By: Raina Barbee
In 2018, the Supreme Court ruled in Murphy v. NCAA[1] that the Professional and Amateur Sports Protection Act (PASPA) was unconstitutional because it “regulate[s] state governments’ regulation” of their citizens.”[2] This ruling opened the flood gates for the potential of legalized sports betting and has since become legal in eighteen states.[3]
Next month, Tennessee will be the first state in the nation to legalize online interactive and mobile-only sports betting.[4] Twenty percent of the revenue from betting will go directly back to the state to fund mental health initiatives, education, and infrastructure.[5] Other states are likely to follow. Virginia will allow at least four and up to twelve online sports betting licenses to businesses operating online wagering sites and apps.[6] Neighboring state Maryland, however, has been more reluctant to expand its sports gambling industry.[7] On the ballot this cycle, voters are asked only if they agree with legalizing sports betting.[8] If voters approve, then licensing logistics will be considered.[9]
A few states that have legalized sports betting have seen a large increase in industry revenue over the past month. Amid a global pandemic and altered sports schedules, Pennsylvania sports wagering has surged on, with online sports betting accounting for more than 88% of all bets.[10] The handle, or amount of money in wagers accepted, hit a record $365 million in August, up 121.5% compared to July and 234.7% from last August, 4.8% higher than the state’s previous all-time record of $348.4 million wagers accepted in January.[11] Last month, Indiana broke the $200 million mark for the first time reporting $207.5 million in the handle.[12]
Only some states are substantially benefitting from the expansion of the online sports betting market.[13] Many online sportsbook companies such as FanDuel and DraftKings dominate the market evidenced by their partnerships with professional sports teams.[14] Everyone is vying for a piece of the pie, including universities. The University of Colorado announced that its athletic program has entered into a corporate sponsorship agreement with online sportsbook PointsBet.[15] The partnership is the first of its kind, leading many to be concerned with the regulatory implications of this type of partnership given the university’s relationship with the NCAA.[16] NCAA rules prohibit student-athletes and athletic department employees from wagering on any sports.[17]
The illegal sports gambling industry is estimated at $150 billion.[18] Murphy v. NCAA legalized the sports gambling market imposing many economic benefits not only for states but for major corporations. Sports betting companies are dominating the market with tremendous profits that are only expected to grow.[19] While the legalization of state-sponsored sports betting provided an opportunity for states to profit from this emerging industry, it has been the catalyst for far more private deals. However, these deals might prove far more lucrative for sportsbook companies than anyone else. The regulatory concerns surrounding university and sportsbook partnerships could limit the possibility of expansion for other NCAA members. As the market continues to grow, it is imperative that states are mindful of the regulatory regimes in place that might hinder economic growth.
[1] 584 U.S. 31 (2018).
[2] Id.
[3] Interactive Map: Sports Betting in the U.S., American Gaming Ass’n, https://www.americangaming.org/research/state-gaming-map/ (last updated Oct. 1, 2020).
[4] Malik Jackson, Tennessee Historic Sports Betting Law Goes into Effect Nov. 1, WBIR-TV(Oct. 7, 2020), https://www.wbir.com/article/sports/tennessee-historic-sports-betting-law-goes-into-effect-nov-1/51-6ace6d88-496c-40ff-8ec3-b9eb2befdee0.
[5] Id.
[6] Kimberly Pierceall, Betting On College, Pro Sports Could Soon Be Legal After Virginia Lottery Signs Off On Final Statewide Wagering Rules, The Virginian-Pilot (Sept. 15, 2020) https://www.pilotonline.com/business/consumer/vp-bz-lottery-sports-betting-20200915-wcwo44ca65gyxdkpauztxuaxv4-story.html; Expanded Gaming Sports Betting & Casino, Virginia Lottery, https://www.valottery.com/aboutus/casinosandsportsbetting (last visited Oct. 16, 2020).
[7] Pamela Wood, $2 Million And Counting Spent on Push For Legal Sports Betting in Maryland, The Baltimore Sun (Oct. 10, 2020), https://www.baltimoresun.com/politics/bs-md-pol-sports-gambling-campaigns-20201010-7ma6oisbqbfz5c2duiffltjv2u-story.html.
[8] Id.
[9] Id.
[10]Monthly Sports Wagering Report, Pa. Gaming Control Bd., https://gamingcontrolboard.pa.gov/files/revenue/Gaming_Revenue_Monthly_Sports_Wagering_FY20202021.pdf (last visited Oct. 16, 2020).
[11] Id.; see also Matthew Waters, PA Sports Betting Market Joins Record-Breakers in August, Legal Sports Report (Sept. 16, 2020), https://www.legalsportsreport.com/44310/pa-sports-betting-august-2020-revenue/ (discussing the online sports betting market in Pennsylvania).
[12]Summary of Wagering and Supplemental Tax – Reported for September 2020, Ind. Gaming Comm’n, https://www.in.gov/igc/files/2020-09%20Revenue.pdf (last visited Oct. 16, 2020).
[13] Jill R. Dorson, How States Are Spending Their Sports Betting Tax Revenue, SportsHandle (Oct. 25, 2018), https://sportshandle.com/how-states-are-spending-their-sports-betting-tax-revenue/#:~:text=By%20state%20law%2C%20a%20percentage,state%2C%20country%20or%20municipal%20projects.
[14] Jabari Young, DraftKings, New York Giants Agree to Exclusive Sports Betting Deal, CNBC (Sept. 16, 2020), https://www.cnbc.com/2020/09/16/draftkings-new-york-giants-agree-to-exclusive-sports-betting-deal.html.
[15] Christopher Conniff & Nicholas Macri, University Sportsbook Deal Raises Compliance Concerns, Law360 (Oct. 7, 2020), https://www.law360.com/articles/1317076 (noting that the University is the first major college athletic program partnership with a sportsbook).
[16] Id.
[17] Id.
[18]97% of Expected $10 Billion Wagered on March Madness to be bet Illegally, American Gaming Ass’n, https://www.americangaming.org/new/97-of-expected-10-billion-wagered-on-march-madness-to-be-bet-illegally/ (last visited Oct. 16, 2020).
[19] Todd Shriber, DraftKings Could Use Amazon, Netflix Playbook to Garner Dominant Market Share, Says Analyst, casino.org (Sept. 24, 2020), https://www.casino.org/news/draftkings-could-see-4-3-billiob-in-revenue-by-2030-says-anayst/.
