Federal sports betting law will impact NJ, other states

The American Gaming Association, the industry's lobbying group, said the proposal "is the epitome of a solution in search of a problem, representing an unprecedented and inappropriate expansion of federal involvement in the gaming industry, which is currently one of the most strictly regulated in the country."

A recently introduced federal bill legislating sports betting nationwide would not immediately affect New Jersey's growing market but it could down the road.

The Sports Wagering Market Integrity Act, a draft of a bipartisan bill proposed earlier this month by U.S. Senate Minority Leader Charles Schumer, D-N.Y., and U.S. Sen. Orrin Hatch, R-Utah, would provide federal oversight to the country's fast-growing legal sports betting market, including here in New Jersey.

The bill's sponsors have pointed to offshore, illegal markets as one of the reasons why a uniform system of regulations is needed.

But what it means for states with existing regulatory framework for sports wagering remains unclear.

Daniel Wallach, a Florida-based sports and gaming attorney, said that the U.S. Supreme Court decision in May which overturned the Professional and Amateur Sports Protection Act of 1992 made "clear that the federal government can require states to meet minimum federal standards, which is exactly what this bill does."

"There is an important role that the federal government can play in sports betting," said Wallach. "The concept of a national sports wagering clearinghouse — in which every bet or wager would be shared on an anonymized basis in real time with an independent third-party — is a mandate that is lacking in current state guidelines, which places the onus solely on the betting operators to report suspicious or unusual wagers."

Dustin Gouker, lead sports betting analyst for PlayNJ.com, said that while the 101-page bill raises "a lot of questions," a cursory reading of the draft does not provide a "grandfather clause" for states with existing sports betting regulations.

Gouker said the proposal, as it is currently written, is geared more toward states that have yet to pass a regulatory framework for legal sports betting.

"I don't think there's a lot of clarity in the bill," Gouker said about how it could impact states with existing sports betting laws. "From what I can tell, it doesn't directly address states currently accepting legal wagers."

Besides New Jersey, six other states — Delaware, Mississippi, New Mexico, Pennsylvania, Rhode Island and West Virginia — and Washington D.C. have enacted their own laws for regulating sports betting since the U.S. Supreme Court overturned PASPA, which prohibited such activity outside of Nevada. Five other states have already pre-filed legislation for 2019 to launch sports betting.

The proposed legislation directs states interested in offering legal sports betting to go through a validation process with the U.S. Attorney General while states with existing laws would be subject to review. The bill would establish a federal entity for the sole purpose of regulating sports betting, restrict online wagers to people within a state's borders (with some exceptions) and allow state regulatory agencies to prohibit certain types of wagers.

The proposed federal bill also contains a provision that requires sports betting operators to use official league data to grade wagers through 2022 and creates a national sports wagering clearinghouse for operators to provide wagering data in real time. The bill does not specify whether the leagues would receive any portion of wagers placed with sports betting operators.

"A federal law which provides this added layer of protection can augment existing state laws and serve as an effective 'early warning' system for tracking and reporting usual or suspicious wagers," Wallach said. "This is such an important safeguard — and one that can only be provided through a federal mandate — that I believe it gives the Schumer/Hatch bill a good chance of being enacted into law eventually. Whether that’s in 2019 or 2020 remains to be determined. But I believe the bill starts the conversation on Capitol Hill and will eventually lead to some level of federal intervention."

The American Gaming Association, the industry's lobbying group, said the proposal "is the epitome of a solution in search of a problem, representing an unprecedented and inappropriate expansion of federal involvement in the gaming industry, which is currently one of the most strictly regulated in the country."

"Additional areas this bill seeks to address — including the mandatory use of official league data and the creation of a national sports wagering clearinghouse — can, and should, be decided by marketplace negotiations between private businesses and cooperative agreements among jurisdictions," said Sara Slane, senior vice president of public affairs for the AGA. "In the mere six months since the U.S. Supreme Court paved the way for legal, regulated sports betting, significant developments on both of these fronts have already occurred without any federal involvement."

The National Football League and Major League Baseball — two of the five leagues which fought the state of New Jersey all the way to the Supreme Court in its effort to offer legal sports betting — expressed support for the proposed legislation when it was introduced on Dec. 19.

"Legalized sports betting is rapidly spreading across the country, creating a clear need for a set of consistent, nationwide integrity standards to protect the sports that millions of Americans love," MLB said in a statement after the bill's release.

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