Today is Super Bowl Sunday in the United States, a day where Americans will unite to watch the Atlanta Falcons take on the New England Patriots in a bid to win the National Football League championship. In the UK, sports betting is an integral part of watching your favourite sport and placing bets on who you think will win or how the game will play out, is very much routine even with half time adverts encouraging viewers to gamble on the result with in-play odds. However, in the United States, it is very much a different picture as sports betting in the vast majority of states is prohibited and a federal offence. Despite that, it is reported that Americans will likely use a variety of methods to place illegal bets, with tonight being one of the most profitable events for the illegal gambling market. It is estimated that a turnover of $400bn, per year, is made by what is arguably the world's largest black market for gambling and 97% of those who place bets on tonight's Super Bowl will do so illegally.
The Professional and Amateur Sports Protection Act (PASPA) 1992 (also known as the Bradley Act) was introduced in the early 1990s and supported by some of the most powerful men in American sports. It's implementation had three goals in mind: (1) to stop the spread betting of state-sponsored gambling; (2) maintain the integrity of sport and (3) reduce the promotion of sports gambling amongst youths.
PASPA states the following:
"It shall be unlawful for:
(1) a governmental entity to sponsor, operate, advertise, promote, license, or authorise by law or compact, or
(2) a person to sponsor, operate, advertise, or promote, pursuant to the law or compact of a governmental entity,
a lottery, sweepstakes, or other betting, gambling or wagering scheme based, directly or indirectly (through the use of geographical references or otherwise), on one or more competitive games in which amateur or professional athletes, participate, or are intended to participate, or on one or more performances of such athletes in such games."
The Act prohibits sport gambling across all states but carries an exemption under section 3704 for those states that allowed or operated some kind of sports betting scheme at any time between 1976 and 1990. The states that fell under the exemption were Nevada, Oregon, Delaware and Montana. However, it was only Nevada that operated a full range of sports betting which meant that other states were limited to what they had on-offer prior to the enactment of the legislation.
Nevada is the only state that offers a full range of legal sports betting for all major professional and collegiate sports.
Oregon allowed parlay bets on the NFL only through its sports betting lottery between 1989 and 2007. The lottery was, however, repealed in 2007 as the state wanted to attract collegiate basketball competitions.
Delaware offers parlay NFL betting on bets of 3 or more NFL games - it is barred from offering single-game betting or betting on any other sport other than NFL games.
Montana allows state-licensed sports pools, fantasy sports leagues and sports tabs games - the state is barred from offering single bet games or betting on a bundle games.
Match-fixing in the USA
Black Sox scandal
Iamge source: Getty Images
The Black Sox scandal was a Major League Baseball (MLB) incident whereby eight members of the Chicago White Sox baseball team were accused and charged with fixing the 1919 World Series, against the Cincinnati Reds, in exchange for money from gamblers. Following the scandal, Judge Landis was appointed as the first commissioner of baseball. His job was to ensure the integrity of the game. In 1921, all players were acquitted at trial but this did not stop Judge Landis from imposing a lifetime ban, from professional football, on all eight players.
2007 NBA Betting Scandal
Image source: Bet Sports Now
The 2007 NBA betting scandal involved referee, Tim Donaghy, who used his knowledge of relationships between referees, coaches, players and owners to bet on NBA games in which he officiated, between 2005 to 2007. The FBI opened their investigation in 2007, leading to two federal charges of which Donaghy pleaded guilty.
During the investigation, Donaghy was alleged to have stated that several games in the NBA play-offs had been improperly refereed, under instructions from the NBA. Donaghy provided an example of deliberately ignoring fouls that were in plain view of the referee on the basis that the NBA were keen to add another game to the series. He was sentenced to 15 months in prison and three years of supervised release.
As a result of the scandal, NBA Commissioner, David Stern, revised the guidelines on the behaviour of NBA referees. The previous agreement barred referees from engaging in any type of gambling but the amendments revised this to allow them to participate in gambling but not sports betting. Additional amendments included changing the announcement of referees to the morning of a game, education and counseling on gambling as well as thorough background checks and the introduction of the analysis of the statistical relationships and patterns between NBA games and referees.
Various US States are now beginning to call for PASPA to be repealed on the basis that it is discriminatory as it allows four states to offer sports-betting in some form or another but bars the 46 other states from doing so. New Jersey takes the lead on this position and has tried to challenge the legislation through federal litigation, state legislation and the voter referendum process. The position has been publicly supported by California, Iowa, Missouri and Rhode Island. New Jersey voters approved reform and the state signed a bill into law but this was challenged, in 2012, by the NCAA, NFL, MLB, NBA and NHL who filed a lawsuit against the State. The US Appeals Court found in favour of the sporting bodies and upheld the constitutionality of the ban, stating that PASPA prevented states from implementing sports betting schemes.
One of the major stumbling blocks of overturning the legislation is the support of it from America's major sports governing bodies who have long aired their opposition to betting on their games, citing the importance of protecting the integrity of the sport. However, that may be about to change. In 2016, former NBA Commissioner, David Stern, made a complete u-turn on his original stance, stating that the legislation was 'out-dated' and that by legalising sports betting across all states, it could be properly regulated, at a federal level rather than state level, which in-turn would still protect the integrity of sports. Stern considered that stakeholders, including those from the major sports leagues, could be involved in the planning of such a framework and that uniting on that front was the best way forward. NBA president, Adam Silver, shares in Stern's view and also called for the adoption of a federal framework.
However, not all the sports leagues share in the NBA's views, the NFL continues to oppose any such petitions to legalise sports betting and has allegedly forced the cancellation of multiple Las Vegas events featuring current players. Whilst the NHL, despite setting up a Las Vegas franchise, is currently opposing sports betting legislation in Canada, which means it is very possible that they will ask the state of Nevada to prevent betting on any of their latest franchise's games. Given this, it is likely that both leagues will still attempt to challenge any moves to legalise sports betting, in other states.
The evolution of mobile technology may also provide challenges for lawmakers and the leagues in due course, as proposed regulations may allow betters who reside outwith Nevada to set up and fund betting accounts, on mobile apps, from bookmakers who are based in Nevada. They would not, however, be able to place bets until they undergo a verification process in-person at the casino sports-book location, in Nevada. Further, betting on single-games, outside Nevada, will still not be permitted through the app, as per PASPA.
The American Gaming Association has indicated that they intend to lobby for the expansion of legalised gaming, across the United States, and this may commence, in Washington DC, in early 2017. However, as indicated above any efforts are likely to be met with a significant set of obstacles from some of the leagues as well as the US Courts but it would appear that it is a case of when rather than if, in relation to the legalisation across all states.
It is clear that the legal position on sports betting is crying out for an update, at the very least, and as demonstrated in the UK, with effective regulation and monitoring for suspicious patterns, the integrity of sport can be protected whilst increasing the level of engagement for fans.
IMPORTANT: This post is not intended to be a legal briefing, it is not intended to be a statement of the law and no action should be taken in reliance on it without specific legal advice.