Inside Asian Gaming

JULY 2018 INSIDE ASIAN GAMING 45 GAMBLING AND THE LAW betting legal if the Supreme Court ruled as it now has ruled. Who will get the licenses? Some states are looking at their state lotteries operating the games. But most will go with a licensing system. The problem is political: there is so much legal gambling that legalizing one more form is politically no big deal. But there is so much legal gambling that almost every state has politically powerful local gaming operators. If those operators, for example the racetracks and casinos in New Jersey, are the ones getting the right to now take sports bets, the legislation will sail through. But in a state like California, the gaming tribes, card clubs and racetracks each have the political power to kill a proposal they do not like, but do not have enough influence to get one passed that cuts out their competitors. Will Congress do anything? The NFL would love to see national regulations and a big share of the wagers go to the leagues. This is not going to happen, mainly because all but three states are already regulating legal gambling. But Congress should amend the Wire Act to allow interstate and international sports bets. Unfortunately, this also won’t happen, because Congress no longer passes any substantive laws. This could change if the Democrats win both the House and Senate in November 2018. Can territories have sports betting? The most immediate concern is Puerto Rico, with 3.4 million residents. But the US Virgin Islands and the Commonwealth of the Northern Marianas have casinos and would like to take internet wagers from the rest of the world. The legal issues are tricky, because the Supreme Court focused on the sovereignty of states. But there are precedents and good arguments why territories should be treated like states, especially when issues like preemption and constitutional rights are involved. Do existing legal arrangements prevent sports betting from being offered? Besides Can territories have sports betting? The US Virgin Islands and the Commonwealth of the Northern Marianas have casinos and would like to take internet wagers from the rest of the world. tribal/state compacts, which sometimes give gaming tribes monopolies, some casinos have contracts with the NFL. Federal taxes were lowered years ago for legal sportsbooks, but there are also issues of existing state tax laws and fees. Most state constitutions do not prohibit “gambling,” only “lotteries.” But some courts and state attorneys general have declared that all forms of gambling are lotteries. The first question here is who decides what is a “lottery” and will the state supreme court give deference to the state legislature if it defines sports betting as not being a “lottery?” Will the sports leagues get their “integrity fee”? Teams have the rights to their games but they do not have any rights to the statistics generated by their games. You cannot copyright facts. So, the leagues have no real bargaining power, because they have nothing to sell. Still, it would be a good idea to have teams as active partners for issues like standardizing the timing of the announcement of results and, yes, increased integrity. Are there ways around the Wire Act? Even before the Supreme Court’s announcement, operators were devising schemes to allow sports bets across state lines. These include calling wagers “risk management.” There might even be a direct court attack on the Wire Act because it was designed to help the states enforce their public policies. It should not apply to state-legal sports bets. Is eSports a sport? Up until a few weeks ago, eSports supporters were urging states to legalize eSports as a sport. Nevada did and limited bets to in-person parimutuel pools. But now advocates should argue that eSports is not a sport, as long as the Wire Act prevents cross-border bets on sports events. CONCLUSION By the beginning of 2020 we will have more than a dozen states with legal sports betting. We may not see that many bills to legalize sports betting become law before November 2018: it is late in the legislative year and also an election year. But following the November elections, it will be wide- open season for state lawmakers looking for another painless way to raise revenue. The one question that the Supreme Court is going to have to address soon is “Can sports bets be taken by phone and over the internet?”