New Bill Proposes Federal Approval For Legal Sports Betting

New Bill Proposes Federal Approval For Legal Sports Betting

On Tuesday, a Congressional draft bill surfaced that would work to provide the federal regulatory framework for legal sports betting in the US. This marks the first bill since the SCOTUS ruling on PASPA that would once again put the power in the hands of the feds.

As to be expected less than six months since the federal ban on sports gambling was lifted by the Supreme Court, the surfacing of the bill has already caused mix reactions across the industry.

“Since the Supreme Court’s ruling in May, the American Gaming Association has consistently maintained that federal legislation regarding sports betting is not necessary,” stated Chris Cylke, VP of Government Relations for the AGA.

“That underlying position remains unchanged. At the same time, we remain committed to maintaining an open and constructive dialogue with policymakers considering sports betting legislation at any level of government.”

Reestablishing Federal Control

The bill would require each state to submit an application to offer sports betting, and give the US Attorney General’s Office the authority to either approve or deny proposed legislation. The AG would have up to 180 days to determine if state proposals met the minimum standards established by federal guidelines, with three-year renewal cycles upon approval.

With states only recently being empowered to put sports betting laws into effect, it immediately brings us back to the commandeering issue. The main argument made by the State of New Jersey in Murphy vs. NCAA was that the Professional and Amateur Sports Protection Act (PASPA) violated the “anticommandeering” clause of the Constitution. SCOTUS agreed that PASPA was unconstitutional in violating the Tenth Amendment rights of the states, which would have presumably set a precedent for future Congressional bill proposals.

In the case of the current draft legislation, the conflict is addressed but nonetheless justified within its language. “While each State may decide whether to permit sports wagering and how to regulate sports wagering, there is an important role for Congress in setting minimum standards for sports wagering that affects interstate commerce,” reads an excerpt from the “Findings” section of the bill.

Reclarification Of The Wire Act

The Wire Act of 1961 has been reinterpreted since its initial enactment, most notably in 2011 when the Office of Legal Counsel (OLC) of the Department of Justice announced that the law only applied to sports wagering. Now in the post-PASPA era, the draft bill looks to once again address the antiquated law.

The language within the Wire Act regarding the transmission of sports wagering information is not completely clear in terms of what is considered prohibited activity. The law was written well before the advent of the internet and does not specifically address electronic sports betting, though it is generally interpreted to include the activity. Another grey area is where the law may or may not exclude states where sports gambling is legal.

The draft bill would amend 18 U.S.C. 1084 to allow interstate wagering compacts between states and Indian tribes. This way, one state could legally accept wagers from bettors in a different state with federal approval. There are also specific provisions detailing the transmission of electronic data.

Other Key Points In The Bill

The 37-page draft bill is comprehensive and would turn the newly established legal sports betting industry upside down.

In the month prior to the Supreme Court ruling on PASPA, the MLB and other pro leagues began actively lobbying for their own model sports betting legislation. Amongst several of their demands were integrity fees and the use of official league data.

While the new bill does not list any specific fees, it does require that state sportsbooks use data furnished by sports leagues in compiling their odds and wagering outcomes – data for which they would have to pay leagues to obtain. This would be a major win for league commissioners, as none of the eight states with legal sports betting have the mandate in their own laws.

The draft bill would also establish the National Sports Wagering Clearinghouse, a nonprofit that would collect real-time wagering data for the purpose of identifying any suspicious gambling behaviors. Sports betting operators would have to provide their information as outlined by the clearinghouse.

Currently, there is a .25% federal excise tax on sports gambling that goes directly into the general budget. Under the new bill, a portion of the tax would be paid into a sports wagering fund that would assist with enforcement, treatment programs, and other industry initiatives.

So Who’s Behind The New Sports Betting Bill?

The untitled discussion draft was reportedly put forth by the office of Sen. Orrin Hatch, who was one of the original co-sponsors of the Professional and Amateur Sports Protection Act of 1992 (PASPA). Shortly after the federal ban on sports betting was lifted, Hatch delivered a speech to Congress and announced that he would be proposing legislation.

“As states move to legalize sports wagering, we must seize the opportunity to put in place world-class measures to protect the integrity of our sporting events and the sports betting market,” stated Hatch.

“To that end, an important part of the legislation I will be proposing is improvements to monitoring and enforcement that will benefit all of the stakeholders – sports books, regulators, governing bodies, and consumers.”

Now that the bill has been brought forth and is being openly discussed, only time will tell if the proposed legislation is able to push forward in a time when legal USA online sportsbooks are flourishing.

PASPA was initially backed by the major sports leagues and courts that repeatedly ruled adversely to New Jersey’s pleas to expand legal sports gambling. While Hatch has garnered the support of several lawmakers over the years, his anticipated retirement leaves doubts as to how much influence he will have getting the controversial law passed.

The federal government’s newfound hopes of controlling the US sports industry may fall to the same fate as their previous piece of legislation.