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  • Entrepreneurs, gamblers, lawmakers and league officials have been preparing for Monday's SCOTUS ruling for years. Here's what they think about the road ahead.
By Jeremy Fuchs
May 14, 2018

The U.S. Supreme Court’s decision to strike down a 25-year-old federal statute, the Professional and Amateur Sports Protection Act (PASPA), paves the way for states to begin offering legal sports wagering in the near future. In anticipation of the Supreme Court’s ruling in the most important sports betting case in U.S. history, Sports Illustrated asked individuals from different spheres—politicians, casino executives, league officials, entrepreneurs, high-stakes gamblers—to weigh in on the implications of the decision, and what to expect going forward. The interviews have been edited for clarity and length.

Tom McMillen
U.S. Representative (Md.), from 1987 to 1993
Currently CEO of LEAD1 Association, which represents the athletic directors and programs of the Football Bowl Subdivision

“To be truthful, [in 1992] PASPA was hardly a debate at all, [after the] the whole Pete Rose situation. It wasn’t even recorded. That’s how non-controversial it was. We polled athletic directors back in late summer, it was not even thought about. The AD’s instinct was, we’ve had a lot of problems in college sports. We need to think twice about this. We even asked the question: If their institution got something from it, how would they feel? If there were remuneration of some sort. It didn’t change it at all. I would guess it’s a little less strident today. I always use the quote from Trotsky: You may not be interested in war, but war is interested in you. You may not be interested in sports betting, but sports betting is interested in you.

If you look at West Virginia, they’re passing bills, there’s not a lot of [opposition]. The NBA and MLB has been opposing it, if there isn’t an integrity fee. But there’s not a huge outcry of opposition. These preemptive bills are being passed. I imagine a whole bunch of states will pass preemptive legislation.”

A number of bills have been proposed at the state level as interest in the legalization of sports wagering has increased in recent years. West Virginia became the first state in 2018 to enact a sports betting law, joining New Jersey, Pennsylvania, and New York with laws on the books in preparation for the Supreme Court’s decision.

Corey Palumbo
West Virginia State Senator

“The leagues lobbied here. They’re hoping to get a piece of the revenue, too. They had a few things they were concerned about, but they wanted a piece of the money, too. For us to send money to the NBA, MLB: Why in the world would we do that? I don’t think there was much traction for doing that at all among the colleagues I talked to.

“What [we’re] hoping for is tax benefits. The estimated tax benefit in West Virginia, we were told, would only be about $5 million in the first year. It could go up to 10 or 15 [in later years]. It’s not game-changing for the state, economically, that’s for sure. One of the concerns I have with it is that the tax rate in West Virginia—in the current bill—is set at 10%. Of the states that have done this, [the 10% rate would be] among the lowest. They say it’s a low-margin operation, table games are much lower than video machines, but in many other states, [around the country] Pennsylvania [is] the biggest one at 36%. New Jersey is around 17.5%. Kentucky is 20%. You have some that are around 10. Nevada is even lower. If you’re going to do it, we should make it worthwhile for the state.”

Mississippi passed a fantasy sports law in 2016 allowing for the legalization of daily fantasy games. An updated bill was passed in 2017 with language that gives the gaming commissioner power to regulate sports betting should the Supreme Court allow it.

Scott DeLano
Mississippi State Representative

“Our gaming commission is ready to issue rules and regulations for sports betting if the Supreme Court does overturn it. They will have to go through their due diligence and public review process. What is Day 1? I don’t know. Is it the day of the ruling? Or [after] 60 days of public comment? They will set that up. We wanted to make sure, through the legislature, anything that dealt with gambling had jurisdiction over that.

“I think this is an incredible opportunity for the Mississippi Gulf Coast and our casino operations in the Delta. We do not want gaming to spread outside the brick-and-mortar establishments, the license areas. The state has spoken to that. It gives us an excellent opportunity to give us a competitive advantage in new investment that going to be made across the U.S. I think it’s going to give us opportunity to see an explosion of gaming, an explosion of investment in gaming areas that will in turn provide us an opportunity to attract people to our state.

“We’re going to have to watch everything. We’re going to have to learn from Atlantic City and Vegas. I know our state has sent regulators out there to look at some of these issues and address them.”

The biggest immediate impact of the Supreme Court ruling is in New Jersey, as the ruling opens the door for racetracks and casinos in the state to take bets on sporting events.

Jeffrey Gural
CEO, Meadowlands Racetrack in East Rutherford, N.J.

“We would have to partner with a company that accepts bets. I’ve already been contacted by a few. We have a huge sports bar. The facility is brand new. We could quickly convert a portion of it to accept sports betting. Our goal would be to be up and running by the football season. We also have a relationship with the Jets and Giants, since we’re next door [to their stadium], and we would have to work out any views they might have, because we have a good working relationship with them.

I think sports betting will be a big shot in the arm for the NFL, in particular. The only reason I’m watching football on a Thursday night is if I have a bet on the game. A lot of people who don’t know how to make a bet illegally—and I bet with a friend of mine, I don’t know how he does it.

They’ll see a jump, especially for football, because football is the most popular. Probably the number one wagered on. It will be a real benefit. I can understand Roger Goodell doesn’t want the aggravation if Joe Schmoe misses an extra point that changes the outcome of the bet. What the NFL ignores is that people who are involved in sports betting want to make sure there’s nothing going on that’s not legit.”

Joe Asher
CEO of William Hill, which operates over 100 sports books in Nevada

“We’re working with our partners in Delaware and New Jersey to be ready to go as soon as possible. In Delaware, there’s already a law on the books, the infrastructure is in place. In New Jersey, we still have to see how the laws shake out, but we got a sports book that’s already built out at Monmouth Park, and we’re actually adding additional capacity adjacent to it. We’ll try to get going as soon as we can. There’s still going to be a lot of work. But we’re not starting from scratch. Our objective is to be in as many states as we can. We’re still talking with partners in various states.

We think we’re well situated to take advantage of the opportunity. But still unclear what that opportunity will be. That will be in the hands of legislators and how they chose to approach it. If they follow the model of Nevada with a reasonable tax rate, and there’s no taxes payable, then that’s a model where business can thrive. If you have a very high tax rate, like in Pennsylvania, it’s going to be very difficult to compete with the black market. The black market isn’t going to go away. The illegal bookies aren’t just going to throw in the towel. They’re still going to be there. The ability to compete with them, because they pay no taxes, have no compliance costs, the ability to compete with them will depend on the result of the legislative landscape.”

A number of companies have been positioning themselves for this moment. Start-ups have popped up in anticipation of wagering becoming legal.

Ian Epstein
Co-founder of PropSwap

 “PropSwap is a peer-to-peer marketplace for sports book tickets. It’s the secondary market for the bet slips that you get at sports books. For example, if you bet on the Cowboys to win the Super bowl at 50/1 odds, if you bet $100, that ticket is worth $5,000 if it wins, zero if you don’t. We created a marketplace and that ticket has a whole range of values in between zero and $5,000 throughout the season.

We’ve got about 3,000 users that have downloaded the app. If New Jersey wins the court case, we’ll be live and active in that state, day one. If legal sports betting comes live in 49 other states, it exponentially increases our pool.”

Gural  

“I went to a seminar on sports betting, and they said that 85% of bets on sports are made online. I don’t think that you can expect realistically that if people are betting illegally online, they’re all of the sudden going to drive to the Meadowlands every time [they] want to make a bet. But there will be people who enjoy making a bet and watching the games. We have the ability in our sports bar to show all the games at once. That’s an advantage. A lot of the future business people think is during the actual event, as opposed to picking the winner or loser. There’s a lot of people betting on if he’s going to make the field goal. There has to be an online component of it. I’m also concerned that the government, since they’ll be taxing it, that the government will focus on putting these illegal entities out of business. If you’re betting illegally offshore, and all they have is a codeword for your account, and now you have to give your name and social security to us, there’s going to be people who prefer to remain anonymous. The product that corporations will be presenting will be so far superior to the illegal product that people will want to bet legally. But for events like the Super Bowl, playoffs, NCAA, we’ll be mobbed. I’m looking forward to it. All in all, it’s long overdue.”

What does this mean for gamblers? According to the National Council on Problem Gambling, there are six million people who are addicted to gambling. They estimate the social cost to be $7 billion a year. Many leagues are reportedly interested in an “integrity” fee, a 1% take from all gambling activity to ensure the sports remain free from undue influence. The PGA adopted an integrity program in January, to educate golfers about the potential for gambling schemes.

Keith Whyte
Executive Director, National Council on Problem Gambling

“Sports bettors tend to have higher rates of gambling problems. Some of that is the nature of sports betting—it’s highly skill-based. There’s some traps in there for people who believe if it’s a skill: the more I play, the more I win, I should keep gambling, part of it may be the illegality. It’s easier to get hooked or do worse when you’re betting with a bookie, who’s extending you credit, who may threaten you.

“We believe that there will be a significant increase of people shifting from the illegal markets to the legal markets, as well as people who aren’t gambling who will start to do so. Most of the models expect an expansion. And we do know that the more people you have gambling, the larger number who will get in trouble. One of our biggest concerns it that if sports betting expands, the expansion is going to be in states that have little or no problem gambling infrastructure already. I think expansion might not create a lot of problems in a state like Massachusetts that has a good system in place, but it might create a ton of problems in Virginia, which has almost nothing. The impacts will be uneven.

“With great profits come great responsibility. If the leagues are going to directly profit from sports betting, they also need to protect people with gambling problems. Because this will be the first time they’ll be involved in legalized sports betting. So these integrity fees will essentially make them gambling operators. The NFL has been a member of the national council. We’ve talked with the NBA, MLB, NFL. We try to be pretty open and transparent. I do think in the past, gambling addiction has not been something the leagues have gotten engaged with. That’s for people who operate and profit from gambling. Now they’re in that boat. If they’re interested in benefiting from legalized sports betting, they need to step up their game to minimize gambling-related harm. Some of the profits from legalized gambling will come from the pockets of people with massive gambling problems.”

Anonymous high-stakes gambler

“I was in the city on 9/11. After I saw the tragedy, I went back to gambling, as an escape. Even thought it was illegal, I was using offshore gambling sites regularly. I was getting as much action as I wanted. Over time, I left the city, started working for another company, started embezzling money to fuel my gambling addiction. Sold several hundred thousands of dollars, led to incarceration and some prison time, as a result of the decisions that I made for gambling. It was all sports gambling. Because it was easy, secretive.

“If it’s legalized in New Jersey, you might see more people coming forward, because it’s legal. When you’re doing something illegal, we know people do it, but a lot of people don’t come forward. In New Jersey, I’m expecting more people to come forward, acknowledging that they have a sports gambling problem. The illegality is one of those hurdles that some people don’t want to mess around with.

“I’m neutral on gambling. I know I can’t gamble, but if you want to go ahead, knock yourself out. If it becomes legalized, I am concerned that more people will become tempted. If you start doing this thing too often, or as a form of escape, or chasing your losses, that’s where the habits become problematic. When you legalize something and make it more available, there will be a subset of the population that will start to develop problems. There is a subset of the population that is currently experiencing problems, but they are afraid to come forward, because it’s illegal. That will change.”

Jeff Beck
Clinical Director, Maryland Center of Excellence on Problem Gambling

“I’m a triple-threat addict. I’m 64 years old, I have 87 years of recovery: 39 years of cigarettes, 27 without a drink or drug, 21 years without a bet.

“I think there will certainly be an increase in people addicted. When the government sanctions it, it makes it O.K. Anyone who had considerations about doing it will be more open to doing it. The fact that it wasn’t legal kept people away. I think that the [American Gaming Association] has run a strong campaign, encouraging people, there's a public opinion that’s changed. People want to be gamblers. I don’t think it has the same moral issue that it once did. When Bill Bradley introduced PASPA, his concern was that sports would become the plaything of gamblers. And I don’t know that that’s still the thought. They probably have better ways of policing it today.

“Anytime there is an increase in opportunity to gamble, there will be an initial spike. I’d like to see laws that provide protections for gamblers. More money for treatment, more money for awareness.”

Andy Levinson
PGA Tour senior VP for tournament administration

“We fully understand that our sport is popular throughout the world, in legal, regulated markets. We’ve seen that activity. We don’t think we’re immune to the potential for corruption. We’ve been looking at this for quite some time. This was us taking a proactive position to protect the integrity of our members and our tournaments. On the PGA Tour, players have been subject to it [for two months], but we’ve had the program in operation since the beginning of our season which started in October. That was a period of education. That’s what an integrity program is about: education. Educating all our constituent groups, players, caddies, player managers, player family members, our volunteers that help operate our tournaments, the tournament staff. Everyone needs to be educated about the potentials for betting-related corruption and what shape that comes in. Our players have had to take an online tutorial that talks about these types of things. They’re all for it.

“That’s not something [the integrity fee] that we were involved in putting out there. We’re talking about ensuring the integrity of the competition and the athletes. When a fan is watching our sport, it’s reflective of the best effort of the athletes, it’s a true competition. It’s unrelated to PASPA.

“We were well down the path of developing an integrity program and interviewing various organizations who provide bet-monitoring services to look at all of our competitions around the globe and look for anomalies. This is a process we initiated quite some time ago. We’re following the case in the Supreme Court. I don't think there was a sense that the court was going to change PASPA until very recently.”

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