It was only in May of 2018, that the federal government repealed PASPA (Professional and Amateur Sport Protection Act) and paved the way for sports betting to grow as a legal, regulated industry in the U.S.
Passed initially in 1992, PASPA had shut down legal sports betting outside of Nevada for decades. The rationale behind the law was to avoid corruption and bribes which had been seen a handful of times as a result of sports betting and organized crime.
In this article, I’ll explain some of the details of PASPA, and show how far the industry has come since it was repealed.
PASPA, the Rise and the Fall Explained
For the sake of brevity and clarity, I won’t get into all the specifics of the PASPA legislation, but will provide an abridged version that should help readers understand the basics of the law.
In June of 1991, the Senate Judiciary Subcommittee on Patents, Copyrights, and Trademarks began holding public hearings that focused on sports gambling. It was the committee’s determination that gambling was having negative impacts even in states where it wasn’t legal. David Stern, in stark contrast to today’s NBA commissioner Adam Silver, said, “The interstate ramifications of sports betting are a compelling reason for federal legislation.” Following these hearings, under the Commerce Clause, congress enacted Senate Bill 474 – Professional and Amateur Sports Protection Act (PASPA) in 1992.
Many states were less-than-thrilled about the decision, specifically New Jersey. Throughout the following years the state’s government pushed back on the gambling ban and in 2011 New Jersey voters were able to propose a state constitutional amendment that would allow sports betting within its borders. In 2012, the state legislature enacted the Sports Wagering Act (sometimes known as the “2012 Act”) which allowed sports gambling at the state’s casinos and racetracks.
PASPA was routinely criticized as proponent of its repeal frequently asserted that the law itself is unconstitutional under the 10th Amendment which ‘reserves to the states all rights not explicitly granted to the federal government.’ Of course, gambling regulation was not one of these rights explicitly granted to the government under the 10th Amendment.
The first arguments came from New Jersey in 2009, when Senator Raymond Lesniak filed a lawsuit stating, essentially, that allowing some states to have sports betting but not others was not fair. Unfortunately, only the Governor (at that time, Chris Christie) could bring the suit to court.
In 2010, due to overwhelming support in New Jersey to legalize gambling, the state was able to get a law passed by 2012 that permitted sports betting in the Garden State. This was obviously challenged by the federal government who ruled that it was in violation of PASPA.
It was at this point that numerous hearings, appeals, lawsuits, and every other type of legal action took place between the federal government and the state of New Jersey. Finally, in 2016 the US Supreme Court heard the case.
In 2017 the Supreme Court listened to both sides debate their legal arguments and in May 2018, under the guidance of now-governor Phil Murphy, New Jersey prevailed. The Court eventually ruled in May 2018 by a decision of 7-2 that many aspects of PASPA were unconstitutional under the 10th Amendment, and in a 6-3 decision it was decided that PASPA was altogether unconstitutional, and thus was repealed.
Sports bettors who now enjoy legal means to place a bet owe a debt of gratitude to both the government leaders and the people of New Jersey. It seems like an inevitability that gambling will eventually become federally legal, but there was a time when that hope was in serious jeopardy.
1 – States Are Free to Make Their Own Choice on Sports Betting
The most notable change that has taken place after the repeal of PASPA is that states are now free to make their own decisions when it comes to the legal status of sports gambling within their borders.
As more and more states provide legal means to place bets, it’s likely that other states who have yet to take the plunge will recognize that they’re simply losing out on easy money by keeping sports gambling illegal.
The argument about if states or the federal government can control sports betting is over. The states can do what they want in sports betting.
2 – Everyone Is Getting In On the Action
One of the fascinating aspects of the repeal of PASPA has been the influx of businesses that have embraced sports gambling wholeheartedly. Never before have there been so many options available in terms of online sportsbooks that can legally accept bets.
Obviously, daily fantasy sports platforms have emerged as one of the leaders in the new legal betting industry. With that being said, just about everyone associated with sports and/or gambling in general is looking for a way to get their piece of the pie.
One example of this is Barstool Sports – a company who has a heavy reach within the younger, male demographic – aka the sports bettors of the future. They have invested tens of millions into the industry and will likely reap the benefits for years to come. Even the sports leagues themselves have taken an arms-wide-open approach to sports gambling as a way to grow the overall interest in their league.
3 – Sports Betting Has Turned Into Big (Legal) Business
Sports gambling has always been profitable on a large scale. Organized crime syndicates used it for decades as a way to fund their operations and line their pockets along the way. That people – sports fans and otherwise – like to gamble, is not new. What is new, however, is the volume of legal money pouring in since 2018.
In the two years following the PASPA repeal, more than $20 billion has been bet with US sportsbooks. More than 20 states now have fully legalized sports gambling and dozens more have legislation (in some stage) in the works that will add to this number.
The growth of the industry in such a short period of time is nothing short of extraordinary and the tax money that is to be gained from legal betting will likely be used to fund state infrastructure and education projects.
4 – Some Concerns Still Exist
Whereas the previous concerns that led to the passing of PASPA included corruption within the sports leagues themselves, a new set of issues has come into the forefront with widespread sports gambling legalization. The one that’s receiving the most attention is the potential for addiction.
Recently it was revealed that of the 16 initial states which legalized sports betting, nine did so without dedicated any additional funding to be used for “problem gambling services.” These programs typically include addiction hotlines, therapy, and other measures that help individuals who have become addicted to betting.
The NCPG (National Council on Problem Gambling) has already issued a statement saying, “Research indicates that anytime we introduce a new form of gambling, we will simultaneously bring additional problems and concerns, this requiring additional dollars.” It is this organization’s stance that a state profits from legalized gambling, they have a responsibility to pay for the consequences as well.
It’s still too early to say definitively whether or not legalization will increase the rate of gambling addiction, but it’s a safe bet (pun intended) to expect to see an uptick in problem gambling simply due to accessibility. Here’s a reminder that it’s okay to take a break if you feel like you’re developing unhealthy gambling habits.
Of course nothing is certain, but the future of sports betting looks bright – whether you’re a handicapper or involved with a company which operates sportsbooks. Though not every state has fully legalized gambling operations, the federal government’s attitude represents a sea change in public and government opinion.
Gambling will continue to become more accessible to fans, which may have unintended consequences we aren’t yet aware of at this time. Time will tell how the experiment will play out, but with the repeal of PASPA, the possibilities are endless.