What does the fall of PASPA mean for the NBA and gambling?

NBA commissioner Adam Silver was in Cleveland on Thursday to announce the arrival of the All-Star Game in 2022.

It’s weird to think that the U.S. — a country whose gambling industry is an exemplar to all others — has remained a sports-betting-free zone for decades. After all, few nations can boast having cities that run on poker, blackjack and roulette. But the Professional and Amateur Sports Protection Act (PASPA) from 1992 said that states are not to permit sports betting under their jurisdictions. Nevada, Oregon, Delaware and Montana were allowed to slip through the law’s fingers because they already had strong ties to the gambling world. Not every state has been legalized to permit betting. For the people who class this as a tradition and are able to do this without any law abiding rules, there is an excellent guide to betting on NBA games that may interest you, if you are planning on betting on this year’s games. With there being a variety of ways this can be done, just be sure to do your research into finding the best way for you. At the end of the day, the main aspect of betting is learning to be responsible in this situation. The same rule applies to bookies too. With the top per head sites for 2019 available to check out, making more money using offshore booking services should help you make more money for your business. As long as you are doing it in the right way and gambling is legal where you live, that’s all that matters.

The law didn’t target gamblers as much as it did the states’ ability to issue licenses for sports gambling. Still, the Act didn’t change much at the time because most states already had a ban on sports wagering. Then times changed, but the law didn’t, and so fantasy leagues came about as a grayish workaround. Technically, PASPA forbids wagering on “live” players but says nothing about betting on virtual games that happen to imitate real life.

In the meantime, the gambling industry all over the world was thriving. Online poker and even being able to play slots online became viral, taking over the world by storm. Sports betting was just as easy, at least in countries that allowed it. So, some states’ legislatures were getting progressively uneasy because of PASPA. Still, another us (states) vs. them (federal government) battle was in order.

New Jersey took the battle to the Supreme Court and won. (pexels.com)

Trick Moves Around the Act

Most states were losing on a lucrative industry. No sports wagering meant no licensing and no tax revenue from it.

Six years ago, New Jersey amended its constitution under the Sports Wagering Act (SWA), essentially allowing sports betting. The amendments, which went against the PASPA, didn’t strike a chord with some sports leagues, notably the NCAA who filed a lawsuit. The Third Circuit ruled against the state. New Jersey argued that PASPA violates the Tenth Amendment, but the court was unimpressed. It ruled that PASPA prevents states from allowing gambling but does not force them to do anything. Though it added that the Act didn’t forbid the repeal of laws either.

New Jersey dropped the SWA but also repealed some of its laws that banned sports betting. Another lawsuit followed, and the court ruled that the repeals constituted authorization of sports gambling, thus violating the PASPA.

The case reached the Supreme Court, which a month ago, ruled that PASPA does indeed violate the Tenth Amendment. The majority of the justices agreed that telling states what they can’t do is the same as ordering them what to do. The decision has wrongly led people to believe that the Supreme Court decided that sports gambling should be legal. The case was not about sports wagering per se, but about whether the PASPA gave the federal government authority that violated the Constitution.

Even four years ago the global sports betting market was valued at over $500 billion. (pushtechnology.com)

PASPA is Down — What’s at stake?

The decision to repeal PASPA was a divisive one not only in politics but also in sports. While for some, the fall of PASPA means opening the doors to bribing and extorting players, for the major sports associations, including the NBA, the main issue is that sports betting operators will be making money off their backs.

NBA’s commissioner Adam Silver commented: “Regardless of the particulars of any future sports betting law, the integrity of our game remains our highest priority.” Hence, the NBA and MLB are pushing for what they call an “integrity fee” of 1 percent that should cover any possible investigations into malicious behavior. But it’ll be a fight. Less money for bookies means less taxed money by the states while the 1 percent is quite the cut for operators who normally do not get a profit margin of more than 5 percent. With sports betting attracting $150 billion in bets (though 97 percent of them are illegal), we are talking several billion in “integrity fees.”

Silver added: “We remain in favor of a federal framework that would provide a uniform approach to sports gambling in states that choose to permit it […].” The Association’s position is in favor of sports betting provided that there will be universal rules for all states. From a sports league point of view, it makes sense. Having individual state rules will bring a bureaucratic and financial mess to the leagues.

Mark Cuban thinks sports betting will bring positives to the NBA. (AmicoHoops)

Take a Breather — It’s Not All That Bad

While some predict all doom and gloom for professional sports due to the new betting policies, others are taking the opposite stance.

“I think that the increased transparency that will accompany more legalized betting around the country will only further protect against potential corruption,” said Washington Wizards owner Ted Leonsis. Mark Cuban is also in favor, saying that betting coming to light “will increase interests, add to what happens in arenas and stadiums, increase viewership for our biggest customers online and on T.V. and I think it helps traditional television.”

Another point frequently raised by supporters of betting is that sports wagering coming to light will strike a blow to organized crime and set protections for everyone involved in the industry. Security is, in fact, among the top concerns regarding sports wagering. If one bets with an underground bookie and gets burned, there’s not much that can be done. It’s not like one can call 911 to report it. Plus, the money, too, will go through secure (physical and electronic) routes and will make its way to the tax system.

Regarding integrity, the athletic associations have something to gain — with sports betting in the spotlight, it’ll be way easier to investigate internal misconduct. Bookies, too, will have to be more vigilant of foul play because their business thrives on their reputation.

Many believe that the fall of PASPA means something about online poker. It doesn’t. (athlonsports.com)

PASPA and Online Poker — How do the two fit together?

A common misconception about PASPA’s fall is that it will somehow affect online poker. While it has a distant connection, in reality, nothing much will change when it comes to the card game.

Currently, the legality of online poker is in the hands of the states, so the only reason why the game is illegal is that they have chosen so. At the moment, it’s only legal to play poker online in Nevada, New Jersey and Delaware. Recently, Pennsylvania also liberalized its gambling laws, paving the way for fantasy sports, online poker and sports betting, but still, the interest in sports wagering is way higher. At the same time, the expected boom in sports betting will probably lead to a domino effect that will affect other forms of gambling.

But how does poker relate to PASPA? As already discussed, it doesn’t directly, but in recent years, all the most successful forms of gambling have been progressively going under the hats of a handful of companies. So, a sports betting provider is likely to have online poker and other forms of gambling under its belt. Meaning, the big names in for-money gaming have a lot of interest in PASPA as its fall will likely serve as a precedent for liberalizing other games as well. Once this happens, the gambling giants will be able to market more of its portfolio to the lucrative U.S. market.

Sports betting operators might be driven away from excessive regulation and taxation. (latimes.com)

The Middlemen

Speaking of sports betting operators, where do they fit in the puzzle? While sports leagues and states have what to gain from sports betting, it’s the facilitator — betting operators and casinos —who are equally if not more critical piece. They will be the ones hit with licensing fees and all other bureaucratic and financial burdens. And if somehow the “integrity fee” makes its way past the negotiation table, it might be a significant hit at booking companies, leaving them to reconsider whether the benefits of operating in the U.S. outweigh the drawbacks.

In reality, neither the sports leagues nor the states want to lose on an industry that’s generating hundreds of billions of dollars. Thus, the chances are that even if athletic leagues get their way, the fees will be much smaller than the discussed 1 percent. Furthermore, states’ legislators might also make an offering and come up with taxing and licensing schemes that don’t drive way gambling operators.

Nothing is set in stone regarding how and if states will regulate sports betting. Though some 18 of them have shown interest in the industry and have already started working on the necessary frameworks. At the same time, the Supreme Court left it to Congress to decide whether it wants to take the lead in regulating sports betting. After all, the strike down of PASPA didn’t mean that the federal government can’t intervene, it merely meant that it could not tell states not to do things that are its constitutional right. A congressional hearing is in order in the coming weeks with some congressmen expressing a will to hold the reins of national sports betting and such has also been the wish of the NBA and MLB.