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It is no secret that gambling has always been a popular and important aspect of professional and amateur athletics across the United States.  Despite such interest in sports gambling, Congress passed the Professional and Amateur Sports Protection Act (PASPA) in 1992, prohibiting states from regulating gambling for competitive sporting events.[1]  However, in a landmark decision in May 2018, the United States Supreme Court held that PASPA imposed unconstitutional restrictions on states’ rights to regulate sports gambling.[2]  As a result, several state legislatures, including Indiana’s, have quickly reacted to the Supreme Court’s decision by proposing or enacting legislation to legalize and regulate sports gambling in their respective states.  This article explains the Supreme Court’s recent decision, the sports gambling legislation proposed in the Indiana legislature, and possible concerns arising from legalized sports gambling in Indiana.

The U.S. Supreme Court’s Decision in Murphy v. NCAA

On May 14, 2018, the United States Supreme Court rendered its decision in Murphy v. National Collegiate Athletic Association[3], finding that PASPA presented an unconstitutional violation of states’ rights with respect to the authorization of sports gambling schemes.  Specifically, Murphy challenged a 2014 New Jersey statute that sought to repeal state prohibitions on sports wagering.  As a result of New Jersey’s 2014 legislation, several professional and amateur sports leagues brought an action against Philip Murphy, the Governor of New Jersey, to enjoin him from enacting this legislation, pursuant to the prohibition in PASPA.  The Supreme Court held that PASPA’s prohibition on states’ regulation of sports gambling violated the anti-commandeering rule of the Tenth Amendment, which reserves all legislative power not otherwise conferred on Congress by the United States Constitution to the states and was therefore unconstitutional.[4]  Consequently, the Supreme Court permitted New Jersey, and all other states, to legislate issues surrounding the authorization and regulation of sports gambling.[5]

Indiana’s Proposed Sports Gambling Legislation

As a result of the Supreme Court’s decision in Murphy, several states have proceeded to either enact or propose legislation authorizing sports wagering.  To date, eight states (Nevada, Delaware, New Jersey, Mississippi, West Virginia, New Mexico, Pennsylvania, and Rhode Island) have already enacted statutes legalizing sports gambling. Additionally, New York and Arkansas have both passed bills that will authorize sports gambling in those states, and twenty other states (plus Washington, D.C.) have proposed bills to do the same. 

In January 2018, State Representative Alan Morrison and State Senator Jon Ford each presented bills before the Indiana General Assembly seeking to legalize and regulate sports gambling.[6]  Specifically, these bills seek to authorize sports wagering at riverboats, racinos, and other approved satellite gaming facilities in Indiana; to regulate the administration and conduct of sports wagering through the Indiana Gaming Commission; and to impose state taxes on revenues generated through sports wagering.[7]  In October 2018, a legislative study committee comprised of several Indiana lawmakers voted to recommend the Indiana bills to authorize sports gambling, and a vote to pass such bills is expected in 2019 during the upcoming session of the Indiana General Assembly.[8]

Where We Go from Here

In the aftermath of Murphy, lawmakers and sports league administrators alike are left with several questions on how best to regulate and control sports gambling.  Although the Supreme Court’s decision in Murphy found PASPA to be unconstitutional, Congress is currently considering several possible options relating to the regulation of sports wagering.[9]  Such options include a federal prohibition on sports gambling that does not inhibit states’ rights, continuing to allow states to determine their own policies on sports gambling, and enacting a uniform statute to regulate the sports gambling industry nationwide.[10] 

Similarly, lawmakers in states enacting or considering enactment of statutes authorizing sports gambling must decide whether their laws will also authorize online or mobile sports wagering in addition to sports gambling at physical gaming facilities.  Because of the widespread use of cellular technology that now makes gaming options available anywhere and at any time, such decisions could significantly impact the popularity of sports gambling in a particular state and the amount of states’ tax revenues that can be generated.  Currently, the bills to be considered by the Indiana General Assembly only permit sports wagering at certain physical gaming establishments; however, it is possible (and perhaps probable) that the Indiana legislature could take up the issue of online sports wagering as more information surrounding the sports gambling industry becomes available.

Moreover, with the legalization of sports gambling, sports leagues are now being forced to address ways to ensure the integrity of their sporting events and to prevent fixing by any of the individuals that could influence their outcomes.  Such legalization raises questions as to whether any of the individuals that could impact the outcome of events should be required to obtain certain licenses, and if so, what individuals would be subject to a licensure requirement  in order to participate in or officiate sporting events subject to wagering.  For example, should players, coaches, and officials all be required to obtain a license from a state or federal gaming commission before they are allowed to compete or officiate in a sporting event?  Because of the widespread nature and availability of sporting events on which people may bet, it could prove to be a significant challenge to impose licensure requirements for any individual who could potentially impact the result of a sporting event.  Additionally, several professional sports leagues have suggested that they should receive an “integrity fee” from states authorizing sports wagering based on tax revenue generated from legalized sports in order to support their efforts to monitor and control the integrity of their events.  However, support for integrity fees appears to be fading as sports leagues realize they stand to benefit from the heightened interest in their leagues that results from legalized gambling.[11]  While the proposed bills in Indiana include an integrity fee provision, no states passed legislation enforcing an integrity fee for legalized sports gambling in 2018.[12]      

Despite the lingering questions that exist as a result of the Supreme Court’s decision in Murphy, sports gambling legislation promises to be one of the most interesting and rapidly changing areas of the law for years to come.  You can bet on that.

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[1] 25 U.S.C. § 3701, et seq.

[2] Murphy v. Nat’l Collegiate Athletic Ass’n, 138 S. Ct. 1461 (2018).

[3] 138 S. Ct. 1461 (2018).

[4] Murphy, 381 S. Ct. at 1475-79.

[5] Id. at 1484-85.

[6] H.B. 1325, 120th Gen. Assemb.,2nd Reg. Sess. (Ind. 2018); S.B. 405, 120th Gen. Assemb.,2nd Reg. Sess. (Ind. 2018).

[7] Id.

[8] Mark Alesia, Lawmakers move ahead on legal sports gambling, but know lots of questions remain, IndyStar (Oct. 19, 2018 5:12 p.m. EST), https://www.indystar.com/story/news/2018/10/19/legal-sports-gambling-betting-indiana-legislature-study/1659216002/.

[9] David Purdum, Congress indicates it may act on sports betting, ESPN (Sept. 27, 2018), http://www.espn.com/chalk/story/_/id/24814518/congress-indicates-act-sports-betting.

[10] Id.

[11] Adam Candee, NBA Sports Betting Plan Follows Yogi’s Advice: When You Come To A Fork In The Road, Take It, Legal Sports Report (Nov. 5, 2018), https://www.legalsportsreport.com/25474/nba-sports-betting-plan-2019/.

[12] Adam Candee, Movement in Indiana Sports Betting As Regulators Look For Help, Legal Sports Report (Aug. 15, 2018), https://www.legalsportsreport.com/22965/movement-indiana-sports-betting-regulators-look-help/.

© Riley Bennett Egloff LLP

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