HomePublicationsNewsletter ArchiveVolume 24Issue 7SPORTS WAGERING LEGAL AND LEGISLATIVE UPDATE

Christie v. National Collegiate Athletic Association (“NCAA”), the case challenging the constitutionality of the federal Professional and Amateur Sports Protection Act of 1982 (“PASPA”), is currently pending at the United States Supreme Court.  Christopher Christie, Governor of the State of New Jersey, asserts that PASPA effectively requires states to maintain sports wagering prohibitions, thus violating the anti-commandeering doctrine of the Tenth Amendment. The NCAA argues that commandeering only occurs when Congress requires “affirmative action” from states and maintains that PASPA does not require such action; rather, it merely prohibits states from explicitly authorizing and sponsoring sports gambling.  Briefing and oral argument has occurred and a decision from the Supreme Court is expected anytime between now and the end of June.

Many are already preparing for a potential repeal of the federal ban. NBA commissioner Adam Silver has presented his version of a potential framework for legalized sports wagering, which includes a 1 percent “integrity fee,” as he called it, to be paid to the NBA as compensation for the extra resources that must be spent to ensure that the game’s integrity is maintained. He had this to say:

“We will spend this year roughly $7.5 billion creating this content, creating these games… What will come with legalized sports betting are enormous additional expenses for the league that go directly to integrity.”

However, Silver went on to alternatively refer to the fee as a “royalty fee” linked to “intellectual property.” The idea that the fee is deserved, regardless of what it is to be used for, will be difficult for lawmakers to accept. West Virginia has already approved a bill (Senate Bill 415) that rejects the fee. Silver has said that he is willing to work with officials to find a “fair” compromise.

The 1 percent fee would effectively amount to a 20 percent reduction to state revenue, as typical state revenue from this type of activity is around 5 percent of the total amount bet. The fee, if applied to the five main sports leagues (NBA, NFL, MLB, NHL and NCAA), would effectively eliminate all state revenue and leave nothing to be collected. The NBA and the MLB are working together to ensure that any legislation includes this league fee, lobbying jointly (and often using the same lobbyists) in half of the states currently seeking legalized sports wagering.  To date, the other leagues have not hired lobbyists in states considering legalized sports wagering.

Indiana and Illinois are the only states with pending legislation that include the “integrity fee” for the leagues. Indiana H.B. 1325 was drafted with the help of both the NBA and MLB, while Illinois Sports Betting Bill (SB 3432) is sponsored by Napoleon Harris, a former NFL player and current senator for the 15thdistrict of Illinois. In addition, Illinois has also introduced a bill that gives a state agency the task of creating rules, regulations, and licensing for sports wagering, as well as a bill that would create the “Division of Sports Wagering within the Illinois Gaming Board to issue licenses under the Act” (S.B. 2478 and H.B. 5186, respectively). The state also introduced legislation (S.B. 3125) that would allow the Illinois Racing Board to authorize organization licensees and inter-track wagering location licensees to participate in sports wagering.

Iowa and West Virginia also have pending sports wagering legislation, but neither state chose to include the 1 percent “integrity fee.” In Iowa, H.S.B. 592 would permit mobile sports betting and allow casinos to accept wagers on sporting events. Similarly, West Virginia’s S.B. 415 would also allow sports wagering in casinos and on mobile apps. The leagues, whose fees are left out of the bills, feel that the legislation is insufficient. In a press release, the MLB had this to say about WV’s S.B. 415:

“Any sports betting legislation must include clear, robust and enforceable protections to mitigate any possible risk to our game… The law quickly advancing in West Virginia unfortunately falls short of meeting those critical standards.”

West Virginia recently passed, by unanimous vote, an amendment to send revenue from sports wagering to the Public Employees Insurance Agency’s stabilization fund. The amendment, which is an addition to S.B. 415, will only go into effect if Congress authorizes sports wagering in its upcoming decision.

Bucking the trend of states that are looking to cash in on sports wagering, Mississippi is fighting to maintain the ban. State Representative Roun McNeal has backed a bill that would, upon a Supreme Court decision to legalize sports wagering, ban all sports betting in the state of Mississippi. Although Mississippi’s position puts the state in the minority on the issue, McNeal and other state officials (as well as athletic organizations) are trying to slow the progression of legal sports wagering.


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