Economics

Print
Supreme Court's Decision on Sports Betting: What’s Next?

30 May, 2018

By: Michael Popke

Now that the United States Supreme Court has shot down the Professional and Amateur Sports Protection Act (PASPA) — the federal law that largely limited sports betting to one state, Nevada, for the past quarter-century — will sports gambling suddenly become a big deal in every state?

Not likely, according to Chris Grove, who oversees the sports betting practice of Eilers & Krecik Gaming LLC, a California-based research firm that serves the gaming industry.

“Broadly speaking, you're looking at a few distinct waves" in how states will proceed, he told USA TODAY.

“The first wave comprises a handful of states that basically have legal mechanisms in place and were just waiting for a favorable ruling from the high court. This includes New Jersey, West Virginia, Delaware and Mississippi,” according to the newspaper. “The next involves a slightly larger set of states whose legislatures are still in session and have sports betting bills pending. California, New York, Illinois and Michigan are among this group.”

CNBC reports that New Jersey could have wagering available by the start of the NBA Finals on May 31, with other states ready by the time the 2018 NFL season kicks off.

Legal sports betting will lead to a rush on new apps and services from tech startups and legacy media companies who will join traditional bookmakers and online betting sites,” according to PACIFIC, a CNNMoney newsletter covering the business, culture and politics of innovation. “The move will also create a whole new field of content around sports betting, including news, analysis and data analytics.”

"You're going to see a recontextualization of how we view sports and how sports are presented to consumers," Grove, the managing director at Eilers & Krejcik Gaming, told PACIFIC. "It's a landscape changer."

Indeed, the NCAA’s Board of Governors has already responded, suspending its championship host policy related to sports wagering. The suspended policy prohibited any NCAA championship competition from occurring in any state that allows single-game sports wagering.

“Our highest priorities in any conversation about sports wagering are maintaining the integrity of competition and student-athlete well-being,” NCAA President Mark Emmert said in a statement, explaining the organization’s support of a federal model addressing legalized gambling. “Sports wagering can adversely impact student-athletes and undermine the games they play. We are committed to ensuring that laws and regulations promote a safe and fair environment for the nearly half a million students who play college athletics. While we recognize the critical role of state governments, strong federal standards are necessary to safeguard the integrity of college sports and the athletes who play these games at all levels.”

For a summary of PASPA and the high court’s actions on May 14, click here.

Sports betting generated only 2.5 percent of 2017’s total $11.6 billion gambling revenue in Nevada, according to Skift.com, which covers the travel business. This, despite sports bets in Nevada setting all-time records the past eight years. In 2017, $4.9 billion was bet on sports, the site reports. (Three other states with more limited sports betting — Delaware, Montana and Oregon — were grandfathered into PASPA.)  

Moreover, the total economic impact of sports betting on cities like Las Vegas isn’t clear, according to Michael Lawton, senior research analyst for the Nevada Gaming Control Board. “Sports betters do more than just bet on sports, such as stay in hotels and visit other attractions,” he told Skift.com, adding that many Nevada locales are considering high tax rates for sports betting.“Sports betting isn’t going to solve everyone’s problems, [and] I don’t think the ruling will be negative to Nevada’s gaming industry.”

Other observers agree that Las Vegas likely won’t lose its status as the sports betting capital of the country. The Las Vegas Convention and Visitors Authority reports that nearly three-quarters of visitors to the city last year gambled. “Some 44 other states have legalized commercial, tribal and racetrack gambling, and sports betting could give them another boost, but many travelers will still want the full Las Vegas experience,” Skift.com notes.

Other significant questions remain, including how much pro sports leagues will make off legalized sports gambling. According to CNBC:

Leagues including the National Basketball Association and Major League Baseball initially pushed for a 1 percent integrity fee, though the amount they'll receive, if any, is likely to be slightly less and could differ on a state-by-state basis. New York state recently proposed a 0.25 percent integrity fee as part of legalized sports legislation. West Virginia has said it won't pay a fee to the leagues at all. 

The NBA and other leagues have defended their reasoning for the fee as a need to police the game from criminals looking to fix games, and implement compliance systems across their leagues. The NBA maintained this stance after the U.S. Supreme Court ruling.

"We will remain active in ongoing discussions with state legislatures. Regardless of the particulars of any future sports betting law, the integrity of our game remains our highest priority," NBA Commissioner Adam Silver said in a written statement.

Critics of the fee argue that the leagues are hurting the potential sports betting business because the legal bookmakers won't be able to compete with the underground market if you decrease the margins.

Perhaps Dylan Byers, writing for PACIFIC, summed things up best: “We're about to witness the launch of a new economy built on vice, not unlike the end of prohibition or the legalization of marijuana. We're beginning to understand what it means for business, we don't yet know what it will mean for society and culture.”

Print

Subscribe to SDM