Federal Sports Betting Hearing in Congress Still Pending

Ryan Butler

June 20th, 2018

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As multiple states advance individualized sports gambling legislation, congress may be closer to a nationwide legislation of its own. The House Judiciary Committee had scheduled a hearing June 26 to discuss federal legislation as Lawmakers in DC want to evaluate a uniform standard for states that chose to legalize sports gambling.

ESPN report June 20 that congress had postponed the hearing due to an unrelated scheduling complication. A make-up date wasn’t immediately announced. Still, the issue remains of interest to legislators in D.C.

When congress takes up the conversation, lawmakers won’t discuss a federal ban akin to the Professional and Amateur Sports Protection Act (PASPA), the previous regulation prohibiting sports betting nationwide outside grandfathered exceptions in Nevada, Delaware, Oregon and Montana. The Supreme Court struck down the ban in May, ruling the law commandeered state rights in violation of the 10th amendment.

New Jersey, the plaintiff in the original lawsuit against PASPA, as well as Delaware subsequently passed individualized laws. Mississippi and West Virginia are set to do so in the coming weeks, with a dozen or more also weighing legislation. This has created a patchwork of regulations that some sports gambling stakeholders, notably American professional sports leagues, want to avoid.

NFL Seeks Return to Capitol Hill

The rescheduled hearing will likely still include the NFL, which along with the NBA, MLB, NHL and the NCAA argued in defense of PASPA in the Supreme Court case. The NBA and MLB eventually reversed their opposition to legalized gambling before the court ruling, but the NFL maintained its distance.

After the ruling opened up sports betting, the NFL pivoted, and supported sports betting within a larger federal framework. According to ESPN, the league has worked with Sen. Orrin Hatch, one of the original sponsors of PASPA, on new legislation.

Hatch and the NFL say they’re worried legalized gambling could interfere with the “integrity” of the game. The leagues have lobbied for what they call an “integrity fee” in response, arguing for a portion of all bets placed in order to protect games from outside gambling influences.

State lawmakers and gambling stakeholders have largely been opposed to the fees, which would have a significant impact on revenue for both entities. Integrity fee opponents also say that it is unnecessary as Nevada has had regulated sports betting for years without any similar fee.

States Continue Without Federal Guidelines

Without federal regulations, states exercising their rights to legalize betting have advanced their respective laws at varying speeds.

Delaware, which already had a head start on gambling legislation because of its exception within PASPA, became the first state outside Nevada to fully legalize single-game wagering on professional sporting events. New Jersey followed shortly after and Mississippi and West Virginia will do so in the coming weeks.

While these states have been able to enact laws, delays in Pennsylvania underscores the obstacles a state-by-state approach, and high fees, can bring. The Keystone State has already legalized sports wagering, but fees have of around 36 percent have dissuaded any gambling entity from applying for a license to accept bets. Until, and if, lawmakers change the fees, Pennsylvanians will likely have to wait to cast bets.

Conversely, states that have already partnered with gambling entities like New Jersey and Nevada have fees under 10 percent. Gambling revenue, which are projected to eclipse hundreds of millions of dollars for states that legalize betting, is the driving motivator for legislative action meaning a federal regulation that stipulates high integrity fees could disincentive states to legalize betting.

A federal framework could prevent the loggerhead in Pennsylvania, but federal lawmakers would have to be warry that high fees reallocated to sports leagues or elsewhere could extinguish state-promoted sports wagering efforts.