SCOTUS Kicks PASPA to the Curb in 2018: How It Played Out and What’s in Store for 2019
On May 14, 2018, the Supreme Court of the United States (SCOTUS) issued a ruling that struck down the Professional and Amateur Sports Protection Act (PASPA), the 1992 federal law that had prevented states from regulating sports betting if they hadn’t already done so.
The 6-3 decision was arguably the biggest story in the gaming industry this year, as it opened the door for states to decide for themselves whether they wanted sportsbooks to proliferate within their borders.
As 2018 draws to a close, eight US states — New Jersey (the state that precipitated the momentous SCOTUS ruling), Nevada (the only state that already had full-blown sports books prior to the change), Pennsylvania, West Virginia, Mississippi, Rhode Island, Delaware, and New Mexico — have already taken advantage of this opportunity, and more are considering authorizing sports betting in the near future.
Pro or con, the PASPA repeal irrefutably changed the face of the American sports betting landscape forever.
Anti-Commandeering Statute Wins Justices
The case, known as Murphy v. NCAA, came about after New Jersey attempted to get around PASPA by simply repealing its existing laws that banned sports betting, rather than pass an express authorization of the practice. The four major American sports leagues and the NCAA sued to stop New Jersey’s racetracks and casinos from opening sportsbooks.
That sent the issue to the courts, where New Jersey argued that PASPA violated the anti-commandeering doctrine: essentially, the idea that because the 10th Amendment reserves all powers not expressly given to the federal government to the states, the federal government cannot prohibit state governments from passing legislation.
While that argument failed to win in District Court or the Third Circuit Appeals Court, it proved persuasive in front of the Supreme Court. Seven of the nine justices agreed that PASPA commandeered state legislatures, and six felt that this was enough to strike down the entirety of the law.
Congress can regulate sports gambling directly, but if it elects not to do so, each State is free to act on its own,” Supreme Court Justice Samuel Alito wrote as the author of the majority opinion.
States Race to Open Books
While many expected New Jersey to be the first to market — given that the Garden State had initiated the case — Delaware was able to beat its northern neighbor to the punch.
This was largely because Delaware was one of the few states that had some sports betting regulations on the books before PASPA, and had been using those existing laws to offer parlay betting on NFL games for several years.
Delaware’s three racetracks opened their full sportsbooks on June 5, with two venues in New Jersey — Monmouth Park and the Borgata casino in Atlantic City — kickstarting the industry on June 14. By September, they had been joined by Mississippi and West Virginia, with Pennsylvania coming up behind.
By August, it was clear that sports betting would provide a big boost for the gaming industry in many states.
With the introduction of online and mobile wagering, New Jersey sportsbooks have already earned more than $73 million in revenue on $928 million in total handle through November.
In 2019 and beyond, it’s likely that more states will consider and pass regulations that allow their casinos and racetracks to open sportsbooks. On Election Day, Arkansas voters approved a constitutional amendment that allows for sports betting at casinos, while a 2013 state constitutional amendment already allows for sports betting at New York casinos, though not until regulators provide guidelines for the industry.
Congress could also potentially step in, as the SCOTUS ruling does not prevent the federal government from crafting new regulations to provide oversight to the sports betting industry.
While there’s little appetite for anything that resembles PASPA, several lawmakers have suggested they would like to see a national framework for sports betting. The most noteworthy proposal has come from retiring Senator Orrin Hatch (R-Utah), who released draft legislation in December that would require states to apply for approval from the US attorney general before they could implement new sports betting laws and force sportsbooks to use official league data through at least 2023.
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