Skip to content

By: John Holden of Legal Sports Report

The illegal sports betting market

Congressman Jim Sensenbrenner expressed skepticism that the illegal market will feel any pressure from the legal market.

Sara Slane of the American Gaming Association (AGA) responded to Sensenbrenner that there was clearly a need for the legal market to be competitive with the illegal market in order to convert bettors.

This is without question true. Sensenbrenner’s question/comment was based on the premise that most gamblers are ambivalent to whether a market is legal or illegal, something that is almost certainly untrue for most Americans.

Unfortunately, Slane doubled down on the statistic that 70 percent of people would move some money to the legal market (I detail the problem with this statement in part two).

There are advantages to the offshore market in that some of the features of betting in grey or black markets cannot be mirrored by the legal market because the social costs associated with the risks are too high. To assume that it is simply better to not create a legal market is an incredibly regressive view, not in touch with large segments of the population.

Underage gambling?

A follow-up comment from the committee asked about the children and how we can keep children from gambling.

Forgive my editorializing, but it appears that small-government Republicanism is dead. Keeping children off of gambling sites begins with responsible parenting. Obviously, there are age verifications that need to be implemented, but no system can stop a child who gains access to their parents log in information, or is allowed to wager on a parents account.

Indeed, a study of Adolescent Online Gambling in the UK showed that 10 percent of study participants had gained access with their parents’ permission (the study is available here).

The issue here is two-part; does prohibition stop children from accessing gambling sites? My response is: No. Second, is whether some regulation or checks is better than no regulation? My response is: Yes. I know it may be hard to find a good, reliable babysitter, but I would suggest that Congress is not the place to find one.

And age verification…

Rep. Bob Goodlatte enquired regarding age verification.

Les Bernal of Stop Predatory Gambling advocated for allowing small unlicensed gambling games, and claims that the issue with gambling is when the state puts the mark of legitimacy on the games by regulating and licensing them.

Jon Bruning of the Bruning Law Group relied on some headlines about underage gambling in the UK to argue that age verification protocols do not do adequately protect against underage access.

This is not a totally fair characterization. Age verification is not perfect. The UK currently does age verification as well as anybody, but stopping underage access begins at home with parents knowing what their children are doing online. The UK is also in a process of updating age verificationprocedures, an important aspect that often does not get discussed after regulations are passed.

There is a need for continued moderating and updating. Becky Harris of the Nevada Gaming Control Board detailed the procedure for registering to obtain access to online betting in the state, seeming to dispel with apocalyptic visions of several members on the panel who suggested that online legal wagering would result in widespread underage access to gambling.

What about the gambling laws already on the books?

Goodlatte inquired how do we get the Department of Justice to enforce the existing statutes against gambling companies.

Bruning and Bernal responded and expressed that this was their question as well. The Department of Justice has the ability to enforce federal law and they are also able to file both civil and criminal lawsuits against foreign actors. It is odd that a congressman chose to ask a witness about such enforcement procedures, when these are questions for the Attorney General.

Congressman Cedric Richmond of Louisiana stated: “when I go into a casino…far too often it appears that many of the people in there look like they should not be there.”

Richmond’s observations are obviously nothing more than anecdotal, potentially offensive, and are not based on statistical analysis. Bernal responded with an anecdote from Ireland that says 70 percent of Irish online gamblers went into debt to wager online, I have been unable to find a copy of this study.

Harris that it is quite difficult to wager with credit cards and because of that, in regulated markets like Nevada, there are barriers to accruing large amounts of debt.

Data security

Richmond then asked about personal data security.

Harris stated that she is unaware of any operators misusing data in Nevada; Bernal, however, elected to inform the committee that the gambling industry knows more about individuals than Google does. In one anecdotal story from Patrick Cain of Canada’s Global NewsCain requestedeverything Google knows about him. They sent him more than 20 gigabytes worth of data that is the equivalent of about 12 million pages of text.

Does the gambling industry know more than that about you? I do not know, but I have my doubts. The comment, however, sure made a good sound bite and one not likely to be questioned by Congress.

College sports

Rep. Martha Roby of Alabama inquired as to how college athletes can be protected from legal gambling.

One solution would be to pay them, but alternatively, Bernal suggested that legal gambling should be banned.

Unfortunately, there will always be a threat of match-fixing since the monster can never be totally eliminated, but threats can be reduced. Increasing costs for match-fixers is one potential avenue for deterrence, as long as college athletes remain unpaid workers in a multi-billion dollar industry, they will be potential targets for match-fixers.

It is likely that match-fixers would prefer to operate in illegal markets than legal markets, as illegal bookmakers are less likely to report suspicions to authorities because of their own exposure. For this reason, one of the best means to protect college athletes is to establish a robust legal market.

After the hearing…

The conclusion of the hearing left little indication of the direction that the House was interested in pursuing. More than anything, the hearing came across as a fact-finding mission, though the buckshot pattern of topics and interests left much ground to be covered before federal legislation becomes a realistic vision.

In addition to the verbal testimony, there were a series of filings. We have managed to track down several:

Americans for Tax Reform

Grover Norquist of the Americans for Tax Reform group urged: “There is no need for federal regulation in the area of sports betting.”

It is unclear if this is advocating for repeal of UIGEA and the Wire Act, or if the organization is simply referring to new legislation. In the second paragraph, Norquist incorrectly asserts that the Supreme Court’s decision in Murphy stood for the proposition that all 50 states must be treated the same.

While I have argued that this was a deficiency of PASPA, this (equal sovereignty) was not an issue that Justice Samuel Alito addressed in his decision.

Interestingly, the group also comes out against an integrity fee, however, it attributes the requests/demands for a fee as originating from the NFLNHL and NCAA, instead of the two-most vocal advocates for the fee, the NBA and Major League Baseball.

National Conference of State Legislatures

The NCSL notes that PASPA “exemplified the failing of a one-size-fits-all federal solution to complex questions of policy.”

Much like the Norquist letter, there appears to be a misunderstanding as to what PASPA was. It was hardly a one-size-fits-all solution since a number of states were treated differently under the statute.

In the next sentence the NCSL refers to the “shackles of federal preemption being removed,” but again Congress was not preempting (something the Supreme Court said Congress could do); instead Congress was commandeering. Words matter, it is important that organizations use language accurately.

The NCSL letter argues that states should remain free to regulate sports betting as they choose.

Major County Sheriffs of America

The MCSA sent a letter to Sensenbrenner arguing that illegal sports gambling supports a number of other illegal activities including money laundering, extortion and drug trafficking.

The MCSA has also come out against integrity fees, noting that if integrity fees go to sports leagues, the money collected is not going back to help communities. This is an important point that the sports leagues have not been held to account for. If they receive a royalty, then that is money that is not going to community interventions, and the costs associated with the lost funds need to be covered by taxpayers.

The American Conservative Union

The ACU advocates for Congress to allow the states to make their own decisions regarding sports betting.

The ACU notes that state legislatures are in the best position to make decisions about allowing sports betting for their citizens. The ACU notes that a survey of Conservative Political Action Conference (CPAC) attendees found that more than 90 percent thought that the states, not the federal government, should be responsible for regulating sports betting.

It should be noted that a survey of CPAC attendees is not likely to be representative of a state’s population, as a key principal of conservative values is limited government with an emphasis on states’ rights.

National Fraternal Order of Police

The FOP weighed in, noting that it is a member of the American Sports Betting Coalition and that the black market operates outside the reach of law enforcement and that illegal betting fuels other illegal activities. FOP thus advocates that legalization is in the best interest of public safety.

The FOP argues that sports betting regulation should be left to the states, and “federal law enforcement should focus on the pursuit of criminals and their organizations beyond the jurisdiction of State and local law enforcement.”

Indeed, this has been the impetus for many of the federal sports betting regulations.

Consumer Action for a Strong Economy

CASE argues that consumers and taxpayers are the real winners because of the “many millions of dollars more in tax revenues, which relieves the pressure of politicians to raise taxes.”

While there will be some money for states, but sports betting is not going to see the government sending us sports betting dividends because they cannot spend all the money coming in. This narrative is unhelpful.

CASE also praised the Supreme Court for “their judicious ruling.” The Supreme Court’s job is to interpret laws. They are theoretically impartial. CASE does make an important point that unreasonable taxation threatens to suffocate the legal industry.

The organization also advocates for private partnerships like those between the NBA and MGM, while calling integrity fees a “laughable prospect.”

Citizens Against Government Waste

CAGW noted that PASPA was an anomaly and that gaming regulation has historically been left to states and localities. CAGW observed that Congressional intervention at this point would throw the nascent state-level industries into disarray.

CAGW appears to have a lot of faith in the efficiency of the market to ensure that best practices emerge.

Once again CAGW comes out in opposition to integrity fees. The CAGW statement is quite similar in scope to that of CASE.

Michelle Minton – Competitive Enterprise Institute

Minton’s testimony advocates for state regulation of sports betting, noting that states are best positioned to pass laws reflecting the morality of their citizens.

Minton notes that outside of Hawaii and Utah nearly all states have experimented with some forms of gambling policy liberalization.

Minton argues that the European market, which is regulated, has limited their vulnerability to corruption and this has “allowed them to successfully address match-fixing.” I think this is true for some countries in Europe, but I would argue there are regulated markets in Europe that are doing an inadequate job of preventing corruption of betting markets.

Minton argues that competition is necessary to shrink the illegal market. This is invariably true, though I would argue that as a country, the cited potential for $16 to $40 billion in economic output are not short-term outcomes.

In summary, Minton’s testimony largely advocates for minimal intervention in the betting market, and recommends that the regulation emerge from states as opposed to federal lawmakers.

Poker Alliance

The Poker Alliance (formerly the Poker Players Alliance) filed a statement for the House record. Again, another organization has taken an expansive view of Alito’s ruling, stating: “the Court held that PASPA violated the 10th Amendment’s “anti-commandeering” principle, which provides that if the Constitution does not give power to the federal government or take power away from the states, that power is reserved for the states or the people themselves.”

This seemingly downplays the fact that Alito stated (accurately) that Congress could preempt state regulations and ban sports betting, but they did not in the case of New Jersey. The Alliance claims that nearly 80 [percent] of wagering is done over the internet, which is certainly an interesting statistic that I have not previously seen, but would seem to suggest the importance of offering mobile betting, if the desire is to convert bettors from the black market to the legal market.

That’s a lot of opposition

The big takeaway from the hearing and the statements of witnesses and non-witnesses is that Congress faces significant opposition if it intends to usurp state-level regulation of sports betting.

With that said, I think we are a long way away from Congress taking a serious stab at usurping the state-level regulation of sports betting. This would not only be unpopular with public opinion according to some circulating polls, but would seem to fly in the face of what many conservative groups are advocating for.

Given that Republicans still control both houses of Congress and the Oval Office, I would expect these powerful conservative voices to be heard.

By: Jake Margis in the Capital Times

Dear Editor: Despite all the political banter feeding the 24/7 media, Americans still like to look out for our neighbors. And that is on full display in a bill currently in Congress that has overwhelming bipartisan support on an issue that doesn’t seem to have much bipartisan agreement these days – health care.

The Access to Marketplace Insurance Act would ensure that no insurance company can deny coverage based on someone getting help with their premium from private charities. Now you wouldn’t think a bill like this is needed, but unfortunately some insurance companies are trying to kick sick people off their plans because they get help with their premium payments from some of the most important organizations in our country: nonprofit charities. But in a time when everything seems partisan, both parties are coming together to stop it.

The Access to Marketplace Insurance Act has the support of Republican Congressman Jim Sensenbrenner. It’s also supported by Democrats like Madison’s Congressman Mark Pocan. All told, the bill has over 110 Republican and over 60 Democrat co-sponsors.

We shouldn’t need a bill to protect charity premium help, but we do. Congress needs to pass this bill immediately because Americans care about our neighbors and this bill proves it.

By: Steve Ruddock of Online Poker Report

Illinois is one of two states that still has a chance to pass sports betting and online gambling legislation this year, with Michigan being the other.

The prospect of Illinois lawmakers passing a comprehensive gaming expansion package got a shot in the arm on Wednesday following a joint hearing in the state House of Representatives. Two subcommittees met to discuss a bill that has been kicking around the statehouse for almost two years.

SB 7 began its life as a Chicago casino bill back in January 2017. The proposal went on to morph into an omnibus gaming expansion package under amendments from Rep. Robert Rita, with online gambling, sports betting and daily fantasy sports added to the mix.

The focus of Wednesday’s hearing was sports betting, with only a few brief detours into land-based and online casino expansion. That said, the four-hour meeting was a net positive for online gambling.

Deciphering legislative hearings

Following the Congressional sports betting hearing in September, many latched on to the closing statements of Chairman Jim Sensenbrenner (R-WI):

“I think the one thing that all of you agree on is that for Congress to do nothing is the worst possible alternative.

“So this means we have some work to do. And I’m looking forward to working with you to try to come up with something both short-term and something more permanent to deal with this issue. Because I’m afraid if we don’t, there are going to be some people that get hurt — and hurt very badly.”

Like the highly refined witness testimony, though, it was nothing more than standard hearing-speak. As I noted on Twitter, if you want to know how far long along a legislative body is on an issue, pay attention to the types of questions it asks.

Yesterday’s hearing featured lawmakers asking many of the right questions to move forward. For the most part, the discussions were

  • Precise, demonstrating a solid understanding of the topic
  • Focused on the best practices and policies, rather than theoretical viability

An omnibus bill may garner the most support

Wednesday’s lengthy hearing was probably a little frustrating if you’re an online poker or online casino advocate, as neither topic got much time. One could see that as a good sign, however.

As Rep. Lou Lang said in his opening remarks, online gaming and DFS are already pretty well vetted in Illinois. The inclusion of these two issues coupled with the general apathy adds fuel to the speculation that they’re mostly wrapped up. Sports betting is the issue the legislature really needs to get up to speed on.

Another positive sign for online gaming supporters were the several remarks from witnesses and legislators about keeping all forms of expansion intertwined in a single piece of legislation. As Pala Interactive CEO Jim Ryan told the committees, sports betting will account for 50 percent of online gaming revenue, so, “just legislating sports betting is doing half the job.”

Furthermore, the same type of omnibus approach allowed Pennsylvania to pass a comprehensive gaming reform package last year, and it could be the secret sauce that garners enough legislative momentum — and votes — in Illinois.

The more industries and businesses that would benefit from the bill, the more decision-makers will hop on board. And if their support of one issue outweighs their reservations about another, lawmakers may be more likely to cast their vote for an omnibus expansion.

By: Ken Blackwell in the Hill

Americans from coast to coast enjoy purchasing goods on the internet. It’s comfortable, convenient, and the product is delivered right to your doorstep. Online shopping makes it possible for people to buy products from states on the other side of the country and, in many cases, to buy unique or difficult-to-find items.

This boom in online shopping has brought tremendous benefits to consumers but also created tremendous opportunities for small businesses. This trend has created countless small sellers across the nation leading to the creation of jobs and wealth.

This exciting trend faces a potential hurdle after a Supreme Court ruling this summer. The case (South Dakota v. Wayfair) overturned a decades-old precedent in Quill Corp v. North Dakota. Specifically, the decision struck down the “physical presence” standard, which stipulated that out-of-state sellers, referred to as remote sellers, were not required to collect sales tax for states where they did not have a physical presence.

Under the previous standard, a small seller in one state is not required to collect and figure out the sales tax for an item bought from a consumer in another state where the seller has no presence. Large corporations may easily be able to comply with these burdens, but it may be impossible for small businesses.

With over 10,000 different tax jurisdictions across the nation, the burden for small businesses would be crushing. This will create enormous costs for companies that have to navigate complex tax laws. Small sellers may need to pay accountants and lawyers to help them comply with these thousands of laws and may open themselves up to potential audits and other state regulations.

As a former state and local official, I know that many states will rush in and try to get their hands on additional revenue. Some states have already moved to begin collecting — some even on the smallest seller — and some have even threatened retroactive taxation. These officials will be more than happy to impose these burdens on businesses that don’t reside in their state and whose votes they don’t depend on. 

The Wayfair decision has left many businesses in limbo wondering what the impact will be, not knowing if there will be generous thresholds for small business before they have to collect or if they will have to collect retroactive taxes.

Thankfully, representatives in Congress have recognized the problems created by the Supreme Court decision. Rep. Jim Sensenbrenner (R-Wisc.), along with a group of bipartisan lawmakers, have introduced a bill to fight the taxation tidal wave. The bill, the Online Sales Simplicity and Small Business Relief Act, would slow down implementation and clarify interstate taxes on remote sales.

Provisions in the bill include a ban on retroactive taxes, which would bar states from taxing any sales from remote sellers prior to June 21, 2018, the date the Court handed down Wayfair. The bill also establishes a phase-in period of compliance, preventing states from collecting taxes until Jan. 1, 2019.

Additionally, the bill would provide small businesses with some breathing room. It allows a generous $10 million exemption for small businesses, meaning any seller that generates less than $10 million in sales a year would not be affected by online sales taxes. The provision remains in place until the states can create a compact to be approved by Congress where such a waiver is unnecessary.

As the National Taxpayers Union argued in endorsing the Sensenbrenner bill, “Absent congressional action, billions of dollars in interstate commerce and millions of small businesspeople face the threat of back-tax bills, complicated collection obligations, and nationwide tax and audit responsibilities simply for having the temerity to use the internet to reach buyers.”

The Supreme Court made a mistake in overturning its physical presence precedent, but Congress has the opportunity to alleviate some of the uncertainty that has been unleashed by the decision. The Online Sales Simplicity and Small Business Relief Act is an important step towards protecting small businesses and taxpayers.

Ken Blackwell is a former domestic policy adviser to the Trump/Pence transition operation. He has served as state treasurer and secretary of State of Ohio, as well as mayor of Cincinnati.

Brookfield, WI—Today, Congressman Jim Sensenbrenner (WI-05) sent a letter to the Environmental Protection Agency (EPA) Acting Administrator Andrew Wheeler urging the EPA to reconsider its plan to expand the sale of E15 motor fuel.

Rep. Sensenbrenner: “The Renewable Fuel Standard violates free market principles, puts consumers at risk, and is harmful to the environment. Expanding the sale of E15 will increase the danger of misfueling, causing damage to engines and voiding consumer warranties. I urge the EPA not to move forward with this plan.”

Background

Congress first established the Renewable Fuel Standard (RFS) under the Energy Policy Act of 2005. The policy now requires that ethanol be blended into motor fuel at increasing levels each year. Currently, fuel can be produced and sold with a blend of 15 percent ethanol (E15). However, due to environmental regulations, E15 fuel cannot be sold during summer months. The Trump administration recently announced plans to lift the restrictions and allow for E15 sale year-round.

You can view the full text of the letter below:

October 11, 2018

The Honorable Andrew Wheeler
Acting Administrator
U.S. Environmental Protection Agency
1200 Pennsylvania Avenue NW
Washington, DC 20460

Dear Acting Administrator Wheeler:

I write to you with significant concerns about the recent proposal to expand the sale of E15 motor fuel.  The Renewable Fuel Standard (RFS) has been in place for more than a decade, yet this policy continues to violate the free market and pose a threat to consumers. Expanding to year-round E15 sales would prop up the RFS and continue to subject American consumers and farmers to government-mandated decision making.

I have had a very active role in the debate surrounding fuel blends with higher ethanol contents. Through this work, I have had ongoing conversations with many interested parties—your predecessors at the EPA, industry representatives, consumer groups, and environmental advocates. My work on this issue has always been driven by the belief that the government should not mandate the use of any product—or fuel—and the country would be better served if the RFS mandates are removed completely. Since this is as much a political debate as a policy-centered one, I recognize the barriers to a complete overhaul of the RFS. However, I would like to highlight some of the most glaring issues and how they will be exacerbated by the expanded sale of E15.

Contrary to the special interest arguments, the RFS is unfriendly to consumers. Misfueling with E15 is dangerous for many common machines. For example, lawnmowers, boats, snowmobiles, motorcycles, and vintage automobiles are incompatible with this fuel blend. The EPA acknowledged these issues in the original waiver permitting the use of E15 in newer automobiles. However, there has been insufficient work done to mitigate the potential for misfueling. Allowing for the expanded availability of E15 sales puts American consumers in greater jeopardy of the dangers of misfueling and product failure.

Free markets drive American innovation and sustain our economy. However, the RFS policy is antithetical to free market principles. The complex, government-mandated market for renewable blending credits is ripe for fraud.  Additionally, the EPA’s use of its broad authority to grant exemptions from blending obligations demonstrates the standard’s unattainability. Furthermore, approximately 40 percent of domestic corn production now feeds into ethanol production, meaning a not-insignificant portion of American farmers are subject to the whims of government policy.  Rural America needs sustained, dependable growth, rather than programmed agricultural outputs generated by political motivations. The United States must return to its historical reliance on market-driven outcomes.

The RFS was established to strengthen national security by reducing dependence on foreign energy supplies. As an added benefit, it was also touted as decreasing the environmental impacts of automobile use. Some research questions whether increased farming activity correlated with the RFS cancels out its expected environmental benefits.

I understand some industries have exerted significant political pressure to convince the EPA to expand the E15 waiver. However, I urge you to consider the RFS’s legacy before propping up this overly-rigid, failed energy policy.

Sincerely, 

F. JAMES SENSENBRENNER, JR.
Member of Congress 

By: John Holden of Legal Sports Report

We’ll take a look back at the recent Congressional sports betting hearing in this short series.

In part one, we look at the opening remarks and the verbal and written testimony of the National Football League.

On Sept. 27, I was one of the people who watched the ‘other’ hearing on Capitol Hill.

While the Brett Kavanaugh hearing attracted most of the attention, the House Judiciary Subcommittee on Crime was holding a hearing on sports betting.

What follows are my thoughts on the hearing, some of these were part of my Twitter feed (hopefully, with fewer typos), others were compiled as I read various statements filed with the committee.

As a disclaimer, I would note that these are my observations only, they do not necessarily reflect the opinions of the other Legal Sports Report writers, and do not reflect the views of my academic employer.

In an effort to make my position clear, I believe that there is room for some federal regulation, in particular, in the area of modernizing federal match-fixing statutes and ensuring that manipulators are not able to play jurisdictional arbitrage and evade prosecution. I believe that are some federal regulatory models that support shared governance with the states, whereby the federal government acts in a support role to state regulators.

I filed a Supreme Court Brief in support of New Jersey in the Murphy vs NCAA case and believe that the federal government can intervene in a way that complies with the Tenth Amendment should it choose to do so. In my opinion, integrity fees or mandating official data do not pass muster.

Opening remarks

Congressman Jim Sensenbrenner opened the hearing, making what I believe was a joke, noting that he viewed the topic as important as the hearing regarding Brett Kavanaugh’s fitness for a Supreme Court appointment.

The joke largely fell flat as it was difficult to tell if it was actually a joke. Certainly, Sensenbrenner’s next statements were not jokes when he outlined the options for Congress moving forward with sports betting.

  • The first option Congress has is the power to ban sports betting. This is invariably true as Justice Samuel Alito said so. What Congress cannot do is put out another piece of Swiss cheese legislation like the Professional and Amateur Sports Protection Act (PASPA). Nonetheless, the likelihood of Congress banning sports betting is exceedingly low at this juncture, but the stakeholders should be acutely aware that this option does exist.
  • The second option is to let the states continue to regulate sports betting, in other words, maintain the status quo. This is the most likely option for the time being. Currently, the entire House is gearing up for elections in November and the Senate is consumed with elections of their own and the recently concluded Kavanaugh saga.
  • The third option, detailed by Sensenbrenner, is for the federal government to establish minimum standards for state regulatory requirements. This is something the federal government could do (constitutionally). The question is why would they? Most of the minimum requirements mentioned by the House Subcommittee are already being put in place by states.
  • There is a fourth option of course, Congress could regulate some aspect of the sports gambling industry, or pass legislation to support enforcement of state laws (in the form of other gambling statutes, which are designed to help states support their own laws).

A turn for the worse for the NBA

At this point, the comments from the chair took a bad turn for the reputation of the NBA as Sensenbrenner expressed a belief that former NBA referee Tim Donaghy fixed games, and was not merely betting on games he officiated, which is the official line that the NBA stands behind.

I can only imagine the expressions on the faces of NBA executives at 645 Fifth Avenue when Sensenbrenner, made the most contemporary betting scandal in American professional sports worse than the official position of the NBA.

Congressman Bob Goodlatte expressed several positions about sports wagering, first was a connection between illegal wagering, money laundering and terrorism. This position has been floating around for the better part of two decades.

There is anecdotal evidence that some terror suspects may have used online poker sites to turn stolen card numbers into cash, but there is no evidence, which I am aware of, that this practice is widespread in legal markets, or even exists in legal regulated betting markets.

Goodlatte made clear that he hates online gambling. This should come as no surprise to fans of gambling related-legislative hearings. That is fine, no one should be forced to wager online, but elected representatives should recognize that a practice that is happening anyway and is “unstoppable” should be regulated as opposed to being left in regulatory abyss.

Misunderstanding online gambling

Goodlatte concluded his trifecta of opinions by demonstrating that he did not understand that it is possible to exclude users based on their geographic locations. The precision of top-level geo-blocking technology, employed by many in the online gaming industry, is precise down to several meters, meaning that gaming companies are able to tightly control who is accessing their product based on their geographic coordinates.

The disconnect between what Goodlatte understands the technology to be and what it is in practice, was one of the most concerning features of the hearing. There has been a breakdown in educating Congress about what the regulated industry can do and the consequence of this failure could have huge ramifications. Companies are literally capable of putting a geo-fence around Goodlatte’s house so that neither he, nor his guests, can access any online gambling sites. For the rest of us, I would suggest we let our states decide.

Congressman Jerrold Nadler of New York spoke after Goodlatte, and underestimated the size of the illegal market by about 90 percent when he articulated that it was between $50 and $200 million.

The sports betting witnesses

The witnesses were sworn in by Sensenbrenner, meaning that they were all under oath and required by law to tell the truth. Each of the five speakers was allotted 5 minutes to speak.

The first witness to speak was Jocelyn Moore, Executive Vice President, Communications and Public Affairs for the NFL.

In Moore’s verbal statement to the committee, she cited a lack of clear sports betting standards as a reason for needing federal intervention. The NFL may not like the standards, and in some places, I concur the standards are designed to protect profit for the state as opposed to protect integrity or convert black market bettors. But there are standards.

In her introductory remarks, MMoore stated we are in a race to the regulatory bottom. Many on Twitter took exception to that comment, but I maintain a different view of that issue, in particular with what we have seen with the sideshow in West Virginia, and tax rates in Pennsylvania.

This may not be a race to the bottom, but state regulation of sports betting outside of Nevada certainly does not appear to be in a race to the top. But, the NFL has not contributed one iota to proposing a regulatory model that protects integrity or consumers without the NFL receiving something in return.

Intellectual property and sports betting

Following her criticisms of state regulatory regimes, Ms. Moore called for federal protection of NFL intellectual property. This was a curious request because the federal intellectual property regime is quite robust and already protects NFL intellectual property, including team names, logos, broadcasts, and even the NFL shield.

The Copyright Actthe Lanham Act, and the US Patent and Trademark Office are all part of the federal regime that protects the NFL’s intellectual property. What I think the NFL is asking for, is for Congress to overturn existing judicial precedent and re-write our federal intellectual property laws so that the NFL owns pieces of information that exist in the public domain.

Enforcing the law

Moore transitioned to the key question overshadowing the hearing. Why pass a new law if the ones we have are not being enforced?

Moore and several other witnesses hit this nail on the head. There are powerful federal laws that enable the Justice Department to target illegal gambling operations, they are used infrequently. Until stopping illegal gambling becomes a federal priority, passing new laws is not going to be very effective, given the laws we do have are minimally enforced.

The DOJ has a budget, and with that budget they need to decide what types of investigations to pursue. There simply is not enough money, manpower, or time to pursue every criminal offense committed in or against America. Because of this, the DOJ is forced to prioritize what they target. That has meant, to date, sports betting is a lower priority than other crimes.

An imaginary sports betting staute?

Moore’s testimony was preceded by the NFL’s written statement, which on page two references a federal statute, which I have never heard of and have been unable to find a record of the existence of a statute titled: “federal barriers to state-sanctioned sports lotteries (1974).”

There were similar issues with the statement that UIGEA legislation was principally concerned with sports betting. Indeed, the first UIGEA related hearings were concerned with gambling generally, with sports betting following blackjack, craps and roulette according to Sen. Jon Kyl in 1997.

Official sports betting data

The NFL statement then drifted back into the commonly recited adage that sportsbooks should be required to use official league data. This, of course, has the opposite effect on integrity than their publicly stated objective of desiring to increase and protect “integrity” of the games.

Requiring use of official data creates a market of one, meaning that there is a need to only corrupt one segment, because there are no additional market participants capable of correcting the corrupted participant. In other words, having a million data providers provides better market security than having a single official data provider.

This argument for official league data is so self-defeating from an integrity perspective, it is absurd that it is still being mentioned as somehow correlated with increased security.

Other issues for the NFL

The NFL then recommended the ability to exclude some wagers. This is perhaps not a totally unreasonable request, indeed, Nevada already has a mechanism where leagues can petition for specific exclusions. There is, however, a risk that over-regulating the types of wagers allowed may create an opportunity for companies to exploit the intent of the rule, much like daily fantasy companies took advantage of UIGEA’s carve out to defeat the intent of the statute, or for the black market to continue to thrive.

Additional issues I saw with the NFL’s statement included, the league’s desire for an information-sharing agreement where books are required to inform law enforcement of irregularities. However, at least according to my reading of the NFL’s statement, this is a one-way street, meaning that the NFL does not view it as necessary for them to inform law enforcement or sportsbooks of irregularities.

Finally, the NFL appears to have a keen interest in helping the federal government prevent money laundering and tax evasion. It is not clear, however, why the NFL thinks the current federal statutes do not adequately encapsulate these activities such that it would be necessary to include them in a sports betting bill.

Nonetheless, I am sure that Uncle Sam is appreciative of the league’s efforts to stop tax cheats, especially now that the NFL has given up its preferred tax status after years of being a 501 (c)(6) entity—an exemption that specifically mentioned “professional football leagues.”

In part two of this series, we examine the testimony of the other witnesses before the house subcommittee.

By: Casino Betting News

House Republicans are in favor of new federal regulations on the sports betting industry, but growing concerns about advertising and minors’ exposure to the industry cannot be thwarted so soon. Heightened activity in Washington for the federal law currently appears to be on track.

At a House Judiciary subcommittee hearing on Thursday, GOP members shared concerns about sports gambling targeting minors and the industry’s potential to fix matches. Rep. Jim Sensenbrenner, Wisconsin Republican countered the arguments saying that Congress’ inactivity is the worst possible alternative in this situation.

The hearing was the first since Supreme Court’s June decision to allow states to open sportsbooks. Full-service sportsbooks have been in operation in Nevada, but the apex court’s decision has led Delaware, West Virginia, Mississippi and New Jersey to legalize betting on pro and amateur sports. Different rules and tax rates in different states could make the prospects of sports betting operators dim.

It could also leave sports leagues fiddling with regulations in different states. They have requested lawmakers for uniform standards for state-level regulatory bodies and also to make 21 years the minimum betting age. Their most important proposal is to let sportsbooks use official league data while limiting in-game prop bets.

The American Gaming Association was represented by Sara Slane at the hearing. The organization favors state-by-state sports betting regulations as additional taxes on casinos could be damaging to their existence. In the absence of better margins, these entities could be forced out of business. The executive director of Stop Predatory Gambling Les Bernal, on the other hand, said that gambling must be restricted to as much extent as possible, including a strict limit on advertising. Bernal noted that Americans could lose $1 trillion of wealth in the next eight years through government-sanctioned gambling.

Interestingly, no bill has been introduced by the GOP members that include all these proposals. The ill-effects of a nationwide sports betting policy may still not be fully comprehended by the lawmakers. While the industry suggests that legalization and federal regulation is good as it will help licensed, tax-paying businesses flourish. It will help in providing better consumer protection and avoid nefarious activities that take place in illegal betting markets.

Chairman of the Judiciary Committee Rep and Virginia Republican Bob Goodlatte said that online gambling could not be contained within state borders, which makes federal action essential. The tension over the consequences of federal regulation was evident at the hearing. Though it appears likely that GOP members would prefer to push for federal regulations, supported by sports leagues, the final look of the regulation is still unclear.

By: Kim Yuhl of Play Pennsylvania

Last week, while the Senate was making headlines with Supreme Court hearings, the other chamber talked sports betting.

The House Subcommittee on Crime, Terrorism, Homeland Security, and Investigation hosted the hearing “Post-PASPA: An Examination of Sports Betting in America.”

The committee invited expert testimony to help decide where sports betting regulations belong – with the states or the federal government.

The hearing and its timing couldn’t be more interesting. Pennsylvania is almost ready to offer online sports betting and online gaming. Not to mention, four other states launched legal sports betting post-PASPA in recent months.

So why now? Well, the NFL may have had something to do with that.

THE NFL: IT’S A WHOLE “NEW WORLD”

As expected, the NFL was invited to provide testimonyJocelyn Moore, executive vice president, communications and public affairs, National Football League, made sure everyone knew the NFL supports federal sports betting regulations.

The NFL and the major sports leagues, along with the NCAA fought to keep sports betting from becoming legal outside of Nevada. After losing the war, it was obvious the league was looking for ways to capitalize on a new reality.

After several failed attempts to secure integrity fees at the state level, the NFL turned its lobbying efforts towards the federal government. When the Supreme Court found PASPA unconstitutional, it opened the door for states to regulate sports betting in the absence of federal regulations.

In her testimony, Moore contends “issues generated by sports betting cannot be confined within state lines.” As such, Moore believes sports betting is an interstate issue warranting federal regulations.

“While state regulators clearly have an important role to play in a post-PASPA environment, the federal government has primary authority regarding interstate commerce, interstate law enforcement, and international sanctions against corruption and money laundering.”

CURRENTLY, SPORTS BETTING CONFINED TO SELECT STATES

What Moore fails to mention is that technology has advanced significantly since PASPA first became law in 1992. Geolocating technology is highly effective. One only has to look towards Nevada and its eight years of on online sports betting history as proof.

Each of the new states that have come online in recent months has implemented strict geolocation regulations to ensure sports bettors are betting within the state lines.

In preparation for its online launch of gaming and sports betting, Pennsylvania has similar regulations in place. In fact, Penn National has already teamed up with GeoComply to ensure players are where they say they are.

Moore goes on to provide a suggested outline for federal regulations. Somehow, though, it feels as if the NFL is more intent on protecting how its image and data. Safeguarding consumers against the “dangers of sports betting” seems like an afterthought. Of course, the NFL believes that kind of protection comes with a fee to ensure the integrity of the game.

PA: DON’T MIND US, WE’RE JUST DOING OUR THING

The sports betting hearing is unlikely to result in any meaningful movement before PA launches legal sports betting.

Currently, there are five sports betting licenses under review in the Keystone State:

The next Pennsylvania Gaming Control Board (PGCB) meeting is on Oct. 3. Translation: PA legalized sports betting is likely to become a reality sooner rather than later.

The sports betting hearing concluded with Chairman Jim Sensenbrenner (R-WI) saying:

“I think the one thing that all of you agree on, is that for Congress to do nothing is the worst possible alternative.

“So this means we have some work to do. And I’m looking forward to working with you to try to come up with something both short-term and something more permanent to deal with this issue. Because I’m afraid if we don’t, there are going to be some people that get hurt — and hurt very badly.”

For now, states that are in the midst of enacting sports betting legislation, PA included, are staying the course.

First of all, not everyone agrees sports betting regulations belongs at the federal level. Secondly, the current legislature has not been entirely effective in actually legislating in a timely manner.

In all fairness, Moore did an admirable job in representing the NFL’s interests. Unfortunately, those interests conflict with the states, the sports betting industry, and most importantly with sports bettors.

Brookfield, WI—Today, Congressman Jim Sensenbrenner (WI-05) issued the following statement after the Trump administration announced it has reached a trilateral trade deal with Canada and Mexico:

“Wisconsin stands to benefit from this new trade deal, which expands Americans’ access to auto manufacturing and dairy markets. This is an important step toward strengthening our trade relationships and growing our economy, and I applaud the administration for its persistence and hard work in reaching this agreement.”

By: Steve Ruddock of Online Poker Report

Considering the witness list and the circus-like proceedings of Congress’ recent gambling hearings, the bar for last week’s sports betting discussion on Capitol Hill was pretty low. And it didn’t take long for two witnesses to throw the primary issue out the window and devolve the hearing into a rant against online gambling.

  •  Jon Bruning, counselor, Coalition to Stop Internet Gambling (CSIG)
  • Les Bernal, national director, Stop Predatory Gambling

The plot turn was foreshadowed by Bruning’s written testimony, as well as Rep. Bob Goodlatte’s(R-VA) opening remarks that put online gambling front and center just minutes in.

You can watch the entire hearing below, or peruse the live blog of the proceedings from Legal Sports Report.

This is not the hearing you’re looking for

Goodlatte’s remarks followed the opening statement of Jim Sensenbrenner (R-WI), the chairman of the Subcommittee on Crime, Terrorism, Homeland Security, and Investigations. Sensenbrenner stuck to sports betting.

Goodlatte didn’t.

As one of the driving forces behind the UIGEA in 2006, Goodlatte attacked the online component of sports betting.

He called online gambling more dangerous than land-based gambling, claiming that the federal government hasn’t done enough to enforce UIGEA. His claim ignored the role of the Department of Justice in the 2011 online poker indictments that became known as Black Friday.

“That could be a key issue for Congress to consider — what role the federal government should have in this,” Goodlatte said. “The answer to that question underlies this entire issue.”

Sidetracked by online gambling

Online gambling and the UIGEA were themes repeated many times throughout the hearing. Members of the subcommittee and some witnesses worked to drive a crowbar between land-based and online gambling.

As the hearing wore on, Goodlatte, Bernal, and Bruning seemed to be rattling off the same talking points. Each called online gambling a ‘different animal’ or a ‘different beast.’

The three were also advocating for, or at least open to the idea of “restoring” the Wire Act.

That’s an argument Online Poker Report has tackled several times. The word “restore” is a misnomer. The proposed legislation amounts to nothing more than a new federal prohibition on online gambling — not unlike the failed PASPA legislation in 1992.

Is federal action on the horizon?

Chairman Sensenbrenner brought the 90-minute hearing to a close with a non-binding call to action:

“I think the one thing that all of you agree on, is that for Congress to do nothing is the worst possible alternative.

“So this means we have some work to do. And I’m looking forward to working with you to try to come up with something both short-term and something more permanent to deal with this issue. Because I’m afraid if we don’t, there are going to be some people that get hurt — and hurt very badly.”

Despite the fire and brimstone Sensenbrenner called down on Room 2141, the chances of meaningful federal action on sports betting and/or online gambling are slim to none. Not only is Congress doing nothing the best possible outcome, it’s also the most likely.

For evidence, look no further than the lack of progress on the Restoration of America’s Wire Act(RAWA) legislation of the last several years. Even with a deep-pocketed, high-profile benefactor, few lawmakers have been willing to attach their names to RAWA bills in either chamber of Congress.

When it comes to sports betting, even the anti-gambling Goodlatte said he was wrestling with the conflicting ideals of federal action and states’ rights. The latter ideology is one reason Congress has largely ignored the RAWA bills pushed by mega-donor Sheldon Adelson and his CSIG organization.

But the lobbyists are happy.