Operators would have to pay leagues for data through 2022
A draft of a bill written by retiring U.S. Senator Orrin Hatch of Utah would require states to have their plans to legalize sports betting approved by the Office of the U.S. Attorney General, and would require sports betting operators to pay sport leagues for data through 2022.
Hatch was one of the co-sponsors of the 1992 Professional and Amateur Sports Protection Act, which was struck down by the U.S. Supreme Court in May.
The bill would amend the federal Wire Act to allow for dissemination of sports betting information and data across state lines. It also would establish a “National Sports Wagering Clearinghouse,” intended to collect data in real-time to detect suspicious transactions.
First comments from gaming law experts indicate that the new bill would encounter the same constitutional problems the Supreme Court justices used to strike down PASPA. Mark Edelman, a law professor at Baruch College in New York, commented in a Twitter tweet that “giving the federal government power to approve or disapprove states’ sports gambling laws could give rise to the exact same commandeering problem” that ended in PASPA’s demise.
The American Gaming Association, which as consistently argued against the need for any federal oversight of sports betting, was quick to comment on the proposed law.
“Since the Supreme Court’s ruling in May, the American Gaming Association has consistently maintained that federal legislation regarding sports betting is not necessary,” said Chris Cylke, AGA’s vice president of government relations, according to the sportshandle.com news site. “That underlying position remains unchanged. At the same time, we remain committed to maintaining an open and constructive dialogue with policymakers considering sports betting legislation at any level of government.”
The draft does address the argument by the AGA that federal regulation is not needed. “All forms of gaming have historically been regulated at the state level, and legal sports wagering markets are and should be established and regulated principally by the states, but sports wagering affects interstate commerce more than most other forms of gaming,” the bill states in the “Findings” section.
“While each state may decide whether to permit sports wagering and how to regulate sports wagering, there is an important role for Congress in setting minimum standards for sports wagering that affects interstate commerce and providing law enforcement with additional authority to target the illegal sports wagering market and bad actors in the growing legal sports wagering market.”
Under the bill, states would submit their sports wagering plans to the U.S. attorney general, whose office would provide a three-year approval, or deny the application within 180 days. The bill identifies certain criteria a state’s program must meet, such as restricting in-person sports wagering to only licensed gaming facilities. Any “material change” to a state’s sporting betting law also would require approval by the office.
From the bill’s enactment through 2022, operators would have to use data supplied by the sports leagues or their approved partners to determine the outcome of bets. Starting in 2023, operators can opt to partner with data companies found to provide “data of substantially similar speed, accuracy, and consistency” compared to the league’s data. But such partners would have to be “expressly authorized to provide such data to sports wagering operators.”
While the NBA last week announced an agreement with Genius Sports and Sportradar to provide in-game data for sports betting programs, no current state law currently mandates that sports books purchase data in connection with sports wagers from any particular provider.
According to the draft bill, states and Indian tribes would be permitted to enter into interstate sports betting compacts, again subject to federal approval, with a slight change in the language of the Wire Act.
The “clearinghouse” would be a nonprofit organization charged with operating a national repository of anonymous data that would have to be provided by sports betting operators to safeguard against illegal betting by monitoring any suspicious betting patterns.
The bill would also empower the Attorney General to bring an action against “a registrant of a nondomestic domain name used by an internet site dedicated to unlicensed sports wagering” or “an owner or operator of an internet site dedicated to unlicensed sports wagering accessed through a non-domestic domain name.”
Anyone found to have made an illegal wager is subject to a civil penalty of “not more than the greater of $10,000 or three times the amount of the applicable sports wager.”
The bill also has a provision that would exclude prior bad actors from licensing, noting that any organization that took an illegal wager “on or after October 13, 2006”—the date President George W. Bush signed the Unlawful Internet Gambling Enforcement Act—would be denied licensing.
As noted in the sportshandle.com report, much of the bill is filled with requirements that sports betting states already maintain, such as prohibiting athletes and others closely involved with the sporting events from betting and maintaining self-exclusion lists to battle problem gambling.
Under the bill, the federal excise tax on legal sports betting that now goes to the general budget would be dedicated to enforcement of sports betting laws and to gambling addiction treatment programs.
The bill does not address any grandfathering provisions—what to do about the growing number of states—eight, so far—that already have implemented sports betting laws.
