More Money, More Laws and So Many More Ads: What Lies Ahead for Sports Gambling

On Monday morning, the Supreme Court of the United States issued its ruling in Murphy v. NCAA and forever changed the sports landscape in America.

In a 6-3 decision, the Court struck down the Professional and Amateur Sports Protection Act, otherwise known as PASPA, which had been in effect since 1993. PASPA prevented the legalization of sports betting in states that had not previously allowed such activities. Hence, Nevada has legally operated sportsbooks while states like New Jersey have been barred. Now, each state will be free to legalize and enforce sports betting as it sees fit.

To get a sense of the impact of the Supreme Court's decision, B/R surveyed a handful of experts on sports betting. Here is what they said to expect in the coming months as states—and sports leagues—respond.

What does the ruling really mean?

The Supreme Court's role was to evaluate the constitutionality of PASPA. Justice Samuel Alito, delivering the majority opinion, wrote that Congress had violated the Constitution by forcing certain states to prohibit gambling. That means that individual states will now be able to legalize, tax and regulate sports gambling.

New Jersey, the state that brought the case before the court, seems poised to pounce on the new ruling right away. One New Jersey race track believes it will be ready to begin accepting sports bets in the next few weeks.

The federal government, however, will still be able to respond. The Supreme Court didn't say that a national prohibition of sports gambling was inherently unconstitutional. Instead, it posited that the method the federal government used in PASPA—preventing states from legalizing something that's not nationally illegal—was unconstitutional.

"Congress can regulate sports gambling directly," Alito wrote. "But if it elects not to do so, each state is free to act on its own."

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Although it seems unlikely, Congress could work quickly to pass a national ban on sports betting. More likely is that federal lawmakers would work with sports leagues and state legislative bodies to come up with a set of regulations for sports betting—especially as it relates to online activities. That's why leagues like the NBA and MLB have been lobbying efforts at the state level for several months.

When can people start betting, and what can they bet on?

For the time being, Nevada remains the only state able to accept legal sports bets. But New Jersey, which had already legalized sports betting in order to have standing for this suit, should be ready in the next several weeks. In many states, there will be a gap of weeks, months or even years as state lawmakers scramble to respond to the Supreme Court's ruling and create legislation and regulations of their own. States' primary concerns would seem to be making sure that they are taxing sports betting at an appropriate rate that balances bringing in new revenue with competition across state lines.

"What we're going to see in the next 10 years is the lab of democracies doing their experiments," said Michelle Minton, a senior fellow and policy analyst at the Competitive Enterprise Institute, a think tank against regulation that filed an amicus brief in support of New Jersey. "Some states will want firm control over their markets. Others will have more relaxed regulations. But either way, they can start making money essentially from Day 1."

There are currently no restrictions on betting topics. Barring forthcoming federal or state regulations, sportsbooks will be able to accept bets on college and pro sports in the United States and abroad. Most sportsbooks in Nevada allow for over/under bets, prop bets, single-game bets and parlays. In-game wagers could also be legal in various states.

Which states seem most likely to legalize?

It's impossible to say for certain, but the Center for Gaming Research at UNLV has predicted that states will legalize in waves. When making these predictions, researchers weighed pending legislation, general attitudes toward gambling and budgetary concerns, among other factors. Their predictions:

• Within two years, 14 states will legalize: Colorado, Connecticut, Delaware, Indiana, Massachusetts, Michigan, Mississippi, Montana, New Jersey, Ohio, Nevada, Pennsylvania, Virginia and West Virginia.

• Within five years, 18 more states will legalize: Arizona, California, Idaho, Illinois, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Missouri, New York, North Carolina, North Dakota, Oklahoma, Vermont, Washington and Wyoming.

• Within seven years, another 12 will legalize: Alabama, Arkansas, Florida, Georgia, Minnesota, Nebraska, New Hampshire, New Mexico, Oregon, Rhode Island, South Dakota and Wisconsin.

That timeline could even be conservative. Researchers at Eilers & Krejcik Gaming predicted earlier this year that more than 30 states could introduce sports betting bills before the end of 2018.

Of course, certain states may never legalize sports betting.

How will leagues make money?

The most direct route for sports leagues to profit would be to create their own casinos and sportsbooks. But the more likely route would be through integrity fees, which would be paid by sportsbooks or casinos to leagues—and thus, potentially, their players—for the cost of monitoring betting activities more robustly. As of now, absent of federal regulations, such fees will not be mandatory in any state.

The NBA, according to testimony offered by NBA senior vice president and assistant general counsel Dan Spillane earlier this year, believes "it is reasonable for operators to pay each league one percent of the total amount bet on its games," per Jeff Zillgitt of USA Today.

That would mean that sports leagues expect to receive 1 percent of the total amount of money wagered on their contests—not just the amount of money earned by the sportsbooks. Obviously, sportsbooks and state legislative bodies are likely to balk at such a figure and attempt to negotiate a more favorable rate for themselves.

"The way it goes," said Stefan Szymanski, a sports management professor at Michigan, "is that sports leagues are opposed to betting. But then if it's legalized, they want a cut of the money. But who's to say that won't incentivize them to act corruptly? Their argument is that they're entitled to a share because their product is necessary for the betting. But you can bet on anything.

"I think it's better, to some extent, to keep the relationship at arm's length. Sponsorships are fine. Rent out spaces for bookmakers at the stadiums. But a share in profits may not be a good idea."

Even absent integrity fees, leagues are likely to see rapidly increasing revenue from sponsorships, advertisements and, eventually, broadcast rights.

"Legal sports betting is going to be great for the leagues," said Brian Musburger, the founder and chairman of VSiN, a Vegas-based sports media company. "There are several revenue streams unleashed this morning. Everybody will benefit from the ad dollars that are getting ready to flood the marketplace."

How will Las Vegas be affected?

Among the more obvious losers of this decision is the state of Nevada, which until Monday had been the only state legally allowed to facilitate sports bets. In 2017, sports betting totaled close to $5 billion in Nevada, a $400 million increase from 2016. It follows logically that fewer people will visit Nevada specifically to place sports bets now, and that will lead to a decline in revenue for sportsbooks and taxes for the state government.

John Locher/Associated Press

But Chris Andrews, the manager of the sportsbook at South Point Hotel Casino & Spa, believes the benefits will outweigh the lost business.

"We've had that concern in the past, with the spread of casino gambling in general," Andrews says. "There may be some initial, minor impacts on Vegas, but over the years, it has grown the market more than it has ever hurt us. This will do the same thing. Our biggest fear is just that the federal government or state governments will get too involved and f--k it up for everyone."

Andrews envisions prominent Vegas sportsbooks like his licensing their information and expertise to other states. And of course, there are plenty of other reasons to visit Las Vegas—especially with a Cup-contending NHL team in town and an NFL franchise on the way.

How will this affect non-gamblers?

Gamblers and non-gamblers alike should benefit from the increased revenues for states that choose to legalize sports betting. According to a report by Oxford Economics, legal betting could nationally generate more than $5 billion in annual tax revenue and support between 125,000 and 152,000 jobs. Cash-strapped states could use these budget windfalls for other essential services, and additional revenue for sports leagues could lead to a more polished product and higher wages for players.

On the downside, detractors argue that "legalizing sports gambling will hook the young on gambling, encourage people of modest means to squander their savings and earnings, and corrupt professional and college sports," as Alito wrote.

Szymanski doesn't believe the integrity of the game ought to be a major concern. He cited the way world football has handled a more relaxed European attitude toward gambling.

"The lesson from soccer is that there's not really much danger in terms of game integrity," he said. "For players attempting to fix games, the risks are very high. The vast majority of professional and NCAA games are highly visible. What leagues should do now is to work with bookmakers. They hate fixes more than anyone, because that interferes with the huge profits they're making. FIFA works with gambling organizations now, and we've seen a great reduction in match-fixing."

Perhaps the most annoying unintended consequence will be the inundation of advertisements for new ways to gamble during games.

"The amount of money spent on advertising in the next few years will make the DraftKings and FanDuel advertising spending of two or three years ago look like child's play," Musburger said.

In other words, if you're worried that you don't know enough about sports betting even at the end of this article, don't worry. We are all about to experience this great experiment in American sports together.