On Monday, the U.S. Supreme Court will begin hearing arguments in Christie v. NCAA, which ironically pits New Jersey Governor Chris Christie and President Donald Trump against each other over the federal ban on sports gambling. Both men have had big interests in gambling—Christie runs a state that wants it, and Trump used to own three casinos there. But now Trump is in the White House, and his lawyers say the ban needs to stay in place.
Known as the Professional and Amateur Sports Protection Act of 1992 (PASPA), the law criminalizes sports gambling throughout the country, except in the four states that were grandfathered in.
As a result, Nevada has essentially held a legal monopoly on sports betting for decades (Delaware, Oregon, and Montana offers it to a very limited degree). So voters in New Jersey decided to give Nevada some competition. With 64 percent of the vote, their state passed a referendum in 2011 to legalize sports betting.
Three years later, Christie signed that bill into law, but Atlantic City’s casinos have never been able to offer such wagering because sports leagues (NCAA, NFL, NBA, MLB, NHL) filed a federal injunction against the state and put legal betting there into a legal limbo.
This has been a long, drawn-out battle in which the state of New Jersey contests that PASPA violates its 10th Amendment right to equal sovereignty, in other words, violating the state’s right to pass its own laws. The U.S. Supreme Court will begin hearing oral arguments on Monday, and a final decision will come at some point next year—June at the latest.
Clearly, there are billions of dollars on the line here, and Atlantic City, a once thriving gambling mecca with deep ties to Trump has much to win or lose in this case.
Market estimates vary widely, but the American Gaming Association came to a moderate conclusion that $150 billion is wagered on sports each year in the United States. However, only $4.5 billion in sports bets were accepted by Nevada’s legal sportsbooks last year, accounting for only three percent of the total estimated market. In other words, roughly 97 percent of sports betting in America takes place on the black market. That’s a lot of money that could be taxed for state coffers, especially in states (many of which already have legalized casino gambling) currently running in the red.
Oxford Economics concluded that legalizing this black market would create as many as 152,000 private sector jobs, along with $26 billion of economic impact, in addition to providing $5.3 billion of tax revenue.
Pennsylvania and Connecticut have already passed bills that would authorize sports betting, pending the outcome of this case. Nine other states have introduced legislation to do the same. And there are bound to be several more to come depending upon the decision by the U.S. Supreme Court.
Christie, of course, hasn’t always been a federalist crusader when it comes to gambling. He actually argued to uphold PASPA in Flagler v U.S. Attorney when he was a U.S Attorney in 2007. In another twist, Trump opposed PASPA in the 1990’s, when he ran three major Atlantic City casinos. At the time, he said he was pushing for legalized sports betting because it was vital for “keeping taxes low,” for “senior citizens,” and for “putting the bookies out of business.” In fact, he last said in 2015 that he wasn’t opposed to legalizing the age-old activity at all. Now, his U.S. Solicitor General will be arguing in favor of the federal law he once opposed.
The courts have been host to several unsuccessful legal challenges to PASPA, which is a crony capitalist’s dream, as it legally protects one state’s monopoly on a multi-billion dollar industry, and criminalizes everyone else who dares to tread upon it.
The U.S. Department of Justice certainly recognized this inconsistency before PASPA was signed into law more than 20 years ago. In fact, the DOJ wrote a letter to Joe Biden, who was then serving as the Senate Judiciary Committee chairman. The letter warned that PASPA may violate the 10th Amendment. Regardless, the committee approved of the bill and it easily passed Congress in 1992.
Much like the War on Drugs, the prohibition on sports gambling ban has been an abysmal failure. This black market is flaunted in broad daylight. The newspapers print the injury reports/betting odds, and the sports commentators openly discuss the point spreads “for entertainment purposes.”
No one knows the exact amount, but organized crime is no doubt raking in these underground profits. Notwithstanding, the sports leagues have been on the front lines of the legalization opposition, arguing that it remain criminalized in order to maintain the “integrity of the game,” i.e. preventing players from fixing games.
It’s an assertion that defies logic in every possible manner. Suffice it to say, a fully legalized and regulated sports gambling industry would drastically improve transparency, thus alerting authorities to more instances of game fixing. In fact, all of the major sports leagues already maintain contacts with Las Vegas casinos to warn them of suspicious betting patterns indicative of potential game fixing. However, Las Vegas only represents a small fraction of the betting market.
Remarkably, some of these points, among many others, were made by the NBA commissioner, Adam Silver, in his 2014 op-ed for The New York Times, “Legalize and Regulate Sports Betting.” He pointed out several of the flaws of the current ban on sports gambling and advocated for a change.
Maybe that’s why, despite its earlier support of PASPA, the NBA recently announced it would begin lobbying Congress for federal regulation of sports gambling.
Then again, sports leagues have always been able to play both sides, to their own benefit. On one hand, anti-gambling rhetoric has been a win-win situation because it appeases traditional values conservatives and gives the leagues the perceived moral high ground. Meanwhile, the federal ban hasn’t reduced the demand for betting on sports, thus not harming profitability.
Furthermore, the leagues have always maintained an anti-gambling facade in the most hypocritical manner. They publicly condemn sports gambling while allowing several team owners to own gambling businesses, accepting advertising from casinos, promoting fantasy sports, partnering with daily fantasy sports companies and state lotteries, among other stunning examples.
But the tide is definitely turning among Americans. A Gallup poll from 1999 found that only 41 percent of Americans supported legalizing sports gambling. However, the most recent economic crash seemingly tipped the scales and there’s been a drastic shift in public opinion. The latest poll by the University of Massachusetts Lowell found that the majority of Americans (55 percent in favor versus 33 percent opposed) support legalization. In fact, this is now an issue with bipartisan support.
All that said, legalized sports gambling is not a panacea. This vice obviously involves a level of harm to society, but it is inherently more harmful hiding in the shadows. The federal ban hasn’t diminished demand. Hence, the reversal of PASPA would be a mammoth improvement from the status quo. It would eliminate one of the most glaring examples of crony capitalism in America today.
Brian Saady is a freelance writer and the author of four books, including Dealing From the Bottom of the Deck: Hypocritical Gambling Laws Enrich Crooked Politicians, a Select-Few Casinos, and the Mob. You can follow him on Twitter @briansaady.