How Are Sports Leagues and Industry Stakeholders Reacting to PASPA Repeal?

PASPA Repeal - Betting Approved

With the release of a 6-3 decision on May 14, the United States Supreme Court struck down the federal sports betting ban known as PASPA.

Short for the Professional and Amateur Sports Protection Act, PASPA was passed in 1992 at the behest of former Senator Bill Bradley – who contended that legal betting represented an existential threat to the integrity of sports.

It was the law of the land for 26 years, limiting legal sportsbooks to the state of Nevada, while prohibiting them everywhere else.

In 2011, New Jersey decided to join Nevada – like it once did with casino gaming in the 1970s – by legalizing and regulating sports wagers. Voters turned out to support a ballot measure with a 66 percent margin, and one year later, lawmakers followed up with the Sports Wagering Act of 2012.

Unfortunately for bettors and operators, the effort soon hit a roadblock when the National Collegiate Athletic Association (NCAA) forged an alliance with the National Football League (NFL), Major League Baseball (MLB), the National Basketball Association (NBA), and the National Hockey League (NHL).

Together, the five sports leagues filed suit against New Jersey and then Governor Chris Christie, contending that the Sports Wagering Act violated PASPA.

The resulting legal battle worked its way through the lower courts, with New Jersey losing out each time. Finally, the Third Circuit Court of Appeals ruled against the state, declaring that the Sports Wagering Act’s impetus to regulate the activity was indeed illegal under PASPA.

That ruling led legislators in the Garden State to take a different approach, and they passed a second Sports Wagering Act in 2014. This bill didn’t involve state regulation of sports betting, but simply repealed existing laws on the books making betting a crime. Police and prosecutors were directed to decriminalize sports betting, prompting casinos and racetracks to gear up for a new era of legal wagering in New Jersey.

The five leagues weren’t done yet, however, and their lawsuit was revived to block the state’s second attempt. Once again, lower courts sided with the leagues, but after another Third Circuit ruling went against him, Christie appealed to the Supreme Court.

In June of last year, the Court decided to hear the case, and oral arguments took place in December. At the time, most observers who heard the arguments believed a majority of Justices were sympathetic to the state’s argument, which hinged on the 10th Amendment:

“The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.”

According to New Jersey, PASPA represented a clear violation of the 10th Amendment’s anticommandeering doctrine, which prevents the federal government from intruding on a state’s right to self-governance.

After months of deliberation, the Court’s landmark 6-3 decision was handed down in May, effectively consigning PASPA to history’s scrapheap. By ruling PASPA to be unconstitutional vis a vis the 10th Amendment, the Court rendered a powerful rebuke while repealing PASPA, as captured by the following passage from Justice Samuel Alito’s contemptuous majority opinion:

“The PASPA provision at issue here – prohibiting state authorization of sports gambling – violates the anticommandeering rule.
That provision unequivocally dictates what a state legislature may and may not do. And this is true under either our interpretation or that advocated by respondents and the United States.
In either event, state legislatures are put under the direct control of Congress. It is as if federal officers were installed in state legislative chambers and were armed with the authority to stop legislators from voting on any offending proposals.
A more direct affront to state sovereignty is not easy to imagine.”

With PASPA now repealed, individual states are free to join New Jersey in crafting their own sports betting laws and regulations. States don’t have to participate, of course, and those that prefer to leave the status quo in place can certainly do so.

But with the PASPA shackles now removed – and at least five states already passing legislation to kickstart sports betting regulation – bettors, sports leagues, and gaming industry stakeholders are gearing up for a new era in American gambling.

To capture their prevailing sentiment, I’ve rounded up a diverse selection of official statements and other reactions to PASPA’s demise. You can take a tour of those below, beginning with the ostensible loser of the case known alternatively as Christie v. NCAA and Murphy v. NCAA (after New Jersey’s newly elected Governor Phil Murphy).

The NCAA Tucks Its Tail

The court case that sparked PASPA repeal had the NCAA listed first and foremost, and for good reason.

The college sports organization has long opposed any efforts to bring sports betting into the mainstream. As the most vocal critic of New Jersey’s efforts, the NCAA led the charge in suing the state, claiming legal sportsbooks would represent a direct threat to the integrity of college sports.

Curiously, the NCAA’s own sordid history with sports betting scandals – including the Arizona State University (ASU) point shaving conspiracy in 1994 – stemmed directly from the underground market necessitated by PASPA’s prohibition. Despite the wealth of evidence demonstrating legal and regulated sports betting to be safer than underground wagering, the NCAA is sticking to its guns on this contentious issue.

Donald Remy, the chief legal officer for the NCAA, issued a statement which seems to dig the organization’s heels in even further:

“Today the United States Supreme Court issued a clear decision that PASPA is unconstitutional, reversing the lower courts that held otherwise.
While we are still reviewing the decision to understand the overall implications to college sports, we will adjust sports wagering and championship policies to align with the direction from the court.”

Rather than embrace the new post-PASPA era – as many of its fellow claimants from the court case have in the intervening years – the NCAA still isn’t sold on the legitimacy of sports betting.

Even so, the organization has already announced a change to its longstanding policy prohibiting tournaments and championships to be hosted in states where sportsbooks operate. With 20 Division 1 championship events scheduled to be played in Pennsylvania – a state which has already legalized sports betting pending PASPA repeal – the NCAA had little choice but to nullify the rule.

NCAA President Mark Emmert also issued a statement addressing the proverbial elephant in the room:

“Our highest priorities in any conversation about sports wagering are maintaining the integrity of competition and student-athlete well-being.
Sports wagering can adversely impact student-athletes and undermine the games they play. We are committed to ensuring that laws and regulations promote a safe and fair environment for the nearly half a million students who play college athletics.
While we recognize the critical role of state governments, strong federal standards are necessary to safeguard the integrity of college sports and the athletes who play these games at all levels.”

The distinction between “federal standards” and state authorized laws is crucial, as the NCAA is echoing other leagues in calling on Congress to pass a nationwide statute.

The NBA is Ready to Play Ball

Back when PASPA was being debated on Capitol Hill, David Stern – commissioner of the NBA at the time – was a vocal supporter of a sports betting ban.

Stern’s concern appeared to be prescient some 15 years down the road, when NBA referee Tim Donaghy found himself under investigation by federal authorities in 2007.

The charges against Donaghy? You guessed it – conspiring to fix games while benefiting directly as an avid bettor.

That scandal rocked the NBA to its very core, joining Pete Rose’s banishment from baseball in 1989 and the 1919 “Black Sox” fixing the World Series in the annals of sporting ignominy. Stern eventually retired from his post, handing the reins to his deputy commissioner Adam Silver in 2014.

Shortly thereafter, Silver rocked the NBA’s world once again when he penned an op-ed in the New York Times. In the op-ed, Silver called for common sense legislation to regulate sports betting – which generated $150 billion in illegal wagering every year despite PASPA being on the books:

“I believe that sports betting should be brought out of the underground and into the sunlight where it can be appropriately monitored and regulated.”

Now that Silver’s premonition has been realized via PASPA repeal, he issued a statement celebrating the development:

“Today’s decision by the Supreme Court opens the door for states to pass laws legalizing sports betting.
We remain in favor of a federal framework that would provide a uniform approach to sports gambling in states that choose to permit it, but we will remain active in ongoing discussions with state legislatures.
Regardless of the particulars of any future sports betting law, the integrity of our game remains our highest priority.”

Like the NCAA, however, Silver is calling for a “federal framework” to regulate the industry – which is coded language for a system wherein the leagues get a cut of revenue generated from their games.

This divide between the federal and state approach will likely become the latest front on the sports betting battlefield. But as has been the case during Silver’s reign, the NBA seems to be ahead of the curve.

MLB Takes Baby Steps

As alluded to above, no other sports league has experienced the downside of illegal sports betting quite like MLB.

Pete Rose spent entire seasons – both on the field as the “Hit King” and behind the bench as manager of the Cincinnati Reds – betting on games, even those involving his own team. His addiction wound up forcing Rose to be banned from baseball for life in 1989, a fate preordained 70 years earlier.

When members of the 1919 Chicago White Sox conspired to throw the World Series, on behalf of criminal mastermind and mobster Arnold Rothstein, the “Black Sox” scandal cast a lasting cloud over the game.

Between Rose and the Black Sox, baseball has every reason to remain adamantly opposed to sports betting – but only the underground variety.

Last year, while New Jersey was still duking it out with the leagues in court, MLB Commissioner Rob Manfred outlined the league’s new outlook on regulated wagering:

“(It) can be a form of fan engagement, it can fuel the popularity of a sport.”
There is this buzz out there in terms of people feeling that there may be an opportunity here for additional legalized sports betting.
We are reexamining our stance on gambling. It’s a conversation that’s ongoing with the owners.”

On the day PASPA was officially struck down, Manfred and MLB issued the following statement:

“Today’s decision by the United States Supreme Court will have profound effects on Major League Baseball.
As each state considers whether to allow sports betting, we will continue to seek the proper protections for our sport, in partnership with other professional sports. Our most important priority is protecting the integrity of our games.
We will continue to support legislation that creates air-tight coordination and partnerships between the state, the casino operators and the governing bodies in sports toward that goal.”

Manfred has also made waves of late by challenging Governor Jim Justice of West Virginia to veto a sports betting bill there. According to Manfred, the bill – which wound up passing, but is still under examination for possible amendment – left the leagues out in the cold when it comes to a cut of wagering revenue.

The NHL Warms to Regulated Betting

In 2016, the NHL announced a truly transformative change to America’s sporting status quo.

Please Note:

For the first time ever, one of North America’s four major professional leagues would place a franchise in Las Vegas. The decision was revolutionary in that it bucked the prevailing theory that pro sports couldn’t be sustained in Sin City – a gambling hotbed home to hundreds of sportsbooks and millions of bettors annually.

The Vegas Golden Knights experienced unparalleled success in their expansion year, and in fact, they’re still competing in the Stanley Cup Playoffs at the time of this writing. That performance on the ice might just be a symbol of the NHL’s grand gamble on Las Vegas, which has been pulled off without a hitch over the last year.

No betting scandals to speak of. No players caught fixing games. None of the boogeymen traditionally trotted out to block Las Vegas from pro leagues have appeared.

As a result, NHL Commissioner Gary Bettman issued a statement addressing the new era of legal sports betting in America:

“The Supreme Court’s decision today paves the way to an entirely different landscape – one in which we have not previously operated.
We will review our current practices and policies and decide whether adjustments are needed, and if so, what those adjustments will look like.
It’s important to emphasize that the Supreme Court’s decision has no immediate impact on existing League rules relating to sports wagering, and particularly, wagering involving NHL games.
So, while changes may be considered in the future, today’s decision does not directly impact the operation of the League or any of our Clubs in the short term.”

The NFL Punts on Embracing Change

Even while other Commissioners were coming around in the idea, Roger Goodell of the NFL remained staunchly opposed to legalization.

He consistently criticized efforts to repeal PASPA, framing the issue as always in the idea of “protecting the shield” – even as he led the charge to relocate the Oakland Raiders to Las Vegas. That move is still pending, but a 31-1 vote by league owners showed that pro football could be compatible with places that offer sports wagering.

So it was no surprise when Goodell and the NFL issued a lukewarm statement on PASPA repeal, one which even referenced the “harms” caused by betting:

“The NFL’s long-standing and unwavering commitment to protecting the integrity of our game remains absolute.
Congress has long-recognized the potential harms posed by sports betting to the integrity of sporting contests and the public confidence in these events.
Given that history, we intend to call on Congress again, this time to enact a core regulatory framework for legalized sports betting.”

Monmouth Park Racetrack in New Jersey Looks to Take the Lead

Monmouth Park Racetrack in Oceanport, New Jersey has been hard at work over the last year or so, partnering with U.K.-based bookmaking giant William Hill to build a sportsbook facility onsite.

That project was undertaken based on the assumption that PASPA would fall, and now that it has, Monmouth Park is chomping at the bit.

Dennis Drazin-who serves as chairman and chief executivefor Darby Development, operator of Monmouth Park– released a bullish statement on the day PASPA was repealed:

“This is the culmination of the hard work and dedication of a large group of individuals, all of whom contributed to today’s victory and will undoubtedly contribute to our future success.
We started this fight back in 2012 and are grateful that the Supreme Court has recognized that we’ve been right all along.
We can now shift our focus on commencing sports betting, which will be off and running at Monmouth Park as soon as possible.”

And while Drazin’s stated goal of a Memorial Day launch has hit a hurdle, New Jersey is expected to finalize its sports betting regulations by mid-June. The moment they do so, expect Monmouth Park to open its doors and welcome wagers of all variety – from horses to hoops.

William Hill Poised to Expand American Empire

William Hill is bookmaker that has been doing business since 1934, with hundreds of brick and mortar bet shops throughout the U.K.

Today, the company is also the largest provider of sportsbook services within Nevada, operating a network of more than a hundred full-fledged books and small-scale kiosks.

Now that PASPA’s downfall has opened up the New Jersey marketplace – and likely many more in the coming months – the company’s William Hill US division is primed for a power play.

Joe Asher – who serves as chief executive officerfor William Hill US -released a statement outlining the company’s post-PASPA plans:

“We are excited, not just for ourselves, but for sports fans across the country.
We’ve been working towards this day for a long time and take great satisfaction in the Supreme Court’s decision. Just as we have with our 100+ locations in Nevada, we look forward to working to make legal and regulated sports betting a big winner for consumers, state governments and all interested parties across the country.
If we do this the right way, the only losers will be the illegal bookies that have been operating a massive black market.”

The AGA Takes a Victory Lap

One of the most steadfast supporters of sports betting legalization has always been the American Gaming Association (AGA), the lobby group representing casino operators and gaming industry stakeholders.

Every year, the AGA makes mainstream media headlines by pointing out the sheer absurdity of prohibition. During the most recent NCAA Men’s Basketball National Championship Tournament, the AGA estimated that $10 billion would be wagered on tourney brackets and games – but 97 percent of those bets would be placed through underground bookies and offshore online sportsbooks.

The AGA also tabs America’s annual sports betting activity at an astounding $150 billion, but only a tiny fraction is taxed by local jurisdictions like Nevada.

Thus, it was no surprise to see AGA president and chief executive Geoff Freeman praising the Court for upholding the right to bet on sports in a safe, secure, and regulated marketplace:

“Today’s decision is a victory for the millions of Americans who seek to bet on sports in a safe and regulated manner.
Today’s ruling makes it possible for states and sovereign tribal nations to give Americans what they want: an open, transparent, and responsible market for sports betting.”

Conclusion

It’s not every day – or every decade for that matter – that the Supreme Court issues a landmark decision affecting millions of Americans. Repealing PASPA was one of those crucial rulings, and its reverberations will be felt long into the future. For the most part, professional leagues have accepted the new normal, while the NCAA and NFL continue to bury their head in the sand. And as for operators and bookmakers, the sky truly is the limit as the post-PASPA age begins in earnest.

Patrick Carter / Author