Monday morning, the Supreme Court ruled decisively 6-3 in favor of New Jersey in Murphy v. National Collegiate Athletic Association, finding that the Professional and Amateur Sports Protection Act violated the 10th Amendment. The finding means states can legalize sports betting, if they so choose.
In the court’s opinion, delivered by Justice Samuel Alito, the court ruled the federal government could not “commandeer” state power and prevent them from authorizing sports gambling. As the ruling said, “All other legislative power is reserved for the States, as the Tenth Amendment confirms. And conspicuously absent from the list of powers given to Congress is the power to issue direct orders to the governments of the States.”
This does not prevent Congress from addressing the issue and passing a federal ban on sports gambling. But given the current political climate, and the fact that sports gambling is already fully legal in Nevada, this outcome seems unlikely.
So where does this leave sports gambling in America?
Now five states, (Mississippi, West Virginia, Pennsylvania, New Jersey, and Connecticut) have legalized sports gambling, thanks to pre-written laws that legalized it if the Supreme Court overturned PASPA, which it did this morning. Legislators in more than a dozen other states have introduced a bill to do the same.
But state legislatures are far from the only players that will have an impact on the final outcome. Both MLB and NBA commissioners Rob Manfred and Adam Silver have recently come out in favor of legalizing sports gambling, with the condition that their leagues can be assured a cut.
Manfred recently lobbied Republican Gov. Jim Justice of West Virginia to veto Senate Bill 415, because the bill didn’t contain an “integrity fee” to be paid to the sports leagues. This fee would be 1 percent of the total amount wagered in the state. For context, Nevada had $4.5 billion wagered last year.
The sports leagues are also lobbying for control of the data governing the results of the wagers and authority over what type of bets are offered.
States should be wary of giving into sports leagues demands.
Not only would states be giving up tens of millions of dollars in revenue, which could go for public services, but putting in favored treatment for sports leagues reeks of cronyism.
The results of the sports leagues lobbying are already apparent in West Virginia, where Justice announced he reached an agreement for the integrity fee after a closed-door meeting with sports lobbyist Larry Puccio. If the closed-door meeting wasn’t suspicious enough, Puccio was also the chairman of Justice’s gubernatorial transition team.
Rather than hire lobbyists to cut deals with lawmakers, sports leagues should be looking to actively partner with the newly legalized sports books to provide data services as a means to generate revenue. Additionally, many European sports leagues bring in revenue from sports books via advertising. There’s no reason the same model couldn’t be applied in an American context.
With many states struggling to balance their budgets, the Supreme Court’s ruling not only affirmed their 10th Amendment rights but threw them a lifeline for potential new revenue.
As states weigh the consequences of legalizing sports gambling, they should heed the lesson of the courts and not look to prescribe a top-down approach to sports betting. Rather than granting sports leagues a monopoly on working with the sports books of the state, as well as a cut of the action, they should make sure the sports books have the right to contract with whomever can provide the best services.
Anything else would be a bad bet.
Eric Peterson (@IllinoisEric89) is a freelancer in Northern Virginia and a native of Illinois. He has written extensively about cronyism in sports.
