Two new battlefronts have opened up in the federal government’s apparent determination to assert control from Washington over a burgeoning national market in legal sports betting.
In Congress, retiring Senator Orrin Hatch, a Utah Republican, has reached across the aisle to join with Senate Minority Leader Charles Schumer of New York in introducing a bill setting minimum standards for states legalizing sports betting and empowering the U.S. Attorney General’s Office to reject regulatory schemes that don’t measure up.
The “Sports Wagering Market Integrity Act of 2018” was immediately hailed by the National Football League and Major League Baseball as an important step in protecting their contests from the threat of gambling-related corruption amid an explosion of new state laws aimed at cashing in on a May ruling in the U.S. Supreme Court that nullified a decades-old federal ban on the industry. Seven states and the District of Columbia have already legalized sports betting in the months since the high court’s ruling, and several more have pre-filed authorizing measures for early 2019. Experts predict as many as 30 states will legalize in the next five years.
“The threats posed to the integrity of sporting contests cannot be confined within state borders,” said NFL executive Jocelyn Moore. “Without continued federal guidance and oversight, we are very concerned that sports leagues and state governments alone will not be able to fully protect the integrity of sporting contests and guard against the harms Congress has long recognized as being associated with sports betting.”
Major League Baseball concurred in a statement citing “a clear need for a set of consistent, nationwide integrity standards to protect the sports that millions of Americans love”.
Promptly condemning the bill as an “unprecedented and inappropriate expansion of federal involvement in the gaming industry,” the American Gaming Association, which represents the commercial casino industry in Washington, said, “This bill is the epitome of a solution in search of a problem.”
Sara Slane, the trade group’s senior vice president of public affairs, said the bill intrudes in areas that “can, and should, be decided by marketplace negotiations between private businesses and cooperative agreements among jurisdictions,” where “state and tribal regulators have decades of experience effectively overseeing gaming operations”.
The bill’s key provisions would allow online sports betting and betting on professional and college sports and the Olympics but not on other amateur sports. A non-profit National Sports Wagering Clearinghouse would be created to receive and share betting data and facilitate the monitoring of suspicious activities among operators, regulators, sports organizations and law enforcement. Finally, the bill would provide federal funding from betting taxes for programs to address problem gambling and would establish a nationwide self-exclusion list of admitted problem gamblers.
Significantly, the bill would not require bookmakers to pay royalties to sports leagues for their game data. But it does require the use of officially licensed league data at least until 2024𑁋a provision which the gaming industry, the NBA, MLB, the NHL and leaders in data service and security monitoring such as SportRadar have already anticipated with a series of high-level private-sector partnerships governing how sports organizations are paid for their data and how it gets distributed to operators.
Hatch said, “The legislation we’ve introduced today is the culmination of eight months of high-level meetings, discussions and negotiations and will serve as a placeholder for the next Congress should they decide to continue working to address these issues.”
Whether the bill has enough support to move forward in the incoming Congress remains to be seen. Schumer has vowed to push hard for it and noted that his co-sponsorship with Hatch indicates there is bipartisan support for regulation at the federal level.
“The time is now to establish a strong national integrity standard for sports betting that will protect consumers and the games themselves from corruption,” he said.
The second front extends beyond sports betting to include a possible ban on all forms of online gaming.
News reports say the U.S. Department of Justice is preparing to reverse a 2011 opinion from the department’s Office of Legal Counsel and declare that the Wire Act—passed more than 50 years ago but still the main federal law governing the transmission of betting information electronically—is not limited to prohibiting sports betting, as the OLC had ruled.
It was not known at press time exactly what the new opinion would say, nor when, or if, it would be promulgated.
The OLC issued its original opinion in response to requests from several states interested at the time in selling lottery tickets online within their borders. One of its effects, though, was to clear a legal path for interstate compacts among states looking to increase the size of the pools of online poker players available to them. Nevada, New Jersey and Delaware joined in such a market-sharing deal several years ago.
Former New Jersey Senator Ray Lesniak said the state’s congressional delegation should fight the move.
“One would expect that other states would stand up for their states’ rights, now that New Jersey has led the way, both with internet gaming and sports betting, and they can see how beneficial it is,” he told the website USBets. “Internet gaming was responsible for keeping the lights on in some casinos, and sports betting over the internet is the greatest revenue producer for our casinos, as well as the state of New Jersey. Meddling around with that would cause us grave concern.”
If the change moves ahead as reported it would mark “a titanic shift in the Department of Justice’s view of the Wire Act,” said John Holden, a professor at Oklahoma State University specializing in the Wire Act and issues related to sports betting.
“An opinion is guidance of the DOJ’s view of the scope of the statute, as opposed to a binding interpretation law, which would need to be passed by Congress.”
Casino tycoon and Republican mega-donor Sheldon Adelson has been pushing for years for just such an outright federal ban on all online gambling, so far unsuccessfully. It’s not known what influence, if any, he may be wielding on the Justice Department’s review, but Senator Lindsey Graham, the South Carolina Republican who sponsored Adelson’s proposed ban in the upper house, has used the recent departure of Attorney General Jeff Sessions to revive the federal conversation on web gambling. Republican Congressman Jim Sensenbrenner of Wisconsin, a proponent of federal regulation of sports betting, also recently sent a letter to the DOJ asking for guidance regarding the Wire Act.
“This is not good news for poker and online casinos,” said Holden.
