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All in: Legalized Sports Gambling

News Story

Faculty members from the Elisabeth Haub School of Law break down the recent Supreme Court ruling on sports betting.

On May 14, 2018, the Supreme Court struck down a 1992 federal law that prevented sports gambling from occurring in many states, thus paving the way for legalized sports gambling throughout the country. Within the past few weeks, both Delaware and New Jersey have joined Nevada as sports betting havens, with more states likely to follow. For this month’s PACEspectives, our professors break down the decision and examine what it might mean for both your state, and America at large.

Emily Waldman, JD
Professor of Law
Elisabeth Haub School of Law

The Supreme Court's decision in Murphy v. NCAA will have huge public policy effects, with numerous states poised to follow New Jersey's lead in legalizing sports gambling. (Can New York really be far behind?) But the decision also has important legal implications far beyond gambling. What happened here was that New Jersey wanted to change its state laws to allow gambling, but a Congressional statute prohibited that change. The Supreme Court ruled that just like Congress can't order states to pass laws, it also can't stop states from repealing or changing their existing laws. If Congress wants to regulate something (whether gambling or anything else), it has to do so directly...not by using the states to carry out that policy. This has major ramifications for how the federal government regulates other important issues like marijuana and immigration. 

Bennett Gershman, JD
Professor of Law
Elisabeth Haub School of Law

The Supreme Court’s recent decision in Murphy v. NCAA was a bombshell. By legalizing sports betting in the US, the Court opened a new and uncertain landscape for professional and college sports, the gambling culture, and enormous new revenue for depleted state coffers.

By striking down the federal sports act (Professional and Amateur Sports Protection Act) which barred states from legalizing sports gambling, the Court opened a floodgate of new streams of revenue for sports leagues and states. Estimates of wagering can potentially reach upwards of $288 billion, with revenue estimates as high as $20 billion. Twenty-two states are in the process of enacting laws to legalize and regulate sports betting. New Jersey did so a few weeks ago; New York’s legislature did not.

As the states begin to legislate, several key issues need to be considered. First, what will be the relationship between the betting establishments and the sports leagues?  How much money will professional sports leagues derive from the new wagering? How much control will they have? Since the leagues control their product, can they control the wagering? If not, can they make lucrative licensing deals and royalty agreements with the companies that operate the wagering business? Also, given their central place in the new legal world of sports betting, can the leagues charge a so-called “integrity fee” as a percentage of total wagers in order to ensure the honesty of the contest?

Also, where will the sports betting take place? Until now, wagering took place in Las Vegas and Atlantic City casinos, as well as the illegal underground. Now it is likely we will see wagering occur in sports bars, hotels, restaurants, and online.

For professional and amateur sports leagues, colleges and universities, and fans, perhaps the most pressing concern is how to ensure the integrity of the games. Will enough checks and guards be enacted to prevent the games from being compromised?         

Just in time for the World Cup, states which have legalized sports betting, and their sports fans, are cheering more loudly than ever. There are legal uncertainties and risks, but the rewards are high. Let the games begin.

James Fishman, PhD
Professor of Law
Elisabeth Haub School of Law

A Supreme Court Decision struck down a federal statute that allowed sports betting in Nevada and a few other states but banned it elsewhere. Financially pressed states are hoping that sports betting will increase tax revenues, help the struggling gambling industry, and create new jobs. Analyses of sports betting shows that such benefits may be fleeting. In Nevada, only two percent of gaming revenues come from sports betting. In other jurisdictions, which allow certain forms of gambling, sports betting may siphon off some existing gaming revenue. Job creation estimates tend to be optimistic.

The real danger is corruption of sporting activities. I’m not so much worried about professional sports, where safeguards are in place, nor at big time division one moneymaking sports such as football and basketball, where the athletes have professional dreams and there already standard betting lines, and a single player may not be able to guarantee a fix. The fixing may occur at lower levels such as division three.

Professional tennis offers a cautionary tale. In April, an independent task force concluded that professional tennis needed to reform to combat a “tsunami” of fixed matches at the sport’s lowest levels. A semi-finalist at this year’s French Open, one of the four “grand slam” tournaments, was suspended by the Italian tennis federation in 2016 for match fixing. The ban was reduced to 12 months by an independent tribunal. Then, the ban was overturned by the Italian Olympic Committee. Yet, there is common knowledge that some lower level tournament tennis matches are fixed.

Fixing a sporting event at the lower levels is not difficult as there is little outside scrutiny or interest. Professional gamblers, assured of winning if a game or match or race is fixed, may gravitate to lower level competitions: division III events in colleges, where financially pressed students may succumb to the lure of needed money and fix a game. It’s easy. The star basketball player, who averages eighteen points a game, misses most of his shots or calls in sick. The soccer striker, who leads the team, pulls up supposedly lame. The tennis player or track star has an “off night.”

The Supreme Court decision stated that states could ban sports betting and “Congress can regulate sports gambling directly, but if it elects not to do so, each state is free to act on its own.” Congress is hopeless, but perhaps states could legislate that there be no betting on college or high school sports. Don’t hold your breath.