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Can the NBA Commissioner’s Wager to Congress Parlay into a New Form of Legalized Gambling?

January 9, 2015

We have long lived in a world full of different forms of entertainment and vices; gambling has long been a one of those forms that crosses the fine line between acceptance and opposition. Gambling has increasingly gained public acceptance and popularity through lotteries and legal casinos; three states have recently approved some form of legal internet gambling. Sports betting, while gaining popularity though the usual gambling suspects, as well as the unusual ones, has generated a lot of noise lately.

Sports betting is a billion dollar industry. Nevada, the only state where it is legal, regulated, policed and taxed, takes in around $4 billion annually in legally wagered sports bets, with gross revenue of $170 million after paying out winnings; according to the American Gaming Association. The National Gambling Impact Study Commission estimates that illegal sports wagers reach around $380 billion annually, meaning legal sports wagering represents 1% of all sports betting nationwide.

Citizens of New Jersey showed their overwhelming support to legalize sports betting in a 2011 referendum, and again in 2012. Governor Chris Christie recently signed a bill authorizing sports betting at local casinos and horse tracks in an effort to rescue the states ailing gambling industry. The bill has since been blocked in federal court because it violates the Professional and Amateur Sports Protection Act (PASPA), which was passed by Congress in 1992, and prohibits states from authorizing, operating, advertising, promoting or licensing sports betting (with the exception of Nevada, Delaware, Montana, and Oregon, where the law does not apply).

The major professional sports leagues, as well as the National Collegiate Athletic Association (NCAA), are in favor of PASPA, as it maintains the integrity of the game. U.S. District Judge, Michael Shipp, recently granted a temporary restraining order to the NFL, NBA, NHL, NCAA and MLB, which prevents a New Jersey racetrack from taking bets on games played by teams belonging to these leagues and organizations. Judge Shipp’s reasoning was that the leagues would suffer irreparable harm if the racetrack started taking bets. 

More hearings in district court and the Third Circuit Court of Appeals are expected. This is not the first setback the gambling industry has faced in its efforts to bring sports betting to New Jersey. Federal Courts have rejected efforts by the state to legalize sports betting on three separate occasions, and the U.S. Supreme Court declined to review those lower court decisions last June.

NBA Commissioner, David Silver, recently spoke out in favor of legalizing sports betting in a New York Times op-ed, despite all of the professional sports organizations heavily opposing the idea of legalizing sports betting because of the potential that it will destroy the integrity of their game.

Silver believes that Congress should adopt a federal framework that allows states to authorize sports betting. The framework should be subject to strict regulatory requirements and technological safeguards which would include: mandatory monitoring, reporting of unusual betting, a licensing protocol to ensure operations are legitimate, geo-blocking technology to ensure betting is available only where it is legal, as well as mechanisms to identify and exclude people with gambling problems and underage gamblers.

Silver is in favor of changing the laws in light of the changing domestic and global trends. Outside of the United States sports betting is popular, widely legal, but subject to regulation. For example, in the United Kingdom, a sports bet can be legally placed on a smart phone or a stadium kiosk.

Business mogul, and owner of the Dallas Mavericks basketball franchise, Mark Cuban, has shown strong agreement with Silver in regards to their views on the issue. Cuban, who is notoriously outspoken, rarely agrees with the NBA and their commissioner, past and present, respectively; but Cuban will not deny the fact that sports betting is a thriving underground business that he feels will undoubtedly be legalized within the next three to five years.

Silver maintains one main objective to any new approach of legalizing sports betting: it must ensure to protect the integrity of the game while maintaining public confidence in the league. This is a responsibility that Silver asserts is one of his most important as commissioner, and he would oppose any course of action that would compromise his responsibilities. Any legalized form of sports betting without a comprehensive federal framework would be both unlawful and bad public policy says Silver.

For more please see Adam Silver’s op-ed in The New York Times at….

Sources include The New York Times, ESPN, the American Gaming Association and the National Gambling Impact Study Commission.