Flint: You can bet on it — Sports gambling in Indiana and beyond

Flint

By Jackie Flint

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. 28 U.S.C. § 3701, et seq. 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. Murphy v. Nat’l Collegiate Athletic Ass’n, 138 S. Ct. 1461 (2018). 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, Indiana’s recently passed sports gambling legislation and possible concerns arising from legalized sports gambling in the Hoosier State.

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, 138 S. Ct. 1461 (2018), finding 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 10th Amendment, which reserves all legislative power not otherwise conferred on Congress by the United States Constitution to the states, and was, therefore, unconstitutional. Murphy, 381 S. Ct. at 1475-79. Consequently, the Supreme Court permitted New Jersey, and all other states, to legislate issues surrounding the authorization and regulation of sports gambling. Id. at 1484-85.

Indiana’s sports gambling legislation

As a result of the Supreme Court’s decision in Murphy, all but seven 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 33 other states (plus Washington, D.C.) have proposed bills to do the same.

In January 2018, the Indiana House and Senate each presented bills before the Indiana General Assembly seeking to legalize and regulate sports gambling, House Bill 1325 and Senate Bill 405.

After debate in both houses of the Indiana General Assembly, the proposed bills were revamped into House Bill 1015, which was passed by both the Indiana House and Senate on April 24. House Enrolled Act 1015 would go into effect as of Jan. 1, 2020, if it is signed into law by Indiana Gov. Eric Holcomb and would authorize sports wagering at riverboats, racinos and other approved satellite gaming facilities in Indiana; permit sports wagering through mobile devices; regulate the administration and conduct of sports wagering through the Indiana Gaming Commission, and; impose state taxes on revenues generated through sports wagering.

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. See 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.

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.

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 state tax revenues that can be generated. Although the version of Indiana HEA 1015 that was ultimately passed through the Indiana House and Senate permits sports wagering on mobile devices, this particular aspect of the proposed sports wagering bills in the Indiana General Assembly caused significant debate and conflict among Indiana legislators throughout its legislative session. See Eric Ramsey, Mobile Sports Betting Apps Return From Dead In Indiana Bill, Legal Sports Report (April 23, 2019), https://www.legalsportsreport.com/31539/indiana-sports-betting-nears-finish-line/.

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, which 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. See 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/. While some of the proposed bills in Indiana included an integrity fee provision to provide sports leagues with a 1 percent cut of the profits from sports wagering, See 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/, HEA 1015 ultimately did not include an integrity fee. Similarly, no other states have imposed an integrity fee for legalized sports gambling.

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

• Jackie Flint is an associate at Riley Bennett Egloff LLP. Opinions expressed are those of the author.