When sports fans arrived at work on Monday morning, they expected to be talking about Lebron and the Cav’s collapse Sunday afternoon against the Celtics. But the U.S. Supreme Court’s decision in Murphy v. National Collegiate Athletic Association quickly changed that discussion. In a 6-3 opinion, the court sided with the state of New Jersey and found that the Professional and Amateur Sports Protection Act, PASPA, violated the 10th Amendment by “commandeering” the states to enforce federal laws or policies. Little did our founding fathers know that side bets on wrestling, cricket and nine-pin matches would someday become the focus of a legal opinion examining the intent of the 10th Amendment’s reserved powers. Moreover, while procrastination usually doesn’t pay off, this time it did for New Jersey and the rest of the country. Had New Jersey actually taken advantage of their window of opportunity in 1992, Murphy might never have reached the Supreme Court.
Nevertheless, this may not necessarily be the panacea that sports books and bettors were expecting. Yes, this decision allows states to begin operating sports books in casinos, pari-mutuels and potentially online. But how much regulation will be applied to these sports books and who is going to get a slice of the pie?
Twenty-one states are already considering, or have passed, proposed sports betting legislation. These states have included everything from a 1 percent “integrity fee” to double digit tax rates on winnings. As expected, the states and the leagues recognized the ability to generate significant revenue from sports betting. Not wanting to be left out, Sen. Orrin Hatch, one of the four original authors of PASPA, trying to “help protect honesty and principle in the athletic arena,” has already made plans to introduce federal sports gambling legislation.
The NFL, citing a desire to protect the “integrity of our game,” has already called upon Congress to “enact a core regulatory framework for legalized sports betting.” The NBA and MLB have adopted a more liberal approach, recognizing that over $150 billion is already wagered illegally on sports each year. College sports and “amateur” athletes also present a challenge to regulators. New Jersey has written proposed legislation that bans wagering on college events that take place in that state, or on college events involving New Jersey-based schools.
Integrity has been at the heart of the sports gambling discussion since the White Sox scandal of 1919 and the original college basketball scandal of the early 1950s. Yet, we haven’t witnessed that type of scandal since then. Sports betting is already legal in Nevada, Oregon, Delaware and Montana. England has long allowed sports gaming to operate in the open. If the “integrity of our game” or “honesty and principle in the athletic arena,” were being ignored or compromised, wouldn’t fixing games have been rampant by now?
What becomes of your Cousin Joey’s “friend” Stan who will take a bet on the Dolphins-Patriots game or the Rockets-Warriors playoff game? Does he fade even deeper into the shadows after Murphy? Illegal wagers generate billions of dollars in untaxed revenue. Some of that money will indeed be diverted to states where sports’ gambling is legal. But for hard-core gamblers, who don’t have the cash to place a bet and who don’t want the IRS to tax their winnings, Stan and his buddies will still be the connection they need to make.
So where will Florida fall in this landscape and how quickly can we go to the window and bet on a Heat game? We will be electing a new governor in November, multiple legislative seats are up for election and we have Constitutional Amendment 3 on the ballot. Is sports betting considered “casino gambling” that will require a 60 percent vote of the electors to be approved? Even if it is not “casino gambling,” it seems likely that the legislators will wait until after the election to see what the will of the people in Florida is for an expansion of gambling. Independent of the referendum, Tribal gaming locations with casinos will certainly try to add sports betting.
I’m not a betting man, at least not beyond a dinner wager on the Bill-Phins game, but I would bet that Florida will not let this opportunity slip away. The door has opened for the state to build up their coffers with money that will be gambled either legally somewhere else or illegally with your cousin’s bookie. New Jersey received a second chance when the door was shut in their face. They are already racing to open a sports book at Monmouth Park before the end of the month. Florida cannot let the door close on them. With the right combination of fees and taxes, Florida can get a piece of the action to fund some of the programs that our state desperately needs.
White collar criminal defense attorney David S. Weinstein is a partner with Hinshaw & Culbertson in Miami. Contact him at email@example.com.