July 2017 Roundup of Online Betting News

There have been some significant developments in the state of online gambling across the nation this month at both the state and federal levels. The biggest of the month is undoubtedly the surprise decision of the Supreme Court to hear New Jersey’s sports betting appeal. The outcome of that case is uncertain, but things are looking better for New Jersey on that front than they have in a long time.

In other states, additional measures to legalize and regulate various forms of betting have also gained ground. It all goes to show that lawmakers around the country are acknowledging that the demand for more forms of legal gambling is not going away any time soon.

Our gambling news roundup this month focuses on six news stories in particular:

  • US Supreme Court Will Take Up the NJ Sports Betting Case After All
  • Mississippi is Ready if Sports Betting is Legalized at the Federal Level
  • New Online Gambling Bill Introduced in Michigan
  • Nevada Legalizes Parimutuel eSports Betting
  • Prominent Law Enforcement Officials Join American Sports Betting Coalition
  • Attorney General Jeff Sessions Will Recuse Himself from the Gambling Issue

US Supreme Court Will Take Up the New Jersey Sports Betting Case After All

When the U.S. Solicitor General filed a brief recommending the Supreme Court not hear the New Jersey sports betting case back in May, New Jersey’s efforts to legalize sports betting were put in dire jeopardy.

As we noted in our June news roundup, the Supreme Court follows such recommendations 80% of the time, and has followed them 100% over the past 20 such recommendations. Multiple lower courts had already ruled against New Jersey and the Supreme Court was New Jersey’s last shot at overturning a federal law that prevents individual states from legalizing and regulating sports betting.

The Solicitor General’s brief had all but killed the best avenue still open to New Jersey for legalizing sports betting. However, the Supreme Court breathed new life into the effort late last month after at least four Supreme Court Justices voted to hear the case despite the Solicitor General’s recommendation.

Attempting to predict the outcome of a Supreme Court case is a fool’s errand for us non-lawyer types, but there are some reasons to be cautiously optimistic. With at least four Justices voting to hear the case despite receiving a recommendation against doing so, it indicates SCOTUS sees the far-ranging implications of this case.

That’s because New Jersey has framed this case as an issue of state rights versus federal authority. Does the federal government have the authority to tell New Jersey whether or not it can legalize sports betting? The answer to this question will affect all manner of other Constitutional questions.

An article published by the Press of Atlantic City also expresses optimism for New Jersey’s odds. In that one, they note that the framing of this case as a states rights issue was a smart move and also point to a 2011 referendum in which 2/3rds of voters voted in favor of legalizing sports betting in New Jersey. And they also note that even if this case does fail in front of the Supreme Court, it appears highly likely that federal legislation at some point will pave the way for widespread legalization.

Mississippi is Ready if Sports Betting is Legalized at the Federal Level

This next news item serves as a nice example of the far-ranging affects the New Jersey sports betting case will have across the country.

A piece published in the Sun Herald on July 27th revealed that when Mississippi passed HB 967 in March to legalize fantasy sports, lawmakers also slipped in some language that would give Mississippi casinos permission to offer real money sports betting should the federal ban be overturned at the federal level.

Representative Scott DeLano confirmed to the Sun Herald that lawmakers had indeed added language:

“We did make modifications to Gaming Control Act that would allow for the Gaming Commission to regulate sports betting if it were ever to be overturned at the federal level.”

This language would only come into play if New Jersey is successful or if the law is overturned via legislative means in the future. However, it puts Mississippi well ahead of the game by removing the greatest barrier to sports betting in the state. The Mississippi Gaming Commission has already come out in favor of legalization and would be ready to introduce regulations should that happen.

New Online Gambling Bill Introduced in Michigan

From Online Poker Report, we have news that Michigan has revived its online gambling efforts. Senate Bill 203 (full text) was first introduced back in March but made little headway due to multiple competing interests in the state as we noted in our 2017 outlook post.

Now, lawmakers are circulating drafts of proposed changes in an effort to appease all interested parties. The legal landscape in Michigan is horribly complicated due to tribal compacts, ambivalence on the part of Michigan’s commercial casinos and numerous legal questions that have no clear answers at this time.

The odds of anything getting done in Michigan still look low for the time being. As an anonymous stat official told Online Poker Report:

“There’s all kinds of unresolved issues, let me put it that way. There’s going to be full employment for a lot of lawyers. You have Michigan law, federal law, tribal issues; all kinds of things. We don’t have a lot of precedence and guidance.”

We’ll be following the developments in Michigan but will not be getting our hopes up on legalization happening any time in the near future. Michigan has many questions to answer and many interests to satisfy before online casino games or poker become a reality.

Nevada Legalizes Parimutuel eSports Betting

On July 1st, a bill legalizing parimutuel eSports betting took effect in Nevada. Governor Brian Sandoval signed the bill into law on May 27th after it received unanimous approval in the Nevada Senate and Assembly.

eSports betting has already been legal in Nevada under laws that permit sportsbooks to accept bets on “other events,” but the types of bets they were allowed to accept previously were limited. This bill now opens the market to parimutuel-style wagering for eSports and other nontraditional competitions (such as betting on the outcome of the World Series of Poker).

In parimutuel wagering, all money taken in from bets is pooled together and then divvied out to the winners. The house does not set the odds as it does in traditional sports betting; the odds are determined based on the wagering activity of the bettors. The house only collects a percentage of the pool and then distributes the rest out to the winners. This is exactly how horse racing betting has been conducted in the United States for decades.

The significance of this bill still remains murky at this early stage. It does open new opportunities for eSports betting operators in Nevada, but how much desire there is for parimutuel-style wagering remains to be seen.

Gambling law expert I. Nelson Rose posted an alternative take on his website a couple weeks ago that makes the case that this change in the law will greatly increase the amount wagered on eSports while also making it easier for regulators to regulate eSports betting.

Prominent Law Enforcement Officials Join American Sports Betting Coalition

The American Gaming Association launched a new coalition last month and it has convinced some prominent members of law enforcement in the United States to get on board. The American Sports Betting Coalition explains its purpose in simple terms on its website:

To change the sports betting law, an entirely new policy environment must be created. The American Sports Betting Coalition brings together leaders in law enforcement, business, and organizations representing elected officials to advocate for a repeal of PASPA and give states the ability to decide the question of legalization.

Ed Davis (former Commissioner of the Boston Police Department), Tim Murphy (former Deputy Director of the FBI) and Geoff Freeman (President and CEO of the American Gaming Association) penned an op-ed for The Hill last month advocating for the repeal of the failed federal sports betting ban and allowing states to chart their own path forward.

The new website for the American Sports Betting Coalition lists the four key components of its agenda:

  • Defer to states regarding the desirability of regulating sports betting as they do other forms of casino wagering
  • Ensure the integrity of sports betting through state licensing and regulation
  • Make all sports betting businesses transparent to law enforcement
  • Ensure a tax regime does not undermine legal sports betting operations’ ability to compete against illegal and offshore operators

The Competitive Enterprise Institute also has an informative and persuasive blog post detailing the issue on its website. One of the key points made in that article argues that legal sports betting would actually improve on sports leagues’ ability to protect the integrity of the games. The article notes that in Europe, regulated on sportsbooks are perfectly situated to work as early-warning systems for suspicious betting activities. In such regulated markets, online betting sites work with law enforcement, not against it.

That article also points to a comment made by NFL Commissioner Roger Goodell when asked if he had any concerns about the Oakland Raiders being relocated to Las Vegas. In his response, he pointed to the strong regulatory environment in Nevada and said it may actually be beneficial in this case.

This development is just the latest example of mounting pressure on lawmakers to do something about sports betting. More and more people are recognizing that illegal sports betting is already out of control and that the best way forward would be to bring the industry into the light and implement proper safeguards for the benefit of gamblers, sports leagues and taxpayers.

Attorney General Jeff Sessions Will Recuse Himself from the Gambling Issue

The confirmation of US Attorney General Jeff Sessions had online gambling proponents concerned as Sessions has never painted himself as a friend of online betting. During his confirmation hearings, he said he disagreed with a 2011 Justice Department decision that paved the way for individual US states to legalize online casino games and poker.

However, Sessions hired a personal lawyer by the name of Charles Cooper to advise him during the investigation into allegations of Russian meddling in the 2016 Presidential election. Jeff Sessions is not the only person to have given Charles Cooper a job in recent months. The Coalition to Stop Internet Gambling, a Sheldon Adelson-backed coalition opposed to internet gambling, also hired Charles Cooper to lobby against the legalization of online gambling.

A Justice Department spokeswoman later announced that Jeff Sessions will recuse himself from the gambling issue, according to a Bloomberg report last month. Getting Jeff Sessions out of the picture may be a key win for online gambling proponents.

But before we get too excited, it is worth noting that the responsibility may then fall to Deputy Attorney General Rod Rosenstein. Calvin Ayre notes that when Rod Rosenstein served as the AG for Maryland, he was responsible for the seizure of eleven bank accounts and ten domains connected to offshore gambling.

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