The GAME Act Explained

The Game Act explained to any normal person should leave them scratching their heads as to why it is even needed in the first place. It is well-known that a hodgepodge of federal and state laws have put the future of online sports betting on shaky ground, but that could be changing within the next several years thanks to a proposed piece of legislation making the rounds in Washington as of mid-2017. The GAME Act, properly known as the Gaming Accountability and Modernization Enhancement Act, has the potential to upend much of the status quo regarding sports betting if approved by Congress and signed into law by President Donald Trump, as is the hope of its legislative and industry proponents.

The new piece of proposed federal legislation, first unveiled in May of 2017, specifically targets the Professional and Amateur Sports Protection Act of 1992 (PASPA) for Congressional repeal. PASPA prohibits state-sanctioned sports betting everywhere in the nation other than Delaware, Montana, Nevada and Oregon, and of those only Nevada has a working legal sports betting industry intact to this day. GAME Act sponsor and Democrat New Jersey Representative Frank Pallone launched the bill out of the House Energy and Commerce Committee, which he also chairs, during the 2017 Congressional session. The aim of game act is to give the power back to the states (not least of which is Pallone’s own, as New Jersey boasts the country’s second-biggest casino and gaming industry behind Nevada), enabling the passage of state gambling regulatory laws.

Though no action was taken on the GAME Act, which exists for now as a draft for discussion purposes only, during the 2017 session, the proposed law is already gaining traction among a coalition of states and gaming industry advocacy groups like the American Gaming Association. (AGA). If eventually passed, the GAME Act’s legalization of sports betting would in all likelihood increase tax revenues for the states, boost the economy by supporting the multi-billion-dollar sports gambling industry, decrease the burden on the criminal justice system and improve protections for players all in one go. The AGA, the leading lobbying group representing the US gambling industry has committed to having the bill ready for signing by President Trump before the end of his first term in 2020.

What Would the GAME Act Actually Achieve?

Like PASPA, which the GAME Act seeks to strike from the books, the provisions of the proposed bill are broad and far-reaching. This is because, as Rep. Pallone explained after the GAME Act emerged from the House Energy and Commerce Committee’s investigation into illegal sports betting, federal laws are woefully behind the times in terms of their relationship to the amount of illegal betting actually taking place in America. In a May statement released to coincide with the announcement of the GAME Act, Pallone said the Committee’s findings indicate that Americans bet nearly $400 billion on sports alone, and that necessarily means most of the money wagered on the outcome of sporting events is done illegally. By tearing down federal barriers to broader sports gambling legalization by states interested in reaping the benefits of a regulated sports betting industry, the GAME Act can help the states, the industry and players alike.

“It’s time to recognize that the laws are outdated, and the GAME Act will modernize them by increasing transparency, integrity, and consumer protections,” Pallone said in the Committee’s press release announcing the legislation.

Just as is the case in other gambling-related laws, the GAME Act has its own gambling definition, but the proposed legislation is thoroughly up-to-date in a way that the 25-year-old PASPA, the 50-plus-year-old Interstate Wire Act or even the more recent Unlawful Internet Gambling Enforcement Act of 2006 (UIGEA) simply aren’t. The GAME Act defines gambling as “the risking of something of value including virtual currency or virtual items, upon the outcome of a contest of others, a sporting event or a game of skill or a game of chance, on the expectation that the person will receive something of value in the event of a certain outcome."

Careful reading of those provisions shows that GAME Act includes participation in lotteries and fantasy sports (DFS) in its definition of betting. Including those two related industries may help the GAME Act gain support with states in possession of high-performing lotteries and the DFS industry, which in many cases operates on unsure legal ground in states that don’t specifically address fantasy contests in their legal codes.

How Would Daily Fantasy Sports Be Impacted By The GAME Act?

As previously mentioned, the GAME Act’s definition of betting or wagering includes daily fantasy sports (DFS), which have as recently as the 2006 passage of the Unlawful Internet Gambling Enforcement Act (UIGEA) been exempted from that definition on the basis of their designation as “games of skill.” The DFS industry has historically been opposed to having its services lumped in the with gambling as many states strictly limit or have different levels of bans on some types of betting and wagering, particularly as it relates to sports. Fear of being legislated out of a profitable sports market has kept the DFS industry from too much cooperation with state gaming authorities.

Thus, the GAME Act’s DFS-inclusive language can be seen as a double-edged sword. On the one hand it firmly establishes fantasy sports contests as activities that can be regulated by the states, but on the other hand it may turn off the major professional sports leagues that have favorable (and profitable) relationships with DFS industry leaders like DraftKings and FanDuel. The NBA, NFL, NHL and MLB head offices generally view DFS as fellow travelers, each helping the other to drive fan engagement (and therefore monetization), and they may oppose the GAME Act out of a reluctance to be involved more deeply with sports gambling.

However, the professional sports leagues’ commissioners, and NBA Commissioner Adam Silver in particular, have softened their position on sports betting in recent years, in some cases even outright predicting that nationwide legalization of the practice was an inevitability. If that prediction by Silver and others turns out to be true, the GAME Act could be the foot in the door the leagues need to begin having a more active role in the crafting of sports gambling legislation that serves their interests as well as their partners in the DFS industry.

It also remains a distinct possibility that the passage of the GAME Act could precipitate an explosion in popularity and profitability for the DFS industry if it allies itself closely with the casino operators, particularly in states with healthy, mature gaming industries like Nevada and New Jersey. The Garden State may already be toeing the line on such an integration of its casino offerings and DFS contests with the July 2017 introduction of Resorts Casino Hotel’s FastPick service, which blurs the line between fantasy sports and sports betting. If Resorts can make FastPick work on its own, it stands to reason that a licensed and regulated DraftKings or FanDuel daily fantasy/single game betting kiosk at a major casino would be hugely popular, and that’s something for fantasy operators to consider going forward.

Federal Regulatory Powers Under The GAME Act

The GAME Act would return the authority of gambling regulation back to the states, but it also gives authority in other areas to several federal bodies. Under the GAME Act, the Office of the Secretary of Health and Human Services would be responsible for implementing gambling addiction prevention and treatment programs, for instance. Additionally, states choosing to legalize sports betting would have to create rules complying with federal banking laws, while also implementing common-sense measures like providing privacy and security measures, restricting access to minors and perhaps limiting the scope of allowable media for advertisement.

These protections that would be required by the GAME Act in many ways only make the same provisions as states that have legalized gambling industries. However, the proposed bill differs in that it gives oversite authority to the Federal Trade Commission as befitting its intended role as a law with national applicability.

Support and Opposition For the Game Act

The odds are actually decently favorable that the GAME Act or something like it will be passed in the not-too-distant future, an assessment based on the strength of its backers and supports alone. That’s owing to an increasingly pro-gambling public sentiment, as evidenced by the hundreds of billions of dollars poured into sports betting markets whether by legal or illegal means each year, but the GAME Act has several prominent organizations and lobbying groups among its supporters. We’ve already discussed the support the GAME Act enjoys from the American Gaming Association (AGA), which represents the lobbies for the casino industry and is pushing hardest for the bill’s adoption. The GAME Act also is beginning to see tacit approval for many of its provisions by some of the heads of the country’s major sports leagues.

The Competitive Enterprise Institute (CEI), a public policy think tank, has also thrown in with other supporters of the GAME Act’s eventual passage and the organization’s research even assisted indirectly in the proposed law’s formulation. A CEI report from early 2017 called on Congress to repeal the Professional and Amateur Sports Protection Act of 1992 (PASPA) as the extant law has proven to do little to deter Americans from wagering on sports or even to ensure the integrity of sports contests. Instead, PASPA has only deprived the federal and state governments of billions of dollars in taxable revenues while also driving bettors into the arms of either the illegal black market of gambling at worst or the legal offshore sports betting sites still serving US players.

Despite support for broader sports gambling legalization from all the aforementioned groups and states, and even from President Trump, who during the run-up to the 2016 election expressed his interest in the subject while on the campaign trail, there are still some serious obstacles standing in way of the GAME Act’s passage. Aforementioned pushback that could come from the sports leagues and the daily fantasy sports industry might also be joined by opposition among socially conservative Republican lawmakers at the federal and state level.

What Does The Future Hold For The Game Act?

At any rate, the spirit, and, by extension, the apparent political will, to repeal PASPA is alive and well among several state legislatures around the country. New Jersey is leading the way with a case to be heard by the US Supreme Court as to whether PASPA, with its differential treatment of the various states, is and has been in direct violation of the 10th Amendment or not. If PASPA were to be stricken down by that means, the GAME Act, released just a day after SCOTUS decided to take up the New Jersey case, might still be necessary as it does provide legal definitions and the beginnings of a federal legal framework enabling the states to pass their own regulatory laws.

Other states are getting in on the act too. Michigan, New York, West Virginia and Pennsylvania have all introduced proposed sports betting laws during their 2017 legislative sessions, though Pennsylvania has taken the boldest steps. The Pennsylvania House of Representatives returned a 24-0 vote to authorize the state to legalize sports betting activities pending federal authorization, or, as the case might turn out to be, no federal law stopping states from regulating their own sports betting industry. The Pennsylvania law is being looked at by other states all around the country as a potential model, and that’s particularly true of states with existing casinos, as the Pennsylvania proposal includes provisions for licensing and renewal fees for casino operators that wish to offer sports betting to customers.

No matter the course of events in coming years, a move toward nationwide sports gambling legislation in the US looks to be merely a matter of time. Popular support and broad public participation in sports gambling, combined with government’s need of new sources of tax revenues, and the backing of federal and state lawmakers, civic organizations and industry associations across the spectrum of gambling sectors make the GAME Act or something similar almost a sure bet. The possibility of political deadlock in Washington related to issues like healthcare and the federal budget notwithstanding, the pieces look to be moving into place to affect the nation-wide legalization of USA online sportsbooks.

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