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Sports betting law prompts questions

West Virginia has become the sixth state to legalize sports betting pending a change in federal law. The state law has an activation clause that will make the law effective should federal law change either through congressional action, or more likely, via a ruling by the United States Supreme Court overturning a federal ban on state sponsored authorized sports betting.

In 1992, after extensive hearings, Congress passed the Professional and Amateur Sports Protection Act (PASPA) into law with sound majorities. PASPA prohibits state governmental entities from sponsoring, operating, licensing, or authorizing by law any betting or wagering scheme based on amateur or professional athletic events. However, Nevada, Delaware, Montana, and Oregon, were exempted from the ban as those four states had some form of legal sports wagering or sports lottery prior to the passage of the law.

In 2011, New Jersey voters approved a state constitutional amendment to permit sports betting. Legislation the following year authorized sports wagering at Atlantic City casinos and the state’s horse racing tracks. The NCAA, NFL, NBA, NHL, and MLB filed suit to enjoin the law arguing that permitting the law to take effect would cause irreparable harm to the integrity of the sports they represent. The district court granted the injunction.

New Jersey then passed a second law repealing existing state laws that prohibited sports betting- in effect authorizing it. The five sports leagues filed suit once more.

That suit has made its way to the U.S. Supreme Court. Oral arguments in a consolidated pair of cases, Christie v. National Collegiate Athletic Association and New Jersey Thoroughbred Horsemen’s Association, Inc. v. National Collegiate Athletic Association, which were heard on December 4, 2017.

Counsel for New Jersey argued that PASPA unlawfully forces some states to adhere to federal regulations to their own disadvantage, while others, such as Nevada, are excluded from the ban and benefit in violation of the “equal sovereignty” doctrine. Additionally, they argue that PASPA requires states to enforce federal law in violation of the “anti-commandeering” doctrine under the Tenth Amendment.

In preparation of a favorable ruling from the Court, several states passed sports wagering acts to take effect immediately upon a change in federal law. Considering the Court decided to hear the case against the solicitor general’s advice and with no circuit split in the lower tribunal below to resolve, it seems like the court is likely to render a favorable ruling to the states over the federal government.

The West Virginia Lottery Sports Wagering Act permits the state’s five gaming facilities (the four horse racing tracks and the Greenbriar Resort) to purchase a license, if they meet the requirements for licensure, at a cost of a $100,000 for the privilege of operating a sports pool and other authorized sports wagering activity.

The licensing, regulation and enforcement of the Act will be carried out by the West Virginia Lottery Commission. The state will receive 10 percent of the licensee’s adjusted gross sports wagering receipts.

Taxes collected from the adjusted gross receipts will be deposited in the West Virginia Lottery Sports Wagering Fund. Each fiscal year the net profits from the Sports Wagering Fund will go into the Lottery Fund until a total of $15 million is deposited with the remaining amount earmarked for the Public Employees Insurance Agency Financial Stability Fund.

With so many possible outcomes in the case, states like West Virginia who have already passed sports wagering acts may have to amend their laws to resolve any conflicts that may be created by the Court’s ruling.

Gov. Justice has commented on the likelihood of such a session. In addition, Governor Justice has urged using that session, if one is called, to come to an agreement on securing a partnership with the major sports leagues to correct what the sports league feel is a “flaw” in the West Virginia’s Sports Wagering Act. The sports leagues argue that there are not enough safeguards in the law to prevent misconduct.

To cover the cost of expanding their investigative departments, data monitoring, and enforcing additional integrity protocols, sports leagues like the NBA, NFL, and MLB are asking for 1 percent of the total amount wagered as an “integrity fee.”

The Court could issue a ruling as early as April.

Nigel E. Jeffries

Charleston

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