Beerbongs & Betting
Beerbongs & Betting
It’s been nearly a year since Murphy v. NCAA, the Supreme Court case that ruled the federal ban on sports betting unconstitutional, and my March Madness bracket--barring the scarring exception of Auburn’s blowout of UNC--is doing surprisingly well. And you’re telling me I can’t legally bet on sports in Georgia and profit from my wizardry? To understand why, one must first understand the underlying mishmash of the flourishing sports betting industry and the vested interests of major sports leagues and states that conflict with its libertarian nature.
Citing Tenth Amendment violations and commandeering, Governor Chris Christie and company managed last May to overturn PASPA, a law enacted in 1992 outlawing sports betting in all states but four. (1) The ruling allowed states to decide for themselves whether or not to allow sports betting, opening the doors for increased tax revenue and employment, but also complicated interests and regulations. There remains the possibility that Congress may “attempt to enact new legislation that would govern all states equally”, though the anti-commandeering precedent set in this case will likely deter the legislation from materializing. (9) Part of the difficulties for legalization across the country can be attributed to the legal difficulties in setting up structures for sports betting: selecting which companies to give licenses to, debating licensing fees, the like. Specifically, a number of existing state bills “specifically limit the number of companies that can work directly with casinos or race tracks”, the two venues where one would traditionally make sports bets. (9) The implication, here, is that one should not expect a true free-market industry to arise. Entrepreneurs new to sports betting should not expect to gain the necessary licenses or contracts needed to establish their business. Indeed, if one were to try “to launch an online sports book that operates in the United States, that individual is very likely to be charged with violating state gambling laws, as well as numerous federal laws that remain on the books, including the Federal Wire Act and the Unlawful Internet Gambling Enforcement Act.” (11) Instead, established companies with ‘ready-to-go infrastructure and strong brand reputations will almost certainly gain selection for these mega-contracts’. (9) Even “those seeking to launch an online sports book”--as opposed to a physical operation or venue--“would need to ensure they did not do any business in states where these activities are still impermissible.” (2) Strangely enough, courts have deemed sports betting a game of chance and daily fantasy sports (DFS) a game of skill; because of this distinction, DFS betting is legal. (5) It’s a controversial distinction to make as the grey area between pure skill and pure chance is a large one. (12) A poker game or a March Madness bracket is no doubt a game of both chance and skill.
Additional difficulties with erecting betting industries arise with the interests of major leagues, who stand to gain extensively. Following the ruling in May, “billionaire Dallas Mavericks owner Mark Cuban told CNBC, ‘I think everyone who owns a top-four professional sports team just basically saw the value of their team double.’” (7) Ironic enough, “the four major leagues -- NFL, NBA, MLB and NHL -- all fought the state of New Jersey over this” but in the aftermath of the case, are all attempting to “get their cut of the action”. (3) The NBA and MLB have both advocated for a “1% sports integrity fee”, which “would be taken out of all sports bets before the government gets to tax bets”. (1) “NBA spokesperson Mike Bass justified the share”, “saying that the league ‘will need to invest more in compliance and enforcement’ and that it’s reasonable for operators to ‘help compensate for the risk and expense created and the commercial value [the NBA’s] product provides them.’” (7) This argument is flawed. For one, it would be the states that regulate betting. For another, a 2017 study by research firm Eilers & Krejcik Gaming LLC, three billion dollars are currently bet on the U.S. black market with no signs of corruption. (9)
This is not to say that legalization efforts are not gaining traction across the country. Currently eight states have legalized sports betting, two states (New York and Arkansas) are on the brink of completing legislation, and twenty-nine states have some form of legislative action in the works. (4)
Despite the melange of interests at play, the ubiquitous economic benefits of legalized sports betting make it a no-brainer. Notable early supporters include the NBA which announced a partnership with gambling company MGM Resorts International on July 31st, 2018, and Buffalo Wild Wings which, a week later on August 8th, stated its intentions to incorporate sports betting in its restaurants. (6) That sports betting offers huge benefits is no secret; a 2017 Oxford University report found that the legalization of sports betting in the United States would “create 125,000 to 152,000 jobs paying between $6 billion and $7.5 billion in total wages” and “contribute between $11.6 billion and $14.2 billion to U.S. gross domestic product (GDP) annually”, including “$3.4 billion in taxes.” (6 & 8) The mobile betting market is especially lucrative; in the U.K., Eilers & Krejcik estimate that betting apps “could bring an additional $9 billion worth of revenue—a well over 50 percent increase to the total sports gambling revenue”. (6)
Legalized sports betting nationwide, regulated or not, is not idealistic future but a potentially imminent reality with tremendous net benefits. Murphy v. NCAA cleared the path to legalization. How will the states pave it?
Sources
http://www.espn.com/chalk/story/_/id/19740480/gambling-sports-betting-bill-tracker-all-50-states
https://www.playusa.com/five-things-the-supreme-court-sports-betting-decision-didnt-do/
https://fee.org/articles/the-economic-benefits-of-legalized-sports-betting-in-the-us-would-be-huge/
https://www.lexology.com/library/detail.aspx?g=0a16536c-4f6f-48ed-966f-a8d43b676f10
