By Jacklyn Flint, Riley Bennet & Egloff LLP
It is no secret that gambling has always been a popular and important aspect of professional and amateur athletics across the United States. Despite such interest in sports gambling, Congress passed the Professional and Amateur Sports Protection Act (PASPA) in 1992, prohibiting states from regulating gambling for competitive sporting events. However, in a landmark decision in May 2018, the United States Supreme Court held that PASPA imposed unconstitutional restrictions on states’ rights to regulate sports gambling. As a result, several state legislatures, including Indiana’s, have quickly reacted to the Supreme Court’s decision by proposing or enacting legislation to legalize and regulate sports gambling in their respective states. This article explains the Supreme Court’s recent decision, the sports gambling legislation proposed in the Indiana legislature and possible concerns arising from legalized sports gambling in Indiana.
The U.S. Supreme Court’s Decision in Murphy v. NCAA
On May 14, 2018, the United States Supreme Court rendered its decision in Murphy v. National Collegiate Athletic Association, finding that PASPA presented an unconstitutional violation of states’ rights with respect to the authorization of sports gambling schemes. Specifically, Murphy challenged a 2014 New Jersey statute that sought to repeal state prohibitions on sports wagering. As a result of New Jersey’s 2014 legislation, several professional and amateur sports leagues brought an action against Philip Murphy, the governor of New Jersey, to enjoin him from enacting this legislation, pursuant to the prohibition in PASPA. The Supreme Court held that PASPA’s prohibition on states’ regulation of sports gambling violated the anti-commandeering rule of the Tenth Amendment, which reserves all legislative power not otherwise conferred on Congress by the United States Constitution to the states and was therefore unconstitutional. Consequently, the Supreme Court permitted New Jersey and all other states to legislate issues surrounding the authorization and regulation of sports gambling.
Indiana’s Proposed Sports Gambling Legislation
As a result of the Supreme Court’s decision in Murphy, all but seven states have proceeded to either enact or propose legislation authorizing sports wagering. To date, eight states (Nevada, Delaware, New Jersey, Mississippi, West Virginia, New Mexico, Pennsylvania and Rhode Island) have already enacted statutes legalizing sports gambling. Additionally, New York and Arkansas have both passed bills that will authorize sports gambling in those states, and thirty-three other states (plus Washington, D.C.) have proposed bills to do the same.
In January 2018, the Indiana House and Senate each presented bills before the Indiana General Assembly seeking to legalize and regulate sports gambling. After debate in both houses of the Indiana General Assembly, the proposed bills were revamped into House Bill 1015, which was passed by both the Indiana House and Senate on April 24, 2019. Specifically, House Bill 1015, which would go into effect as of January 1, 2020 if it is signed into law by Indiana Governor Eric Holcomb, would authorize sports wagering at riverboats, racinos and other approved satellite gaming facilities in Indiana, permit sports wagering through mobile devices, regulate the administration and conduct of sports wagering through the Indiana Gaming Commission and impose state taxes on revenues generated through sports wagering.
Where We Go from Here
In the aftermath of Murphy, lawmakers and sports league administrators alike are left with several questions on how best to regulate and control sports gambling. Although the Supreme Court’s decision in Murphy found PASPA to be unconstitutional, Congress is currently considering several possible options relating to the regulation of sports wagering. Such options include a federal prohibition on sports gambling that does not inhibit states’ rights, continuing to allow states to determine their own policies on sports gambling and enacting a uniform statute to regulate the sports gambling industry nationwide.
Similarly, lawmakers in states enacting or considering enactment of statutes authorizing sports gambling must decide whether their laws will also authorize online or mobile sports wagering in addition to sports gambling at physical gaming facilities. Because of the widespread use of cellular technology that now makes gaming options available anywhere and at any time, such decisions could significantly impact the popularity of sports gambling in a particular state and the amount of states’ tax revenues that can be generated. Although the version of Indiana House Bill 1015 that was ultimately passed through the Indiana House and Senate permits sports wagering on mobile devices, this particular aspect of the proposed sports wagering bills in the Indiana General Assembly caused significant debate and conflict among Indiana legislators throughout its legislative session.
Moreover, with the legalization of sports gambling, sports leagues are now being forced to address ways to ensure the integrity of their sporting events and to prevent fixing by any of the individuals that could influence their outcomes. Such legalization raises questions as to whether any of the individuals that could impact the outcome of events should be required to obtain certain licenses and if so, what individuals would be subject to a licensure requirement in order to participate in or officiate sporting events subject to wagering.
For example, should players, coaches and officials all be required to obtain a license from a state or federal gaming commission before they are allowed to compete or officiate in a sporting event? Because of the widespread nature and availability of sporting events on which people may bet, it could prove to be a significant challenge to impose licensure requirements for any individual who could potentially impact the result of a sporting event.
Additionally, several professional sports leagues have suggested that they should receive an “integrity fee” from states authorizing sports wagering based on tax revenue generated from legalized sports in order to support their efforts to monitor and control the integrity of their events. However, support for integrity fees appears to be fading as sports leagues realize they stand to benefit from the heightened interest in their leagues that results from legalized gambling. While some of the proposed bills in Indiana included an integrity fee provision to provide sports leagues with a 1% cut of the profits from sports wagering, House Bill 1015 ultimately did not include an integrity fee. Similarly, no other states have imposed an integrity fee for legalized sports gambling.
Despite the lingering questions that exist as a result of the Supreme Court’s decision in Murphy, sports gambling legislation promises to be the most interesting and rapidly changing area of the law for years to come. You can bet on that.
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