08/09/2017 5:37PM

No consensus on where Supreme Court will land on challenge to sports betting law

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SARATOGA SPRINGS, N.Y. – Among the legal experts, there is no consensus about whether the Supreme Court will throw out a federal law that largely prohibits states from offering gambling on sports, an issue that is being closely watched by the horseracing industry.

A panel of gambling-law experts appearing at the Saratoga Institute on Equine, Racing, and Gaming Law conference on Tuesday agreed that many states would welcome a Supreme Court decision to toss the law, the Professional and Amateur Sports Protection Act, which was passed in 1992 with the wide support of sporting leagues. But they also said that it is hard to predict which way the court will rule.

“I would not put money on anything, even if I legally could,” said Marc Edelman, professor at Baruch College at the City University of New York.

The Supreme Court agreed to take up a challenge to PASPA by the state of New Jersey earlier this year, after New Jersey’s efforts to authorize sports betting within its borders were repeatedly struck down by lower courts. The court will hear the case this fall, with a ruling expected in the spring.

According to the panelists, New Jersey will argue that the case violates the Constitution on two fronts. The first is that the federal law “commandeers” the power of states to determine what is legal within their borders, and the second is that the law is unconstitutional because a provision within it gave four states the ability to continue to offer sports betting under limited circumstances. That could be considered a violation of the constitution because it grants some states more power than other states.

The issue is being closely watched by the horseracing industry because of the competitive challenge that would be mounted by an expansion of sports betting, along with the opportunities the expansion could create for existing racing companies that would look to capitalize on sports betting, such as account-wagering companies with large databases of existing customers already predisposed to bet on sports.

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One of the plaintiffs in the New Jersey appeals process was Monmouth Park, which would have been allowed to offer sports betting under New Jersey’s various approaches to legalize the practice. If the law is overturned, states that legalize the process are expected to restrict sports wagering to licensed operators, and it is unclear if racetracks or simulcast outlets would be included in those preferred lists.

Already in New York, legislators have pre-filed legislation that would authorize sports wagering if PASPA is overturned. One of the authors of that legislation, Assemblyman Gary Pretlow, the chairman of the New York Assembly’s Racing and Wagering Committee who has played a significant role in all major racing legislation produced in the state in the past 20 years, appeared on the panel, and he said that he regretted that the current legislation would only allow sports wagering at casinos.

“I’m disappointed in myself that I didn’t include racinos and OTBs in the enabling legislation,” Pretlow said. Under New York’s laws dealing with gambling bills, the legislation would need to pass in two consecutive sessions of the legislature and then be approved in a public referendum.

Earlier in the day at the law conference, New York State Sen. John Bonacic, the chairman of the Senate Racing, Wagering, and Gaming Committee, predicted that legislation authorizing sports wagering would lead to a “food fight” among OTB companies, which are owned by counties in New York, and the casino industry.

Some panelists predicted that if the law is struck down, states will gain the power to authorize sports betting and regulate it through their own commissions, but Keith Miller, a professor at Drake University Law School who is an expert on gambling law, said that he believed the professional sports leagues would instead push for federal legislation. Either way, Miller said that professional sports leagues would almost certainly play a leading role in crafting the regulatory environment, given the stakes involved. Some experts have predicted that gambling on NFL games alone would reach $20 billion a year if the practice is adopted across the U.S.

“The pro leagues seem to be saying, ‘We better be aggressive with this or we are going to get a result we don’t like,’ ” Miller said.

Andrew Smith, the senior director of research at the American Gaming Association, said on the panel that his organization has conducted research demonstrating how the leagues would benefit from sports gambling.

“Most sports teams are having trouble keeping eyeballs on [their games],” Smith said. “We’ve found that people who bet on sports are much more avid followers of their teams and they consume a lot more of the product. They are more active on social media. They buy more merchandise. Any number of metrics.” The AGA’s members include companies that would benefit from sports gambling.

Edelman said he felt there were four possible outcomes for the Supreme Court decision. The court could strike down PASPA in its entirety, leaving states free to repeal their own prohibitions on sports gambling. Second, the court could find most of PASPA constitutional, but strike down the grandfather clause, which could mean making sports betting illegal in Nevada, the biggest market for sports betting in the U.S. Third, it could issue an opinion that affirms that the law is constitutional.

The fourth possibility is that the court could imply that the law is unconstitutional but “punt the issue back to Congress” to resolve questions it raises about the law in its ruling.

“If I had to throw something out there, that’s the one I’d pick,” Edelman said.