House Subcommittee Hears Spirited Debate On Role Of Federal Government In Regulating Sports Gambling
September 27, 2018
Addressing the 10,000 pound Elephant In The Room, Rep. James Sensenbrenner opened his remarks at a Congressional hearing on sports betting by expressing concern that intense media coverage of Brett Kavanaugh's Supreme Court confirmation could diminish the gravity of Thursday's hearing.
Sensenbrenner, the chairman of the U.S. House Subcommittee on Crime, Terrorism, Homeland Security and Investigations, tackled the issue head on by asserting that the societal impact of sports gambling is just as critical to the nation as the matters discussed before the Senate Judiciary Committee. The hearing entitled, Post-PASPA: An Examination of Sports Betting in America, marked the first time a Congressional subcommittee convened for a discussion on the topic since the Supreme Court struck down a federal ban on sports gambling in May.
"This is going to be an issue that is going to be very important in terms of making a determination of how professional and amateur sports are played, and any regulation, if any, that Congress should decide to put on the huge amounts of money that are bet both in legal and, in some cases, illegal forums," Sensenbrenner said in his opening remarks.
A debate on whether regulation of sports gambling should be largely enforced by the federal government or left to individual states dominated the 90-minute hearing inside the Rayburn House Office Building. While four states -- Delaware, New Jersey, Mississippi and West Virginia -- have legalized sports betting over the last three months, more than a dozen others could follow suit over the next two years. The committee heard from a panel of experts on the ramifications of the Court's decision, headlined by NFL Executive Vice President of Communications and Public Affairs Jocelyn Moore.
Echoing a position taken by NFL Commissioner Roger Goodell earlier this summer, Moore noted that sports gambling remains an interstate question requiring a response from the federal government. As such, Moore urged Congress to establish core standards that will ensure a legal, regulated sports betting framework with substantial safeguards for consumers. Without proper federal oversight, Moore warned against a potential regulatory "race to the bottom," by state legislatures, a concern also expressed by Sen. Orrin Hatch, a co-author of the Professional and Amateur Sports Protection Act of 1992.
At the same time, a leading trade group for the gaming industry argued that the responsibility of regulating sports gambling should be handled mostly by states and tribal nations, not the federal government. Just as Congress has refrained from regulating lotteries and other games such as slot machines, it should take a similar Laissez-Faire approach to sports betting, according to Sara Slane, senior vice president of public affairs at the American Gaming Association. In addition, the AGA believes policies should be enacted to curb the influence of the illegal, black market estimated at billions of dollars per year.
Slane was pressed by Sensenbrenner on why a gambler should place a bet with a legal sports book when a surfeit of options are offered on the illegal market. The illegal books, Sensenbrenner noted, are unshackled from burdensome tax requirements and in some cases can offer more favorable odds than their legal counterparts. In response, Slane cited a recent AGA commissioned study from Nielsen Sports which found that 71 percent of respondents that placed bets with a bookkeeper would move their betting activity to a regulated market if they had access to a legal platform. Nielsen surveyed more than 1,000 adult bettors nationwide.
The committee also heard from John Bruning, managing partner of Bruning Law Group and former attorney general of Nebraska. Bruning urged Congress to restore the Federal Wire Act to dissuade unlicensed and illegal online gambling sites from capitalizing on the expansion of legalized gambling in the U.S. Bruning also suggested that changes should be made with the Unlawful Internet Gambling Enforcement Act of 2006 to better enforce gambling activity among Americans on offshore internet websites.
Easy access to sports gambling via the internet poses a considerable risk to underage bettors, Bruning emphasized. Bruning referenced a situation in the U.K. where a 13-year old boy gained access to his father's credit card after watching advertisements from a gaming operator during a soccer match. The teenager subsequently lost more than $140,000 in a span of a few days, Bruning said.
In a written statement provided to the committee, Moore recommended that Congress require the use of official league data in settling the betting outcomes of contests. The use of such data protects consumers from being manipulated by unscrupulous actors through fictitious contests known as ghost games, Moore wrote. There is anecdotal evidence of the practice in lower-level soccer matches in Europe that receive scant attention from regulators. Bettors wagered thousands on a 2015 match between FC Slutsk and Shakhter Soligorsk, two teams in the Belarus Premier League, only to discover later that the contest never took place.
The NFL is also concerned that unsophisticated bettors could be duped by fake in-game proposition bets during the course of a game. Nevada Gaming Control Board Chair Becky Harris countered that there are restrictions on certain exotic wagers that a casino can offer within the state. A sports book, for instance, cannot offer bets in Nevada on whether a kicker will place an errant field goal to the left or right of the goalpost on an attempt.
"I would argue that in a strictly regulated market there is not a specific bet type that is more susceptible to some kind of impropriety," Harris said.
Other leagues appear to be just as alarmed. The issue gained traction in January when NBA Senior Vice President and Assistant General Counsel Dan Spillane argued that leagues should have the right to prohibit risky bets such as which player will commit a game's first foul. Although obscure wagers may be available at minor operations outside the U.S., Wynn Las Vegas Executive Director Of Race And Sports Operations Johnny Avello said at the time that he hasn't offered that type of bet in nearly four decades as an oddsmaker.
Maintaining integrity in sports is just one of many issues Congress may confront over the next several months in determining the role of government in regulating sports betting. For the most part, the panelists at Thursday's hearing believe that some intervention from the federal government is needed to address the issues, Sensenbrenner indicated.
"This means we have some work to do," said Sensenbrenner, a Wisconsin Republican. "I'm looking forward to try to come up with something short-term and more permanent to deal with this issue. I'm afraid that if we don't there will be some people who will be hurt and will be hurt pretty badly."