Sports Wagering? A Sure Bet It’s Coming.

A small portion of betting odds at a casino sportsbook

“For most men (till by losing rendered sager)

Will back their own opinions by a wager.”

~ Lord Byron

This week, the Supreme Court of the United States issued a decision in a case involving gambling. Just writing that seems a bit quaint given the prevalence of lotteries, poker rooms, bingo halls and Native American casinos. Make no mistake, however, this decision potentially means big money.

And that’s why expanded sports betting will happen.

The decision in Murphy v. National Collegiate Athletic Association dealt with a law—the Professional and Amateur Sports Protection Act, or PASPA—that prohibited States from enacting laws permitting sports wagering. What PASPA did not do is set up a federal regulatory scheme to monitor, investigate, enforce or otherwise exercise control over of wagering.

So, basically Congress and President Obama told the States, “Don’t allow sports betting because we, the federal government, think it’s a bad idea.”

In addition to this overreaching directive, PASPA had another wrinkle that made it vulnerable to a legal challenge. New Jersey Senator Bill Bradley (now retired from the National Basketball Association and the US Senate), a co-sponsor of the bill, was trying to balance protecting the integrity of authentic sports competition with the need to revitalize Atlantic City’s once thriving gambling industry. With Nevada and the Indian casinos grandfathered in, Congress included a special provision that gave New Jersey a year to legalize sports betting.

New Jersey did not pass a law within the year, but the State’s citizens passed a constitutional amendment to legalize sports betting in 2012. The NCAA and numerous athletic organizations quickly challenged the amendment in court and won. Then, in 2014, New Jersey enacted a law repealing the ban on sports betting for Atlantic City only. The challenges came again, and the lower federal courts found in favor of the sports leagues again, striking down New Jersey’s law as violating PASPA.

On appeal, the Supreme Court overturned the lower courts and ruled 6-3 that PASPA was unconstitutional. Justice Samuel Alito wrote for the majority that included the rest of the court’s conservative bloc (Roberts, Thomas and Gorsuch) along with usual swing Justice Anthony Kennedy and liberal Justice Elena Kagan. The majority determined that PASPA violated the Constitution’s “anticommandeering” principle.

What is the “anticommandeering” principle? Glad you asked.

Essentially, the “anticommandeering” principle is a limit on federal power. It prevents the federal government from enacting a law to compel or force States to enact and enforce a federal regulatory program.

For example, if Congress decided it wanted to combat the graffiti problem by ordering States to prohibit sales of spray paint to anyone under 21, Congress couldn’t just pass a law telling the States pass laws to accomplish the ban. If Congress was permitted do this, they would be using the Constitution—a document that confers on Congress the power to regulate people, not States—to “commandeer” the sovereign State governments to force them to act just because they say so. Rather, assuming Congress had the power to regulate spray paint sales, it would have to also establish a scheme for how sales are to be regulated and what penalties should be imposed for violations. The States would then follow these laws because federal laws “preempt” (supersede) State laws where both the feds and the States have laws addressing the same issue (or federal law is the only law on the issue).

Ultimately, the majority held that PASPA unconstitutionally commandeered the States to enforce a regulatory scheme Congress failed to adequately specify. It found this flaw fatal and struck down the entire act.

And gamblers everywhere gleefully rejoiced. Here’s why.

First, it’s important to note this decision did not legalize sports wagering. What it did was strike down a law that was preventing States from choosing for themselves whether to permit sports wagering and, if so, enacting their own regulatory schemes. Nothing has really changed at this point. If your State has outlawed sports betting, don’t expect bookies to open up shop next to your local Starbucks tomorrow.

Second, however, your State’s legislature could now elect to change its laws and permit sports betting. Some States probably will, some won’t, but each will have the power to decide without Congress forcing them into a ban. The Tenth Amendment to the Constitution supports this.

Third, the Supreme Court seemed sympathetic to the idea that Congress could regulate sports wagering if it chose to. The majority suggested a proper act with a workable, enforceable federal regulatory scheme could be implemented and funded by the federal government. The liberal dissenting justices agreed and would have upheld PASPA. Congress was not successful this time, but some believe the feds’ authority to regulate interstate commerce includes regulation of sports betting I f the feds want it to.

The good news for gamblers is Congress probably won’t have the stomach to draft, debate and try to pass a comprehensive regulatory ban on sports betting. Congress will read the tea leaves and probably drop the issue.

Truthfully, there are some very good reasons to outlaw (or keep illegal) wagering on athletic contests. The NCAA always seems under fire for its rules and disciplinary system that prevents collegiate athletes from receiving essentially any compensation or gift. Gambling could make kickbacks to collegians more common.

In the past there have been many gambling scandals that have impacted virtually every sport, from Major League Baseball and Pete Rose, to the National Basketball Association and disgraced referee Tim Donaghy, to the National Hockey League and former player and coach Rick Tocchet among others. The NCAA itself has been stained by gambling scandals in the past. In addition, technology has made sports wagering susceptible to manipulation by international cabals. And over the years betting and match fixing scandals have plagued sports from boxing to soccer to horse racing.

Justice Stephen Bryer, in his dissenting opinion in Murphy, noted that Congress enacted PASPA to ensure sports gambling would not spread and turn sporting events from wholesome family entertainment into mechanisms for gambling. I’m not sure how “wholesome” sporting events are when one considers the well-publicized poor behavior of athletes in and out of the competition. Not a day goes by, it seems, without some athlete in a major sport being accused of domestic violence, sexual assault or harassment, or using performance enhancing or other drugs, or some other immoral conduct. The 24-hour news cycle perpetually shines on these realities and dims the light of some of the brightest athletic stars.

But while our culture has become very sensitive to domestic violence and sexual peccadilloes, gambling has become more mainstream than ever. Who doesn’t participate in an annual March Madness or Super Bowl pool for a couple of bucks? The popularity of fantasy sports has exploded including through pay sites like DraftKings and Fan Duel. Many States even have provisions that allow these forms of small-time pools and betting. It may be a bad idea to expand sports wagering, but the momentum has been going that way for years and the stigma has correspondingly diminished.

So, will legal sports wagering become widespread? Yes, and the over/under is probably 24 months.

Why? The answer is simple: Follow the money.

Pretty much everyone involved in sports is getting rich, except college athletes. Thanks to lucrative broadcasting deals, sponsorships and people with disposable incomes, sports already means billions for professional athletes, teams and their owners, executives and leagues. Official and unofficial sponsors of everything from athletic apparel to stadium placard ads to instant video replays pay big bucks for the exposure. Everyone down to the local concessioners and parking lots get some of the action. Imagine what will happen if you throw potentially billions more into the mix. And if you think the disparity between athlete and teacher pay is far too great now, just wait.

Then there are the federal, state and local tax revenues. Remember when lotteries were sold as a way to improve education? Our schools don’t seem to be much better. And yet, get ready for your local politicians to sell you on how much “good” they could do with sports wagering tax dollars.

Professional leagues are getting ready to pitch plans to State legislatures right now with the goal of approving local wagering and getting their piece of each State’s betting pie. The NCAA and universities, who also make billions off major sports, will lobby for their share, too. Given the appetite for sports betting, there should be plenty of money to go around.

Maintaining the integrity of sport competitions will be critical in this new age. The only way for this to happen is if violators are exposed to extremely stiff penalties. But that will be up to each State unless Congress enacts a comprehensive regulatory scheme (which they won’t). If your State is considering legalizing sports betting, you should express your concerns to your local political leaders and lobby them for harsh penalties for violators.

Wherever you stand on the issue of gambling generally—and sports wagering specifically—the landscape is changing. Momentum favors legalized sports betting and there is now little to stand in the way. The gamblers’ glee is well placed.

The Supreme Court made the right decision in this case from a constitutional perspective.

Time will tell whether it was a good decision for our society.