December 10, 2018

federal-sports-gambling
Federal Sports Gambling

According to recent reports, Utah Senator Orrin Hatch has drafted a bill intended to create a framework for federal sports gambling that he will introduce before the current legislative session ends.  Readers of this blog will recall that on the eve of the 2018 football season, Senator Hatch, an original author of the Professional and Amateur Sports Protection Act (“PASPA”), gave a floor speech foreshadowing that such a bill was in the works in the wake of the Supreme Court’s landmark ruling striking down PASPA.

What are the main components of the draft federal sports gambling legislation?

Senator Hatch’s draft proposal would set up an opt-in framework in which states would be required to obtain the approval of the United States Attorney General (“USAG”) in order to administer sports gambling programs.  In the absence of such approval, sports gambling would be prohibited at the federal level.  The bill provides that the USAG must approve a given state’s application unless that state’s proposed sports gambling program does not meet minimum federal compliance standards set forth in the proposed legislation.  These standards include, but are not limited to:

  • Location verification requirements to prevent individuals from wagering on interactive platforms from unauthorized locations;
  • Prevention of wagering by certain prohibited individuals, such as minors and athletes;
  • Licensure requirements for operators that accept sports wagers;
  • Certain consumer protections, such as self-exclusion lists;
  • Advertising standards that prohibit targeting minors; and
  • Real-time information sharing by sports wagering operators with a national sports wagering clearinghouse for the purpose of monitoring suspicious activity.

It is unclear from the text of the proposal how the bill would treat states that have already legalized sports gambling prior to enactment of prospective federal legislation.  Additionally, the bill proposes amendments to the federal Wire Act to allow sportsbook operators to lay off bets to other states, and the Bribery Act, by adding extortion, blackmail and wagers based on non-public information as violations.

What does the Future Hold for State and Federal Sports Gambling?

There are already concerns that Senator Hatch’s proposed bill, by requiring states to opt-in to the legalized framework subject to a veto from the USAG, raises the same constitutional commandeering issues that ultimately befell PASPA.  Nevertheless, with the current legislative session and Senator Hatch’s retirement imminently approaching, it is likely that the recently-released proposal is meant to begin the tortured legislative process towards federal intervention into the sports gambling arena.  While the process plays out, individuals states will continue to create a patchwork of laws for businesses and individuals to navigate.  Until such time as federal intervention ultimately occurs, it is critical that those interested in entering this space work closely with knowledgeable gaming lawyers.

If you are interested in learning more about this topic or pursuing a venture in this area, please e-mail us at info@kleinmoynihan.com, or call us at (212) 246-0900.

The material contained herein is provided for informational purposes only and is not legal advice, nor is it a substitute for obtaining legal advice from an attorney.  Each situation is unique, and you should not act or rely on any information contained herein without seeking the advice of an experienced attorney.

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