Photo Credit: https://www.flickr.com/photos/chadwho1ders/2513576283
By Troy Lambert
As proof that nearly anyone can do something worthwhile, the United States Supreme Court has agreed to hear a case brought by the state of New Jersey and backed largely (pun intended, sorry) by Governor Chris Christie. The state has been trying with little success to get the 1992 Federal statue, the Professional and Amateur Sports Protection Act (PASPA) repealed.
Why is this good news? Well, not only will these efforts affect the sports betting industry, potentially generating significant revenue on the same scale as the legalization of marijuana in several states, but will also have far reaching legal effects on other laws as well.
The states and Congress often get things done through a voluntary process known as Cooperative Federalism. This is because the Federal government, including the legislative branch, cannot make states implement specific policies. The practice helps Congress set policy more efficiently and at a lower cost than they would otherwise.
However, states must be incentivized to cooperate. From time to time, a state will change their mind and opt out of a policy previously agreed to under the voluntary system. The failure to repeal PASPA would bring this long-standing policy into question, and might make states think twice about participating in the practice in the first place.
After all, no state wants to enter into an agreement with Congress about a policy change if they know that they can never opt out of it.
The other issue is political accountability. If Congress can hold states to policies created under cooperative federalism they now want to opt out of or can force them to implement new policies that run contrary to the desires of the citizens of the state, they won’t be held responsible.
Voters will, of course, be angry with state governments for passing laws that implement policies they don’t want, never realizing it was at the behest of Federal lawmakers. If those laws can never be changed until Federal law is modified, states could be stuck with them for years to come.
Show Me the Money
Even notoriously conservative states that might otherwise oppose gambling on principle stand waiting for this move. After all, the four states that are grandfathered in under PASPA, namely Nevada, Montana, Oregon, and Delaware are benefitting financially. According to the Constitution, what is good for one state is good for another, at least in principle.
States like Arizona, Idaho, and others who already have casinos and lotteries are looking closely at the ruling. They could use the extra cash, especially for education. For example, Idaho ranks 48th in the nation for what they spend on each student, and their education system received a D minus from Education Weekly this year, ranking them 46th for quality.
The potential income outweighs many other concerns about legalized gambling and the new businesses that might spring up as a result.
The NFL, the NBA, and Major League baseball like the idea of a repeal. They see the potential revenue for themselves and the fan engagement that could result. Even former NBA commissioner David Stern reversed his opposition, and current commissioner Adam Silver has warmed to the idea.
The ways the league could monetize such a ruling include hosting online games, although this might be tough as state laws surrounding sportsbooks might vary. The other ways include sportsbooks sponsorships, similar to those that the English Premier Teams offer.
There is little worry of fixing or point shaving. Players make enough or have the potential to make enough money that any fixing attempt would probably be futile. It’s unlikely that any player who is making, or headed toward making, an eight figure a year annual salary would risk it all by throwing a game.
The NCAA, on the other hand, is opposed to legalized sports betting, and for reasons that appear valid on the surface. However, as with compensation limits, the black market that already exists around college sports will continue to grow in the area of fixing and gambling as long as there is no close scrutiny of second and third tier games.
On the other hand, sportsbooks will actually mean more eyes on those games. The same book that would take a large bet on an Alabama or Texas game certainly won’t take the same six-figure bet on a game between Idaho State and North Texas should the teams ever meet. Not only do sportsbooks want to stay above board and worry about game fixing, but they might not know enough about the teams and the game to take on such a large wager.
No matter what the outcome of this Supreme Court ruling, it is almost certain other challenges to PASPA will follow: the stakes are simply too high for them not too. Leagues, including the NCAA, should prepare themselves for the fact that legal sports betting will soon be a reality in the United States.