Congress Wants Federal Oversight for Sports Betting

Congress wants federal government to play a greater role in the sports betting sector. This follows the Supreme Court’s decision in May 2018 to end the federal ban on sports betting.

States now have the power to decide for themselves if they want to legalize sports betting or not. Those states that decide to proceed in this manner would be in charge of their own regulatory framework for the sector.

There is now some draft legislation that aims to change this approach – a discussion paper on the issue of introducing a federal regulatory oversight on the sector. The 37-page report was produced by the office of Senator Orrin Hatch.

The draft proposals

Many states have already made sports betting legal or are in the process of doing so. Some estimate that in the next two years that as many as 40 states will have a legal sports betting offering.

Senator Hatch’s draft legislation would require states to gain the approval of the US Attorney General before they can bring in new sports betting regulations or laws. It would also introduce a new system enabling the authorities to target illegal operators, whether offshore or onshore.

This draft bill also proposes the creation of a National Sports Wagering clearing house. This would collect all sports betting data in real time and anonymized.

The clearing house would collate info such as when wagers are made and where, what type of bet it is and what the outcome was. The draft bill would allow the clearing house to monitor any suspicious betting trends in real time in order to weed out potential corruption.

Another aspect of the draft legislation is proposals to deal with problem gamblers and sports betting companies’ advertising efforts. Two current federal statutes for gambling would need to be tweaked in order to do so.

This would be the 1961 Wire Act, which gives operators the ability to lay off their bet through compacts with other states, plus additions to the 1964 Sports Bribery Act.

The chances of success

If passed, the legislation would cause a tremendous shift in the sports betting landscape in the United States. However, many people wonder what is the probability that it will ever see the light of day.

It is the first piece of draft legislation since the ending of the federal ban in May 2018. It would cause a lot of disruption to those states now operating sportsbooks: West Virginia, Rhode Island, Pennsylvania, New Mexico, New Jersey, Mississippi, Delaware and Nevada

The American Gaming Association is of the opinion that there is no need for any federal legislation with regards to sports betting. However, it is open to having a constructive dialogue with those key policy-makers in case this does end up happening.

The fact that the soon to be retiring Senator Hatch is behind the creation of this draft bill is no surprise. He has long been an outspoken critic of legal sports betting. He was one of the key drivers of the federal ban when was approved in 1992. His time as a senator will come to a close in December 2018.

Previously, Senator Chuck Schumer issued his own idea regarding the federal sports betting framework. There was also a hearing at the House Judiciary Subcommittee for Crime, Terrorism, Homeland Security and Investigations on the issue during September.

Disruption for operators

If the legislation is passed, it would cause a massive upset in the sports betting world. The operators would have to pay each of the major sports leagues for the use of their official league data as part of this draft bill. This would seriously undercut their margins and possibly stunt the growth of the sector.

Sportsbook operators would need to get access to the official data of the major sports leagues in order to create their markets up until 2023, at the earliest.

There would also be a lot of red tape and systemic inefficiencies, as there would be a lot of moving parts and information to analyze.

There are concerns that a curtailing of the advertising practices of the gambling companies could also have a seriously detrimental effect. A ban on gambling ads is in place in Italy, and the country is already seeing significant declines in sports betting revenues.