The U.S. Supreme Court struck down the federal law Monday that has barred California and 46 other states from legalizing and taxing the $400 billion a year in “black market” sports betting.
The Supreme Court ruled in a momentous 6-to-3 vote (Justices Ruth Bader Ginsburg, Justice Sonia Sotomayor and Justice Stephen Breyer, dissenting) that under the U.S. Constitution’s Tenth Amendment, the federal government cannot “commandeer” a state legislature or its governor to enforce a federal law or policy.
Murphy v. National Collegiate Athletic Association was brought by the State of New Jersey to challenge a 1992 federal statute called the Professional and Amateur Sports Protection Act (PASPA), which forbid state or local government efforts “to sponsor, operate, advertise, promote, license, or authorize by law or compact” for any system that involved betting on games of sport.
The Court agreed that the federal government has always had the right to ban an activity, like gambling, but PASPA did not make gambling on sports a federal crime.
What PASPA did do is circumvent the Tenth Amendment protection that “The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.” It did so by authorizing the federal government and any professional or amateur sports organization to bring a lawsuit against a state for a civil injunction against the activity.
PASPA also discriminated by exempting Nevada and New Jersey casinos to operate “sports books,” and it allowed four states to grandfather existing sports betting lotteries.
There has been a concerted effort by 22 states to end PASPA, after new NBA commissioner Adam Silver announced in November 2014 that the league had signed a multi-year partnership and partial ownership interest deal with on-line daily fantasy sports (DFS) site Fan Duel.
Silver, in an op-ed piece in the New York Times, said that legalized sports betting was “inevitable,” because “those who wish to bet resort to illicit bookmaking operations and shady offshore websites.” He estimated that illegal sports wagering on pro sports alone was already a $400 billion industry, and that technology would soon spike that number as the success of every pro sports shot, pass, or kick would eventually be bet online.
As the PlayUSA website demonstrates, there are 22 states that have already made provisions for legal sports betting, in expectation that either Congress or the Courts would blow-away PASPA.
California State Assemblyman Adam Gray (D-Merced) has already introduced a state constitutional amendment to capture some of the estimated $20 billion to $40 billion a year in black market gambling in the Golden State.
His initiative would request voters authorize sports gambling by deputizing the legislature to regulate the various forms of online, card room, horse track, and tribal sports betting.
Both houses of the legislature would have until June to pass a bill for Gov. Jerry Brown to sign and then place on the November ballot. Because the effort requires a constitutional amendment, it would need a two-thirds vote of the people for approval.
Gray told Sacramento local television station KCRA 3 that a legalized sports book could have a very positive impact on state finances: “You could see tax revenue as high as a $100 million or $200 million a year to the state general fund if we authorize sports wagering.”