On Monday, the Supreme Court handed down a decision in the case Murphy v. NCAA which opens the way for the legalization of sports gambling nationwide. Specifically, the Court struck down a 1992 law prohibiting sports gambling. Here's a rundown.
Case Background:
Prior to the decision, the status quo was that sports gambling was effectively illegal in all but four states (Nevada, Delaware, Montana, and Oregon) which were grandfathered in and permitted to maintain gambling. Nonetheless, sports gambling continued to happen, centered around the states where it was legal, especially Nevada, but also continuing to happen illegally across the country. Despite its illicit nature, sports gambling remained a billion dollar industry which was often controlled by or contributed to other criminal enterprises. By one estimate, illegal bets add up to $150 billion annually. The New Jersey case began when voters legalized gambling via a state constitutional amendment, which led to the case resolved on Monday. The 1992 law was known as the Bradley Law, after its main sponsor, former New Jersey Senator Bradley. Bradley was also a former college basketball and NBA player, who supported the law in part to, in his view, preserve the integrity of sports.
Decision:
The Court struck down the Professional and Amateur Sports Protection Act, a 1992 law which prohibited gambling in that didn’t already permit it, allowing the four previously mentioned states to be grandfathered in. To be technical, the law did not make involvement in gambling a federal crime, but rather it prevented states from legalizing sports gambling. This is the key point which made the law unconstitutional, because by restricting what states could decide the law violated states’ Tenth Amendment rights.
Effect:
This decision does not immediately make sports gambling legal. Rather, states now must decide whether to legalize gambling and set up regulatory frameworks. Most states are expected to legalize, and some had already begun preparations before the decision was rendered. In New Jersey, for example, gambling will likely open before June 30. Other states will take longer as they hammer out the regulatory framework. This decision transforms the landscape of professional sports by adding a massive new revenue stream to be taken advantage of, which is not lost on the leagues. Already, some leagues are pushing to receive a cut of all wagers placed on their respective sports. Owners are likely to see team values, already at record highs, continue to increase, with Mark Cuban (the Mavericks owner) saying that he believes that every franchise just doubled in value. While that evaluation is considered hyperbolic (shocking development from Mark Cuban), there is little doubt that legalized gambling will increase team values. The new landscape of legalized sports gambling also presents a challenge for players associations and for the NCAA. Players associations have to figure out whether or not to push for a cut of their own and how players can legitimately profitably interact with legalized gambling without compromising the integrity of the game. The NCAA, meanwhile, also needs to hammer out its role in gambling, whether it will get a cut, and how to maintain the game’s integrity. This is a particular challenge for the NCAA because of the amateur, and thus unpaid, status of college athletes. The rise of sports gambling is likely to intensify the debate on whether college players should receive compensation.
Overall, legal sports gambling is a certainty that will change professional and amatuer sports forever. However, many of the specifics have yet to determined, as with so much revenue up for grabs, every stakeholder is angling for a piece of the pie. Wherever the chips fall, stay tuned, it’s going to be an interesting, foundational struggle for the character of American sports. From all of us at Third and Long, we’ll keep you posted, and we would remind any readers eager to take advantage of this new opportunity to please enjoy responsibly.
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