Business

Congress to Stop States from Making Their Own Bets?

In 1992, Congress enacted the Professional and Amateur Sports Protection Act (PASPA) that effectively prevented any state from legalizing sports gambling unless the state had already legalized it. The result was that legalized sports wagering on college and professional sports was only fully legal in Nevada, and available to a more limited extent in Delaware, Montana, and Oregon.  Also excluded from coverage of the law were several areas of wagering, jai alai, parimutuel horse and dog racing. Despite a stream of testimony about the social ills of wagering clearly the federal law was never about principle given all of the carve-outs and exceptions.

PASPA did not make sports betting a federal crime, but instead ensured that states could not authorize or tax gambling activities. States were robbed of choice being left only with a decision to ban sports wagering entirely or having no regulations (including taxation) on the practice whatsoever. In May of this year, the U.S. Supreme Court determined that PASPA was unconstitutional precisely because the law took power from the states, violating the 10th Amendment and principles of states’ autonomy. With that decision, the power was returned to where it belongs – to the states where what is best its citizens can be determined. The American Gaming Association’s Sara Slane correctly says “Federal oversight of sports betting was an abject failure, succeeding only in enabling the growth of a massive illegal market.”

States already regulate other forms of gaming and do it well. Nevada, in particular, acts as a model in many respects on how to guarantee the integrity of the gaming industry, deter illicit activity, and foster beneficial relationships between law enforcement and industry participants. Numerous other states have developed a regulatory gaming structure to account for casinos, card rooms, lotteries, and horse races.

But, Congress wants to act again. Senator Orrin Hatch is calling for a federal framework to regulate sports betting. His statement made clear that he wants exactly what the Supreme Court has already struck down, a one federal sized answer to fifty innovative state solutions. He wants the federal government to seize the power to dictate to the states. In addition, the House Judiciary Committee will potentially hold a hearing later this month to discuss what the House could do.

With the demonstrable capacity of states to enact regulatory regimes tailored to their individual needs and concerns, Congress would do well to refrain from attempting to again regulate this industry. The fifty laboratories of democracy are quite capable of leading the way on matters related to legalization and taxation. Absent Congress choosing to regulate sports betting on a federal level, states and sovereign tribal nations will have the authority to decide whether or not to permits sports betting in their respective territories. State policymakers must determine how—and if—to legalize sports betting and how best to tax the industry. Those fifty laboratories are the very essence of public policy innovation, and shutting them down again with federalism violating federal law is no more than big government mandating liberty fighting action.

The real end goal should be to frustrate illegal sports betting and the criminal behavior that comes with it, not stop states from acting to do what is right for them. States can build on the successful record they have. State-regulated sports betting will bring tools and transparency that will empower law enforcement and regulators to maintain integrity, to spot irregular behavior, and to provide consumers with the protections they deserve. Breaking the law by violating the Constitution and eliminating the power of the states and the people is not the path forward. That approach should never have been considered, instead, states can and should decide for themselves, just as the Founders envisioned.


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