As the nation preps for March Madness, a free-market group argues that Congress should give the power to legalize and regulate sports gambling to the states.
Twenty-five years ago, Congress passed the Professional and Amateur Sports Protection Act (PASPA), which blocked all states but Nevada from regulating bets made on the outcome of individual sports contests. The Silver State was grandfathered in because it already allowed the practice.
But as with the movement to give states the right to choose whether to allow various forms of online gambling within their borders, the Competitive Enterprise Institute says states should also be empowered to decide whether to legalize sports gambling.
Daily fantasy sports, which allow players to select a team of players and risk and win money based on how those players fare statistically over a slate of games, is already legal in the majority of states.
“Millions of Americans who bet on March Madness brackets are unwitting lawbreakers, no thanks to a government prohibition on sports betting,” said Michelle Minton, co-author of the CEI report. “Even former President Barack Obama openly discussed his bracket picks and admitted to gambling on the games.”
CEI said the PASPA has essentially created a massive black market for sports gambling in which at least 95 percent of the money wagered is bet illegally, from the office bracket pool to the local bookie to offshore websites. That deprives Americans the protection of a legal market, CEI said.
After Congress passed the Unlawful Internet Gambling Enforcement Act in 2006, several online poker sites — some of which also offered sports betting — pulled out of the U.S. market, taking the bankrolls of many Americans with them. Although the vast majority of players on leading sites Poker Stars and Full Tilt Poker were eventually paid, millions of dollars were still lost from sites such as Absolute Poker and World Sports Exchange.
The Department of Justice, under the Obama administration, ruled the 1961 Interstate Wire Act applied specifically to sports betting and not other forms of gambling, which led states such as Nevada, New Jersey and Delaware to offer online poker and other states to sell lottery tickets online. That decision has also led to a call for the federal government to take its foot off of online wagering, in general.
However, newly minted Attorney General Jeff Sessions has expressed an interest in revisiting the Obama administration’s Wire Act interpretation.
Because so much of sports wagering takes place under the table, it’s unclear how much money is actually involved, although CEI estimates it at between $150 billion and $400 billion annually. Because of the federal ban, states are deprived of billions of dollars in potential tax revenue, the institute said.
“Congress should repeal this prohibition and let states decide whether it makes sense to legalize sports gambling for their citizens,” Minton said.