Congress Looks to Stick Its Nose in Sports Betting
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The U.S. House Subcommittee on Crime, Terrorism, Homeland Security and Investigations recently held a hearing called “Post-PASPA: An Examination of Sports Betting in America” to discuss sports wagers in the wake of its possible legalization around the United States, which is the first step in Congress trampling on state authority in regards to sports betting.

In May, the Supreme Court struck down the Professional and Amateur Sports Protection Act of 1992 after the law that only allowed Nevada to offer legal sports betting was challenged by New Jersey and nearly 20 other states. SCOTUS ruled the concept violated the Tenth Amendment that reserves rights for the states not specifically granted to the federal government by the Constitution.

The majority opinion written by Justice Samuel Alito said “the legalization of sports gambling is an important policy choice, but the choice is not ours to make. Congress can regulate sports gambling directly, but if it elects not to do so, each State is free to act on its own.”

Now some in Congress are looking to take the reins on the issue. Wisconsin Republican U.S. Rep. James Sensenbrenner, the chairman of the subcommittee, said “this is going to be an issue that is going to be very important in terms of making a determination of how professional and amateur sports are played, and any regulation, if any, that Congress should decide to put on the huge amounts of money that are bet both in legal and, in some cases, illegal forums.”

Since the SCOTUS ruling, Delaware, New Jersey, Mississippi and West Virginia have legalized sports betting, with many more states considering their own legislation. But Congress may butt in and establish some guidelines — whether states like it or not.

The National Football League has argued — and Jocelyn Moore, the NFL’s executive vice president of communications and public affairs, spoke to the issue at the hearing — that sports gambling is an issue of interstate commerce, which merits the federal government stepping in.

The American Gaming Association (AGA), on the other hand, told the subcommittee it’d rather see Congress take a light-touch approach and leave the decision to states, as it has for lotteries and casino games.

Sara Slane, senior vice president of public affairs for the AGA, said a survey the group commissioned of Nielsen Sports found that 71 percent of sports bettors would move their bets from bookies to regulated sportsbooks if they had the legal access.

That also depends on keeping the games fair. I pointed out in a previous American Spectator column that states that are implementing sports betting could easily be lured by the siren call of higher sin taxes. This may keep bettors currently in the black market solidly in the black market as sportsbooks would be forced to offers worse odds to compensate for the loss of revenue due to too-high taxes.

The current black market for sports betting is estimated at $150 billion, dwarfing the wagers made in Nevada on an annual basis.

Michelle Minton, a senior fellow who covers gambling issues at the Competitive Enterprise Institute, said the way to combat illegal sports betting is to make legal betting as attractive, and that depends on the ability of legal operators to compete in terms of bets, odds, payouts, etc. In that regard, she wrote disdainfully in a recent blog post about a framework proposed by Sen. Chuck Schumer, D-N.Y., that would require sports books to rely exclusively on data from leagues in determining winning and losing wagers.

On its face, the concept sounds like it would keep bets on the up-and-up, but take a deep dive into the idea and the drawbacks become obvious.

Bets on events within games — team that scores first, player who scores first touchdown, etc. — are popular and increase the action for sportsbooks. Companies sell this data to sportsbooks based on their ability to deliver it quickly and accurately, and the service is valuable.

Minton points out that professional American sports leagues could “ransom their data, forcing sportsbooks to pay as much as the leagues want for the data” under Schumer’s plan. This would also give leagues bargaining advantages over sportsbooks, and allow them to refuse to sell the data if sportsbooks rejects the leagues’ demands.

“At heart, this is an anti-competitive requirement that will do little more than give the leagues a government instituted monopoly,” Minton wrote.

It could also increase the chances of match-fixing, she pointed out, because a larger black market makes it easier to place large bets and fix a game without getting caught due to the lack of regulation and oversight.

Moore and the NFL take a different view, arguing that the creation of fake, “ghost games” by unscrupulous bet-takers could dupe unsuspecting bettors.

“Sports leagues already produce this data for broadcast and statistical purposes. Our data should be the standard in a legal, regulated market,” she wrote in a statement. “For these reasons, requiring the use of official league data is vital to establishing and maintaining marketplace integrity, which is in the public interest.”

Others argue the issues is overblown: Johnny Avello, the director of race and sports operations at Wynn Las Vegas, said his casino hasn’t taken a bet such as which player would commit the first foul — a concern raised by the NBA — in nearly four decades.

Unfortunately for us light-touch types, Sensenbrenner indicated he believes congressional intervention is needed to deal with the sports betting issue.

“I’m looking forward to try to come up with something short-term and more permanent to deal with this issue,” he said. “I’m afraid that if we don’t there will be some people who will be hurt and will be hurt pretty badly.”

The concept of Congress sticking its nose into the sports gambling debate is a strike out. Capitol Hill should leave the decisions to the states.

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