The draft of a federal sports betting bill released this week by outgoing Utah Senator Orrin Hatch, much like a certain 26-year-old law that was struck down by the U.S. Supreme Court in May, has the federal government stepping into the picture.
So is this just another ill-advised effort to exert improper influence over the states?
The answer is — well, it’s complicated.
Marc Edelman, a tenured professor at Baruch College in New York City, questions the intent of the new bill.
“The new proposed bill could give rise to the very same commandeering issues,” Edelman told USBets. “In essence, the Supreme Court decision to strike down [the Professional and Amateur Sports Protection Act of 1992] was not one based on public policy toward gambling, but rather one that found the law unconstitutional because the federal statute required states to maintain their anti-gambling laws on the books.
“The new proposed law, at least as explained, is nearly identical — with the exception for scenarios in which the federal government specifically likes the new [state] law. Indeed, the gravamen of the new proposed law is very much the same in terms of the federal government usurping the states’ independent authority.”
Another view on the new bill
Fort Lauderdale, Florida-based gaming law attorney Daniel Wallach sees it differently.
“By setting forth federal standards for the state regulation of sports betting, the draft bill from Senator Hatch avoids the commandeering problem,” Wallach said. “For example, states must adhere to federal standards when implementing food stamp programs.”
Wallach then cites a 2000 case called Reno v. Condon, where a court concluded: “That a State wishing to engage in certain activity must take administrative and sometimes legislative action to comply with federal standards regulating that activity is a commonplace that presents no constitutional defect.”
“The USAG veto power over state sports betting legislation in the Hatch bill is not an unfettered right,” Wallach added. “The AG must approve the application unless the AG determines that the proposed State sports wagering program does not meet the standards set forth in section 103.
“In other words, it is simply a mandate that state sports betting laws comply with federal standards. It is not a commandeering defect. Remember, [the Supreme Court] said that feds are free to regulate, but if they don’t, they can’t stop states from doing so. But, here, feds would regulate. The USAG approval process in the federal sports betting bill resembles the approval process in the federal Food Stamp Act, where the Secretary of Agriculture sets forth uniform national standards and no state plan can be approved unless it meets those standards.”
Edelman isn’t convinced.
“The 10th Amendment is complex, and there’s limited case law,” Edelman tweeted, referring to the specific amendment that upended PASPA. “Requiring a federal official to approve a state plan before implemented *might* still be seen as commandeering.”
Down to the Wire
The proposed bill includes revisions to both The Wire Act and The Bribery Act. Wallach finds the former revision insufficient.
“It would have been nice to see the Hatch bill expand the Wire Act safe-harbor in Section 1084(b) to include all bets and wagers between jurisdictions where sports betting is authorized,” Wallach said. “For now, the safe-harbor is expanded only for layoff bets of bookmakers, rather than all bets.”
Wallach added to USBets that the lack of clarity on what the federal government would do with the eight states that now have legalized sports betting is “problematic” for the bill.
One complication is Iowa Senator Chuck Grassley, the chairman of the Senate Judiciary Committee who as it happens was the only senator to speak out against PASPA in 1992.
Grassley, while personally opposed to sports betting, objected to the full exemption for Nevada and limited exemption for states such as Delaware, Oregon, and Montana. He also objected to the fact that PASPA authorized the five sports organizations — who ultimately lost their lawsuit against New Jersey — to be granted the right in court to try to impose those restrictions.
“The Federal Government also has never authorized private parties to enforce restrictions against the States,” Grassley told the Senate in June 1992. “This legislation would do so.”
That issue is not in play here. But the philosophical objection to federal interference in state’s rights runs deep in Grassley’s veins.
Perhaps an even bigger obstacle for the bill is the fact that Hatch, 84 — who began his Senate tenure under President Gerald Ford — is stepping down next month and being replaced by Mitt Romney. Supporters, on the other hand, may note that Grassley, 85, is up for re-election again in 2022.
It’s possible that this bill is merely a case of Hatch, a prime sponsor of PASPA 26 years ago, feeling a need to fulfill a promise. It’s not clear if anyone else in the Senate will be as eager to pick up the mantle once he’s gone.