Sports Betting: How is it legal and how did We get here?
- Kolya Salter
- Mar 4
- 4 min read
In first year, I fell in love with basketball. A sport that once existed on the fringe of my consciousness had, in the span of two weeks in February, turned into an all-encompassing obsession. Every night, I would tune into whatever game I could find, whether it was a beautiful battle of big men Joel Embiid and Nikola Jokić or a brick-off between a Lamelo-less Hornets and the Pistons. Through my constant consumption of NBA television, two things particularly caught my attention. First, I hate Tatum with a passion. Second, I could not escape gambling advertisements.
Every NBA game has four quarters, seven possible timeouts, and two possible coach challenges. Each quarter has a two-and-a-half minute break (15 minutes for half time), each timeout lasts 75 seconds, and challenges can range from thirty seconds to two minutes. If you exclude five minutes for a halftime breakdown from the analyst desk, that’s around twenty-seven minutes of every NBA game devoted to advertisements; between every monotonous Tide Pod or Hyundai Elantra advertisement is Aaron Paul imploring you to spend the kid’s RESP on a wicked four-leg parlay.
Throughout this consistent bombardment, one question came through the fold: how is this legal? The answer to that question starts with a hearing. In 1991, the Senate Judiciary Subcommittee on Patents, Copyrights, and Trademarks held an inquiry into gambling at the college and professional level. David Stern, the commissioner of the NBA at the time of this hearing, advocated heavily for the prohibition of sports gambling. In his congressional testimony, Stern argued that wagering transforms the relationship of a fan to the game: “A fan who bets on his favourite team may leave a game disappointed because, even though his team won the game, it failed to ‘cover the spread.’ Normal game events will come to be viewed primarily for their impact on the betting line instead of the bottom line” (S.Hrg. 102-499, pg 48). In effect, sports betting changes the motivation of a fan from an affair of passion to a monetary concern. Stern’s testimony, aided by a dozen other statements by various members of the sporting community, brought the Professional and Amateur Sports Protection Act (PASPA) into action on October 28th, 1992.
In 2009, FanDuel was incorporated in Edinburgh, initially marketed to American users as a fantasy football application that offered a financial reward for the top performers. FanDuel was well aware of the potentiality of the U.S. market, but the PASPA prevented them from expanding into the market (outside of Las Vegas). With a new influx of Series C, D, and E funding fuelling the company’s valuation north of a billion dollars, FanDuel launched a lobbying campaign to dismantle the PASPA. Their strategy centred around finding a state with a soft spot for the gambling market, a state with a history of disrupting the status quo. New Jersey became their Mecca. Atlantic City had long since been in decline, and Chris Christie was chomping at the bit to revitalize New Jersey’s once prosperous casino industry. After a successful 2011 referendum on betting legalization, Christie legalized sports betting in 2012. Almost immediately after this ratification, the MLB, NBA, NFL, NHL, and NCAA (collectively referenced as NCAA) banded together to tear this legislation down.
The NCAA’s case was straightforward: New Jersey, by legalizing sports betting in its state, violated PASPA. For the initial version of this bill, Christie I, both the Federal District Court and the Third Circuit of Appeals sided with the NCAA. Christie passed a reworked bill, affectionately named Christie II, in 2014. Again, the NCAA sued New Jersey. This time, New Jersey reframed the case into a constitutional dispute. The 10th Amendment states 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.” New Jersey argued that by enforcing PASPA nationwide, the Federal government violated the state’s right to govern itself. As the case progressed, the leadership of the NBA and the MLB changed hands. In particular, Adam Silver took a far more bullish stance on the future of wagering to grow the sport. The Federal District Court and the Third Circuit Court of Appeals both sided with NCAA, prompting an appeal to the Supreme Court. On May 14th, 2018, the Supreme Court handed down a verdict that altered the course of sports forever.
The Supreme Court decision revolved around authorization. PASPA decreed that states could not “authorize” sports gambling. The question was of a “dual sovereignty” outlined by the 10th Amendment. The State cited New York v. United States (505 U.S. 144, 1992) and Printz v. United States (521 U.S. 898, 1997) in their argument, outlining a precedent of state’s rights overruling a congressional decree. Printz v. United States is particularly applicable, with the case surrounding the Brady rule on handgun ownership and the national need to protect its citizens. The NCAA argued that the PASPA did not outright command a state to “do” something - but that the state’s complete or partial repeal of an act is in effect an authorization - and thus the 10th Amendment was inapplicable, and Christie II was in violation of federal law. Ultimately, the Supreme Court ruled in favour of the respondent, decreeing that PASPA was in violation of the anticommandeering principle.
Since the 2018 ruling, 38 states have legalized sports betting. The market has grown from 920 million to 14.3 billion, with projects estimating a 23.8 billion market cap by the end of the decade. FanDuel has entered a partnership with every plaintiff except for the NCAA. Ontario introduced Bill 126 to prohibit online advertisement of gambling, but the bill has yet to pass through a second reading. Similar legislation has been contended in the U.S., but no formal processes have commenced. Gambling corporations have free reign to expand their empire as much as they see fit - at the expense of the ~8-10 million Americans who suffer from moderate to severe gambling dependencies.
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