March 29, 2019

The Proliferation of Sports Betting In The US - What Are The Issues And Effects?

In 1992, Congress enacted the Professional and Amateur Sports Protection Act (“PASPA”) to prevent states that did not already have legalized sports wagering from legalizing sports betting. Lawmakers worried that interstate sports betting would undermine the integrity of sports, and in turn viewership, by incentivizing match fixing. Since then, only four states—Oregon, Delaware, Montana, and Nevada—allowed for legal sports wagering.

Twenty six years later, in May 2018, the Supreme Court in Murphy v. NCAA struck down the law, holding that the law violated the 10th Amendment’s anti-commandeering principle. This principle prevents the federal government from compelling a state to enact legislation. Because of this principle, the Court found that two PASPA provisions unconstitutionally commandeered the states by prohibiting state legislatures from enacting laws. The Court explained, “PASPA’s anti-authorization provision unequivocally dictates what a state legislature may or may not do,” and that there is no distinction between “compelling a State to enact legislation or prohibiting a State from enacting new laws.” The Court further held that no part of PASPA could be salvaged, as the other provisions not in issue were too closely tied to the provisions that violated the anti-commandeering principle.

The decision ushered in a wave of states seeking to capitalize on the opportunity. West Virginia, New Jersey, Mississippi, and Delaware legalized sports betting and are now taking bets. Pennsylvania, Rhode Island, and New York legalized sports betting, but have not started taking bets. There are also fruitful opportunities in tribal gaming jurisdictions, because those jurisdictions experience less barriers to entry and a very strong market share. While states are rushing to legalize sports betting, several hurdles remain, and understanding these potential issues, their effects, and the various regulatory schemes is critical for business attorneys with clients interested in entering the gaming industry.