Legislation Calls for Federal Oversight of Sports Wagering

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A draft of federal legislation that would require states to get approval from the U.S. Attorney General before they implement legal gambling has surfaced in Congress.

The bill, drafted by the office of retiring Sen. Orrin Hatch, has come to light seven months after the U.S. Supreme Court overturned the Professional and Amateur Sports Protection Act, lifting the ban sports betting nationwide.

Hatch, an author of the PASPA, announced earlier this year his intentions to draft legislation to override a state-based gambling industry that he called “a patchwork race to the bottom.”

Hatch was one of the original authors of the Professional and Amateur Sports Protection Act that the high court overturned.

Since then, seven states already have implemented full-scale legalized sports betting beyond Nevada which has had some form of gambling since 1931, two more have passed legislation and are poised to launch sports betting and more than a dozen other states have bills introduced that are making their way through their legislatures.

This draft follows a mid-November Sports Betting Policy Summit where Ohio Sen. Bill Conley suggested interstate sports betting compacts as a way to keep a lid on the illegal betting market.

Also during the summer, the House Judiciary Subcommittee on Crime, Terrorism, Homeland Security and Investigations heard testimony on sports betting. Following that hearing, Rep Jim Sensenbrenner R-Wisc. declared “doing nothing was the worst possible choice,” asking the Department of Justice if it agrees with the Office of Legal Counsels decision that interpreted the Federal Wire Act does permit online gambling; what guidance, if any, it could provide to states on sports betting and what issues does it foresee arising if Congress does not act.

What’s in the draft legislation obtained by ESPN and Legal Sports Report :

  • Prohibits states from approving betting on amateur sports and events while allow wagering on college sports.
  • If laws don’t meet certain criteria, the federal government could possibly veto state sports wagering laws.
  • Clarifies the long-standing Wire Act to allow limited sports betting information to move between states.
  • Creates a clearinghouse to provide “real time” betting data.
  • Mandates use of professional league data by sportsbooks through 2022.
  • Allows interstate sports wagering compacts to be joined by states and tribes.
  • Requires minimum standards for dealing with problem gambling or wagering addiction.
  • Requires a federal excise tax of .25 percent to be placed into a wagering trust fund for deployment on betting matters when needed.

The draft legislation says states cannot unilaterally pass sports betting laws, requiring them to seek Department of Justice approval. To receive a federal OK, any sports betting bill must meet certain minimal requirements allowing the attorney general 180 days to approve or disapprove.

If rejected, time is allowed for steps to be taken to amend the legislation. What is not spelled out in the draft legislation it how it applies to the states that already have implemented legal sports gambling, or for that matter, those that will likely approve and implement it before this bill gets through Congress.

As for sports data, the law allows for information that comes from a licensed provider such as the “applicable sports organization” or an “entity authorized by an applicable sports organization.”

With the pace at which states are implementing sports wagering or at least moving forward with legislation that would allow it, any move by Congress would need to be just as quick.

In his note to the DOJ, Sensenbrenner concluded it would take Congress many months, if not years, to enact viable and workable legislation related to legal sports betting.

 

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