The Professional and Amateur Sports Protection Act (PASPA)
The Professional and Amateur Sports Protection Act, or PASPA, is a 1992 law that serves to enhance the Interstate Wire Act (1961) by specifically targeting and prohibiting sports betting across the majority of the United States.
The operative portion of PASPA is found in 28 US Code § 3702 – “Unlawful sports gambling” which states, in part, that “It shall be unlawful for a governmental entity...[or]...a person to sponsor, operate, advertise, or promote...a lottery, sweepstakes, or other betting, gambling, or wagering scheme based, directly or indirectly...on one or more competitive games in which amateur or professional athletes participate...or on one or more performances of such athletes in such games.”
In much the same way that the Wire Act was prompted by the gambling and sports betting activities of organized crime in and around New York City, so too can PASPA trace its roots back to the Big Apple. To understand PASPA’s origin, you need simply look to Atlantic City in neighboring New Jersey. When Atlantic City was envisioned, most casino developers and city planners believed the area would be the Las Vegas of the East Coast.
Unfortunately, the Vegas-style glitz and glamor was slower to take hold around the Jersey Shore, and – in 1992 – New Jersey senator Bill Bradley (D) spearheaded legislation that would give Atlantic City a distinct leg up over its many regional rivals. That plan was PASPA. And though PASPA was introduced in the Senate by Arizona Democrat Dennis DeConcini, the law is often called the Bradley Act, reflecting Bradley’s – and thus New Jersey’s – deep investment in PASPA from the very beginning.
Before the Professional and Amateur Sports Protection Act became law on January 1, 1993, there was no federal preemption banning sports betting in the US. As long as states adhered to the Wire Act, each could pass its own sports betting laws and regulate the pastime as it saw fit. The responsibility to manage such a system fell solely to each individual state’s legislature, gaming commission, and law enforcement agencies. New York sports betting, for example, was entirely under the purview of the NY state government.
PASPA, however, sought to change that. Appealing to the public for support, various congressmen and senators framed PASPA as being a necessary control against various mafias’ sports betting businesses while simultaneously echoing that old chestnut about “the integrity of the game.”
Of course, sports protection is not actually what the Professional and Amateur Sports Protection Act was about. As Atlantic City was floundering, the idea behind the law was to create legislation that would give New Jersey’s casino district a shot in the arm. This law would ban sports betting in every state that didn’t currently offer it (Delaware, Montana, Nevada, and Oregon), and there would be an exemption baked in for any state that just so happened to have a commercial gambling industry in continuous operation for the previous 10 years. By sheer happenstance and nothing else, only one state qualified under the terms of this exemption. Care to guess which one that was?
Because New Jersey could simply pass a sports betting law within one year of PASPA’s start date and become exempt from PASPA forever, many assumed that New Jersey would quickly turn around its underperforming casino districts. After all, it was obvious that Bill Bradley wrote PASPA specifically to grant New Jersey an eastern US monopoly on sports betting. Then, a funny thing happened: Because New Jersey is New Jersey, the state screwed up and missed their window. They’ve been trying to get PASPA repealed or overturned ever since.
So how does NY figure into PASPA’s creation? Consider Las Vegas: Most of the Las Vegas casino customer base lives in Southern California, just over the Nevada border. Without the steady flow of Los Angeles-based gamblers and sports bettors, Las Vegas could not survive economically. This is widely understood and accepted as an economic fact.
In this way, Atlantic City needs New York gamblers to keep its expensive casino operations afloat. Without that reliable influx of well-to-do city slickers, Atlantic City – and thus New Jersey – would suffer tremendously. The Professional and Amateur Sports Protection Act, then, was meant to attract New York sports betting enthusiasts to boost New Jersey’s struggling economy. Without the potential business that New York sports betting was projected to bring to the area, PASPA probably never would have been proposed in the first place.
PASPA is currently the law of the land in the US, with only Nevada being meaningfully exempt. (The other states exempt from PASPA at its original passing never had robust sports betting menus, so Delaware, Montana, and Oregon remain restricted to limited parlays and sports pools. For perspective, these options don’t even represent a single percent of the action that Las Vegas sportsbooks are allowed to offer.)
For all intents and purposes, PASPA has effectively forbidden non-Nevada casinos, racetracks, and all other physical storefronts from offering sportsbooks. To Nevada’s delight, Las Vegas has an effective monopoly on sports betting in America.
Under the Professional and Amateur Sports Protection Act, there are few exceptions. Pari-mutuel betting and jai-alai are not covered by the law, and PASPA predates Daily Fantasy Sports significantly enough that its application in that particular industry is tenuous at best (and totally ignored by the federal government). Otherwise, four US states have varying degrees of PASPA exemptions. Unfortunately, New York is not one of them.
Delaware – At the time PASPA was passed into law, Delaware was technically able to offer NFL parlay cards as part of its state lottery suite. However, the game was abandoned by the Delaware Lottery after its inaugural 1976 season, though the law allowing it remained active. In 2009, Delaware attempted to resurrect this game as well as install a full menu of traditional sports betting fare on NFL, NBA, MLB, NHL, and NCAA games. The leagues took Delaware to federal court, where the case’s ruling held that PASPA exemptions do not apply to any game types that were not active when PASPA became law. Not much of an exemption, really.
Montana – While Montana never offered traditional sports betting, the state had a “sports pool” law on the books at the time of PASPA’s passage. This law basically allows bars to host “betting squares contests,” which is essentially bingo for sporting events. The bars can keep none of the money wagered, which is all collected in a pot and paid out to the winners after every contest. Bars can also host pig, hamster, and gerbil racing outside of city limits, provided the same funding rules are followed. Controversially, the Montana State lottery also offers a pari-mutuel fantasy sports betting game, though this is limited to NASCAR and NFL events.
Nevada – The Professional and Amateur Sports Protection Act is wholly exempt only in Nevada, as sports betting has been in full swing in the state since 1949. As such, Las Vegas is the de facto destination for sports betting in the United States. There are many corporations and government agencies that wish to maintain this status quo, as Nevada remains the most powerful voice in favor of PASPA.
Oregon - PASPA originally exempted the Oregon Lottery’s “Sports Action” card game, which was composed of NFL and NBA parlay bets. Because of complaints from the NFL, NBA, and NCAA (including threats from these leagues to exclude Oregon from future team expansion and other business opportunities), the Oregon legislature banned the “Sports Action” game, which was finally shuttered in 2007. PASPA will not allow Delaware’s exemption to apply to any new forms of sports betting other than those in effect at the time of its 1992 passage.
PASPA contains no language addressing Daily Fantasy Sports, as DFS did not exist in 1992, and the law has not been amended to include any. However, that does not mean that DFS is illegal in all states. On the contrary, Daily Fantasy Sports is legal in New York, and there are many DFS services to choose from. Both DraftKings and FanDuel are currently open to NY residents, and DFS is the closest thing to New York sports betting that’s actually allowed within the state’s borders.
From a governmental standpoint, PASPA’s failings tremendously outweigh its utility. Obviously, the primary reason the law was passed in the first place fell apart after New Jersey failed to follow the giant breadcrumbs. Since then, the consequences of the Professional and Amateur Sports Protection Act have been predictably devastating to the American economy. Nevada, as the only place in the US for legal land-based sports betting, is estimated to rake in a whopping 3% of the money that the country spends on the pastime. The remaining 97%, of course, is spent through unregulated avenues, with most of that business going to legal online sportsbooks like BetOnline, SportsBetting, and the like.
Estimates for taxable income lost to state and federal entities due to PASPA’s limitations sit between $200 and $550 billion, with legal online sportsbooks taking the lion’s share of that massive handle. The government doesn’t often err on the side of leaving its citizens’ money on the table, so PASPA represents one of the biggest economic mistakes that the feds have ever made.
Fortunately for fans of New York sports betting, PASPA doesn’t actually prohibit people from betting on sports at all. Instead, the law simply makes it illegal for commercial enterprises like sportsbooks to accept those bets. Because of this distinction, the solution is simple: If you live in NY and want to legally bet on sports, just use an online sportsbook.
These sportsbooks are exempt from the Professional and Amateur Sports Protection Act because they do not operate on US soil. As they’re all based in other countries that do not outlaw sports betting, legal online sportsbooks are allowed to accept bets from American customers. Provided these sportsbooks follow all the laws of their host nations, they are 100% legal, and NY sports bettors can use them without breaking any laws.
Some, no doubt, will argue that this method constitutes a sports betting loophole, or PASPA loophole. That’s not true, because a PASPA loophole would mean that this allowance is an overlooked inadequacy in the law, and not an intentional one. Had PASPA made it illegal for individuals to bet on sports, there could be no Las Vegas exemption, as US citizens are entitled to the uniform application of criminal law per the Equal Protection Clause of the 14th Amendment of the US Constitution. Thus, PASPA had to be written to apply exclusively to US-based businesses in order to avoid any obvious Constitutional challenge.
Of course, PASPA has been – and continues to be – challenged. Virtually since its inception, the Professional and Amateur Sports Protection Act has been characterized by New Jersey as a wanton violation of states’ rights, as it clearly gives preferential economic treatment to Nevada at the expense of all other states. Aside from this Constitutional argument, many legal scholars assert that PASPA violates the US’ so-called “nondelegation doctrine,” giving prosecutorial oversight to private entities (professional and amateur sports leagues, in this case).
As you might expect, New Jersey has been the primary force behind such PASPA challenges, and the state – in its 25-year trek to wipe the egg off its face – has finally forced the issue all the way to the United States Supreme Court. Current New Jersey governor, Chris Christie, has been an outspoken critic of PASPA, calling it “dramatic, unprecedented, and in direct conflict with...Tenth Amendment jurisprudence barring Congress from controlling how the States regulate private parties.”
Scheduled to be heard in the first half of 2018, New Jersey’s case is likely to result in some serious changes to the Professional and Amateur Sports Protection Act. The court may even overturn the law outright, nominally legalizing sports betting across America. To that end, 19 states (and counting) have joined New Jersey, echoing its position to the Supreme Court via amicus brief.
Many industry analysts, as well as pundits on both sides of the debate on legal New York betting, are predicting that PASPA is approaching the end stages of its standing in American law. In addition to the 20 states challenging the law at the Supreme Court, most of the major sports leagues have come out in support of the land-based legalization of sports betting. Led by NBA Commissioner Adam Silver, the NBA, NFL, NHL, and MLB have all embraced sports betting as a part of their respective sports’ futures. (The NCAA remains in favor of the Professional and Amateur Sports Protection Act.) Given that each one of America’s major professional sports leagues keeps their headquarters in New York City, it can be argued that the New York sports betting community is very much at the forefront of PASPA’s probable dissolution.