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You Can Bet On It
The Supreme Court ruled on May 14, by a 6-3 margin, that the 1992 Professional and Amateur Sports Protection Act is unconstitutional, opening the door for states to legalize sports betting.
Nevada has long been the standard bearer for sports betting in the United States. In fact, it’s the only state in the union in which single-game sports betting is legal. But other states—particularly New Jersey—have recently expressed a serious desire to get in on the action.
Given the amount of revenue involved, it’s no surprise that state agencies have been pushing the federal government—so far, to no avail—to allow sports betting to leak beyond Nevada’s borders. What is a surprise? That the U.S. Supreme Court has decided to jump into the game by agreeing to hear an appeal from the state of New Jersey, whose request to overturn the federal sports-betting ban was denied in August 2016 by the U.S. Court of Appeals for the Third Circuit.
“I think it’s going to be interesting, because I wasn’t expecting the case would be taken, nor were a lot of people expecting it,” says Jennifer Roberts, adjunct professor at the UNLV William S. Boyd School of Law.
Roberts has practiced gaming law for 14 years and also serves as the associate director of the International Center for Gaming Regulation, housed on the UNLV campus. So she has a keen interest in how New Jersey’s case is received by the nation’s top court, which will hear arguments in the coming months and likely render a decision by spring 2018.
If the High Court rules in New Jersey’s favor, Nevada for the first time would have domestic competition in the legalized sports betting market. A bad thing for the Silver State? Not according to Roberts, who believes New Jersey (and other states) would come knocking on the doors of Nevada casinos asking for operations help.
“I’d expect sportsbook operators here would help run or operate or at a minimum advise New Jersey operators,” Roberts says. “You’re probably going to have a lot of operators here [also doing business] in New Jersey.”
That could include companies such as MGM Resorts International or, as Roberts noted, an independent operator such as William Hill US.
David G. Schwartz, longtime director of UNLV’s Center for Gaming Research, agrees that a New Jersey victory in the Supreme Court would be a net positive for Nevada companies. And that’s even if Nevada’s betting handle took a bit of a hit.
“There’s a possibility that Las Vegas will lose some appeal as a destination for big sports events like the Super Bowl and March Madness, but a broader spread of sports betting will likely increase the total customer pool,” Schwartz says. “In addition, Nevada-based companies will be well-placed to start offering sports betting in states like New Jersey.”
Not surprisingly, there are entities lined up on both sides of this issue. Among the more dominant forces rooting against the expansion of sports betting are major sports organizations such as the National Football League and the National Collegiate Athletic Association. But the question becomes: How much sway should such organizations have in this debate?
“The arguments are primarily based upon a state’s-rights issue—whether the federal government can regulate that New Jersey have a criminal law prohibiting sports wagering,” Roberts says. “What I see as favorable is that sports betting is a traditional state’s-rights issue, because gambling is reserved to the states under the 10th Amendment.”
Which is why a Supreme Court victory for New Jersey would essentially be a Supreme Court victory for every state.
“I think it is very likely,” Schwartz says when asked if other states would fall in line behind New Jersey and legalize sports betting if given the federal green light. “There is not a state in the union that doesn’t need more revenue, and sports betting will be seen as a way to raise more revenue without raising taxes.
“Keep in mind, though, that in Nevada, sports betting is a relatively small market—about 2 percent of the total gaming win, or $200 million a year. The tax receipts are in the neighborhood of $14 million. Needless to say, sports betting isn’t going to be balancing the budget anywhere anytime soon.”
Indeed, but the bigger victory could be breaking up sports betting’s black market. Total handle at Nevada sportsbooks in 2016 was a record $4.5 billion. However, according to the American Gaming Association, illegal sports betting in the U.S. massively dwarfs that number, with estimates ranging from $150 billion to as much as $400 billion annually.
Permitting a legal alternative outside of Nevada, Roberts says, is a reasonable and necessary solution. She says jurisdictions that already have regulated gaming would be the most likely to move forward with sports betting, including such states as Mississippi, Pennsylvania and Michigan. Native American tribes that offer other forms of casino gambling might look to get on board, as well.
“Regulated sports betting is a much better system than illegal sports wagering,” Roberts says. “It’s better for the customers, providing protection when they make a wager, while also preventing criminal elements. And it addresses problem gambling. There are a lot of built-in protections you don’t have in unregulated gambling.”
Widespread legalized sports wagering would also positively impact UNLV Law by adding to the relevance of the school’s pioneering Master of Laws (LL.M.) program in Gaming Law and Regulation—the only LL.M. program of its kind, which this year graduated its second class. Because Boyd offers more gaming courses than any other law school in the country, graduates of and students in the Gaming Law program gain unique expertise. And that expertise will be in greater demand if legalized sports betting spreads, which is why Gaming Law students are closely following the New Jersey case.
“Sports betting is obviously a big part of the gaming economy in Nevada,” says Brian Wall, UNLV Law’s director of admissions and financial aid. “But a number of our students are working in New Jersey, [so they] would obviously benefit greatly, and we have students in other states that don’t have legalized gambling where that opportunity could open.
“Our students are prepared for whatever kind of landscape there is, depending on what the changes to sports betting are.”
Which brings things full circle back to the question of the day: Will the Supreme Court defer to state’s rights, side with New Jersey and provide the impetus to broaden sports betting in America? “It rests upon those unique constitutional issues,” Roberts says. “I’m not an expert in those areas, so what will happen, I couldn’t speculate.”
She may not care to offer a prediction, but Roberts isn’t afraid to say what side she’s cheering for: New Jersey’s. Because if sports betting does expand beyond Nevada, it might then force Congress to look into repealing the Professional and Amateur Sports Protection Act of 1992 [PAPSA], a mandate that is ostensibly propping up sports betting’s black market.
“I think PASPA is an antiquated, unnecessary federal law,” Roberts says. “You’re losing out when sports betting is already happening [illegally]—you’re losing out on revenue and employment, and having those regulatory protections.”
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