What to Expect from this Week’s Congressional Hearing on Sports Betting

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The United States House of Representatives has scheduled a hearing on the morning of Thursday, September 27 to discuss the effects so far of legal sports betting since PASPA has been struck down.

The hearing, entitled “Post-PASPA: An Examination of Sports Betting in America” is the first real congressional action on the subject since the Supreme Court decision this spring. So what, if anything, can we expect as a consequence of the discussion?

In short: not much.

For a variety of reasons, chief of which that it’s far too early, there is unlikely to be any immediate repercussions of the hearing. Instead it will likely simply be the first step on a long road towards any Federal legislation regarding the industry in the United States, if such a thing even happens at all in the relevant future. After all, the government needs to start somewhere.

The subcommittee

As many members of Congress are currently more focused on the more pressing issues of the upcoming midterm elections, in many ways it seems like this hearing is being held now somewhat out of rote obligation; a likely product of lobbyists from pro leagues pushing for legal sports books to purchase official data in exchange for a portion of their revenue (integrity fees).

Indeed, this is actually the second time this exact Post-PASPA hearing has been scheduled, as it was originally going to transpire in late June. That hearing was postponed almost immediately after being announced.

This was for the best, as an examination would have been even more pointless back then, since betting had only barely begun to take place and there was not yet any observable information on which to base any conclusions. At least now there are a few more months of numbers in various states, and online betting has finally begun in the New Jersey market.

The hearing is being conducted by the Subcommittee on Crime, Terrorism, Homeland Security, and Investigations. This is a fairly important branch of the Judiciary Committee, but mostly has jurisdiction over the criminal justice system and domestic threats. This means that the only logically relevant focus for the examination would be if there was some reason to believe the new gambling markets could see an increase in crime, or if there were a risk that wagers were being used to funnel money to terrorists. Not only are both scenarios extremely improbable, it would also still be too soon to detect if there had been any such effects.

Instead, this appears to be all about appeasing lobbyists from the leagues, just as Sen. Chuck Schumer (D-NY) seemed to be doing when he called for a federal sports betting framework last month (all major pro leagues are headquartered in Schumer’s state of New York).

Pushback emerges

Two congresspeople, Dina Titus (NV) and Tom MacArthur (NJ) — both representing states that support regulated sports betting operations — have come out strongly against the push for a federal framework on the industry, via a letter released ahead of the hearing.

Titus and MacArthur argue that “most states already have some form of gambling regulatory structure which could be used to regulate sportsbooks,” and cite Nevada as an example of a state that has successfully regulated the industry for decades.

The duo also point out (accurately) that integrity threats are hardly new, as the illegal market has been in operation for many years. If anything, national integrity fees on the legal industry allow the unchecked illegal market to thrive:

“Calls for integrity fees paid to leagues would chip away at state revenues and already slim revenue margins for legal sportsbooks, hurting their ability to compete with offshore books and move more customers into the regulated market … A heavy-handed federal framework could repress innovation and competition, sending more people back to the illegal market.”

The witnesses

Five experts have been called by the subcommittee, although the value of their collective expertise at this time is very questionable. While some – such as the Nevada Gaming Control Board Chair, Becky Harris, or American Gaming Association Senior VP of Public Affairs, Sara Slane – can obviously provide some useful data on the topic, two witnesses in particular will likely provide the best indication of what kind of dialogue we can expect to dominate any future congressional dialogues.

Adelson’s Hand

The first party to watch closely is Jon Bruning, who is identified as a Counselor for the Coalition to Stop Online Gambling. This organization was originally orchestrated by casino magnate Sheldon Adelson, with the aim of creating an impression that there were legitimate concern about online casinos.

The group has tried for years to foster fear that online gambling will result in gambling addictions in underage citizens and/or be used to launder money for organized crime and terrorist groups. In actuality, the real reason for the Coalition’s existence was rooted in the billionaire Adelson’s worries that internet sites would create too much competition for his brick-and-mortar casinos.

Both the false and real concerns are equally asinine. Money laundering and underage gambling are, quite obviously, a much bigger concern with illegal gambling, which has always existed in the United States, and far less likely to pose a problem with a well-regulated and constantly investigated industry. Also, in the New Jersey market the introduction of legal online casino sites has benefited the real-world casinos, not detracted from them.

Still, it is likely that Bruning can be expected to rehash the Coalitions usual arguments, so it should be telling to see which congresspersons appear to be swayed by these ideas (or at least find it politically expedient to play into them).

The NFL

The other interesting witness is Jocelyn Moore, one of the Executive Vice Presidents of the National Football League.

It’s a little hard to predict at this point what stance the NFL is likely to take towards the idea of sports betting these days. Up until recently it was one of the biggest opponents in the fight to prevent new gambling markets from opening, and its lobbying efforts are in part responsible for legalization being delayed by several years.

However, on the other hand, the industry is now aware that the expansion of gambling is likely going to result in the NFL now earning billions of dollars more than it would have otherwise. It seems the increase in interest in football that is being generated by the opening of sports books may likely overcome the league’s previous arguments against gambling, now that it sees how much money is involved.

It is also relevant that after the fight was lost, other major sports leagues (MLB, NBA) immediately launched into the laughable argument that states should help them impose integrity fees on the industry, while the NFL quickly shifted focus to enforcing its intellectual property rights and on preparing to count all its new extra profits.

Going forward

Regardless of what information is presented, the House is unlikely to start any serious attempt to change federal law until after election season. Even then, any action would probably begin in the Senate first.

Two senators in particular, on both sides of the aisle, have already expressed claims of potential proposals being worked on. Republican Senator Orrin Hatch and as mentioned previously, Democratic Minority Leader Chuck Schumer, usually political rivals, have been very public about their concerns regarding increased gambling – especially their concerns over the “integrity of the games”.

There is, as usual, no explanation as to how this integrity is facing any greater risk than it already suffered from illegal sports betting operations or from decades of legal betting in Nevada.

Neither senator has yet presented an idea on paper that is likely to turn into real legislation, especially without a huge battle from the industry that has discovered the new economic windfalls may be far greater than originally hoped.

In the short term, the only change that might get through the legislative process without major public outcry may be an adjustment to the existing excise taxes on bets, which could potentially put a minor damper on the growing industry, but even that scenario is not a likely outcome of Thursday’s hearing.

For the time being it is far more probable, and probably a far better idea, for regulation of sports betting to remain the responsibility of individual states.

Robert DellaFave also contributed to this article

Ryan is a seasoned writer with several years of expertise in poker and online gaming. He is also an aficionado of advantage gambling and a general lover of statistics with a keen interest in strategic probability.

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