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American Gaming Association Outlines Priorities For Legalized Sports Betting Market

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As numerous gaming experts anticipated, a momentous ruling by the Supreme Court invalidating a quarter-century federal ban on sports betting has produced a strong reaction among interested parties nationwide.

Less than 10 days since the nation's highest court issued a historic decision, Churchill Downs Inc. has taken steps to launch a multi-state sports gambling operation, while the NFL finally emerged from the sidelines after months of remaining silent. The activity has been widely expected after the nine-justice panel declared the Professional and Amateur Sports Protection Act (PASPA), a 1992 law that restricted state sponsored sports gambling, as unconstitutional. 

On Tuesday, the nation's leading gambling trade group weighed in, attempting to bring some clarity on how a legalized sports gambling market should operate in the post-PASPA environment. In a terse, 675 word letter to Congress, American Gaming Association President and CEO Geoff Freeman reiterated the industry's main priorities as lawmakers on Capitol Hill mull whether to enact new federal legislation for regulating sports gambling.

One of the association's top priorities, Freeman wrote, is to lend support to state regulators as they decide whether to offer legal sports gambling operations. Nearly a dozen states could legalize sports betting in 2018, Eilers & Krejcik Gaming predicted in January ahead of the decision, while the figure could swell to as many as 32 over the next five years. More immediately, former New Jersey governor Chris Christie has indicated that patrons of Monmouth Park could begin placing sports wagers by the end of the month. In Delaware, officials issued a statement May 17 that the state plans to offer full-scale sports betting by mid-June.

While the Supreme Court has acknowledged that Congress can regulate sports betting directly, individual states will be given the opportunity to legalize and regulate sports gambling operations, according to Sen. Orrin Hatch (R - Utah). Nevertheless, Hatch has taken the position that Congress needs to enact some federal standards in order to deter state regulatory agencies from engaging in a "race to the bottom." Hatch, a co-author of PASPA in 1992, said May 14 that he plans on introducing new federal legislation over the next few weeks aimed at protecting the integrity of sports.

"The problems posed by sports betting are much the same as they were 25 years ago," Hatch said in a press release. "But the rapid rise of the Internet means that sports betting across state lines is now just a click away. We cannot allow this practice to proliferate amid uneven enforcement and a patchwork race to the regulatory bottom."

Freeman, on the other hand, argues that any efforts to create a federal framework are "unwise," and will be met with strong resistance from the association.

The publication of the letter came one day after NFL commissioner Roger Goodell advised Congress to enact uniform standards for states that intend to legalize sports gambling, based on four core principles. The standards include substantial protections for consumers and strict law enforcement tools to protect NFL fans from unscrupulous actors in the gambling marketplace. 

"We have spent considerable time planning for the potential of broadly legalized sports gambling and are prepared to address these changes in a thoughtful and comprehensive way, including substantial education and compliance training for our clubs, players, employees and partners," Goodell said in a statement. "These efforts include supporting commonsense legislation that protects our players, coaches and fans and maintains public confidence in our games."

Freeman, meanwhile, urged Congress to reevaluate a 0.25 percent federal excise tax on sports wagers. Congress originally imposed the tax as part of the Revenue Act of 1951 to aid states in the enforcement of illegal gambling activity. At present, however, the levy places the legal market at a competitive disadvantage against illegal gambling operators that avoid paying taxes, he said.

Ultimately, Freeman would like a wide array of groups to work in collaboration to combat an illegal, black market that the association estimates has reached as high as $150 billion a year in the U.S.

"If our shared goal is stamping out the massive illegal sports betting market, industry stakeholders and policymakers at all levels of government must work together to ensure sound policies enable legal operations to compete," Freeman wrote in the letter.