Is this the beginning of the end for PASPA?

Is this the beginning of the end for PASPA?

Monday, December 4, 2017 Posted by Luke Massey
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New Jersey officials are seeking to repeal the 1992 law

This morning at 10am oral arguments begin in front of the Supreme Court of the United States (Scotus) in Washington DC that could potentially lead to the Professional and Amateur Sports Protection Act of 1992 (PASPA) being consigned to history.

It is an historic day for the US gambling industry. It is a hearing that could determine whether sports-betting moves towards a long-awaited and way overdue acceptance in many more states. It might also mark the point at which the sports bodies are finally forced to recognise the legitimacy of an activity it has (successfully) both marginalised and ignored for generations.

At stake will be the right of the plaintiff in this case, the state of New Jersey, and other states to allow sports-betting on an intrastate basis. The defendants are the major sporting bodies in the US including the NFL, the NBA, the NHL and Major League Baseball.

The case is likely to take at least six months and should the Supreme Court judges determine that PASPA should be struck down, it would have implications for both the states and the gambling industry within and outside of the US.

The most immediate impact would be in New Jersey, and certainly the major gaming players in the state appear to be convinced of their chances of success. At the end of November, MGM Resorts International announced the beginning of construction work on a new sportsbook at the Borgata casino property in Atlantic City.

But it is not a done deal. When contacted for this article, MGM said it would not be commenting any further before the hearing and similarly others major names in US gaming are remaining tight-lipped.

The caution is understandable. Joe Asher, chief executive of William Hill in the US which currently operates sports-betting outlets in Nevada, says though the company is “hopeful” a ruling in the right direction will enable more states to “choose their own path” on legal sports-betting, the timetable could prove to be very elastic.

“It is an important opportunity but even if the PASPA ruling goes the right way it will take some time to fully realise its potential,” he says.

A developing picture

Not the least of the intrigues surrounding the case is that though the sports bodies remain committed to putting their case before the Supreme Court their collective approach is evolving towards a point of acceptance for more sports-betting in the US.

The latest development came just last month when Dan Spillane, senior vice president and assistant general counsel for the NBA, took the opportunity of a gaming conference in Washington organised by Sportradar to suggest the league has been discussing with its advisers a potential future federal framework.

“Sports bodies have moved a long way in recent months and any removal of PASPA may be the catalyst to lead them to a more united position,” says Asher.

But Benjie Cherniak, managing director at Don Best Sports, argues that the position of the NBA in particular comes with complications. “The good news is that at least some of the leagues, led by the NBA in particular, are in fact supportive of sports-betting legislation,” he says.

“The twist is that they are endorsing federal legislation as opposed to at the state level. In fact, as recently as last week, Spillane reiterated the NBA position that sports-betting should be regulated federally and insinuated that the NBA is preparing to lobby congress for a federal framework regardless of the New Jersey outcome.”

That framework is unlikely to be straightforward. As Cherniak points out, there is the potential for a federal solution to be land-based only. Moreover, while the focus of the Washington event was quite properly on integrity issues, Spillane suggested that opt outs for sports leagues would be central to any federal position and “should not impose sports-betting on anyone.”

This includes the controversial issue of college sports. Says Cherniak: “I can envision an initial structure allowing sports-betting on professional sports while prohibiting wagers on college sports, which would be equally problematic given that college represents around 25 percent of current handle.”

Asher suggests, however, that the support of the various sports bodies might not be the pre-requisite towards other states opening up to sports. “There is no reason why sports-betting could not be legalised in numerous states without active support of the sports bodies,” he says.

“There will likely be different routes chosen by different states,” he adds. “In Nevada we offer online betting but deposits must be made in casinos so some states may well follow that model but there will likely be other models as well.”

The phoney war is nearly over and all eyes will be on events in the courtroom in Washington DC for the next six months. While there is understandable nervousness among the gambling industry, they have reason to hope that this could be an epoch-changing moment. As Asher says, “to have the world’s major economy open up to sports-betting has the potential to be transformational.”

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