Pennsylvanians Cheer As The US Supreme Court Repeals A Nationwide Prohibition On Sports Betting

Pennsylvanians Cheer As The US Supreme Court Repeals A Nationwide Prohibition On Sports Betting

On May 14, 2018 the US Supreme Court (SCOTUS) ended a nationwide prohibition on single-sport wagering that had been in effect for 36 years. During the ban (due to grandfather clauses) Delaware, Oregon, and Montana were allowed to accept limited sports wagers, and only Nevada casinos could operate a full sports book. With the repeal, all 50 states can now legalize, regulate, and tax sports betting. Pennsylvania has laid the groundwork to do just that and both gamblers and casino operators are thrilled about it.

The legal history

The law at the heart of the case was the 1992 piece of legislation called the Professional and Amateur Sports Protection Act (PASPA). The law was ostensibly created to eliminate the murky nationwide practice of bookmaking and the the perceived harms associated with it. What actually happened, of course, is that bookmaking was driven underground into a black market valued in the tens of billions of dollars range. Whatever protections and rights that had existed at the state level were swept away by the federal ban.

The case that eventually led to the repeal of PASPA was Murphy vs. NCAA, also referred to around the nation as the “New Jersey sports betting case.” For most of the life of this litigation, it was called Christie vs. NCAA, but was re-titled when Phil Murphy replaced Chris Christie as governor of New Jersey. The case revolves around the issue of Federalism. New Jersey is asserting a states-rights claim to be able to regulate an activity enjoyed by its citizenry in defiance of a broad federal ban. The issue was raised in 2009 when New Jersey state senator Raymond Lesniak publicly announced his intention to challenge the prohibition. Just two years later, this challenge appeared in the form of a successfully passed 2011 referendum allowing sports betting throughout the state.

The major professional and amateur sports leagues banded together in opposition to New Jersey’s actions and (led by the NCAA) filed suit. Despite losing the case in district and circuit courts, then-governor Christie vocally championed the case through the appeals process until it finally landed before the highest court in the land. SCOTUS, in deciding for New Jersey in the matter, also ruled in favor of hundreds of millions of sports bettors nationwide. The federal ban was over.

Pennsylvania saw it coming

New Jersey’s activity and the associated national ramifications weren’t lost on Pennsylvania lawmakers. Presciently, they began laying the groundwork for legalized betting in their state well in advance of the hoped-for positive SCOTUS ruling. In October of 2017, Pennsylvania passed a bill (H 271) legalizing online poker, daily fantasy sports, traditional casino games, and perhaps most importantly, sports betting. Just three days after passage, governor Tom Wolf signed the bill into law. Gambling in Pennsylvania would now be legal, taxed, and regulated under the Pennsylvania Gaming Control Board.

As it is still early in the licensing process, the full details of the Pennsylvania gambling landscape are not yet known. We do know a few things, however. Full gaming licenses will be available to all 12 current brick and mortar casinos and “racinos.” There will also be partial licenses available for operators that wish to focus on smaller segments of the betting market (such as daily fantasy sports). Also, the fees and taxes will be hefty. The full sports betting license fee is $10 million and comes with an associated tax rate of 36 percent.  For comparison, Nevada’s casinos are taxed at 6.75 percent.

Despite these costs, there is no doubt that business will be booming. Pennsylvanians love to bet on (and against) their favorite teams and casino operators are finally able to legally accept those wagers. In Pennsylvania, it’s a great time to be a sports fan.