Betting on Freedom: The Federal Ban on States Legalizing Sports Gambling

Have you ever played fantasy sports for money? Have you ever participated in your office March Madness pool? Well, if you did, you may have broken federal law, which is quite ridiculous. If you’ve bet on your local jai alai match, though, that was probably safe.

In sports gambling, as is so often the case with many things, the law is not keeping up with our behavior and attitudes. There’s a growing movement to modernizing our gambling laws, including some new coalitions, such as the American Sports Betting Coalition (ASBC), and at least one case pending at the Supreme Court. That case, Christie v. NCAA, is a challenge to the constitutionality of the Professional and Amateur Sports Protection Act of 1992 (PASPA). Cato supported the petition, which will be discussed by the justices next week. 

PASPA outlawed sports betting, with the exception of horse racing and jai alai (obviously), in most states. In classic, horse-trading style, carve outs were made for Oregon, Delaware, Montana, and Nevada. Even worse, the law prohibits states from “authorizing” sports gambling “by law,” which should be regarded as a violation of states’ rights protected by the Tenth Amendment—but the Third Circuit didn’t see it that way. The irony, of course, is that 44 states and 47 jurisdictions (D.C., U.S. Virgin Islands, and Puerto Rico) all have government-run lotteries, because evidently those governments are okay with gambling that benefits their budgets.

By overturning the restrictive federal ban on sports betting, states will be empowered to make their own decision about whether or not to allow it. If states were able to make their own laws about sports betting, areas where it is allowed could see economic growth sparked by increased tourism and an increase in betting-related jobs, as well as other industries springing up around this new frontier of economic possibility. Oxford Economics—one of the world’s leaders in global forecasting and quantitative analysis—has estimated that legal sports betting could add $14 billion to the national economy, generate up to $27 billion in total economic impact, and support 152,000 American jobs. In addition to these economic benefits, overturning such a ban would give states and local law enforcement the ability to oversee legal gambling, thus taking power from dangerous underground gambling rings. 

At its root, this is an issue of federalism; people in cities and towns across America should be able to decide for themselves if sports betting is something they want for their communities. Many of them do; nearly 7 in 10 Americans believe that the issue should not be left to the federal government, and 72 percent of avid sports fans support the legalization of sports betting. 

This concern is becoming more relevant as states move to classify fantasy sports leagues as “sports betting” under PASPA and prevent a growing American pastime from thriving in an open, legal market. From 2007 to 2016, 37.6 million people in the U.S. and Canada started playing fantasy sports. As of 2016, a total of 57.4 million people in both countries take part in them. Widespread participation in casual betting extends well beyond fantasy sports websites: during this year’s NCAA March Madness, 70 million brackets were filled out, with people placing a total of $10.4 billion in bets, of which only 3 percent were made legally. Even former presidential candidate Mitt Romney got in on the action in 2015’s March Madness (and nearly had the best bracket in the country).

Clearly, people have not stopped betting because of PASPA; on the contrary, these legally ambiguous arrangements are becoming even more popular and lucrative. The line between legal and illegal is increasingly difficult to define, if not arbitrary. In states that are cracking down on fantasy sports leagues, the leagues are considered “chance based” rather than “skill based.” If a fantasy sports player researches draft picks, checks injury reports, or consults expert opinions, are they merely leaving it to chance? There are surely players who play randomly, with no thought to strategy, but does this justify outlawing such a popular practice over a semantic difference between “chance” and “skill?”

As evidenced by the nation’s annual tradition of March Madness office pools, average people want to bet on sports. It should not be a crime for a regular person to put $5 on the game. Big government bans and one-size-fits-all legislation are ineffective, and states, localities, and individuals should be empowered by repealing the federal ban on sports betting.

(Thanks to legal intern Patrick Moran for assistance with this post.)