SCOTUS Declares 1992 Sports Betting Ban Unconstitutional
The Supreme Court of the United States has just overturned a law that prevented sports betting in 46 of the fifty states, and made it all but impossible to legally bet on a specific game anywhere other than Nevada.
Sports betting is a huge underground industry in the United States. Sports betting is an underground – and therefore untaxed – industry for just one reason. That reason was a 1992 federal law that banned sports betting everywhere in the United States…except Nevada. The inexplicable Professional and Amateur Sports Protection Act (PASPA) also allowed Oregon, Delaware and Montana to continue running lotteries based on the results of sporting events, but Nevada was the only place in the U.S. where a sports fan could legally place a bet on a specific game.
PASPA was always obviously unconstitutional because it allowed citizens (and visitors) of Nevada to place bets that citizens of the other forty-nine states were not allowed to place, unless they placed those bets illegally with organized crime outlets or by participating in sports betting pools at the workplace. The law went unchallenged until 2012, when major sporting organizations got together to challenge the law by suing New Jersey for the right to open up sports betting in that state…after supporting the bill for the previous 20 years as necessary and proper to prevent betting scandals from invading professional and amateur sports.
The change is undoubtedly due to recent declines in both attendance and viewership of sporting events, factors that are cutting into the revenues of both professional and amateur sports. The plaintiffs, which included NCAA, NFL, NBA, NHL and Major League Baseball, contended that the federal law unfairly discriminated against sports fans in 49 states and the District of Columbia, but the real reason for the change of heart in the sports associations was clearly money.
The sports betting handle (the total amount wagered) in the state of Nevada hit $4.7 billion in 2017 but that’s a drop in the bucket compared to the $150 Billion that the American Gaming Association estimates is wagered illegally in the other 49 states each year. ESPN cited one research firm that believes sports betting will be available in up to 32 states within five years, with the states chomping at the bit to get bite of the tax revenues that will be earned from levies on the total handles in each states. A ten percent “sin tax” on sports betting wagers would generate at least $15 billion for cash strapped state legislatures. States would also be able to track – and tax – the winnings earned by sports fans who bet and win.
In many respects, sports betting is cleaner form of gambling because it is less prone to manipulation by organized crime elements, and because it incorporates a greater degree of skill over chance when knowledgeable fans bet on their sports knowledge. On the other hand, it also up the ante for criminal elements, who will try to hold onto their customers by offering better odds, faster payouts, and a tax-free environment for their bettors.
Proof of this assertion is that it is still possible to “play the numbers” in any major American city, even though 44 states now have official lotteries that compete against the illegal bookmakers.
With the advent of legally sanctioned sports betting, we may see more point-shaving scandals and other nefarious activities in both professional and amateur sports. However, those who hope to see Pete Rose get into the Baseball Hall of Fame should not hold their breaths. While the Supreme Court’s action will make sports betting legal, it is doubtful that Major League Baseball will condone players betting on – or against – their own teams.
In the meantime, the gold rush is on. States across the nation will be jumping into sports betting in a big way over the next few years.