Supreme Court Close to Legalizing Sports Gambling Nationwide

Yesterday the biggest sports news story of the 21st century dropped and most didn’t notice — the Supreme Court agreed to hear New Jersey’s appeal of a ban on the state being allowed to offer sports gambling. For those of you who aren’t aware New Jersey has been waging a six year battle to allow its citizens to gamble on sports. Included in that battle has been countless court hearings, filings, arguments, and a voter referendum in which over 60% of state voters said they wanted to have the right to gamble on sports legally within their state’s borders. Thwarted on every turn so far, New Jersey was down to its last legal option —  a hail mary request that the Supreme Court hear their case and overturn existing federal law.

And New Jersey’s desperate heave into the end zone was just caught for a touchdown.

The Supreme Court’s decision to hear the case means it is highly probable the court will strike down a 1992 law, the Professional and Amateur Sports Protection Act or PASPA, which banned sports gambling in all but four states: Nevada, Delaware, Montana and Oregon. (Nevada is the only state with full casino sports gambling, but other states have offered parlay cards). If you’re a lawyer and you’re interested in our nation’s gambling laws, you can get online continuing legal education credit here for my course on the absurdity of our sports gaming laws.

But if you’re not a lawyer you just need to know this — I believe most of you will soon be able to place sports wagers in your state. Why do I believe it is highly probable the court will strike down PASPA?

Because four justices have to agree to hear a case in order for it to be accepted by the Supreme Court. The vast, vast majority, about 99% of all cases that seek Supreme Court review, are rejected. That’s why I described this as a legal hail Mary. Given that New Jersey has already lost in the 3rd circuit, this means four justices are likely in agreement that case was wrongly decided. (Otherwise why would they take the case?) Since it takes five justices to overturn a lower court ruling and write a majority opinion, odds are very good that at least five justices will vote to overrule PASPA on federalism grounds and allow individual states to make the decision about whether sports gambling is allowed within their borders.

This is even more likely when you consider this case doesn’t have strong ideological merits for either Republicans or Democrats. So it’s unlikely that justices are firmly entrenched on either side of the ideological spectrum. This isn’t abortion or gay marriage.

Futhermore, many of the justices are sports fans. They may also have children or grandchildren who gamble. They may well gamble themselves on games. An issue like this is nonpartisan. Indeed, the original PASPA law was shepherded through a Democratic congress and signed by a Republican president. Proving that politics can make strange bedfellows then Senator, later Vice-President, Joe Biden, the head of the Senate Judiciary Committee at the time, didn’t believe PASPA was constitutional and the George Bush, Sr. justice department agreed with him. So even at the time of passage there were many Republicans and Democrats who disagreed with the law. Nevertheless, PASPA was signed amid fears that sports gambling was a threat to the legitimate outcome of games.

Since that time much has changed.

You can now gamble on your phones through offshore gambling sites — which is technically illegal, but no individual has ever been prosecuted for this violation alone –, the NBA’s commissioner has endorsed the legalization of sports gambling in a New York Times editorial, both the NHL and NFL have placed franchises in Las Vegas, and both Draft Kings and Fan Duel have raised billions of dollars for their companies through a legal loophole called daily fantasy.

Gambling has become such big business that the threat of anyone having enough money to fix a game has virtually vanished. Indeed, the more public gambling has become, the more impossible it has become to rig a contest. Why is that? Because casinos and gambling houses notice when abnormal betting patterns arise and major dollars rush in on one side or another. The more money is wagered on a game and the more able casinos and gambling houses are to see that money coming in, the more honest the event is actually likely to be.

Ultimately I believe it is highly likely the Supreme Court will overturn PASPA, which would open up sports gambling to any state which votes to allow it.

So what will that look like for people like you and me, individual fans who enjoy gambling on sports?

1. If you’re seeking an easy analogy for what sports gambling will resemble, here’s one, it will be very similar to lotteries.

Every state will have the ability to set up its own legal framework for sports gambling just as they did with the lottery. Presently 44 states allow lotteries — the only six that do not are Utah, Nevada — hello, politics, Alabama, Mississippi — hello, politics again –, Alaska, and Hawaii. I mentioned politics for both Nevada and Mississippi because casinos are very popular in both states and the reason lotteries don’t exist is because casino interests would rather you spend your gambling money in their venues than in gas stations on lottery tickets. Nevada already allows sports gambling in its casinos and Mississippi legislators have already filed legislation to allow sports gambling in its casinos as well.

Your state won’t have to allow sports gambling, but it probably will.

 

2. How soon could this happen?

If the Supreme Court overturns PASPA, the ruling is likely to come down in 2018. My expectation is that many states will act quickly to permit gambling. Some of you will be able to legally gamble on football by the fall of 2018.

If I had to predict, I would say that within ten years of legalization, every state in the country except Utah may well have legalized sports gambling.

3. Why would a state want to allow sports gambling?

For the tax revenue.

Each state would stand to make millions of dollars in taxes off your sports bets. Instead of all sports bets being part of the underground, illegal economy, the legalization of sports gambling would bring to light billions of dollars in transactions that have been hidden.

Only around 2% of sports bets are legally placed in Nevada right now, the rest are illegal wagers.

4. What if my state doesn’t offer sports gambling?

Then you will be able to gamble online — which will still technically be illegal — or you may live close enough to a neighboring state that does allow gambling. For instance, Mississippi and Alabama don’t allow lotteries now, but tens of thousands of their residents cross state borders to Tennessee, Florida, Arkansas, and Georgia to buy lottery tickets. The same opportunity would apply for sports gambling.

5. How will I place a bet?

It will depend on the state.

Consider how states regulate liquor and beer. As anyone who has ever traveled across state lines and purchased alcohol knows, every state has its own individual quirks and unique rules when it comes to alcohol purchase and distribution. And all the beer and liquor companies have to comply with those individual rules in order to distribute their product in a state.

I suspect sports gambling will be similar.

Just as, for instance, California allows you to buy beer, liquor and wine in a grocery while Tennessee only allows you to have beer and, just recently, wine in grocery stores, some states may allow you to gamble online within state borders while others may require you to drive to a physical location and place your bets in person.

6. What will this look like if I’m a new sports gambler?

There will be an insane land rush to gain your business.

Remember what television commercials looked like for Fan Duel and Draft Kings a couple of years ago during games? Look out, you ain’t seen nothing yet — companies will spend billions of dollars trying to get you to sign up and gamble with their brands. Because they’ll know that if you start using them you’re likely to stick with them for years.

Consider the Internet gold rush as a great example. There are tens of millions of people who still start off their online reading on AOL.com, MSN.com and Yahoo.com. Do you know why? Because they got in the habit of doing that in the 1990’s and never broke the habit.

Dozens of gambling companies will come to market and try to get big fast.

This will be a tremendous boon for content creators in sports — TV networks, teams, leagues, and people like me who write and talk about sports. We’ll all be in high demand. Some of you in college now who are worried about getting jobs in sports will end up getting hired because of the money legalized sports gambling will rain down on sports content. Virtually every advertisement on a site like Outkick will become ads for gambling. Hell, we may even end up with Outkick the Sportsbook in some states.

Do you know who will be one of the biggest beneficiaries of all of this? ESPN. I’ve been critical of the business prospects of the company due to cord cutting, but sports gambling ad revenue could add billions to their coffers.

7. What will the pro leagues and the NCAA do about the law changing?

Many of the leagues, teams and their owners are already invested in Draft Kings and Fan Duel. Each of these companies has millions of customers playing daily fantasy. The legalization of sports gambling would allow them to offer both daily fantasy and sports gambling to millions of additional online customers.

Indeed, I’ve long written that I thought this was the best reason to invest in either company.

So the NFL, the NBA, the NHL and MLB will all be thrilled when they see the amount of money sports gambling will bring to their sports. I suspect that some teams will end up sponsored on their jerseys by gambling houses — as occurs in European soccer now — and many leagues will sign exclusive deals with gambling companies just like they do with beer, apparel and soft drink companies now.

The NCAA is a more fascinating question. In theory amateurism and gambling are not great partners. But NCAA amateurism is a sham. And I’ve got a great compromise for you — why couldn’t individual college conferences sign deals with gambling companies and use the money to give athletes more substantial stipends? It would be hard for the NCAA to oppose gambling if the result was college athletes getting thousands of dollars in additional money.

8. How will this change the games themselves and sports media coverage?

I suspect that within two years every sports channel will have multiple gambling shows. Just as fantasy sports gained a toehold on the major sports network as their popularity grew, so too will gambling shows in the future. Halftime and postgame shows won’t just focus on who won, they’ll focus on who covered and who didn’t cover. A team’s record against the spread will become a regular staple of game analysis.

Announcers will be schooled on directly assessing the impact of late touchdowns in blowout games.

Just as Mel Kiper became the face of the NFL Draft, media figures will emerge to become the face of modern day gambling.

Gambling’s impact will dwarf the impact of fantasy sports, likely leading many to give up fantasy sports in exchange for gambling instead.

The reason I’ve always preferred gambling to fantasy sports is because every person has a side in gambling, you’re either with me or against me. Fantasy is highly specialized — should I start (x player) against (x defense) is a question that a tiny percentage of people actually face for their teams. The result is really boring, in my opinion, TV or radio shows focused on fantasy sports. That’s why I’ve never done fantasy segments on TV, radio or Outkick. But every single person watching or listening to a show will make a decision about which side to bet on. So everyone, in theory, cares about a game line.

What’s more, ratings go up when gamblers watch games. Why? Because even if there’s a blowout, they keep watching so long as the line or the over/under is in play.

Live sports gambling will represent a true revolution in media coverage.

In summation, assuming the Supreme Court overrules PASPA and gives states the right to legalize sports gambling, I believe this will be the biggest change in sports since the Supreme Court legalized free agency in the Curt Flood case. Everything is about to change in sports content and coverage and most haven’t even realized it yet.

 

 

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