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The Impact of Murphy v. NCAA

For over two decades, the Professional and Amateur Sports Protection Act (PAPSA) stood as the federal roadblock preventing states from legalizing sports gambling. In May of this past summer, the Supreme Court removed this barrier by a vote of six to three in Murphy v. NCAA. ((Murphy v. NCAA, 138 S. Ct. 1461 (2018).))

Justice Alito wrote the opinion for the Court and made clear that PAPSA is unconstitutional because it involves the commandeering of state governments by the federal government. Since PAPSA’s ban on state-authorized sports gambling did not fit within any of the three categories of preemption, Justice Alito made clear that “there is simply no way to understand the provision prohibiting state authorization as anything other than a direct command to the States.” ((Id. at 1481.))

While 1Ls taking Constitutional Law in the coming years may look back on this case primarily as an example of the anti-commandeering principle at work, the more immediate effects of the decision are already being felt throughout the United States. There are now eight states in the United States who have legalized gambling on sports, including Nevada who was grandfathered into PAPSA. The remainder of states have a decision to make.

Opportunities to Generate Revenue

On the one hand, states can use the funds generated by sports gambling to their advantage. States can enact systems in which betting companies pay a tax of a specified percentage of their revenue. In New Jersey, the legislature imposed an 8.5% tax on in-person bets and a 13% tax on bets placed online or through mobile devices. ((Matt Rybaltowksi, As Sports Betting Launches in New Jersey, Can Sportsbooks Remain Competitive with 8% Tax, Forbes (June 14, 2018) https://www.forbes.com/sites/mattrybaltowski/2018/06/14/as-sports-betting-launches-in-new-jersey-can-sports-books-remain-competitive-with-8-percent-tax/#14b63f5c6cd9.)) Some lawmakers have expressed hope that this potential source of funds will enable state and local governments to expand the services that they offer to the public. There is disagreement about the size of the impact that sports betting would have on governmental funds, but many lawmakers are generally excited by the possibilities.

Is it Worth the Drawbacks?

The possible downsides for states that decide to legalize betting on sports are much more diverse. Some of the most common concerns raised by opponents of sports gambling focus on  gambling addiction. ((See Laila Kearney, As States Chase Sports Betting Gold, Addicts Left in the Cold, Reuters (Oct. 26, 2018) https://www.reuters.com/article/us-usa-betting-addiction/as-states-chase-sports-betting-gold-addicts-left-in-the-cold-idUSKCN1N019H.)) There are already millions of Americans who struggle with gambling addiction and it is undeniable that this number will increase if sports betting becomes commonplace. Many organizations that treat people who are addicted to gambling are already underfunded, and individuals who work with these organizations have been alarmed by the fact that states who have legalized sports gambling have not significantly increased funding for programs to help problem gamblers.

Another possible disadvantage of legalizing sports betting is the effect that it might have on young people. As betting organizations become more prevalent in society through the use of advertisements and mobile betting apps, young people will be increasingly exposed to the phenomenon of sports betting. ((Zachary Zagger, US Lawmakers Raise Concerns with Online Sports Betting, Law360 (Sept. 27, 2018) https://www.law360.com/articles/1085123/us-awmakers-raise-concerns-with-online-sports-betting.))

While some may claim that sports betting is currently part of the mainstream discussion surrounding sports due to television programs, mobile apps, radio shows, and podcasts, states that have legalized sports betting have begun to experience the visible spread of the industry. Lawmakers point to the United Kingdom as an example of a society where young people cannot avoid becoming exposed to sports betting because advertisements are so common. ((Id.)) For example, nine of the twenty soccer teams in the English Premier League are sponsored by betting companies.

Conclusion

On Tuesday November 6, 2018, voters in Arkansas chose to allow certain casino operators to offer sports gambling at their establishments. This result is just the latest example of a state deciding to legalize sports betting in the wake of Murphy. It has been less than half of a year since the decision was reached, but American society has already begun to adjust to the landscape created by the Court’s decision. While states are grappling with whether to adopt laws that allow their residents to wager on sports, the enthusiasm of betting companies has made league officials realize that they do not have the luxury of deliberation. Mobile apps, partnerships with major sports leagues and venues are only some of the developments that have emerged in the short period since May of last year. With the enormous potential that lies within this previously-untapped market, it is unlikely that concrete answers will arise anytime soon.

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Jacob Gach

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