Rule change could open Arkansas up to sports gaming

Those who like to have some “action” on a football game on a fall weekend are well aware that, with one major exception, such a bet is illegal in the United States.  That exception is Nevada, where sports gambling is legal.

The scene in a Las Vegas sports book on a football weekend at places like Caesars Palace or the Westgate Super Book is a crowded and energized one.  It’s possible that scene could be coming to a state near you soon.

The Professional and Amateur Sports Protection Act (“PASPA”) was passed by Congress in 1992 to prohibit state-sanctioned sports gambling. (28 U.S.C. §§ 3701-3704). It was sponsored by U.S. Sen. Bill Bradley of New Jersey and was designed to curb sports gambling in the United States. As already noted, it contains exceptions, such as the grandfathered status for Nevada. As an aside, Oregon, Montana and Delaware also have grandfathered status, but it is limited to parlay bets and betting square contests on certain sports. Only Nevada may legally offer full scale sports gambling under PASPA.

Over the past several years, New Jersey has battled back against PASPA’s ban so it may offer sports betting at its gaming establishments in the state. Its first effort came in 2011 when the voters of New Jersey passed a constitutional amendment allowing sports gambling in certain circumstances. Opposition from the NFL, NBA, NHL, MLB and NCAA came in the form of a lawsuit seeking to enjoin the law. The district court ruled that PASPA was constitutional and barred the gaming sought by New Jersey. The Third Circuit Court of Appeals agreed and the United States Supreme Court declined to review the decision, meaning that PASPA continued to prohibit sports gambling in states other than Nevada.

Not willing to give up the fight, in 2014 the New Jersey legislature passed legislation effectively authorizing sports gambling in the state. Again, that law was challenged and in August 2016 the Third Circuit again ruled that PASPA prohibits states from authorizing sports gambling. New Jersey filed a petition asking the U.S. Supreme Court to review the decision and on June 27, the Court issued an order stating it will now determine whether PASPA is constitutional and therefore whether there will still be a ban on sports gambling.

To be clear, just because the U.S. Supreme Court decided to hear the case does not mean it will overturn PASPA. What it does mean, based on the “rule of 4,” is that at least 4 of the 9 justices want to issue a decision on the validity of PASPA. It is fair to speculate, however, that those justices who voted to hear the case have some measure of doubt about PASPA and a ruling could come down within the next 12 months allowing the states to make their own individual decisions whether to offer sports gambling.

As you would expect, there have also been efforts to repeal PASPA legislatively. U.S. Rep. Frank Pallone of New Jersey has introduced legislation that would authorize states to legalize online gambling with oversight provided by the Federal Trade Commission.

There are many other proponents of legalized sports gambling, including the American Gaming Association, which argues that PASPA does nothing more than benefit a thriving $150 million illegal gaming market. Even some of the original opponents of the New Jersey effort are softening, such as NBA commissioner Adam Silver who has called for a repeal of PASPA and the implementation of regulated gambling in the states.

The Supreme Court’s decision to consider the New Jersey lawsuit is likely to prompt some discussions among the stakeholders and members of Congress to consider a legislative compromise. If that comes to pass, the Supreme Court likely won’t have to rule on New Jersey’s appeal.

In the event PASPA meets its end in the coming months or years, states will make individual decisions about gaming within their borders. Without doubt, New Jersey will move quickly to authorize some form of sports gaming, and some other states will likely follow suit. Interestingly, Mississippi recently passed a fantasy sports bill that many feel will automatically allow for sports gambling in the event PASPA is repealed or invalidated.

As for Arkansas, it will probably be deliberate in considering expanding gaming. One might even argue our state constitution will need to be changed to allow for it. Regardless, it will be very interesting to watch the process play out in the coming months.
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Editor’s note: Justin Allen is a partner with the Little Rock-based law firm of Wright Lindsey Jennings. He leads the firm’s governmental relations group. Opinions, commentary and other essays posted in this space are wholly the view of the author(s). They may not represent the opinion of the owners of Talk Business & Politics.