SCCG Research: PASPA’s historical context and implications

The Professional and Amateur Sports Protection Act (PASPA) of 1992 stood as a pivotal regulation governing sports betting in the United States. Essentially, PASPA prohibited sports betting nationwide, with the sole exemption being the state of Nevada. Although the act did present a one-year window for New Jersey to legalise sports betting, the state failed to act upon this opportunity.

sports betting legal twist

Under PASPA's domain, Delaware, Montana and Oregon were permitted to continue specific quasi-sports betting games due to a grandfathering provision. This allowed Delaware to offer NFL parlays comprising three or more teams; Montana to legalise sports pools, fantasy sports leagues and sports tab betting; while Oregon had the liberty to endorse parlay betting until its cessation in 2007.

However, the landscape underwent a paradigm shift when the Supreme Court ruled in favour of New Jersey in the Murphy vs NCAA case, rendering PASPA null and void. This monumental decision empowered states individually to determine their stance on sports betting legalisation.

Legal and Regulatory Environment Post-PASPA

a. Different jurisdictions and their rules

Following the repeal of PASPA, multiple states, including Delaware, New Jersey, Mississippi, West Virginia, Pennsylvania, Rhode Island, New York and Arkansas, commenced legal sports betting. Delaware pioneered this wave merely a month post-PASPA's overturning, closely followed by New Jersey. Subsequent years witnessed other states like Illinois, Indiana, Michigan, Tennessee and Virginia legalising sports betting, each with its unique regulations and operating nuances.

b. Impact on sports betting

The eradication of PASPA revolutionised the sports betting sector. Previously, unless venturing to Nevada, those desiring to place legal bets were constrained. Alternatively, they could risk engaging with offshore sportsbooks or local bookmakers, which posed significant challenges.

However, post-PASPA, the blossoming industry witnessed the entry of major players like DraftKings and FanDuel, transforming the dynamics entirely. Johnny Avello, a revered figure from the Las Vegas sportsbook scene, encapsulated the sentiment, expressing astonishment at the exponential industry growth and the diversity of markets now available.

III. The rationale behind PASPA and its downfall

PASPA was enacted with the primary intent to curb the spread of legalised sports betting. Spearheaded by Democratic Senator Bill Bradley of New Jersey, the legislation received strong endorsement from sports leagues, emphasising the "integrity of the game" as the central argument.

However, as the years progressed, the sports leagues themselves recognised PASPA's inefficacy in halting sports betting or preserving the sanctity of games. Adam Silver, the NBA commissioner, acknowledged the flourishing underground sports betting industry, devoid of regulations or oversight and emphasised the need for a fresh approach.

The Supreme Court's decision to invalidate PASPA was rooted not in favour of sports betting but due to the legislation's infringement on the 10th Amendment of the US Constitution. PASPA's imposition on states' rights and its directive nature was deemed unconstitutional, leading to its downfall.

This is an exclusive excerpt sent by SCCG Research. Its full report will be released this week.

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