The failure of PASPA – Why It Didn’t Accomplish any of its 3 Primary Goals and is Terribly Outdated

PASPA had three primary goals:

(1) stop the spread of sports gambling (stopping state-run/state-sanctioned sports gambling was thought to be the solution),
(2) maintain sport’s integrity, and
(3) reduce the promotion of gambling to youth.

While these 3 goals were very important, they weren’t important for Nevada, and to a lesser degree, 3 other states.  The reason they weren’t important for Nevada is because Nevada was allowed to continue accepting sports bets, while the other 46 states were barred from accepting sports bets.

The primary reason lawmakers didn’t want to take sports betting away from Nevada is they believed doing so would cripple the state, as they rely so heavily on gambling for their economy, so lawmakers had to keep it in there.

However, that logic makes no sense at all.

In 2012, sports betting accounted for $170M of the total $10.86B won by casinos.  That’s about 1.6% of their total winnings for 2012.  In 2011, this number was 1.3%.

If you want to argue that in 1992, a larger percentage of their profit came from sports betting, you would be horribly wrong:

In 1992, sports betting accounted for $50M of the total $5.86B won by casinos.  Which is 0.86% of their total winnings, or about “half” of the percentage it was this past year (1.6%).

So clearly, sports books do not generate near the profit that the rest of the casino does.  From the most profitable table games to slightly less profitable slot machines, the sports book is simply not a huge moneymaker for the casino.

And also note that the casino’s win % (or hold) for the sports book was 4.9% in 2011 and 2012, which is far below the average hold for their games/tables overall, at 12.4%.

So if sports betting was so “bad” and terrible that it “threatens the character of team sports”, it easily could have been banned in Vegas too and honestly, Vegas would not take hardly any hit at all.  They don’t make much in their sports books, and there are lots of emerging studies showing that sports books take up so much space, and that space would be better used adding more slots and table games to increase casino revenue.

So it makes no sense for PASPA to grandfather in some states and exclude others.

Now let’s move on to a cursory analysis of the three primary goals:

#1 – Stop the Spread of Sports Gambling

PASPA has been a miserable failure in stopping the spread of sports gambling.  True, no “new” states have yet offered state-run sports gambling, but none were actively doing so prior to the passage of PASPA.

The Commission which studies gambling estimated that $380 B is wagered illegally on sports annually.  Whereas in Nevada, only $3 B has been wagered on average the last 3 years ($3.5 B in 2012).

In other words, fewer than 1% of overall wagers are actually legally bet in Nevada.

Clearly, more and more people are betting larger and larger sums of money on sports.

In 1992, $50 M was wagered on the Super Bowl in Nevada.  In 2013, $99 M was wagered.  Essentially double.

Studies done by the FBI estimates that $2.5 B is wagered illegally on March Madness.

Its not just sports betting which is becoming more popular and common:

In 1990, only 2 States had casinos (4%).  In 2013, 35 of 50 States have casinos (70%).  That’s 17.5 times MORE now than in 1990.

If PASPA were effective, the spread of sports betting would have stopped in 1992.  Instead, all indications show that year after year, sports betting has exploded into a $380 B industry.

#2 – Maintain Sport’s Integrity

Regardless of whether sports betting is legal or not, there will ALWAYS be scandals and point shaving accusations.

Link 1
Link 2
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Link 4
Link 5

Whether its questionable officiating which swings between tens to hundreds of millions of dollars from one side to the other on a single call, or its direct fixing of games by referees (Tim Donaghy), many many game outcomes since 1992 have been MORE than questionable.

Even ignoring sports betting, in the NBA, you have the “star treatment” and not a single person thought stars like Michael Jordan didn’t get most of the 50/50 calls to go in his favor.  Year after year there are studies done on particular teams who are called for significantly more penalties, sometimes due to potential referee bias.

And particularly when a season winds down, teams are notorious in every sport to rest players for the playoffs, scale back the game plan, or bench players to improve their draft status.  This puts a significantly “lower quality” product on the field for fans who bought their tickets weeks (months or years) in advance, paying full price, not knowing the players they paid to see would not play, and teams may not try to win games.  That is a lack on “integrity” that goes unchecked in virtually every sports league.

It easily could be argued that an even bigger pimple than gambling for the leagues on the topic of “integrity” is Performance Enhancing Drugs (PEDs).  Whether its baseball, cycling, swimming or track & field, scandals occur with regularity.

In the 1992 Summer Olympics, the year when PASPA was passed into law, no athletes were stripped of medals due to doping/drug use.

In 2000, 14 medals were stripped.  In 2004, 15 medals were stripped.  In total, in the last four summer Olympics, an average of 9 medals have been stripped annually due to doping/drug use.

Ray Lewis allegedly ingested Deer Velvet Antler Extract during his remarkably fast recovery from a torn triceps, which contains banned substances but which currently is not tested for by the NFL, and this story garnered the national spotlight for a full 2 days leading up to the Super Bowl.  Certainly there are “integrity” issues there as well.  Not to mention the fact that the league is concerned enough about a banned substance to make it illegal, but does not even have the ability to test players to see if they are taking it.  Seems like a massive “integrity” issue they have on their hands.

PASPA’s goal of maintaining sport’s integrity has been a massive failure, but the fact is, we still watch and ingest sports at record breaking numbers, and no scandal has ever stopped that and I doubt any will in the future, whether sports betting is or is not legalized.

#3 – To Reduce the Promotion of Gambling to Youth

  • Back in 1992, the “World Wide Web” was less than 1 year old, and full text web search engines would not be created for two more years (1994).
  • Back in 1992, Amazon (1995), eBay (1995), Craigslist (1995), Hotmail (1996), Google Search (1998), Paypal (1998), Napster (1999), Skype (2003), iTunes (2003), Facebook (2004), YouTube (2005), etc did not exist.
  • Back in 1992, ESPN was not known as the “Worldwide Leader in Sports”, but “All Sports, All the time”.  There was no ESPN2, and ESPN Radio was less than 1 year old.

And in 1992, along came PASPA.  By passing PASPA, we were supposed to reduce the promotion of gambling to our youth.  But these lawmakers had no idea how the internet was going to take the world by storm.

In 2013, the “Worldwide Leader in Sports” ESPN commonly discusses point spreads and betting on sports.  Most of their radio hosts provide game picks against the spread on Friday before football weekends.  There are well written articles and blogs done by Chad Millman and others which incorporate discussion of point spreads.  And there is absolutely nothing wrong with it.  Why was it smart for ESPN to pursue this type of “Vegas” and “point spread” discussion?  Because they must stay in tune with the public’s wants and desires.  And the public today loves talking about point spreads, favorites and underdogs.

It’s not just ESPN, most newspapers incorporate a section on “lines”.  One of the newspapers with the widest circulation of any in the US, USA Today, has lines every single day for current sports.

Right now with the internet, access to news media such as ESPN, USA Today and the thousands of gambling sites, its impossible to conceive that one would be able to prevent the youth from learning and engaging in gambling.

Thanks to PASPA, you technically (and currently) can’t bet on sports in New Jersey.  I guess that solved everything, right?

Well where do we stand today?  Currently, out of 1,000 New Jersey high school students, 2 are found to be actual bookmakers and statistics show that 1 in 3 high school students (nationwide) gamble on a regular basis.  So PASPA really was effective, wasn’t it?

Conclusion

PASPA had 3 goals and accomplished none of them.  It has been a colossal failure in respect to these 3 goals.  Times have changed dramatically since 1992, and sports betting is no longer considered to be the “scourge on society” it perhaps once was.

The time has come to advance past outdated, poorly construed legislation and do something our Country rarely does:  utilize common sense.  Figure out how to capitalize on the fact that our citizens are betting $380 illegally each year, and we could be earning tax dollars on that money.

CalNeva estimates that sports gambling in New Jersey each year will bring in $1.3 B in gross revenue and $220 M in tax revenue.  States with lotteries use that revenue to fund public education, economic development, parks and problem gambling treatment.  Legalizing and taxing sports betting would generate revenue that can be used for the same programs.

Preventing certain States from regulating and allowing sports betting (while others are afforded that right) because of the 1992 horribly outdated, poorly construed, and terribly ineffective PASPA would be a massive mistake.

This is the fourth in a series of articles examining sports betting laws and the push for New Jersey to legalize sports betting in their state.  The first article in the series was Why I Wish Sports Betting was more like Marijuana.  The second article was Hypocrisy of Defenders of Current Federal Sports Betting Law.  The third article was The One Metric which Destroys any Commissioner’s “Integrity of the Game” Argument.  Warren Sharp is not an attorney, so nothing herein is legal opinion, but personal opinion and viewpoints.

The One Metric which Destroys any Commissioner’s “Integrity of the Game” Argument

If you’ve been reading along with my blog, you know the professional sports leagues helped to pass regulation in 1992 banning 46 states from betting on sports, and exempting 4 states.  The primary argument in 1992 supporting the passage of PASPA was the “integrity of the game”.

At the time, then NFL Commissioner Paul Taglibue represented this position by stating:  “Sports gambling threatens the character of team sports. Our games embody our very finest traditions and values….  With legalized sports gambling, our games instead will come to represent the fast buck, the quick fix, the desire to get something for nothing.”

Recently, New Jersey wanted to join the ranks of Nevada, to help their troubled economy by raising revenue off of something which is already very prevalent within the state.  In November 2011, 64% of the public voted to support sports betting, and despite it now being legal by State law, the sports leagues and the DOJ are suing the State of New Jersey.

NBA Commissioner David Stern said ““The one thing I’m certain of is New Jersey has no idea what it’s doing and doesn’t care because all it’s interested in is making a buck or two.”

And current NFL Commissioner Rodger Goodell said:  “The spread of sports betting, including the introduction of sports betting as proposed by the State of New Jersey, threatens to damage irreparably the integrity of and the public confidence in NFL football. As I’ve repeated to you, we will do everything we can to protect the integrity of the NFL and we monitor that closely, however we can. We do research, we do other facts about the integrity of our game and that’s important to us. And so we will continue to do whatever we can to uphold that and make sure people have confidence in our game, but more importantly believe that the NFL’s doing the right things”

Harsh and strong!  Clearly the leagues are concerned they would be in big trouble if something came out that a game was fixed.  This type of scandal would likely permanently destroy credibility and hurt the league to a point of “irreparably” harming it.

Such a scandal could happen.  Looking at the landscape of sports, it is possible.  And then, it would be curtains for the leagues.  They’d be done for.  Over with.  Who knows what type of scandal would permanently destroy the league’s credibility.  It would have to be something bad.  Terrible.

Maybe it would be a scandal involving a referee.  Imagine that maybe there is this “rogue” referee, who started fixing games he was hired to unbiasedly referee.  Maybe this referee would bet millions on these games, and even work with the mob (ohhhh, knees wobble w/ fear), and then the professional sports leagues would really be screwed.  The damage would be irreparable.

A perfect nightmare for the leagues.  A crooked and “rogue” referee, working with the mob, to fix games while betting millions over multiple seasons.  I’d go as far to guess that could be the worst thing that could happen to a professional sports league.

Oh.  Wait.

Didn’t that already happen?   Didn’t a guy named Tim Donaghy, a NBA referee, from 2005 thru 2007, bet on games and manipulate outcomes in concert w/ the mob to make a profit?  And wasn’t this uncovered in the summer of 2007?  And wasn’t it a huge lead story, which the whole nation saw unfold right before its eyes?  And didn’t this receive mainstream coverage, from 60 Minutes to SportsCenter to everything in between?  And didn’t NBA Commissioner David Stern, at the time, say of this scandal:

It is the “worst thing that could happen to a professional sports league”?

If you answered “yes” to all of the above, you are correct.

So the league’s worst nightmare happened:  A massive betting scandal of epic proportions perpetrated “from the inside” by arguably the single most influential person on the court, the referee.

Clearly, if the leagues were right in 1992 and right in 2012-13, this scandal should have caused “irreparable” harm to the NBA.  And yet, since this 2007 scandal, the NBA is still in business.  Interesting.

Well, perhaps the NBA is losing revenue, attendance is probably down, franchise values are probably much lower, TV ratings and deals are probably suffering badly, and surely the league is barely alive in the United States, let alone internationally.

Two law students at Saint Louis University studied these factors, and found that overall, the league is doing just fine (thank you).  In fact, it’s doing better than “fine” – it’s as if there was no scandal in 2007 at all, on virtually all fronts listed above.  (You can read their 11 page study HERE)

I felt this study was fascinating and supportive of the position that legalizing sports betting would not cause any more “integrity” issues in the league than already exists currently.

However, there was an angle that I think should be examined, but which was not my the metrics investigated in the study.

Something more basic.  Something more elemental to the notion that “public confidence” would disappear if such a horrible scandal would arise.  Something far easily measured, and much more directly impacted to the theorem that tarnishing integrity thru sports betting would lead to “irreparable harm”.

Because (if you think about it) as long as the NBA has its TV deal in place, those networks (ESPN, ABC and TNT) would be pedaling their product to the masses as often as they could.  They would also be acting as a public advocate for the fact that the NBA is not corrupt, because if they went the opposite direction and perpetrated the notion that the NBA could not be trusted, they would be losing out on their $930 Million they are paying annually to the NBA thru 2016.  And because of these advocates pushing the NBA’s product, it’s natural to suggest that league revenue, attendance, franchise value and TV ratings would not take an exceptional nose dive.  (The fact that they have generally grown well is outstanding, but not the point.)

To find the true, singular metric to determine whether the “public” lost confidence and believed the NBA’s integrity was shattered, or if they still believed the NBA was offering a legitimate, honest product, is found in one place and one place only:

Basketball Betting Volume

If 2007 was such a monumental problem for the NBA due to news breaking in the summer that Tim Donaghy bet on games and manipulated outcomes to make a profit, people would lose faith in betting on the NBA.

Much like you don’t see Las Vegas odds set on WWE Wrestling matches, and you won’t find random Super Bowl props (such as “will Beyonce’s hair be straight or curly”) in town, Las Vegas is not in the business of taking action on events where the outcome is predetermined or known by a group of people ahead of time.

The same fundamental logic used by Vegas oddsmakers is also employed by sports bettors.  If you have strong reason to believe that a game you’re betting on is likely to be fixed, and regardless of skill/talent by either team, the event is largely predetermined, you will be hesitant to bet on that game unless you have access to this “inside information”.  It’s simply too big of a risk for you to throw your money at a crooked game unless you are privy to the information as to why it is crooked and who will win.

So if leagues are correct, we should see a drop off in the amount of money that was bet on basketball in 2008, in 2009, and perhaps into 2010, the years immediately following the corruption and scandal of 2007.

If, as according to David Stern, this scandal was ““worst [thing] that could happen to a professional sports league”, we should clearly and without equivocation see a drop off in amount of money bet on basketball.

While most of the sports leagues did see a drop off in the amount of money bet in 2008 and 2009, ironically, the amount of money bet by the public in Nevada on basketball actually increased, and the increase was significant.

2008

A total of  $1.841 Billion was bet on all sports other than basketball, which was a DECREASE of almost 4% from the  $1.907 B bet in 2007.

But for basketball betting, 2008 saw a 7% INCREASE vs. 2007 basketball betting, from $687M to $738M.

2009

A total of $1.765B was bet on non-basketball sports, which was DECREASE of almost 8% vs. the amount bet in 2007.

Meanwhile, basketball betting in 2009 saw a 17% INCREASE vs. 2007’s total, with $804M bet in 2009.

2010

A total of $1.932B was bet on non-basketball sports, which was barely an improvement (1%) of what was bet 3 years prior, in 2007 .

But basketball betting in 2010 saw a 21% INCREASE vs. 2007’s total, with $830M bet in 2010.

Summary

The best measurable to determine whether the public thought the NBA was corrupt, fixed, or any other manner a defective product following the Tim Donaghy scandal of 2007 would be to see how their betting habits were affected.  If the NBA’s integrity was shattered, no one would want to toss away money betting on something where the outcome could be predetermined before the game even started by the bet of a referee.

Surely the first place where the destruction of public confidence would be measured would be at the betting window.   And while the economy struggled in 2008, and non-basketball betting was down 3%, that number doubled to -7% in 2009, as even less money was bet on non-basketball sporting events.

But basketball betting saw rocketed and continual growth, completely opposite that of all other sports.  And it also saw a 21% increase 3 years later, vs. just a 1% increase for all non-basketball sports betting.

There is simply no rational support to show that, even if the “worst thing that could happen to a professional sports league” did happen, the public’s interest in that sport diminished.  Franchise value’s and TV ratings are at all time highs and they increased immediately after this scandal broke, and as shown above, public confidence and trust was not erased in the least, as they put their hard earned money on the line betting on these games at a rate vastly exceeding all other sports.

The arguments that “sports gambling threatens the character of team sports” and “threatens to damage irreparably the integrity of and the public confidence” in sports are simply inaccurate when a true case study is examined.

While the “integrity of the game” issue won’t be the deciding factor in the current lawsuit as presently structured, it was paramount in the implementation of the original 1992 PASPA law.  In the next posting in this series, I will tackle the inaccurate platforms which PASPA was built upon and, as a law, its monumental failings.

This is the third in a series of articles examining sports betting laws and the push for New Jersey to legalize sports betting in their state.  The first article in the series was Why I Wish Sports Betting was more like Marijuana.  The second article was Hypocrisy of Defenders of Current Federal Sports Betting Law.  Warren Sharp is not an attorney, so nothing herein is legal opinion, but personal opinion and viewpoints.

Hypocrisy of Defenders of Current Federal Sports Betting Law

The 1992 Professional and Amateur Sports Protection Act (PASPA) is a clear violation of the Tenth Amendment of the US Constitution, which states:  “The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.”

PASPA creates a perpetual monopoly to allow certain favored states (like Nevada) to violate the ‘right’ of sports leagues to be protected from corruption, but prevents other states from doing the same.

Not only is this unfair and unconstitutional, we now have a state like New Jersey, where voters already approved a referendum in 2011 to allow sports betting, and Gov. Chris Christie signed a law legalizing sports betting.  This is no longer a hypothetical, a state’s citizens and government have decided they want the revenue and economic boost from sports betting.

Yet the sports leagues, supported by the DOJ, are suing the State of New Jersey for it’s attempt to allow sports betting, while turning a blind eye to the fact that Nevada continues to profit from it.

NBA Commissioner David Stern said all New Jersey is interested in is “making a buck or two” and MLB Commissioner Bud Selig called the attempt by New jersey “corruption”.

Let’s examine the hypocrisy, first of the league’s themselves, then of the DOJ, in their fight to “stop sports betting” (just ignore the fact that $375 Billion is illegally bet in the United States each year, so PASPA isn’t stopping anything):

Hypocrisy of the Sports Leagues

None of the leagues can say they are “anti-betting”, as they sided with support of PASPA in 1992.  PASPA allowed Nevada full ability to conduct sports betting.  Apparently, according to the leagues, if Nevada allows sports betting, it is OK.  But when New Jersey (or other states) try to do the same thing, they are “corrupt” and trying to “make a buck or two”.

Looking back, the establishment of PASPA was fraught with problems.  It received opposition from Senator Chuck Grassley of Iowa and the DOJ (ironically, more in this below).

The DOJ and Senator Grassley highlighted the hypocrisy of the leagues in supporting PASPA. Senator Grassley contended that “if the professional sports leagues were truly concerned about the risk of ‘fixed’ games and the integrity of professional sports . . . they would have sought to prohibit the $1.8 Billion (as of 1992) head-to-head sports wagering industry in Nevada.”  Instead, the leagues supported legislation that allowed Nevada to be grandfathered in.

Additionally, the NBA held exhibition games in Nevada during the four years leading up to PASPA and Nevada gaming laws allowed the NBA to prohibit wagering on the games, but instead, the NBA allowed wagering to take place.

In 1992, NFL Commissioner Paul Taglibue testified before Congress:  “Sports gambling threatens the character of team sports. Our games embody our very finest traditions and values. They stand for clean, healthy competition. They stand for teamwork. And they stand for success through preparation and honest effort.  With legalized sports gambling, our games instead will come to represent the fast buck, the quick fix, the desire to get something for nothing.”

Again, the hypocrisy is thick.  The NFL and the leagues supported a law which would allow sports betting in certain places, but not in others.  So if it was so bad, and if the leagues were so noble, particularly in their rhetoric as they defend PASPA, why would they have voted to allow it back in 1992?

Now, NBA Commissioner David Stern says New Jersey is just “interested in making a buck or two”.  I really don’t understand this “making a buck” or Taglibue’s “fast buck” comments.  Certainly its not the bettors who are making that buck, and they aren’t making it fast.

Nevada sports books have won an average of $150 Million annually on sports betting the last 10 years.  If the bettors themselves were making that “fast and quick buck”, Nevada wouldn’t be profiting every single year on sports betting.  In 2012 alone, Nevada sports books won $170 Million on sports betting from the bettors.

And let’s think about this for one second.  The league’s want us to believe that because PASPA is law, we don’t question the “integrity” of the games, and we believe everything is on the “up and up” because betting is not “legal”.  Yet we have Tim Donaghy, the tainted basketball referee linked to the Gambino mafia family.

Then you have countless game endings which have been very peculiar to say the least.  One of the many suspicious game endings I vividly remember was in 2008 where a touchdown on the last play of the game swung the ATS winner of the game.  The play was ruled a Touchdown live on the field, as well as after review, the ruling stood as a touchdown.   But the referee crew gathered and reversed the call to not a touchdown after the the review.  The game was over, the touchdown was overruled, and the team who should have covered did not.  While he was being interviewed on the field moments after the game ended, the referee admitted the call should have stood as a touchdown and he “made a mistake”.  The NFL later apologized, and millions of dollars went to the house.  LINK 

The point is, if a week goes by in sports where some element of integrity is NOT called into question (whether it’s a referee decision, PEDs, resting players for positioning at the end of seasons or suspicious game endings and covers/non-covers), then its a surprise.  PASPA has done nothing to “maintain the integrity” of professional sports, and my next article in this series will focus more on this topic (the failure of PASPA in general).

This past November, NFL Commissioner Rodger Goodell said:  “The spread of sports betting, including the introduction of sports betting as proposed by the State of New Jersey, threatens to damage irreparably the integrity of and the public confidence in NFL football. As I’ve repeated to you, we will do everything we can to protect the integrity of the NFL and we monitor that closely, however we can. We do research, we do other facts about the integrity of our game and that’s important to us. And so we will continue to do whatever we can to uphold that and make sure people have confidence in our game, but more importantly believe that the NFL’s doing the right things”

There is so much here with regard to “damage irreparably the integrity of and the public confidence in NFL football” that I think I’ll be focusing on this exclusively in my next update tomorrow (Friday).  Because Goodell couldn’t be more wrong on this point based on public data I’ve reviewed.

You probably would not believe that an active Commissioner said the following in 2009, when asked if it was in the best interest of his sport to support the legalization of sports betting:

“It has been a matter of league policy to answer that question, ‘No,’ . . . but I think that that league policy was formulated at a time when gambling was far less widespread—even legally….Considering the fact that so many state governments — probably between 40 and 50 — don’t consider it immoral, I don’t think that anyone [else] should.  It may be a little immoral, because it really is a tax on the poor, the lotteries. But having said that, it’s now a matter of national policy: Gambling is good… We have moved to a point where the leap [of accepting legalized sports gambling on games] is a possibility.”

That person was none other than David Stern, as cited in this 2009 Sports Illustrated Article

To summarize the hypocrisy of the leagues, this simple timeline is helpful:

1.  92 Leagues – We want to prohibit sports betting to maintain sport’s integrity
2.  92 Leagues – Although sports betting crushes our sport’s integrity, we only want it banned in 46 states.  Nevada is cool, their residents can bet on sports and the nation can flock there to bet on sports, and this betting magically does not hurt our sport’s integrity.  But anyone who bets on sports in the other 46 states would destroy our sport’s integrity.
3.  07 Stern – In light of the Tim Donaghy sports betting scandal: this is “the worst thing that could happen to a professional sports league.”
4.  09 Stern – “Gambling is good”
5.  13 Stern – “New Jersey has no idea what it’s doing and doesn’t care because all it’s interested in is making a buck or two.”
6.  13 Leagues – We do not oppose sports betting, just State regulated sports betting (hello #1 above!)

Hypocrisy of the DOJ

Along w/ Senator Grassley, the DOJ opposed PASPA back in 1992 because they felt that PASPA would be a “substantial intrusion” into states’ rights.

Senator Grassley argued that it would discriminate among the states because the grandfathered states would have a monopoly on sports gambling.

The DOJ went on to say that “determinations of how to raise revenue have typically been left to the States.”  The DOJ felt that PASPA raised federalism issues and expressed concern that sports leagues would be permitted to enforce its provisions.

Now, the DOJ is supporting the case against New Jersey to prevent them from allowing sports betting, despite it being their right to raise revenue, by imposing an affirmative mandate on the State.

Putting things in Perspective

New Jersey, like many states, needs serious help.  They are losing money, and studies show that legalizing sports betting in New Jersey could bring the state more than $50 million in annual tax revenue.  Let alone adding to the State’s tourism and providing hundreds of new jobs.

Meanwhile, that’s viewed as “detrimental” by the sports leagues, although it’s perfectly fine in Las Vegas.  And the league’s are concerned with people trying to gain a “quick buck”?

While the league’s fight to stop New Jersey, they continue to have some of the most wasteful and ludicrous payments occur to their players:

  • $275 Million to Yankee’s Alex Rodriguez?
  • $121 Million to Rockies’ Mike Hampton?
  • $119 Million to Hawks Joe Johnson?
  • $111 Million to Wizards’ Gilbert Arenas?
  • $100 Million to Knicks’ Allan Houston?
  • $100 Million to Knicks’ Amare Stoudemire?
  • $68 Million to Islanders’ Rick DiPietro?
  • $65 Million to Orioles Albert Belle?
  • $40 Million to Jets’ Mark Sanchez?
  • $39 Million guaranteed to Raiders’ JaMarcus Russell?
  • $30 Million to Knicks’ Jerome James?
  • $21 Million guaranteed to Trail Blazers’ Greg Oden?

To the first 9 players listed (thru Mark Sanchez), there is a total of $1 Billion guaranteed.

Even if New Jersey made $50 Million in annual tax revenue via sports betting, it would take them 20 years to amass the $1 Billion paid to those players in those ridiculous contracts.

So really, do the sports league’s have a leg to stand on when it comes to talk about someone getting a “quick buck” here?

PASPA has been challenged before

PASPA has been challenged based on claims that it violates the Constitution, most notably the Tenth Amendment, twice since its enactment.

The first time, In Flager v. United States Attorney, a private citizen of New Jersey challenged PASPA on the grounds that it violated the Tenth Amendment because “the power to outlaw sports wagering was not expressly granted to the federal government” by the Constitution. The court did not address the Tenth Amendment claim and dismissed the case holding that the plaintiff lacked standing.

In Interactive Media Entertainment and Gaming Association, Inc. v. Holder, Interactive Media Entertainment and Gaming Association, Inc. (“iMEGA”), New Jersey state senator Raymond Lesniak, and the New Jersey horse-racing industry filed suit against the United States Attorney General, Eric Holder, claiming that PASPA was unconstitutional and violated the First, Fifth, Tenth, Eleventh, and Fourteenth Amendments in addition to the Commerce Clause and the Equal Protection Clause. Senator Lesniak and iMEGA contended that “raising revenue by means of state laws authorizing sports betting is a right reserved to the individual states.” Therefore, they argued, “PASPA violates the Tenth Amendment by unconstitutionally arrogating to the United States such express and implied reserved powers to the individual states to regulate matters affecting its citizens including the raising of revenue.” The government sought to dismiss the case for lack of standing and failure to state a claim. The court ruled in favor of the government, holding that the plaintiffs had suffered no injury and therefore lacked standing. Regarding the Tenth Amendment claim, the court briefly stated that a Tenth Amendment challenge is reserved for states and that since New Jersey was not a party to the lawsuit there was no standing.

As you can see, now that the State of New Jersey is involved, the problems with the prior lawsuits are missing from this case, and now we can get to the heart of the Constitutionality, or lack thereof, of PASPA.

The Current Lawsuit

In oral arguments in the current suit against New Jersey, the league’s plainly stated they did not oppose sports betting, just State regulated sports betting.  So toss out the “integrity of the game” arguments, as apparently sports league’s don’t care at all if sports betting occurs, they just don’t want it to occur everywhere.  The league’s are trying to dictate which states should be able to bet on sports, and which should not.  PASPA infringes on states’ rights in raising revenue, unfairly disadvantages many states, and has been ineffective in what it set out to do.

As argued online:  “The only way to ban lotteries (States) from offering sports betting constitutionally would be to make sports betting itself a crime, and Congress would never have the political will to pass a bill that would have made everyone in both chambers who fills out as much as an office pool guilty of a Federal crime.”

I’d be interested in seeing an offshore sports book put a line on whether a Judge (Shipp or an Appellate Judge) ultimately rules in favor of, or against the leagues.  I suppose you’d have to put “against the leagues” as the solid underdog.  But I certainly would take a flyer on the payout as I believe PASPA is unconstitutional.

This is the second in a series of articles examining sports betting laws and the push for New Jersey to legalize sports betting in their state.  The first article in the series was Why I Wish Sports Betting was more like Marijuana.  Warren Sharp is not an attorney, so nothing herein is legal opinion, but personal opinion and viewpoints.