Below is an article by Ryan Butler. It was the Featured Article on Gaming.com, and was published on July 12, 2019. I have boldfaced the parts where I am quoted or referred to in the article. This article references the remarks which I made at the NCLGS conference on July 12. I published the text of my speech on this blog less than an hour ago, and they appear directly below this article. Please view the speech in my prior blog post.
US Sports Betting Future, Legality Remain Largely Undefined
MINNEAPOLIS — More than a year after the Supreme Court struck down the federal ban on sports betting, nine states are taking legal wagers and 30 or more could do so within the next few years. But as more and more states embrace legal wagering, major questions remain about taxation, implementation and even the legal basis for the nascent industry overall.
Speaking at a conference of state lawmakers Friday, a group of gaming lawyers reiterated the myriad legal and regulatory challenges that remain even after the landmark Supreme Court decision opened widespread sports betting outside of Nevada. Questions and court battles over federal and state laws have loomed over the industry since its inception, but the complexities and possible impacts of these interpretations are even less certain than originally believed.
New Jersey led the legal challenge that ultimately resulted in the Supreme Court ruling and was the first state outside Nevada to implement a regulated online market, but even that intrastate array of internet-based offerings may run afoul of federal statute, argued Geller Law Firm’s Steve Geller. The former Florida state Senator and gaming lawyer said he didn’t believe New Jersey law wasn’t in compliance, but said it wouldn’t be hard for an opposing legal view to take shape.
That dichotomy served as a microcosm of the entire debate.
“The short answer as an attorney is I can make a convincing argument for whichever side hired me,” Geller said.
Geller and other speakers at a session during this weekend’s National Council of Legislators from Gaming States (NCLGS) meeting tried to address these questions over legality, but largely acknowledged one of the few definitive in U.S. sports betting was uncertainty.
Legislative Restrictions Remain Unclear
Questions over legality are nothing new to gambling stakeholders, but Friday’s NCLGS meeting only opened up more fronts in the ongoing developments, and challenges, for legal gaming.
Much of the meeting, and debate across the gaming industry, centers on the Wire Act of 1961. Enacted as a means to combat organized crime and legalized decades before the commercial internet was publicly accessible, there has been ongoing debate, and reinterpretations, over its effect on online gaming.
In 2011, the Obama administration answered a question from a state lottery by ruling the Wire Act didn’t apply to online gaming. This helped a handful of states pursue or expand internet lottery offerings, iCasino games and online poker.
That was revised in 2018 by the Trump administration, which ruled the law prohibited all forms of internet gaming in a move that sent shockwaves across the multi-billion dollar industry and threatened to cripple the fledgling U.S. market. The ruling was challenged in court soon after it was issued, and gaming advocates scored a significant victory earlier this year when a New Hampshire court ruled the new interpretation was invalid.
Still the matter remains far from settled, and even the presiding judge in the New Hampshire court believes the case will be challenged all the way to the U.S. Supreme Court. The fallout from this looming court battle remains the central concern of the industry, and gaming observers at NCLGS and across the country still remain unsure how it will end.
Under either interpretation, the law explicitly prohibits sports betting across state lines, but Geller opened up the possibility that intrastate markets conducted online may still be in violation.
Though New Jersey requires its internet servers for online gaming be located in Atlantic City, and bettors must be within state lines to place a bet, it still could be in violation of the Wire Act’s sports betting provisions against interstate communication. Any information, payment processing or other component inherent in online communication that is transmitted through any out-of-state location (or even a satellite in outer space) could, by technical definition, be in violation.
Geller also said a clause in existing New Jersey sports betting regulations prohibiting bets on in-state college teams could also violate federal statutes. The ban on bets could favor the integrity protections of an in-state team at the expense of an out-of-state team, which Geller said could violate the dormant commerce clause of the Constitution.
The veteran gaming lawyer didn’t say he necessarily agreed with that interpretation, but told attendees this is just one of a myriad of ways a law could be viewed, and how it could impact gaming.
During a question-and-answer portion of the seminar, Kentucky Rep. Adam Koenig asked panelists what to look for when interpreting these laws. A leader in Frankfort for his state’s sports betting expansion efforts, Koenig wanted to prepare for future legalization efforts when the federal laws remain so poorly defined.
The answer, panelists said, lies largely in the federal and state authorities who have the ability to interpret such laws.
Federal Inaction Continues as Lone Constant
If it’s any consolation, the actions – or inactions – toward gaming legislation on the federal level remains one of the few constants in the ongoing gaming debate.
The federal government has taken no significant move on gaming laws since the ban was overturned in May of last year and industry observers, stakeholders and consumers have largely believed that pattern will continue. The panelists during the NCLGS session reaffirmed that, with officials from law offices, sports betting data services platform Sportradar and even representatives from the National Basketball Association all agreeing that no move was likely.
Though a federal law could clarify many of the aforementioned legal question marks, this national-level ambivalence is a welcome development for much of the industry.
National advocacy groups like the American Gaming Association as well as commercial stakeholders and state-level officials have all preferred the current state-by-state approach to gaming legislation. Though it lacks a federal-level baseline that could potentially alleviate many of the concerns facing the industry, these stakeholders largely believe that any national-level action would be even more detrimental than the current hands-off approach.
In an address to NCLGS attendees later in the afternoon Friday, Penn National CEO Tim Wilmott didn’t mince words when asked about federal intervention.
“We believe gaming is a states’ rights issue and we’re going to fight that to the death,” Wilmott said. “Any involvement from the federal government will be something that we’ll put all our energies and resources against.”
Wilmott and other industry leaders don’t appear to have much to worry about. Congressional gridlock has become a punchline for even the nation’s most pressing issues, leaving most observers to believe gaming has little chance of being further regulated by a highly partisan and divided federal legislature.
“I think it would be a waste of time,” Geller said of a push for federal regulation. “The current Congress, I don’t think could pass gas, much less legislation.”