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Legal Developments

Federal Sports Betting Regulation Remains Unlikely

Congress’ latest sports betting flirtation will, once again, likely lead to little significant action. That’s just fine in the sports betting industry’s eyes.

Despite testimony that legal college sports betting will degrade “the integrity of amateur competition,” there’s little indication the Senate Judiciary Committee hearing Wednesday will spark federal intervention in amateur wagering – or any other area. In a wide-ranging, multi-part hearing ostensibly about the rights of college athletes, which touched on scholarship allocation, race relations and transgender participation, Senators showed comparatively little interest in U.S. sports betting.

American Gaming Association President Bill Miller believes that’s the best step forward.

“Any efforts to use the power of government to impose costs, eliminate operators’ market-based choices, or make it harder for consumers to place legal wagers will directly undermine the goals we all share,” Miller testified Wednesday.

Federal Framework

Since the Supreme Court struck down the federal ban two years ago, Miller and the industry at large have fought another federal standard. The “best” effort, a 2018 bill from then-Senate President Pro Tempore Orrin Hatch and current Senate Minority Leader Chuck Schumer, has gone nowhere.

Wednesday’s hearing gives a follow up little hope.

Miller laid out the extensive state-level guidelines that have regulated gaming for decades. Age restrictions, record-keeping and licensing determinations have continued without major issue, meaning further federal oversight would be detrimental, Miller said.

Instead Miller argued Congress should strengthen match-fixing penalties, but also reduce or repeal the 0.25% sports betting excise tax.

“The tax does not advance any specific policy goals, and continues to make it more difficult for legal operations to compete with illegal bookmakers,” Miller said.

Chair Lindsay Graham and Ranking Member Richard Blumenthal followed Miller’s testimony with brief remarks, but offered nothing beyond an undetailed commitment to fight illicit gambling and even less input on formal policy.

College Corruption Fears

In absence of federal regulation, 22 states, Washington D.C. and Puerto Rico have approved sports betting since May 2018 and three more states will place voter referendums on their respective 2020 ballots to do so. That’s meant disparate paths over nearly every facet of legal wagering, including college events which, as reaffirmed during Wednesday’s hearing, remains a controversial aspect of the newly expanded gaming market.

University of Pittsburgh Director of Athletics Heather Lyke said her school and the Atlantic Coast Conference at large still opposes legal wagering on college sports, more than two years after the Supreme Court decision and after multiple Mid-Atlantic states – including Pennsylvania – have accepted several billion dollars in legal wagers.

“While sports wagering might create revenue opportunities for states, it will ultimately undermine the integrity of intercollegiate sports and the academic, personal and social experiences of students and student-athletes at our institutions,” Lyke testified.

Lyke’s testimony underscored the gambling fears still lingering in college athletics, but there’s little indication lawmakers will clamp down on collegiate betting, especially at the federal level. Neither Graham nor Blumenthal discussed any specific proposals, and after Graham prodded Miller about some jurisdictions’ in-state collegiate wagering bans he seemed content with Miller’s answer that it was partially due to the university’s influence in the legislative process.

Though the committee chair said he worried about college prop bets, he said he largely supported legal gambling and made no mention of a blanket collegiate betting or even college prop betting ban.

When pressed by Blumenthal, Lyke said she couldn’t quantify the role expanded legal gambling played in tempting college athletes but said they faced “more pressure than ever.” In an indirect rebuttal, Miller said most college sports betting scandals were caught by legal wagering regulators, which wouldn’t be possible in an unregulated market.

Miller then reaffirmed amateur and professional sports wagering’s biggest threat remains legal stakeholders’ fight against the misunderstanding surrounding offshore and unlicensed bookmakers, which is still ubiquitous despite the proliferation of regulated options.

“The primary role of the federal government should remain enforcement against the illegal marketplace and represents the most meaningful solution to help ensure the integrity of sports,” Miller said in closing his prepared remarks before the committee. “Legal sports betting operations have an overwhelming economic interest in clean competition and will continue to work with regulators and law enforcement to ensure that criminal efforts to undermine sports integrity are detected and deterred.”

The committee’s top officials didn’t push either panelist much further.  A handful of other committee members that had floated in and out of the multi-hour hearing, peppering an earlier panel of college athletics stakeholders, had departed the meeting room by the end of Miller’s testimony.

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