5 Questions Regarding the Future of Legalized Sports Betting in US: Watch Live

Since the U.S. Supreme Court threw out decades long prohibition of sports betting, ushering in a new era of all 50 states having the ability to offer the activity should they choose, questions remain.  Forbes attempts to answer five of these critical questions. WATCH LIVE BELOW THURSDAY 10 AM EST SEPTEMBER 27, 2018

About the Hearing

At 10 a.m. ET on Thursday, the U.S. House Subcommittee on Crime, Terrorism, Homeland Security and Investigations will convene for a highly anticipated hearing, entitled Post-PASPA: An Examination of Sports Betting in America.  PASPA stands for Professional and Amateur Sports Protection Act of 1992.  Thursday’s hearing will focus on the state of the legalized sports gambling market. 

To date, New Jersey, Mississippi, Delaware and West Virginia offer legalized sports betting post-PASPA at designated venues and, in the case of New Jersey at least, via mobile apps anywhere within its borders. Pennsylvania and Rhode Island are expected to have sportsbooks prior to Super Bowl 53.

The hearing will be live below

Question 1: Will Congress Get in the Way of the States?

Experts in the industry fear that the federal efforts to establish a legal framework is an effort to impose an "integrity fee".  This fee amounts to something akin to royalties for the professional sports leagues.  Not surprisingly, the leagues are highly supportive of a federal framework.

The American Gaming Association (AGA) believes that individual states can oversee the process just fine.  There will likely be additional resistance, especially when it comes to any "integrity fee".

Question 2: Will There be Mandates for Gaming Operators on the Use of a Professional Sports League's Official Data?

From Forbes:

Over the summer, the NBA announced a historic partnership with MGM Resorts International that designated the company as the official gaming partner of the league. The deal provides MGM with access to the league's official data on a nonexclusive basis. In some respects the access to the league's real-time data feed could give MGM a competitive advantage over competitors, namely with in-game wagering when speed is at a premium.

Schumer's proposal requires the use of official league data in determining betting outcomes, a provision that has been opposed by the AGA. As intellectual property creators of the data, the NBA believes it should receive proper compensation. The AGA, on the other hand, argues that there is "neither a need, nor a legal precedent" to mandate gaming operators to purchase data from the leagues. "Mandating every sportsbook contract with only one official data company will allow individual, preferred data providers to set inflated, non-competitive monopoly prices for their services," Slane wrote in the letter. Two states, New York and Missouri, have pending bills with language regarding the use of professional sports league data in determining sports wagering outcomes.

Question 3: How About Addressing Gambling Addiction?

Any type of federal framework would advocate for addressing the issue of gambling addiction. John Warren Kindt, another witness scheduled to testify, has written extensively on the toxic effects of gambling addiction among U.S. consumers.

"By legalizing sports betting, states can expose themselves to additional taxpayer costs for crime and the creation of new financial products that could lead to a potential "speculative bubble," he once indicated.

There are those who would argue that individual states may be better equipped to address gambling addiction just as they do other forms of addiction.

Question 4: What Efforts Will be Made to Curb the Influence of the Black Market?

At least one state Attorney General has gone on record as saying his state can't go it alone in stopping offshore operators and unlicensed bookmakers other than to apply pressure to firms looking to do business with licensed operators not to work with both (double dipping). 

According to various estimates, Americans wager upwards of $100 billion annually on sports.  Most of that was done with offshore operators up to this point.  These firms, many in business now for 20 or more years, have long contended that they operate in jurisdictions where the activity is legal and, because some form of gambling has been legal in all but two U.S. states (the assumption being that lotteries are a form of gambling), it was all about free competition.  With the May ruling, this position becomes less of a grey area.

Some gaming experts argue that high state tax regimes will simply push bettors away from regulated sports books back to the black market.  New Jersey imposes a steep 13% through its sports betting apps while neighboring Pennsylvania is likely to tax even more.  West Virginia has a 10% tax on sports betting.

From Forbes:

The illegal market lacks consumer protections and threatens the integrity of sports, Rep. Dina Titus, a Nevada Democrat, wrote in a Sept. 25 letter to Sensenbrenner. Titus also took exception to a so-called integrity fee that some leagues have proposed in recent months. "Calls for integrity fees paid to leagues would chip away at state revenues and already slim margins for legal sportsbooks, hurting their ability to compete with offshore books and move more consumers to the regulated market," she wrote. The committee could also address implications of the Wire Act in the Post-PASPA era on the unregulated black market. 

Any federal position would likely mimic that of the states in dealing with the so-called "double dipping".  They could even come after the "offenders" by ordering them to pay a fine in the form of unpaid tax.  Some of the more established offshore operators at one time embraced the concept of paying taxes to the U.S. government. 

Response to palpable Errors From Pricing Systems Used by Gaming Operators to Set Odds

In an abrupt U-turn last week, FanDuel Sportsbook agreed to pay a small numbers of bettors who received erroneous odds of 750-1 on the Denver Broncos to defeat the Oakland Raiders on Sept. 16. For a period of 18 seconds, the book listed incorrect odds on the Broncos to win the game outright due to a pricing error. FanDuel initially declined to honor a $110 ticket that would have paid approximately $82,000, before changing its stance days later. Though palpable errors are well-documented in Europe, the incident represented the first time a legal book in New Jersey experienced a major gaffe since the state legalized sports betting. Legislators could be interested in the types of internal controls that books need to maintain to limit the occurrences.

Be Sure To Bookmark This Page to Watch Live 10 am EST Thursday September 27 Below

- Gilbert Horowitz, Gambling911.com