming. I have never seen anything concerning gaming to compare with the attention the Supreme Court’s opinion has drawn nationwide. In every jurisdiction, organization, media outlet and corporation with the slightest connection to sports or gambling there are people with opinions on the impact of the court’s decision. It seems that no two people agree on the subject. Literally hundreds of articles appeared in the first five days after the ruling was issued. The articles and theories cover the gamut from the regulatory structure each state will need to who will profit and how the integrity of the games will be insured. Most of these questions will have different answers in each state and at the moment the possibility of federal guidelines and restrictions cannot be discounted. Some legislation has already been introduced in Congress and more will follow. It is also certain that the major leagues will be lobbying at both the state and national level for an agenda that benefits them.
It will take a very long time before all of the questions are answered. The Indian Gaming Regulatory Act passed in 1988 and there are still some unanswered questions in Texas, Massachusetts and Virginia for example. No one in 1988 imagined that Indian gaming would grow to the size it has or produce the billions of dollars of gaming revenue that are currently generated by Indian gaming. The estimates on revenues from a legal sports industry begin at $50 billion by 2020 to over $150 billion by 2025. If those estimates are even close, sports betting is set to join casino gaming, lotteries and Indian gaming as the major sources of gaming revenue in the United States. Sports betting will probably never reach some of the extreme $150 billion estimates, but there is little doubt that it is set to become an extremely important part of the gaming industry, the sports media and the games themselves. Opponents think wagering on sports will corrupt the games and the athletes. Gambling on sports may not erode the integrity of athletic contests or the participants. However, it is going to alter drastically the landscape of gambling, sports and the media coverage of sports. The games will never again be the same. Whether the changes will be good or bad for all concerned, we will just have to wait and see.
