The odds of legalized sports betting in Donald Trump's America

Dec 18, 2016 |
The odds of legalized sports betting in Donald Trump's America
Covers spoke with politicians, industry experts and gaming insiders about the chances of legalized sports betting with Donald Trump in the White House.
Photo By - USA Today Images
Covers spoke with politicians, industry experts and gaming insiders about the chances of legalized sports betting with Donald Trump in the White House.
Photo By - USA Today Images
The surprise election of Donald Trump as the next U.S. president was one of the biggest betting upsets in recent years, with the Republican nominee cashing in as big as a 200/1 long shot this past November.

That underdog run to the White House has now sparked hope for another political long shot: the legalization of sports betting across the United States. 

Many sports bettors and industry types – Trump supporters or not – are hoping the president elect will help expand sports betting beyond Nevada’s borders into other states that wish to allow it, and to perhaps even establish a federal policy. And a Trump administration – led by a man who used to own casinos – could be the vehicle to drive this issue forward.

Covers talks with four key voices in that chorus - Florida attorney Daniel Wallach, New Jersey attorney Dennis Drazin, the American Gaming Association’s Sara Rayme, and renowned longtime Las Vegas oddsmaker Jimmy Vaccaro – about the potential future of sports betting with Trump in the White House.



Just three days after the November 8 election, while the rest of the nation was still getting its collective head wrapped around what happened, Wallach was looking at what could happen with sports betting. Wallach, an authority on gaming law and sports law, penned an article that was posted on Sports Law Blog, where he is a regular contributor.

Wallach noted that for the past 24 years, the key roadblock to sports betting expansion has been PASPA – the Professional and Amateur Sports Protection Act of 1992. The legislation outlawed sports betting in the United States, with a carve-out for Nevada’s already well-established legal and regulated betting, and exceptions for sports lotteries in a couple of other states.

However, Wallach said a President Trump absolutely has the means to work around the law, which has faced numerous legal challenges, all unsuccessful so far. But such means wouldn’t necessarily include Congress.

“A Republican-controlled Congress is not going to be inclined to be in favor of lifting PASPA. It’s going to be challenging to persuade Republican lawmakers – who are generally opposed to gambling expansion – to change the law,” Wallach told Covers. “So what can Trump do to work with Congress? Maybe this could be tied to a large job creation package. But I’m not optimistic in the next year that sports betting is going to be tackled.

“But he has the ability to appoint an attorney general who will do his bidding,” Wallach added, noting that the AG’s office could determine how – and more importantly whether – to exercise PASPA’s enforcement powers. “What could sports leagues do?”

The four major professional sports leagues – the NFL, NBA, Major League Baseball and the NHL – along with the behemoth NCAA, have been the biggest obstacles to sports betting expansion, all often working in concert to wield PASPA as the weapon against such expansion. As Wallach smartly points out, though, the law itself notes that a sports organization can only seek injunctive relief for PASPA violations when that specific organization’s games are the basis of the violation.

In other words, the NFL does not have standing under PASPA to say, “Hey, New Jersey can’t bet on the NBA.” That’s up to the discretion of the NBA, though again, so far, the major sports organizations have played ball together to stifle legalized sports betting – which ironically only helps add to massive underground illegal betting in the U.S., estimated between $150 billion and $400 billion annually.

Where Wallach’s attorney general proposal comes into play, however, is when you go beyond the Big Four and the NCAA, to other sports organizations, such as the Ultimate Fighting Championship or Major League Soccer, or tennis and boxing.

“A path that would work between states and sports leagues is to craft a bill that would be inclusive of (other leagues) but would not create standing for the major sports leagues to bring a lawsuit,” Wallach said. “And with the understanding that the attorney general would let it go. If you’re looking for an avenue in which to legalize sports betting and avoid litigation, this is one way to accomplish it, if the attorney general has the appetite.

“The four majors and the NCAA are not the only game in town.”

True enough. Wallach went on to note that leagues working with states toward such agreements could lead to numerous benefits for both parties, which could be especially attractive to states at a time when many are scrambling to create new revenue streams for government.

“It could potentially bring in significant money to state coffers,” Wallach said. “And maybe you pay the leagues a quarter of a point. You could envision a statutory structure for payment of individual leagues, the licensing of data rights, video rights, in-play wagering. You’d have increased interest and fan engagement, higher TV ratings and increased attendance.”

Wallach said any sport on the outside looking in could find his work-around very appealing. But mixed martial arts in general, and the UFC in specific, could be the best place to start, since the sport has a history of trail blazing.

“I think MMA has always tried to push the envelope, and the demographic is young enough that it could really promote the sport,” he said. “It could be the first sport to legalize gambling, the first to market in the conservatively estimated $160 billion market (legal and illegal sports betting combined). Obviously, MMA betting is not going to be a $160 billion business, but UFC and MMA could be the staple of regulated sports betting in this country, and I think other sports organizations would want to be involved in that.

“An attorney general is less likely to seek an injunction if a pro sports league endorsed it. We’ve never had a situation where a state legalized sports betting and a sports league endorsed it.”



Drazin is a key figure in New Jersey’s ongoing effort to bring legalized sports betting to the state. The attorney serves as an advisor to Darby Development, which operates Monmouth Park, a venue fighting much of the sports betting battle in the Garden State.

Back in August, New Jersey’s sports betting proponents were dealt their latest blow when the Third Circuit Court of Appeals upheld a previous ruling against allowing sports betting in the state. So could the results of the presidential election that followed, bringing into office a former casino mogul, perhaps bring about a different result?

“I can’t speak for Donald Trump or predict what will happen,” Drazin said. “My personal opinion, given his casino background and casino experience, is that it might be more likely in his administration than in the current administration.”

Despite the latest setback in New Jersey, Drazin believes litigation and legislation are the more likely paths to bring change. The August ruling has now been appealed to the Supreme Court.

“New Jersey filed briefs, and the league briefs are due (Dec. 14),” Drazin said. “The Supreme Court is going to have to decide if it wants to take up the challenge.”

The goal is to have the Supreme Court declare PASPA unconstitutional or declare that New Jersey’s partial repeal is sufficient to proceed with sports betting. At the same time, though, Drazin and Darby Development are working with the state Legislature on an effort that could really bring down the house of opposition from the major sports leagues: a full repeal of all state laws which prohibit sports betting.

“That’s the leagues’ worst nightmare,” Drazin said, noting that based on court rulings, a full repeal – rather than the partial repeal previously being sought – cannot be challenged by the leagues. And that would likely serve to quickly change the leagues’ backwards attitude on sports betting. 

“They’ll be much more aggressive about going to Congress and using support there to try to get change. The NBA is on board, the NHL is likely to support it. Major League Baseball is still opposed, and the NFL is certainly opposed. But there’s more of a chance of the leagues trying to change if New Jersey goes that route.”

Some argue that such a repeal would lead to an unfettered sports betting market, but Drazin is quick to remind that many hurdles would still exist for anyone looking to get into the industry.

“Even if there were a full repeal, there’s still a federal packet of laws that would give one pause before engaging in regulated sports betting, things an average bookmaker would not be willing to do,” he said. “That would give the Legislature comfort that it’s not going to be the wild, wild West. If the Supreme Court doesn’t undertake (the appeal), I think New Jersey will move to do a full repeal under current case law.”

Such a move would certainly have the support of New Jersey Gov. Chris Christie, long an advocate of expanded sports betting. Just this week, Gov. Christie came out and said he believes Monmouth Park will be offering sports betting at some point in 2017.

What’s frustrating for Drazin and his peers is that it’s come to this point due to the hazy, shifting line the major sports leagues have drawn when it comes to sports betting. Fantasy sports – in which most participants are competing to win money and which now generate billions of dollars a year in entry fees – get the A-OK, especially from the NFL, while betting on a team is seen as the end of sports’ civilization.

“I’m outraged by the hypocrisy,” Drazin said. “Fantasy gaming is encouraged, while at the same time, we shouldn’t be betting on sports, when everybody who understands PASPA knows that you can’t bet on the game or the performance of individual players. The federal government bowed out on this, and the leagues are not trying to stop this, because they’re benefiting from it. How can one be permitted, and not the other? Congress has been adamant that this is gambling.”

Yet fantasy goes on relatively unencumbered, save for some of the injunctions of the past year on the massive DraftKings and FanDuel operations.

“In the stadiums in New England and Dallas, there’s an entire section dedicated to fantasy sports. So they’re OK with people betting on their players,” Drazin said.

And again, on top of the massive amounts of cash flowing through fantasy sports leagues, there is the eye-popping money wagered illegally every day in this country. Underground bookmaking operations are the pipeline through which almost all sports betting takes place in America.

“It’s a $400 billion industry, mostly illegal,” Drazin said. “You’re not gonna stop that. You need to find a way to regulate it and tax it.” 

Drazin found interesting Wallach’s proposal of working with leagues that aren’t participating in litigation, but said even that is currently prohibited by the court’s decision.

“When the leagues sought an injunction on the partial repeal, judgeship ruled that not only could we not take wagers on the five major leagues, but the state was enjoined from permitting us from entering into agreements to take wagers on any of the other professional sports,” Drazin said. “We’d need the Supreme Court to consider that issue. The Supreme Court could say, we’re hoping they’ll say, that the partial repeal would be OK. But they could also say the lower court erred by prohibiting us from entering into agreements with sports leagues that were not parties to the case.”

If the court stops short of such statements, Drazin said the full repeal route would allow the state to enter into such agreements with willing sports leagues.

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The American Gaming Association seemed somewhat heartened that Trump’s background could be beneficial in the push to expand legalized sports betting. But the gaming lobby group knows it must get more of the political set in Washington, D.C., up to speed on this issue.

“Obviously, given the fact that President-elect Trump was formerly a casino owner, that clearly helps,” said Rayme, the AGA’s senior vice president of public affairs. She noted the AGA hasn’t yet reached out to Trump on the issue. “Not directly, but based on his previous comments and the fact he does understand the business, that is somewhat promising.

“We obviously have our work to do, educating Congress on why PASPA is a complete failure. It’s not working the way it was intended. It was passed 24 years ago, back before Netscape and AOL. The world has changed dramatically since then. We need a legal, regulated sports betting market in place, instead of the illegal one currently operating.”

Rayme said shifting opinions over the past couple of years indicate some progress. NBA Commissioner Adam Silver came out in favor of legal, regulated sports betting two years ago, and former NBA chief David Stern, long firmly opposed to sports betting, said in September his position has evolved, as he made the case for legal, regulated wagering at the Global Gaming Expo in Las Vegas.

“I think there’s obviously been a shift in (some of) the leagues, and with team owners, who have a lot of influence,” Rayme said. “They’ve seen the benefit of daily fantasy sports and player engagement. I do think as we move forward, these stakeholders will hopefully come around to seeing the benefit of a PASPA repeal.”

In the interim, Rayme found Wallach’s idea to be one that might have some possibilities.

“I think that certainly as this conversation progresses, it’ll be interesting to see how each pro league receives it,” she said. “There are a lot of other professional sports out there – NASCAR, golf, mixed martial arts. These are conversations we look forward to having, and see where people land on this issue.”


 
Here in Las Vegas, Vaccaro has long been the voice screaming out in the wilderness, working to get those who pull the legislative power levers to understand that legal, regulated sports betting is the solution, not the problem.

“At the tender age of 71, I really thought that this would get done 10 years ago,” said Vaccaro, now an oddsmaker at the South Point Hotel-Casino. “I’ve asked them to come here, stay here for the weekend, see how secure and transparent sports betting is, to see that this is not backroom stuff. And I’ve never gotten a reply from a politician. I haven’t heard of anybody coming out here who would have the ear of someone who could bring change.

“Here’s a bet I’d like to make: that there’s more politicians in jail than bookmakers.”

Vaccaro sees any positive talk – whether from Silver and Stern, the AGA, New Jersey proponents, or MGM Resorts CEO Jim Murren ahead of the opening of the company’s new property, MGM National Harbor outside Washington, D.C.  – as little more than talk, due to the one obstacle he believes cannot be overcome: Roger Goodell. The NFL is the most popular sport in America, and as long as Goodell is commissioner, Vaccaro sees no chance of any forward progress for sports betting.

“Adam Silver’s comments came two years ago, and nothing has changed, nothing will change,” Vaccaro said. “Forget who the president of the U.S. is. It’ll have to be after Goodell is gone. He is never, ever gonna let it fly. He’s fighting right now to keep the Oakland Raiders out of Vegas.”

Indeed, until this month, Goodell had been no more than lukewarm to the prospect of the NFL team landing in a new stadium in Sin City, with his anti-betting stance surely helping form that mindset. However, at the league owners meeting in Houston, he said, “There are some real strengths to the Las Vegas market,” among other comments that were by far the most positive he’s uttered about the prospect.

But move or no move, Vaccaro would still be stunned if sports betting advances while Goodell is in the commissioner’s seat.

“Let’s put it this way: Nothing is an absolute, but it’s such a big favorite that it’s not gonna happen until he’s out of there,” Vaccaro said. “And even then, it’s not gonna be easy until we have a new generation of politicians, ones who play fantasy football. You think the Nancy Pelosis of the world are gonna pop up and push for sports betting in all 50 states?”

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Much as Wallach believes in his proposal of an agreement between a state and a willing league, along with a willing attorney general, even he is skeptical of it taking a foothold anytime soon, if at all. Still, he sees it as a fast track if the incoming administration had the stomach for it.

“If the Trump administration wants to see legal sports betting, this would be the true test of the administration’s mettle,” he said. “Because that’s entirely within the sole discretion of the U.S. attorney general to decide whether to pursue a PASPA lawsuit to shut that down. If the attorney general doesn’t want to, no one else can.

“It’s a fantasy scenario, but it’s there for the taking. The plain language of the (PASPA) statute allows it. Will it be done? I doubt it.”

If it did actually happen, though, Wallach said that could lead to points made by Drazin – successful litigation, which could greatly accelerate the timeline for rewriting sports betting laws in Congress. Whether Wallach’s idea comes to fruition or not, Drazin struck a much more optimistic tone on the future of sports betting, with the federal government playing a key role.

“Five years from now, I think we’ll have sports betting. And if New Jersey has it, other states will have options,” he said. “If you look at other things Trump has said, he believes in states’ rights and would leave it to each state to determine if they want it. And the leagues would want a federal policy. So in the long term, the better plan is to have a federal regulation process – federal oversight to preserve integrity. I think that’s what everybody should focus on.”

The American Gaming Association certainly shares Drazin’s optimism. Rayme pointed to the new NHL team that will take the ice in Las Vegas beginning in the 2017-18 season, along with the prospect of the Raiders’ move, as signs that major sports leagues are starting to wake up to the realities – and benefits – of legal, regulated sports betting.

So, if Rayme could craft a statement from the incoming Trump administration on sports betting, how would it read?

“Along the lines of: ‘Obviously, the current law is failing, and the administration looks forward to working with stakeholders to see that it’s fixed, and to get a legal, transparent sports betting system that promotes the integrity of the game,’” Rayme said.

That sounds reasonable. Certainly more reasonable than turning a continued blind eye to the multi-hundred-billion-dollar illegal gaming industry in this country.

Patrick Everson is a Las Vegas-based senior writer for Covers. Follow him on Twitter: @Covers_Vegas.

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