Sports Betting Spurs Lobbying Efforts In Congress

The gambling industry has raced to cut deals, expand facilities and lobby lawmakers in a growing number of states with legalized sports betting or in those poised to do so. These same groups are likewise making a name for themselves on a federal level.

The Hill reports casinos, game providers and other gambling stakeholders are still pushing lawmakers on Capitol Hill to craft a national framework to benefit the industry. These groups have nudged state legislatures in a similar direction to varying degrees of success and they remain keenly invested in any federal level efforts.

Though Congress has made little progress on sports betting, the gambling industry knows a base nationwide framework could cut out much of the state-level minutia that has in some cases delayed gambling expansion even with broad political support. These same groups also fear a restrictive federal-level system that could suffocate any gambling opportunities.

States Show the Pros And Cons of Regulation

The Supreme Court ruling to strike down the federal ban on sports betting as a violation of the 10th Amendment meant states had the right to take wagers if they chose to do so. It also means Congress cannot pass another similar law to ban it in the future.

In the aftermath of the ruling, federal lawmakers have shown no interest in another sweeping ban. However, they may consider a universal regulatory framework, which could solve many of the problems that have stalled legalized betting at the state level.

Every state that pursues legalization has to determine its taxation rate, availability, distribution channels and regulations, among a variety of other issues. All eight states with legalized sports betting laws (Nevada, Pennsylvania, New York, Delaware, New Jersey, Mississippi, West Virginia and Rhode Island) have come up with different solutions to every major issue. That has delayed implementation for months, even after lawmakers have passed legalization bills.

A universal framework would take that decision out of statehouses. Any state choosing to take sports bets would simply follow the federal pattern.

That could be enticing for the next wave of states considering legalization.

The current state-by-state approach has even stalled lawmakers and regulators in states with widespread, bipartisan gaming support. New York passed a limited form of sports betting legalization, but further discord in Albany snuffed out any widespread expansion. Gaming regulators are dependent on a baseline guidance from lawmakers before they can begin their own, oftentimes lengthy rule-making process. This has effectively halted New York sports betting until when, and if, lawmakers figure out their next steps.

Further south, Pennsylvania has also failed to take sports bets even though it has laws to do so. An exorbitant tax rate north of 36 percent on winnings has dissuaded any potential sports betting partners from affiliating with the state’s casinos. All other states now taking bets have fees around 10 percent.

That’s left gaming providers and casinos at an impasse as industry stakeholders lobby lawmakers to lower the rates. There has been little indication legislatures will choose to do so. Pennsylvania, like New York, now watches neighboring New Jersey rack in millions of dollars in sports betting revenue.

These states’ struggles also show a warning sign of a poor federal baseline. If Congress passed a burdensome tax rate it could in effect keep out any sports betting as fees would be too high to allow companies to profit.

Either way, D.C. doesn’t seem like a source for solutions.

Sweeping Federal Action Remains Unlikely

Utah Sen. Orrin Hatch announced plans to introduce a federal-level sports betting regulation after the Supreme Court ruling. One of the founders of the original ban more than 25 years ago, he said issues about the “integrity of sports” remain. The House Judiciary Committee announced a hearing on the matter soon after but it was postponed. As of August, there has been no makeup date.

Sports betting may not be discussed in the Capitol any time in the foreseeable future. Despite the obstacles at the state level, lawmakers seem content to let individual states determine their sports betting prospects for themselves. A myriad of national issues like the economy and immigration continue to take up significantly more attention in the minds of lawmakers as well as their constituents.

The upcoming midterm elections, when a third of the Senate and the entire House of Representatives are up for election, are perhaps a bigger priority for lawmakers. Sports betting becomes another variable in the election, one they may not want to factor on the campaign trail in the coming months.

Hatch, the president pro tempore and one of the most significant voices on gambling on Capitol Hill, is not seeking re-election. When he leaves Congress in January, so does a major figure pushing for laws on the industry. January will also bring debate in more than a dozen states which already have legislation. State capitals will most likely present the battleground for sports betting legalization – and the most concentrated, and potentially fruitful, lobby efforts from industry stakeholders.