Sports betting may soon become a reality in most US states since the US Supreme Court struck down the nearly 30-year-old PASPA law forbidding individual states to allow such wagering. The decision reversed a lower-court opinion in a case brought by the state of New Jersey.
The Supreme Court of the United States (SCOTUS) has struck down the law that blocked most individual states from authorizing sports wagering for more than a quarter-century. In a highly anticipated ruling, SCOTUS reversed a lower-court decision that upheld the federal Professional and Amateur Sports Protection Act (PASPA) in a case involving the state of New Jersey, where voters authorized such wagering via referendum nearly a decade ago.
The victory in the high-profile “Christie II” case brought by New Jersey and the state’s New Jersey Thoroughbred Horsemen’s Assn., Inc. over five prominent US sports organizations — the National Football League, National Basketball Association, Major League Baseball, National Hockey League, and the National Collegiate Athletic Association — has widespread impact. It also means that single-event sports wagering will debut within weeks (or even days) at New Jersey’s casinos and pari-mutuel facilities. Other US states will quickly follow. A few have already authorized such activity in the event of a New Jersey victory in the Christie II case.
“The legalization of sports gambling requires an important policy choice, but the choice is not ours to make. Congress can regulate sports gambling directly, but if it elects not to do so, each state is free to act on its own. Our job is to interpret the law Congress has enacted and decide whether it is consistent with the Constitution. PASPA is not,” wrote Justice Samuel J. Alito, who authored the ruling’s majority opinion.
PASPA overturned in its entirety
The ruling announced by the US Supreme Court on Monday, May 14, overturned a 26-year ban on legalized sports wagering in 46 of 50 US states. Pre-existing sports-betting activity was grandfathered in when PASPA (also known as the Bradley Act, after its primary sponsor, former NBA star and US Senator from New York Bill Bradley) took effect in 1992. However, only four states allowed any such sports-based activity at that time. Of those four, only Nevada allowed true single-event sports wagering; the other three — Oregon, Delaware, and Montana — allowed only a form of parlay wagering connected to those states’ lottery offerings.
New Jersey did not enact its own sports betting legislation during the brief window allowed after PASPA was enacted, but as public opinion changed and as its own casino hub, Atlantic City, suffered a downturn in fortune, the state reexamined the entire sports-betting equation. That led to its challenge of the federal PASPA ban which was always unconstitutional on the grounds of it “commandeering” states’ right regarding a wide swath of social behaviors, including gambling.
SCOTUS sided with New Jersey in a case the court accepted last year, against long odds. And in issuing its reversal, which itself cannot be appealed, the court also decreed that provisions within PASPA are not severable, meaning that PASPA has been abolished in its entirety.
The Supreme Court’s official ruling came on a 6-3 vote. Agreeing with the merits of New Jersey’s arguments were Justices Alito, John Roberts, Anthony Kennedy, Clarence Thomas, Elena Kagan, and John Gorsuch. Justice Stephen Breyer concurred in part and dissented in part (which counts as a nay vote), while Justices Ruth Bader Ginsburg and Sonia Sotomayor dissented wholly.
Sweeping changes expected
New Jersey and neighboring Delaware will be the first states to bring single-event sports wagering live, but the land rush will continue throughout 2018 and 2020. As visualized in an online tracking graph at ESPN, Pennsylvania, West Virginia, Mississippi, and Connecticut have already passed legislation authorizing sports wagering in the event of PASPA’s downfall. An additional 14 states have similar legislation at some stage of deliberation.
PASPA’s demise doesn’t mean that the United States’ federal government will drop its interest in the topic. Indeed, some form of replacement ban is likely to be fast-tracked, but it will be one that entirely exempts states who have enacted their own rules on the topic.
Justice Alito noted: “Respondents and the United States tell us that the PASPA ban on state authorization allows complete repeals, but beyond that they identify no clear line. It is improbable that Congress meant to enact such a nebulous regime,” referring to a post-PASPA era.
The leagues are powerful and wealthy corporate lobbyists in their own right and will continue efforts to extract an “integrity fee” (really a data-rights fee), in an attempt to grab some financial slice of this newly created revenue pie. However, in states such as New Jersey, those efforts are unlikely to be well received.
Meanwhile, the shares of gambling companies connected to sports betting in any form have surged around the globe in Monday trading, most particularly on US-based stock exchanges.